Flexibility and real options in engineering systems design
File(s)
Accepted version
Author(s)
Cardin, M-A
Mijic, A
Whyte, J
Type
Chapter
Abstract
Designing engineering systems for flexibility is of utmost importance for future generations of systems
designers and operators. As a core system property, flexibility provides systems owners and operators with the ability
to respond easily and cost-effectively to future changes. It contributes to improved economic value, sustainability and
resilience by enabling systems to adapt and reconfigure in the face of uncertainty in operations, markets, regulations,
and technology. The field of Flexibility in Design has steadily evolved over the last two decades, emerging from the
area of Real Options Analysis, which focuses on quantifying the value of flexibility in large-scale, irreversible
investment projects. Flexibility in Design goes further by developing and evaluating novel design methods and
computational procedures to enable flexibility as a systematic value enhancement mechanism in engineering systems.
This chapter provides an overview of how the field has developed over time as well as design frameworks, methods
and procedures to support such design activities in practice. It discusses important challenges and limitations with
supporting case studies in aerospace, automotive, energy, real estate, transportation, and water management. The
chapter highlights key future directions for research, involving sustainability and resilience, data-driven real options,
empirical studies and simulation games, machine learning, digital twin modelling, and 3D virtualization.
designers and operators. As a core system property, flexibility provides systems owners and operators with the ability
to respond easily and cost-effectively to future changes. It contributes to improved economic value, sustainability and
resilience by enabling systems to adapt and reconfigure in the face of uncertainty in operations, markets, regulations,
and technology. The field of Flexibility in Design has steadily evolved over the last two decades, emerging from the
area of Real Options Analysis, which focuses on quantifying the value of flexibility in large-scale, irreversible
investment projects. Flexibility in Design goes further by developing and evaluating novel design methods and
computational procedures to enable flexibility as a systematic value enhancement mechanism in engineering systems.
This chapter provides an overview of how the field has developed over time as well as design frameworks, methods
and procedures to support such design activities in practice. It discusses important challenges and limitations with
supporting case studies in aerospace, automotive, energy, real estate, transportation, and water management. The
chapter highlights key future directions for research, involving sustainability and resilience, data-driven real options,
empirical studies and simulation games, machine learning, digital twin modelling, and 3D virtualization.
Editor(s)
Maier, A
Oehmen, J
Vermaas, PE
Date Issued
2022-04-19
Citation
Handbook of Engineering Systems Design, 2022, pp.1-29
ISBN
978-3-030-46054-9
Publisher
Springer
Start Page
1
End Page
29
Journal / Book Title
Handbook of Engineering Systems Design
Copyright Statement
© Springer Nature Switzerland AG 2021
Identifier
https://link.springer.com/referenceworkentry/10.1007/978-3-030-46054-9_35-1
Publication Status
Published
Date Publish Online
2022-04-19