On the Concept of Value and its Importance to Space Systems Design and Acquisition

Abstract

Following the heydays of the Apollo program, the space industry saw a change in the design and acquisition of space systems that emphasized financial responsibility and costconsiderations; the latter were neither left as after-thoughts of design nor were they subordinate to system performance any longer. This shift from a performance-centric to a cost-centric mindset—more prominent for civilian and commercial systems than for certain national security assets—was brought about by budgetary constraints and increasingly competitive markets, and was facilitated by ever-more financially aware engineers and program managers. Unfortunately, too much emphasis on cost brought in its wake a host of systemic problems in government acquisition of space assets, including cost overruns and poor oversight. The Young panel report recommended as a remedy to these problems, a renewed focus on mission success—not performance. Mission success, like a balanced scorecard, is a holistic qualifier which encompasses the positive elements of both the costcentric and performance-centric approaches. We believe that the critical idea underlying mission success is the concept of value. In this paper, we provide a brief review of the nature and measures of value as discussed in the finance and economics literature. We then adapt our discussion to the case of complex engineering systems in general, and space systems in particular. A number of methodologies are examined and a top-level process flow presented for integrating these methodologies into a value-centric framework. We suggest that the next evolutionary paradigm in the design and acquisition of space systems is or should be valuecentric.