Beyond Cost and Performance: A Value-Centric Framework and Pareto Optimization for Communication Satellites

Abstract

Investments in space systems are substantial, indivi sible and irreversible, characteristics of high -risk investments. Traditional approaches to system design, acquisition, and risk mitigation are derived from a cost -centric mindset, and as such, they incorporate little information about the value of the spa cecraft to its stakeholder s. These traditional approaches are appropriate in stable environments. However, the current technical, and economic conditions are distinctly uncertain and rapidly changing. Consequently , the se traditional approaches have to be r evisited and adapted to the current context. We propose that in uncertain environments, decision -making with respect to design and acquisition choices should be value -based. We develop a value -centric framework, analytical tools, and an illustrative numeri cal example for communication satellites. Our two proposed metrics for decision -making are the system’s expected value and value uncertainty. Expected value is calculated as the expected NPV of the satellite. The cash inflow is calculated as a function of the satellite loading, its transponder pricing, and market demand. The cash outflows are the various cost s for owning and operating the satellite . Value uncertainty emerges due to un certainties in the various cash flow streams, in particular because of mark et conditions. We propagate market uncertainty through Monte Carlo simulation, and translate it into value uncertainty for the satellite . The end result is a portfolio of Pareto -optimal satellite design alternatives. By using value and value uncertainty as decision metrics in the down -selection process, decision -makers draw more information about the system in its environment, and in making value -based design and acquisition choices, they ultimately make more informed and better choices.