Evaluating Flexibility in Embedded Automotive Product Lines Using Real Options

Embedded automotive architectures and software need to support a large number of vehicle product lines over many years of production. This leads to a complexity and many uncertain factors when developing such systems and a need for support in the design process. An evaluation method using real options provides the opportunity to analyze the cost of designing for flexibility to cope with a future growth of a product line, based on the estimated value of the future functionality. In this paper real options is applied on a case within the automotive industry. To improve the usability an evaluation process is defined to aid engineers. This process provides a way of valuing system designs and enables the engineer to think about the future in a systematic manor. The value of a flexible design can thereby be quantified and the proposed process shows how it can be accepted by practitioners.