Ongoing cost escalation in excess of general inflation is exerting economic pressure on U.S. naval ship acquisition programs. Concurrently, evolving and unpredictable national security needs are raising the level of uncertainty regarding future ship design requirements. This problem is particularly acute for surface combatants. Modular, adaptable, and flexible designs are becoming naturally attractive; however, flexibility may incur additional cost. This paper presents a framework for determining how much of what type of modularity, adaptability, and flexibility features to incorporate into a surface combatant design to enable the warship to remain operationally relevant over its design service life in an affordable manner. This framework is based on the principles of Real Options Analysis.

This content is only available via PDF.
You can access this article if you purchase or spend a download.