Architectural Valuation using the Design Structure Matrix and Real Options Theory

This study outlines a methodology for the valuation of the architecture of an integrated product or system through an appropriate level of modularization to maximize the societal value created. This method is developed through the application of the design structure matrix (DSM) and real options theory. The DSM method is utilized to develop an improved visibility estimate for non-hierarchic system architectures. A method is also proposed to account for different module sizes and system module level testing costs. Finally, a normalization procedure is proposed that allows comparing alternative modular arrangements of the same underlying system elements. The proposed method serves as the basis of an improved approach for architecture optimization. The proposed method is illustrated using a reference example of an industrial gas turbine.