Determining the Value of a Prototype
McGregor-Dorsey, Zachary S.
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Most major defense acquisitions require a technology that is not yet fully developed, introducing a non-negligible amount of risk to the program and its cost. Developing a prototype or technology demonstrator prior to execution of the program can be useful in mitigating this risk, yet these demonstration programs also have associated costs. This paper develops a method to value this risk mitigation, setting an appropriate maximum cost for the demonstration program. This novel application of Value of Information theory and properties of the Bayesian preposterior distribution requires only a program cost estimate distribution and some estimate of possible results of the demonstration program. The method is broadly applicable to programming with varying amounts of technological uncertainty. We describe the method, then show how actual cost overruns of historical programs with and without prototypes can be used to estimate a value of prototype efforts relative to estimated program cost. We conclude with a discussion of other applications and how to explain the method and results to decision-makers.
RightsThis 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.
NPS Report NumberSYM-AM-17-059
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McGregor-Dorsey, Zachary S. (Monterey, California. Naval Postgraduate School, 2017-03); SYM-AM-17-110Most major defense acquisitions require a technology that is not yet fully developed, introducing a non-negligible amount of risk to the program and its cost. Developing a prototype or technology demonstrator prior to ...
Altizer, Charles Edwin (1988-12);Rapid prototyping is a method of software system development that is gaining much support presently. Rapid prototyping allows the designer to quickly produce a model of a system or part of a system which the user can see ...
Dampier, David A.; Berzins, Valdis; Luqi; Shing, Mantak; Dolk, Daniel R.; Rassmussen, Craig W. (1995-08);This report outlines a formal method for merging changes in independently developed versions of software prototypes. A useful semantics-based method, which is guaranteed to detect all conflicts, is outlined. Prototype slicing ...