Application of Real Options Theory to DoD Software Acquisitions
Abstract
The traditional real options valuation methodology, when
enhanced and properly formulated around a proposed or
existing software investment employing the spiral development
approach, provides a framework for guiding software
acquisition decision making by highlighting the strategic
importance of managerial flexibility in managing risk and
balancing a customer’s requirements within cost and schedule
constraints. This article discusses and describes how an integrated
risk management framework, based on real options
theory, could be used as an effective risk management tool
to address the issue of requirements uncertainty as it relates
to software acquisition and guide the software acquisition
decision-making process.
Description
Image designed by Nina Costine
Rights
This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.Collections
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