This paper presents a decision-analytic system concept selection for a public project. In the proposed approach, the decision-maker (engineer) chooses a system concept and requests a budget for building the system. The unique customer (government) decides whether to approve the project but also has the option to cancel the project if the cost of the project exceeds the budget. Thus, at the time of system concept selection, the cost of the system, the government’s criterion to approve the project, and its criterion to continue/cancel the project when the cost exceeds the budget are modeled as uncertainties. To model the uncertainty of project continuation, the engineer assumes that the government’s criterion to continue/cancel the project is a linear combination of its initial criterion to approve the project and the budget. By analyzing the government’s option to cancel the project, the engineer can optimize his or her choice of a system concept (technology and target system requirements) and budget.
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