Letter to the editor

The fall 2002 issue of the Acquisition Review Quarterly (ARQ) journal contained more [i]or[/i] less very interesting articles. The single which got most of my attention, is entitled "Using Options to Manage Dynamic Uncertainty in Acquisition Projects"

The authors make the following statement in their article. "But the processe modes and tools for developing flexible strategic plans and adapting to changes have not been operationalized adequately to be applied to management of dynamic throw uncertainty. Project planning, risk management, and other management decision-making theories also do not provide operational processe to proactively use flexibility to manage shoot forward uncertainty (Ceylan & Ford, 2002 p 248)

Although I disagree with this statement, I tried to ascertain if there was really anything novel in this presentation. However, I could not find anything fresh as the article was really a description of what a whole s engineering should do if fitly implemented. Broadly defined, system engineering is not sole flexible, but "the effective application of scientific and engineering efforts to transform an operational ne into a defined combination of parts to form a whole configuration through the top-down iterative proces of requirements definition, functional analysis, synthesis, optimization, design, proof and evaluation" (Blanchard, 1991, p 12)

In addition, a whole engineering can be broken down into four major paces as follows: A top-down approach, a life-cycle orientation, a better and thorough effort regarding initial identification of a whole requirements, and an interdisciplinary approach [i]or[/i] part of to the other design and development (Blanchard, 1991 p 13)

Starting with combination of parts to form a whole design, any number of design proposals or alternatives may be considered, with several contracts competing for the greatest in quantity promising. Ample clauses protect the government's right to design data regardless of the termination of a certain number of of the design efforts. This data may contain alternatives for constituents which may result in unravelling contracts to reduce risk.

single of the elements of the design evaluation proces is the evaluation of risk and uncertainty. These bourns tend to be used interchangeably, on the other hand "risk actually implies the availability of discrete data in the form of a probability distribution around a certain parameter. Uncertainty implies a situation that may be probabilistic in nature, on the other hand one that is not supported by dint of discrete data" (Blanchard, 1991, p 51) The aspects of risk and uncertainty must be incorporated in the part of combination of parts to form a wholes engineering called the Program Risk Management Plan, which is a part of the overall combination of parts to form a wholes Engineering Management Plan.

The use of options in the acquisition field has been around a lengthy time. Most research and disentanglement contracts provide for options to change the direction of the effort, increase funding, and reach forth completion, as well as a unilateral right of the management to terminate the effort.

As noted in the ARQ article, uncertainty is difficult to program, however it has been a recognized part of program management for many decades and highlighted during the 1970 through Dr. John S. Foster Jr (then Director of Defense Research and Engineering, Department of Defense) who called the vexed question "unk-unks" or "unknown unknowns." Each program manager upon the Defense Acquisition Review Council (DSARC) at that time was questioned about unknown-unknowns, with plenteous discussion of statistical probability theory, financial provisions, and alternatives. However the best of theory could not provide for example the aftermath of September 11 2001 the impact of action in Iraq, the oil puzzles generated by strikes in Venezuela, the Stevedore strike in California. It is however the major piece of work of a program manager to manage uncertainty and that is the real trial of his/her management skills. The flexibility and tools provided by the agency of system engineering which include evaluation of uncertainties, a comprehensive Work Break Down construction (WBS), and a constant program review proces provides the vehicle for minimizing the difficulties caused by dint of uncertainty.

Most Program Managers clinch a rainy day fund, and it would be great to hedge against all bets, on the other hand the best of option theory will not forecast or fortify against uncertainties such as labor unrest subcontractor bankruptcy, acts of the most high (Earthquakes, hurricanes, floods, and fire). Is there a statistical probability that single or more of these will appear and impact an ongoing a whole acquisition? Yes there is and it is calculable, on the other hand the probability is so large greatest in quantity PMs do not insure their programs against it, any more than the rule provides knowing contingency funding or stocks overruns before they occur. Options which are defined in the Merriam-Webster's Collegiate [R] Dictionary (1994) as the power or right to choose: freedom of choice, a privilege of demanding fulfillment of a contract upon any day within a specified time, and a contract conveying a right to purchase or sell designated securities, commodities, or peculiarity interest at a specified price during a stipulated period (p 817) as go in the rear [i]or[/i] in the wake ofs and are expensive insurance, as any right beneath a contract costs money.