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Title: Application of Real Options Theory to DoD Software Acquisitions
Authors: Albert Olagbemiro
Johnathan Mun
Man-Tak Shing
Keywords: Real Options
Strategic Investments
Software Acquisitions
Risk Management
Software Engineering
Issue Date: 1-Feb-2009
Publisher: Acquisition Research Program
Citation: Published--Unlimited Distribution
Series/Report no.: Real Options Theory
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, therefore, guide the software acquisition decision-making process.
Description: Acquisition Management / NPS Faculty Research
Appears in Collections:Sponsored Acquisition Research & Technical Reports

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