Value-driven design
Encyclopedia
Value-driven design is a systems engineering
strategy based on microeconomics
which enables multidisciplinary design optimization
. Value-driven design is being developed by the American Institute of Aeronautics and Astronautics
, through a program committee of government, industry and academic representatives. In parallel, the US Defense Advanced Research Projects Agency has promulgated an identical strategy, calling it Value centric design, on the F6 Program
. At this point, the terms value-driven design and value centric design are interchangeable. The essence of these strategies is that design choices are made to maximize system value rather than to meet performance requirements.
This is also similar to the value-driven approach of agile software development
where a project's stakeholders prioritise their high-level needs (or system features) based on the perceived business value
each would deliver.
Value-driven design is controversial because performance requirements are a central element of systems engineering. However, value-driven design supporters claim that it can improve the development of large aerospace systems by reducing or eliminating cost overruns which are a major problem, according to independent auditors.
by providing designers with an objective function and eliminating those constraints which have been expressed as performance requirements. The objective function inputs all the important attributes of the system being designed, and outputs a score. The higher the score, the better the design. Describing an early version of what is now called value-driven design, George Hazelrigg said, "The purpose of this framework is to enable the assessment of a value for every design option so that options can be rationally compared and a choice taken." At the whole system level, the objective function which performs this assessment of value is called a "value model." The value model distinguishes value-driven design from Multi-Attribute Utility Theory applied to design. Whereas in Multi-Attribute Utility Theory, an objective function is constructed from stakeholder assessments, value-driven design employs economic analysis to build a value model. The basis for the value model is often an expression of profit for a business, but economic value models have also been developed for other organizations, such as government.
To design a system, engineers first take system attributes that would traditionally be assigned performance requirements, like the range and fuel consumption of an aircraft, and build a system value model that uses all these attributes as inputs. Next, the conceptual design is optimized to maximize the output of the value model. Then, when the system is decomposed into components, an objective function for each component is derived from the system value model through a sensitivity analysis.
A workshop exercise implementing value-driven design for a global positioning satellite was conducted in 2006, and may serve as an example of the process.
, which amounted to setting performance requirements. But he included optimization techniques in his recommended curriculum for engineers, and endorsed "Utility theory and statistical decision theory as a logical framework for rational choice among given alternatives."
Utility theory was given most of its current mathematical formulation by von Neumann
and Morgenstern
, but it was the economist Kenneth Arrow
who proved the Expected Utility Theorem most broadly, which says in essence that, given a choice among a set of alternatives, one should choose the alternative that provides the greatest probabilistic expectation of utility, where utility is value adjusted for risk aversion.
Ralph Keeney and Howard Raiffa
extended utility theory in support of decision making, and Keeney developed the idea of a value model to encapsulate the calculation of utility. Keeney and Raiffa also used "attributes" to describe the inputs to an evaluation process or value model.
George Hazelrigg put engineering design, business plan
analysis, and decision theory together for the first time in a framework in a paper written in 1995, which was published in 1998. Meanwhile, Paul Collopy independently developed a similar framework in 1997, and Harry Cook developed the S-Model for incorporating product price and demand into a profit-based objective function for design decisions.
The MIT Engineering Systems Division
produced a series of papers from 2000 on, many co-authored by Daniel Hastings, in which many utility formulations were used to address various forms of uncertainty in making engineering design decisions. Saleh et al. is a good example of this work.
The term value-driven design was coined by James Sturges at Lockheed Martin while organizing the first workshop of what became, in 2006, the Value-Driven Design Program Committee of the AIAA. Meanwhile, value centric design was coined independently by Owen Brown and Paul Eremenko of DARPA in the Phase 1 Broad Agency Announcement for the DARPA F6 satellite design program in 2007.
Castagne et al. provides an example where value-driven design was used to design fuselage panels for a regional jet
.
Such a system is proposed in some detail in an essay by Michael Lippitz, Sean O'Keefe, and John White. They suggest that "A program office can offer a contract in which price is a function of value," where the function is derived from a value model. The price function is structured so that, in optimizing the product design in accordance with the value model, the contractor will maximize its own profit. They call this system Value Based Acquisition.
