Risk-based ROI, capital budgeting, and portfolio optimization in the Department of Defense

Mun, Johnathan

doi:10.22594/dau.19-829.27.01

“…Some authors have advocated for greater accuracy and complexity in the decision-making process, while others argue for practicality and ease of use. The research area remains active, and recent work has considered the path dependence of R&D, including sequencing of investments (Van Bommel et al, 2014) and technology roadmaps (Lai et al, 2019), as well as unique portfolio optimization challenges faced by the DoD (Mun, 2020). The extent of this research evidences a core idea that R&D decision-making is a key source of value and competitive advantage.…”

Section: Optimization Of Randd Decision-making and Portfoliosmentioning

confidence: 99%

Effective Decision-Making Behaviors for Defense R&D: Accounting for Dynamic Competition

Calafut¹,

Sarkani²,

Mazzuchi³

2021

Defense ARJ

0

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Research and Development (R&D) in the Department of Defense (DoD) is shaped by competition. Competition is a complex, interactive process that is difficult to predict and has significant effects on the value of R&D investments over time. Initially promising investments may ultimately result in little value, due to the actions of others in a competitive environment. This article models the interaction of competition with R&D decision-making and introduces a simulation-based methodology to determine effective decision-making behaviors for the distinctive competition dynamics of DoD applications. The approach is built on the insight that R&D decision-making can be optimized for the resulting Post-Competition Value (PCV) of opportunities, rather than for their initial value. The authors demonstrate the value of this approach in three diverse applications across the DoD, including a case of defense industry companies, government laboratories, and nonprofits. In all cases, optimized behaviors are identified that achieve significantly more average value than standard alternatives that do not account for competition. This creates an opportunity for DoD leaders to systematically account for competition in their decision-making and enhance the value of their R&D investments.

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“…Some authors have advocated for greater accuracy and complexity in the decision-making process, while others argue for practicality and ease of use. The research area remains active, and recent work has considered the path dependence of R&D, including sequencing of investments (Van Bommel et al, 2014) and technology roadmaps (Lai et al, 2019), as well as unique portfolio optimization challenges faced by the DoD (Mun, 2020). The extent of this research evidences a core idea that R&D decision-making is a key source of value and competitive advantage.…”

Section: Optimization Of Randd Decision-making and Portfoliosmentioning

confidence: 99%

Effective Decision-Making Behaviors for Defense R&D: Accounting for Dynamic Competition

Calafut¹,

Sarkani²,

Mazzuchi³

2021

Defense ARJ

0

View full text Add to dashboard Cite

Research and Development (R&D) in the Department of Defense (DoD) is shaped by competition. Competition is a complex, interactive process that is difficult to predict and has significant effects on the value of R&D investments over time. Initially promising investments may ultimately result in little value, due to the actions of others in a competitive environment. This article models the interaction of competition with R&D decision-making and introduces a simulation-based methodology to determine effective decision-making behaviors for the distinctive competition dynamics of DoD applications. The approach is built on the insight that R&D decision-making can be optimized for the resulting Post-Competition Value (PCV) of opportunities, rather than for their initial value. The authors demonstrate the value of this approach in three diverse applications across the DoD, including a case of defense industry companies, government laboratories, and nonprofits. In all cases, optimized behaviors are identified that achieve significantly more average value than standard alternatives that do not account for competition. This creates an opportunity for DoD leaders to systematically account for competition in their decision-making and enhance the value of their R&D investments.

show abstract

“…Some authors have advocated for greater accuracy and complexity in the decision-making process, while others argue for practicality and ease of use. The research area remains active, and recent work has considered the path dependence of R&D, including sequencing of investments (Van Bommel et al, 2014) and technology roadmaps (Lai et al, 2019), as well as unique portfolio optimization challenges faced by the DoD (Mun, 2020). The extent of this research evidences a core idea that R&D decision-making is a key source of value and competitive advantage.…”

Section: Optimization Of Randd Decision-making and Portfoliosmentioning

confidence: 99%

Build it Better

2021

Defense ARJ

0

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This quantitative, exploratory article examines the relationship between Department of Defense information technology (IT) program managers (PMs), their technical education, commercial project management certification, and project management success-also known as project efficiency-for IT PMs. It also examines to what extent project management success in scope, schedule, and cost compares with PMs' technical education, commercial project management certification, and the effects of interaction between education type and commercial PM certification.

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Risk-based ROI, capital budgeting, and portfolio optimization in the Department of Defense

Cited by 3 publications

References 49 publications

Effective Decision-Making Behaviors for Defense R&D: Accounting for Dynamic Competition

Effective Decision-Making Behaviors for Defense R&D: Accounting for Dynamic Competition

Effective Decision-Making Behaviors for Defense R&D: Accounting for Dynamic Competition

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