Professor Richard de Neufville
Richard de Neufville is Professor of Engineering Systems and of Civil and Environmental Engineering. He is responsible for the MIT School-wide subject on Engineering Systems Analysis. He has led its development and implementation in practice through its several phases. The original focus was on optimization, which assumes certainty. Recognizing that engineering systems exist in the context of risk and risk aversion, the methodology later extended to cover decision analysis and utility assessment. These basics now provide the platform for the use of real options that enable designers and managers to value design flexibility for the first time and, thus, to organize technological systems to evolve for the most effective performance under constantly changing conditions.

Professor de Neufville has received numerous MIT and international awards for his contributions to Engineering Systems Analysis and the development of the field of Technology Policy. From 1975 to 2000, he was Founding Chairman of the MIT Technology and Policy Program. For details, see his personal web page: http://web.mit.edu/civenv/html/people/faculty/deneufville.html

Subject Overview
Engineering Systems Analysis for Design addresses the design and management of technological systems to create maximum value over time in the presence of inevitable uncertainty. Flexibility is the key characteristic of a system that enables it to perform effectively when operating conditions change. To obtain the highest performance, designers need to build the right kind of flexibility into the system, and managers need to determine when to exercise this flexibility. Using the new tools of "real options," analysts can now, for the first time, determine the best kind and amount of flexibility for the design of engineering systems.

The subject leads the participants to understand how best to design the economically efficient development, over time and in the context of risk, of major projects. It first presents the tools that form the basis of the analysis: economic evaluation over time, systems modeling and optimization. It then defines and illustrates the application of the tools necessary for dealing with risk: decision analysis and real options analysis.

The subject is a fall-semester School-wide Elective in the MIT School of Engineering under the following course numbers: ESD.71; 1.146; 2.192; 3.56; 13.62; 16.861 and 22.821. Starting in 2002, it will be available at Cambridge University in England in association with the co-operative relationship between MIT and the Judge Institute of Management.