Systems engineering
Systems engineering is an interdisciplinary field of engineering that focuses on how complex engineering projects should be designed and managed over the life cycle of the project. Issues such as logistics, the coordination of different teams, and automatic control of machinery become more...
strategy based on microeconomics
Microeconomics
Microeconomics is a branch of economics that studies the behavior of how the individual modern household and firms make decisions to allocate limited resources. Typically, it applies to markets where goods or services are being bought and sold...
which enables multidisciplinary design optimization
Multidisciplinary design optimization
Multi-disciplinary design optimization is a field of engineering that uses optimization methods to solve design problems incorporating a number of disciplines. As defined by Prof. Carlo Poloni, MDO is "the art of finding the best compromise"...
. Value-driven design is being developed by the American Institute of Aeronautics and Astronautics
American Institute of Aeronautics and Astronautics
The American Institute of Aeronautics and Astronautics is the professional society for the field of aerospace engineering. The AIAA was founded in 1963 from the merger of two earlier societies: the American Rocket Society , founded in 1930 as the American Interplanetary Society , and the Institute...
, through a program committee of government, industry and academic representatives. In parallel, the US Defense Advanced Research Projects Agency has promulgated an identical strategy, calling it Value centric design, on the F6 Program
Fractionated Spacecraft
A fractionated spacecraft is a satellite architecture where the functional capabilities of a conventional monolithic spacecraft are distributed across multiple modules which interact through wireless links...
. At this point, the terms value-driven design and value centric design are interchangeable. The essence of these strategies is that design choices are made to maximize system value rather than to meet performance requirements.
This is also similar to the value-driven approach of agile software development
Agile software development
Agile software development is a group of software development methodologies based on iterative and incremental development, where requirements and solutions evolve through collaboration between self-organizing, cross-functional teams...
where a project's stakeholders prioritise their high-level needs (or system features) based on the perceived business value
Business Value
In management, business value is an informal term that includes all forms of value that determine the health and well-being of the firm in the long-run...
each would deliver.
Value-driven design is controversial because performance requirements are a central element of systems engineering. However, value-driven design supporters claim that it can improve the development of large aerospace systems by reducing or eliminating cost overruns which are a major problem, according to independent auditors.
Concept
Value-driven design creates an environment that enables and encourages design optimizationOptimization (mathematics)
In mathematics, computational science, or management science, mathematical optimization refers to the selection of a best element from some set of available alternatives....
by providing designers with an objective function and eliminating those constraints which have been expressed as performance requirements. The objective function inputs all the important attributes of the system being designed, and outputs a score. The higher the score, the better the design. Describing an early version of what is now called value-driven design, George Hazelrigg said, "The purpose of this framework is to enable the assessment of a value for every design option so that options can be rationally compared and a choice taken." At the whole system level, the objective function which performs this assessment of value is called a "value model." The value model distinguishes value-driven design from Multi-Attribute Utility Theory applied to design. Whereas in Multi-Attribute Utility Theory, an objective function is constructed from stakeholder assessments, value-driven design employs economic analysis to build a value model. The basis for the value model is often an expression of profit for a business, but economic value models have also been developed for other organizations, such as government.
To design a system, engineers first take system attributes that would traditionally be assigned performance requirements, like the range and fuel consumption of an aircraft, and build a system value model that uses all these attributes as inputs. Next, the conceptual design is optimized to maximize the output of the value model. Then, when the system is decomposed into components, an objective function for each component is derived from the system value model through a sensitivity analysis.
A workshop exercise implementing value-driven design for a global positioning satellite was conducted in 2006, and may serve as an example of the process.
History
The dichotomy between designing to performance requirements versus objective functions was raised by Herbert Simon in his essay, "The Science of Design" in 1969. Simon played both sides, saying that, ideally, engineered systems should be optimized according to an objective function, but realistically this is often too hard, so that attributes would need to be satisficedSatisficing
Satisficing, a portmanteau "combining satisfy with suffice", is a decision-making strategy that attempts to meet criteria for adequacy, rather than to identify an optimal solution...
