A Methodology for Improving the Shipyard Planning Process: Using KVA Analysis, Risk Simulation and Strategic Real Options

Abstract

The U.S. Navy must be extremely diligent with its maintenance policies to ensure that ships and submarines meet national defense objectives. Maximizing the Navy's readiness requires continuous process improvement and innovation, and making information technology (IT) acquisitions that leverage technological advances to reduce costs and increase efficiency levels. Measurement tools are essential to define, capture, measure and evaluate the total value of potential IT acquisitions to ensure the likelihood of success. This paper describes research conducted on the Knowledge Value Added/Real Options (KVA+RO) Valuation Framework. A comprehensive tool, KVA+RO was applied to Naval maintenance processes in a case study analyzing the potential impact of Commercial-off-the-shelf (COTS) technology on ship yard planning processes. Specific technology, including three-dimensional (3D) laser scanning and collaborative Product Lifecycle Management (PLM) solutions, were evaluated under three scenarios. Real Options analysis was also performed to determine the prospective value of strategic options over a three-year period.