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Flexibility and Real Options in Engineering Systems Design

Handbook of Engineering Systems Design

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, computational methods, and algorithmic 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 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.

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Authors and Affiliations

  1. Dyson School of Design Engineering, Imperial College London, London, UK

    Michel-Alexandre Cardin

  2. Centre for Systems Engineering and Innovation, Imperial College London, London, UK

    Michel-Alexandre Cardin, Ana Mijic & Jennifer Whyte

  3. Department of Civil and Environmental Engineering, Imperial College London, London, UK

    Ana Mijic & Jennifer Whyte

  4. School of Project Management, The University of Sydney, Sydney, Australia

    Jennifer Whyte

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  1. Michel-Alexandre Cardin
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  2. Ana Mijic
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  3. Jennifer Whyte
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Correspondence to Michel-Alexandre Cardin .

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Editors and Affiliations

  1. Department of Technology, Management and Economics, DTU- Technical University of Denmark, Lyngby, Denmark

    Anja Maier

  2. Department of Technology, Management and Economics, DTU- Technical University of Denmark, Lyngby, Denmark

    Josef Oehmen

  3. Philosophy Department, Delft University of Technology, Delft, Zuid-Holland, The Netherlands

    Pieter E. Vermaas

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Cardin, MA., Mijic, A., Whyte, J. (2021). Flexibility and Real Options in Engineering Systems Design. In: Maier, A., Oehmen, J., Vermaas, P.E. (eds) Handbook of Engineering Systems Design. Springer, Cham. https://doi.org/10.1007/978-3-030-46054-9_35-1

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  • DOI: https://doi.org/10.1007/978-3-030-46054-9_35-1

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  1. Latest

    Flexibility and Real Options in Engineering Systems Design
    Published:
    06 January 2023

    DOI: https://doi.org/10.1007/978-3-030-46054-9_35-2

  2. Original

    Flexibility and Real Options in Engineering Systems Design
    Published:
    19 April 2022

    DOI: https://doi.org/10.1007/978-3-030-46054-9_35-1

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