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ILP Institute Insider

March 16, 2015
News Feature Thumbnail

Designing for Flexibility

For nearly fifty years, Richard de Neufville, PhD, has been working on ways to plan, analyze and design complex engineering systems. A civil engineer by background, de Neufville’s latest research focuses on a major paradigm shift in engineering in general.
Richard de Neufville
Professor of Engineering Systems
and Civil & Environmental Engineering
To be successful, today’s engineering projects require intentionally designing systems for a range of possibilities. “It is a major change from the way people think of the standard way of engineering design,” says de Neufville of the traditional manner of designing a project to service a prescribed set of specifications. In contrast, the Flexibility in Engineering Design (FIED) mindset requires that the system be designed to the needs and opportunities that exist over time.

“You want to create a system that can adapt to the actual demands occurring at different points of time over its lifetime.” Regardless of its application, FIED is an engineering design concept that can – and is – applied to a wide range of fields and problems.

“Flexibility in Engineering Design” is also the title of the textbook co-authored by de Neufville and Stefan Scholtes of the University of Cambridge. In it, the authors describe and apply FIED concepts to all sorts of engineering systems, i.e. any complex physical arrangement of different parts performing different functions that have to perform reliably, effectively, and efficiently over time. Examples range from automobiles, highway networks, aircraft systems to communication satellites, and petroleum drilling and refinement.

Three-Pronged Approach to Creating Value
De Neufville explains that the Flexibility in Design concept increases the value of an engineering project in three ways. First, it reduces the possibility of a loss by not creating an over-sized system in the first place. Secondly, by adding to it or changing the capabilities the design can take advantage of new opportunities. Third, the initial cost is typically smaller. Together, de Neufville suggests that these benefits can lead to a 25-30 percent improvement in project expected value.

A real-life industrial application of FIED involves de Neufville’s recent partnership with a company to design a major set of oil platforms. Typically, de Neufville’s group collaborates with industry domain experts tasked with a particular problem or engineering need. The usual engineering approach would be to build to the midpoint of a range of capacity possibilities, the ‘most-likely’ scenario. “This means that the actual design is almost always too large or small for the actual situation,” de Neufville explains. Instead, de Neufville and his students engineered a modular system, bringing together smaller platforms, often separated by many miles.

“These platforms are tied in with connections that allow them to be operated very flexibly in terms of what goes where and how,” he adds. “The company we worked with estimated this type of design would improve expected lifetime values by almost 80 percent.”

Over the course of his long career, de Neufville has worked with a number of major innovative projects. The development of the Sydney, Australia airport system is one example. There, the team transformed the design concept from one of simply building a large new airport to a strategy of acquiring a site for a possible large airport for if, and when, it might be needed. This approach saved the government from large, premature expense while enabling future construction of a facility suited to what the future might actually bring. As of 2014, the government decided to exercise this option and take advantage of this flexible system design.

Whatever the project, de Neufville’s goal is to work with industry partners to provide a holistic, complete approach to the engineering need. Each unique experience provides insight into the next project that by extension can be useful for other companies and other activities in that field.

Major Infrastructure Challenges
Due to his background in civil engineering, de Neufville is particularly drawn to projects involving major public infrastructure developments. He refers to the many major public/private industrially-led developments of ports, highways, water resource systems as key examples. Working with other MIT colleagues, de Neufville has been involved with developers in India, Portugal, Morocco, China, and Singapore to engineer some of these projects.

As a professor both of engineering systems and civil and environmental engineering, de Neufville has a particular interest in airport systems planning and design. He has been associated with major airport projects “on every continent except Antarctica.”

Going forward, de Neufville sees enormous potential for FIED concepts to improve global engineering projects, such as developing subway systems in Brazil, water resources desalination plants in the Gulf, or defense systems because technologies and threats change rapidly.

