Accession Number:

ADA495785

Title:

Application of Real Options Theory to DoD Software Acquisitions

Descriptive Note:

Technical rept. Oct 2007-Dec 2008

Corporate Author:

NAVAL POSTGRADUATE SCHOOL MONTEREY CA DEPT OF COMPUTER SCIENCE

Personal Author(s):

• Olagbemiro, A.
• Mun, J.
• Shing, M.

Report Date:

2009-02-20

Pagination or Media Count:

43.0

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 customers 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.

Descriptors:

• *COMPUTER PROGRAMS
• *DECISION MAKING
• MILITARY REQUIREMENTS
• RISK MANAGEMENT
• ACQUISITION
• COSTS
• RELATIONAL DATA BASES
• SOFTWARE ENGINEERING

Subject Categories:

• Administration and Management
• Information Science
• Operations Research

Distribution Statement:

APPROVED FOR PUBLIC RELEASE