FLEXIBILITY IN DESIGN - Title Page - MIT

de Neufville + Scholtes D R A F T September 30, 2009Because an exponential process describes the rate of change of many possible drivers,we cannot untangle their effects. Technically, the potential drivers are likely to be highlycorrelated. The consequence of this high correlation is that it is not possible to have much – if any– statistical confidence in any of the effects of the drivers. Box 2.7 describes examples of thisphenomenon. From a practical point of view, we simply cannot have much confidence in theresults of analysis trying to determine the causes of most trends we would like to project.[Box 2.7 about here]Recommended procedureRecognize uncertainty. The starting point for good design is the fundamental reality that wecannot predict the future precisely. Our best thinking, our most thoughtful analyses cannotovercome the unpleasant facts that make forecasts unreliable. Interpreting the historical record isambiguous at best. And even though trends may persist over the short-term, trend-breakersroutinely occur over the long-term horizon for systems design.We must recognize the great uncertainties that inevitably surround any forecasts. As theexamples illustrate, the realistic range of possibilities is often as wide as a factor of two from amedium estimate for innovative, large-scale projects. The range of possibilities is large even formature, well-established activities; witness the 10% deviation from forecast for air traffic forBoston after only 5 years. We should direct an important part of our forecasting effort towarddeveloping a reasonable understanding of our uncertainties. What is the range of possibilities wemay have to deal with over the life of the system?We need to think carefully about the range of possibilities. Sometimes we can reasonablyassume that their distribution is symmetric about the forecast of the most likely future, forexample “plus or minus 20 percent”. However, the distribution is often significantly skewed. Forexample, the most likely long-term price of copper is probably in the range of US$ 1 per pound.Its lowest price will be well above zero, a drop of perhaps US$ 0.50 – but its highest price couldwell be as high as US$ 4, as has already happened. The distribution of copper prices is thusskewed from the most likely forecast – perhaps only minus 50%, but possibly plus 300%.A good way to develop an understanding of the size and the shape of the range ofuncertainties is to look at previous experience in the same or a similar area. The historical recordfor the product or service often gives a good view of the situation. Thus, a range for the price ofcopper is easily available from records of past prices. Figures 2.5 and 2.6 respectively showprices over the last 5 years for example, and back a century. 6 This kind of information gives arealistic perspective on the range of possibilities. For completely new situations, for which there isno historical record, an effective approach can be to look at situations that appear comparable.We might ask, for example, about the track record of predictions for new electronic technologies,when thinking of a new system in that field. We might look at previous experience predicting thePart 1: Chapters 1 to 3 Page 31 of 69