Engineering Systems Analysis for Design

Collage of three small photographs: a bridge, construction equipment, and a space station.

Examples of large-scale engineering systems where flexible design can be valuable. (Bridge photograph is courtesy of Ric e Ette on Flickr; construction gantry photograph is courtesy of brewbooks on Flickr; International Space Station photograph is from NASA.)


MIT Course Number

ESD.71 / 1.146 / 3.56 / 16.861

As Taught In

Fall 2008



Cite This Course

Course Description

Course Features

Course Description

Engineering systems design must have the flexibility to take advantage of new opportunities while avoiding disasters. This subject develops "real options" analysis to create design flexibility and measure its value so that it can be incorporated into system optimization. It builds on essential concepts of system models, decision analysis, and financial concepts. Emphasis is placed on calculating value of real options with special attention given to efficient analysis and practical applications. The material is organized and presented to deal with the contextual reality of technological systems, that substantially distinguishes the analysis of real options in engineering systems from that of financial options.


This MIT OpenCourseWare site is based on the materials from Professor de Neufville's ESD.71 Web site. Additional materials, updated as needed by Professor de Neufville, can be found there.

Related Content

Richard de Neufville. ESD.71 Engineering Systems Analysis for Design. Fall 2008. Massachusetts Institute of Technology: MIT OpenCourseWare, License: Creative Commons BY-NC-SA.

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