A Defense Capability Metric From Investment Portfolio and Technological Aging

Abstract

We introduce a metric for defence capabilities by combining an investment measure of project portfolios with technological aging, allowing us to quantify a return on investment directly on capability values. Unlike conventional portfolio quantification approaches for defence applications, where subject matter experts (SME) quantify capabilities, we propose a data-driven approach where the capability value is simulated directly from the projects’ data. Our proposed metric for project value is derived from planned future investments where SME knowledge is incorporated into a fitting procedure. This procurement metric is combined with an aging mechanism of the corresponding military systems to quantify the technological decay. Thus the combination of both mechanisms, linking investment projects to operational systems that perform tasks for specific capabilities, allows us to define a capability novelty measure. Our approach provides future force planners a quantitative tool for capability-based planning of military structures. Based on current data, various defence investment applications are considered to validate the proposed project metric and the obsolescence mechanism. This method can be generalized to investment portfolios of non-defence organizations, offering a significant advancement in strategic planning and resource allocation.

Keywords

• Capability-based planning
• data-driven defence planning
• defence capability quantification
• operations research
• procurement portfolio selection
• simulation techniques