, which amounted to setting performance requirements. But he included optimization techniques in his recommended curriculum for engineers, and endorsed "Utility theory and statistical decision theory as a logical framework for rational choice among given alternatives."
Utility theory was given most of its current mathematical formulation by von Neumann
John von Neumann
John von Neumann was a Hungarian-American mathematician and polymath who made major contributions to a vast number of fields, including set theory, functional analysis, quantum mechanics, ergodic theory, geometry, fluid dynamics, economics and game theory, computer science, numerical analysis,...
and Morgenstern
Oskar Morgenstern
Oskar Morgenstern was a German-born Austrian-School economist. He, along with John von Neumann, helped found the mathematical field of game theory ....
, but it was the economist Kenneth Arrow
Kenneth Arrow
Kenneth Joseph Arrow is an American economist and joint winner of the Nobel Memorial Prize in Economics with John Hicks in 1972. To date, he is the youngest person to have received this award, at 51....
who proved the Expected Utility Theorem most broadly, which says in essence that, given a choice among a set of alternatives, one should choose the alternative that provides the greatest probabilistic expectation of utility, where utility is value adjusted for risk aversion.
Ralph Keeney and Howard Raiffa
Howard Raiffa
Howard Raiffa is the Frank P. Ramsey Professor of Managerial Economics, a joint chair held by the Business School and the Kennedy School of Government at Harvard University...
extended utility theory in support of decision making, and Keeney developed the idea of a value model to encapsulate the calculation of utility. Keeney and Raiffa also used "attributes" to describe the inputs to an evaluation process or value model.
George Hazelrigg put engineering design, business plan
Business plan
A business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals....
analysis, and decision theory together for the first time in a framework in a paper written in 1995, which was published in 1998. Meanwhile, Paul Collopy independently developed a similar framework in 1997, and Harry Cook developed the S-Model for incorporating product price and demand into a profit-based objective function for design decisions.
The MIT Engineering Systems Division
MIT Engineering Systems Division
The MIT Engineering Systems Division is an interdisciplinary academic and research unit devoted to addressing large-scale, complex engineering challenges within their socio-political context...
produced a series of papers from 2000 on, many co-authored by Daniel Hastings, in which many utility formulations were used to address various forms of uncertainty in making engineering design decisions. Saleh et al. is a good example of this work.
The term value-driven design was coined by James Sturges at Lockheed Martin while organizing the first workshop of what became, in 2006, the Value-Driven Design Program Committee of the AIAA. Meanwhile, value centric design was coined independently by Owen Brown and Paul Eremenko of DARPA in the Phase 1 Broad Agency Announcement for the DARPA F6 satellite design program in 2007.
Castagne et al. provides an example where value-driven design was used to design fuselage panels for a regional jet
Regional jet
A Regional jet , is a class of short to medium-range turbofan powered airliners.-History:The term "Regional jet" describes a range of short to medium-haul turbofan powered aircraft, whose use throughout the world expanded after the advent of Airline Deregulation in the United States in...
.
Value Based Acquisition
Implementation of value-driven design on large government systems, such as NASA or ESA spacecraft or weapon systems, will require a government acquisition system that directs or incentivizes the contractor to employ a value model.Such a system is proposed in some detail in an essay by Michael Lippitz, Sean O'Keefe, and John White. They suggest that "A program office can offer a contract in which price is a function of value," where the function is derived from a value model. The price function is structured so that, in optimizing the product design in accordance with the value model, the contractor will maximize its own profit. They call this system Value Based Acquisition.
See also
- Systems engineeringSystems engineeringSystems engineering is an interdisciplinary field of engineering that focuses on how complex engineering projects should be designed and managed over the life cycle of the project. Issues such as logistics, the coordination of different teams, and automatic control of machinery become more...
- Decision theoryDecision theoryDecision theory in economics, psychology, philosophy, mathematics, and statistics is concerned with identifying the values, uncertainties and other issues relevant in a given decision, its rationality, and the resulting optimal decision...
- Multidisciplinary optimization