Class Meeting Times
Lectures: 1.5 hours / session; 2 sessions / week
Prerequisites
None
Course Concept
This course addresses a fundamental issue in system design and management: the need for engineering leaders to recognize uncertainty in the performance of their plans or designs. How should we analyze and cope with risks in demand, requirements, cost, technology, etc.?
This course presents Discounted Cash Flow (DCF) Excel models, simulation, and decision analysis as primary ways to analyze possible outcomes of design and management strategies.
The learning objective is to provide an overall view of the use, benefit, and mechanics of essential tools for Risk and Decision Analysis. Specifically, we will find that:
- You can’t really avoid uncertainty (as design processes often do).
- Because, if you do, you get inferior results—and sometimes major financial losses.
- So you need to address uncertainty proactively as part of design process.
- You can choose between methods based on the circumstances.
A quiz at the end of term validates your understanding of the class material.
Flipped Classroom
Course instruction will be principally based on the concept of the “flipped” classroom. This approach reverses the traditional, almost medieval, structure in which students first attend lectures and then work through their questions as best they can. Instead, students are to review and question the material before the in-person classes, which we will then devote to faculty-led discussion responding to student reactions to the material. This is possible thanks to our accumulated recordings of Zoom lectures. Experience this spring demonstrated that the “flipped” classroom greatly improves student learning.
We will post “lecture” material in advance of each class. Students will respond to these “pre-reads” on Google Forms, highlighting their issues, queries, and doubts. These responses will help the instructors identify important points to address and respond to the class.
The responses to “pre-reads” will not be graded. But they will count toward class participation which will be 30% of the student grade! Full credit for participation if you respond on time, otherwise not.
Grading
Course grades will be a weighted average of the following elements:
- Participation (including pre-class assignments) 30%
- 3 Homework Assignments 36% (equal weight on each assignment)
- Quiz 34%
Text
Richard de Neufville and Stefan Scholtes. Flexibility in Engineering Design, MIT Press, 2011. ISBN: 9780262016230. [Preview with Google Books]
Reading List
Richard de Neufville. Applied Systems Analysis: Engineering Planning and Technology Management (free download). McGraw-Hill, 1990. ISBN: 9780070163720.
Excel and @Risk boot camp material
Related References
David Geltner and Richard de Neufville, Flexibility and Real Estate Valuation under Uncertainty: A Practical Guide for Developers. Wiley-Blackwell, 2018. ISBN: 9781119106487.
Richard de Neufville, and Kim Smet. Chapter 6 “Engineering Options Analysis,” in Decision Making under Deep Uncertainty: From Theory to Practice (free download). Springer, 2019. ISBN: 9783030052522.
Richard de Neufville, et al. Chapter 11 “Engineering Options Analysis - Applications,” in Decision Making under Deep Uncertainty: From Theory to Practice (free download). Springer, 2019. ISBN: 9783030052522.
Software Students Should Have
We expect students to have an up-to-date version of Excel.
You might also want to use @Risk. This user-friendly product simplifies production and presentation of results. To obtain the software, you can get the 15-day free trial version or pay $75 for a student version.
