This book provides a high-level overview of why flexibility in design is needed to deliver significantly increased value. It describes in detail methods to identify, select, and implement useful flexibility. The book is unique in that it explicitly recognizes that future outcomes are uncertain. It thus presents forecasting, analysis, and evaluation tools especially suited to this reality. Appendixes provide expanded explanations of concepts and analytic tools.

“Forecasts are a necessary part of planning major capital projects. The problem is these forecasts are almost always wrong. It is very important to recognize this truth and even more important to shield projects from the potential downsides of an uncertain future by building in flexibility. Professors de Neufville and Scholtes have provided a clear and practical guide, well supported by specific examples, on the science of identifying, justifying, and implementing flexibility in design.”

Lloyd A. McCoomb, President and Chief Executive Officer
Toronto Pearson International Airport

“De Neufville and Scholtes convincingly show us that enhancing flexibility in engineering design can help us a lot to improve our performance. Anchored in their research, the book is an easy read because both authors are also excellent pedagogues who take the reader step by step through some difficult materials. This book is a real must-read for anybody involved in large-scale projects.”

Arnoud De Meyer, President and Professor
Singapore Management University

Series Foreword
Acknowledgments

Introduction.
I. HIGH-LEVEL OVERVIEW—

1. Flexible Design: Its Need and Value
2. Recognition of Uncertainty;
3. Flexibility Can Increase Value

II. METHODS OF ANALYSIS—

4. Phase 1: Estimating the Distribution of Future Possibilities
5. Phase 2: Identifying Candidate Flexibilities
6. Phase 3: Evaluating and Choosing Flexible Designs
7. Phase 4: Implementing Flexibility
8. Epilog: The Way Ahead

Appendix A: Flaw of Averages

Appendix B: Discounted Cash Flow Analysis;

Appendix C: Economics of Phasing

Appendix D: Monte Carlo Simulation

Appendix E: Dynamic Forecasting

Appendix F: Financial Options Analysis

Notes
Bibliography
Index.