Book Review: Cost-Effectiveness Analysis: A Systems Engineering Perspective (Fernandez Review)

By Dr. Howard Eisner – INCOSE Fellow

1st Ed. Nov-2021

Reviewed by Jose L. Fernandez, Madrid (Spain), IEEE Senior member, INCOSE member and PMI member.

Professor Howard Eisner is a Fellow of IEEE and a Fellow of INCOSE. He has 30 years of experience in industry and 24 years in academia. This book is the last of his 12 books dealing with systems engineering, project management, and other topics.

The book begins by looking back at the origins of effectiveness and the main players of those days: Robert McNamara and the US DoD, and the RAND Corporation.

Prof. Eisner states that cost-effectiveness is a part of systems engineering used in the architecture definition process. It illustrates the approach with examples.

The book continues with a presentation of the basics of cost-effectiveness analysis. Very useful examples of Measures of Effectiveness (MOEs) for a transportation system, a communication system, and an air defense system are presented. The evaluation criteria used in the analysis are obtained from the MOEs. Prof. Eisner emphasizes that MOEs and functional decomposition elements are quite different and should not be confused.

Chapter 5 describes the diverse categories of life cycle cost, particularly those used by the US DoD. Some useful Cost Estimating Relationships (CERs) are given as examples in Chapter 6, also describing the COCOMO I and II estimation methods for software development.

Cost Benefit Analysis is described in Chapter 7. Chapter 8 deals with everyday cost effectiveness, illustrated with examples of a computer system and a home system. This chapter finishes with incremental capabilities and cost with a CD player example.

Chapter 9 contains some interesting military examples and some additional MOEs related to the Cheyenne Mountain facility.

Chapter 10 deals with some miscellaneous topics, such as risk analysis of COVID vaccines.

Each chapter is complemented with a very complete list of references. So this little book is a good start for systems engineers to begin to understand the importance of cost-effectiveness analysis and how to use it properly.