Real Options and Flexibility in Engineering Design

Centre for Systems Engineering & Innovation Seminar Series

On Thursday 26 November 2015, the Centre welcomed Dr Michel-Alexandre Cardin to give a talk in the Centre's Seminar Series. The talk titled, 'Real Options and Flexibility in Engineering Design: An Emerging Paradigm for Infrastructure Systems' is detailed herein.

Abstract:

Architecting, designing, and managing infrastructure systems are increasingly challenging tasks. Architects, designers and operators are required to design and manage large-scale, systems of high complexity that will perform well over long-time horizons, inevitably facing uncertainty in changing operating, markets, regulatory, and technological environments. Designing infrastructure systems for flexibility – also known as real option – is an emerging paradigm that provides the system with the ability to adapt pro-actively to changing conditions, so as to extract additional economic value and performance from uncertainty. Inspired from the fields of finance and economics, this paradigm aims to improve standard design and project evaluation by focusing on better management of the distribution of performance outcomes and risks, considering architectures and designs that enable better protection against downside conditions – acting like an insurance policy – and providing contingencies to capitalize on upside opportunities – like a call option on a stock.

The talk provides an overview of the latest research developments in this emerging field by introducing a framework to enable flexibility in complex engineered systems under uncertainty. The framework can also be used as a taxonomy to classify the latest procedures developed to support this process as part of early conceptual architecture and design activities. Novel procedures are introduced covering topics such as creative concept generation techniques, design space exploration using optimization and statistical techniques, and process management using simulation games. Procedure evaluation is done through example applications in waste-to-energy and emergency medical services urban system infrastructures.

Biography:

Dr. Michel-Alexandre Cardin is Assistant Professor of Industrial and Systems Engineering at the National University of Singapore (NUS) and Lead of the Strategic Engineering Laboratory (SEL). He is a research affiliate at the Massachusetts Institute of Technology (MIT), the NUS Institute of Real Estate Studies, and co-investigator at the Singapore-MIT Alliance for Research and Technology. He is Associate Editor of the INCOSE journal Systems Engineering, Committee Member of the INCOSE Singapore Chapter, and member of the Editorial Review Board of the international journal IEEE Transactions on Engineering Management. He is the founding chairman of the organizing committee for the new conference on Complex Systems Design and Management (CSD&M Asia) held annually in Singapore. His research focuses on the development, experimental evaluation, and real-world applications of novel procedures to design and architect complex engineering and infrastructure systems for uncertainty and flexibility – also known as real options. He has worked with international collaborators in different industries including aerospace, nuclear, real estate, offshore oil exploration, and transportation. He earned a PhD and Master’s degree in Engineering Systems from MIT, a Master’s in Aerospace Engineering from the University of Toronto, a honors BSc in Physics from McGill University, and is a graduate of the Space Science Program at the International Space University