System Architecture to the Identification and Valuation of Design Option Flexibilities under Uncertainty

摘要

Previous studies in real options and decision-making have been primarily focused on obtaining the Net Present Value (NPV) of a certain project or investment; however, this method does not account for the entire spectrum of an investment. This approach becomes less valuable when analyzing the entire system rather than just the valuation of the specific element of the system due to (1) vaguely capturing the uncertainty, volatility, and owner requirements of the investment; (2) proposed alternatives and flexibilities enabling a smaller risk factor in volatility and uncertainty; and (3) a systematic approach to capture and treat the investment as a system. This proposed study builds on the real options idea which supports a systems thinking approach to decision-making by considering a board spectrum of real options under various uncertainties in order to improve the limitations of a simple NPV approach. The proposed systems architecture is broken up into five unique components: (1) Initial Design; (2) Volatility and Uncertainty Recognition; (3) Alternate Generation/Design Flexibilities; (4) Real Options Valuation; and (5) Delivery and Management. The modeling results generated can be used to support decisions made in the planning stages of a new project by comparing and analyzing results using the Binomial Lattice Valuation.