Keeping it Real and in Context
For 25 years, de Neufville chaired MIT’s Technology and Policy Program, a program focused on understanding the embedded policy context, legal environment, and economics surrounding any technological product and project. “We can benefit enormously from having a strategic view of what we are doing, not just thinking about what the problems are today but what they may be in future and how we should position ourselves for it,” says de Neufville, who also considers the larger societal need or requirement when working on a project. “The proper design of engineering systems has to consciously involve the social, environmental, and economic context of the situation. Absent that we can design wonderful artifacts that may be in fact great failures.”

Ultimately, the role of engineering design, in de Neufville’s perspective, is to provide good value for money. “We need to understand that value is not something intrinsic in the artifact, in the cleverness of the design. Value resides in the context of the users as individuals, groups, as societies.”

Research News

March 13, 2015

MIT launches three new cybersecurity initiatives

Computer-network security breaches are never out of the news for long, but lately, they’ve been hogging the headlines: the Sony hack, the Uber hack, and last month, the revelation that an international gang of cybercriminals had used malware to steal an estimated billion dollars from financial institutions over two years.

In this context, MIT yesterday announced plans to address the problem of cybersecurity from three angles: technology, public policy, and organizational management.

At an event at MIT’s Stata Center, the home of the Computer Science and Artificial Intelligence Laboratory (CSAIL), with more than 200 students, academics, and industry representatives in attendance, MIT faculty and administrators unveiled three new cybersecurity initiatives, to be housed at CSAIL and the MIT Sloan School of Management.

MIT Sloan
Management Review

March 12, 2015

Don’t Bet the Farm on the Winning Streak

When people see or experience a winning streak, they often assume that the performance will continue to improve — and make decisions based on that assumption.

But this belief may be flawed, particularly if individuals are viewing initial absolute performance as a precursor of subsequent performance improvement.

Researchers Clayton R. Critcher and Emily L. Rosenzweig found that while positive results are often consistent with one another (for example, strong midterms often point to high final exam scores), performance improvement can be a different story. In fact, they write, success may be a negative predictor of future performance improvement, in part because it is easier for people who initially perform poorly to improve substantially through learning than it is for those who perform well from the start. In addition, statistically, those with very low and very high performances initially are likely to grow less far apart in subsequent performances.

Critcher is an assistant professor of marketing, cognitive science, and psychology at the Haas School of Business at the University of California, Berkeley. Rosenzweig is an assistant professor of marketing at the A. B. Freeman School of Business at Tulane University. They presented their research in the Journal of Experimental Psychology: General (issue 143, no. 2, April 2014), in the article “The Performance Heuristic: A Misguided Reliance on Past Success When Predicting Prospects for Improvement.”

The authors conducted several studies to gauge how people factor past performance into their expectations for the future.

In the first study, they asked participants (drawn from University of California, Berkeley students) to play a game of darts. The scores for the initial round were recorded, after which participants were invited to bet on whether they expected their scores in the second round to improve by a certain threshold number of points.

Those who had done better in the first round generally bet higher amounts that they would beat the improvement goal than those who did worse. This did not serve them well: In reality, the better the participants’ score in the first round, the less likely they were to improve their score by the required amount in the second round.

In another study, the researchers set out to test more generally whether people view past performance as a broad indicator of future performance improvement.

The vehicle they chose to examine was high-yield bond mutual funds. They presented participants with performance data about 12 funds and asked them to predict how likely the individual funds were to improve over their June 2012 performance in July 2012 and to express their level of confidence about the improvement in the form of a bet. The predictions generally fared poorly.

As the authors note, “Initial rate of return was highly negatively correlated with the change in return for the next month.”

However, as in the other study, the participants showed signs of relying on a “performance heuristic,” where they saw success as a predictor of the likelihood of future performance improvement.

This cognitive shortcut, while easy to follow, led them astray.

This article draws from “Why You Decide the Way You Do,” by Bruce Posner (MIT Sloan Management Review), which appeared in the Winter 2015 issue of MIT Sloan Management Review.