DocumentCode :
2921282
Title :
Applying Real Options to Flexible Systems Engineering: A Proof-of-Concept Study on Capability Acquisition of Tactical Data Links
Author :
Chang, Shin-Jyh Frank ; Backus, Gary R.
Author_Institution :
MITRE Corp., Bedford
fYear :
2007
fDate :
9-13 April 2007
Firstpage :
1
Lastpage :
7
Abstract :
How do we show the value of flexibility in systems engineering? This paper is aimed at answering this question with a proof-of-concept case study, which applies flexible systems-engineering concepts to the design of solutions for providing improved Tactical Data Link (TDL) capabilities to the Close Air Support (CAS) mission and then compares the return on investment (ROI) of these solutions. Many flexible systems-engineering concepts can be viewed as applications of Real Options, where options represent valuable sources of flexibility designed into assets or activities of an investment whose payoff is strongly related to some uncertainties. Such sources of flexibility can substantially raise the investment´s expected payoff, because they would allow the project to limit the downside risk while exploiting the upside potential. TDL systems can support the CAS mission by providing digital machine-to-machine target location, weapon aim points, and Blue Force situational awareness to reduce the risk of fratricide. Engineering a useful system would face uncertainties in technical development and implementation coordination with various components. Solutions have been proposed that incorporate flexibility into systems engineering strategies for responding to uncertainties. This paper presents an analytic method based on a Real Options approach for analyzing such solution strategies. The results show that flexible systems-engineering concepts embedded in a capability acquisition program can probabilistically enhance its investment value.
Keywords :
investment; military computing; systems engineering; target tracking; weapons; Blue Force situational awareness; CAS mission; TDL capability acquisition; close air support mission; digital machine-to-machine target location; flexible systems engineering; proof-of-concept case study; real options approach; return on investment; tactical data links; weapon aim points; Content addressable storage; Data engineering; Financial management; Government; Ground support; Investments; Systems engineering and theory; USA Councils; Uncertainty; Weapons;
fLanguage :
English
Publisher :
ieee
Conference_Titel :
Systems Conference, 2007 1st Annual IEEE
Conference_Location :
Honolulu, HI
Print_ISBN :
1-4244-1041-X
Electronic_ISBN :
1-4244-1041-X
Type :
conf
DOI :
10.1109/SYSTEMS.2007.374684
Filename :
4258889
Link To Document :
بازگشت