1-2-3 Invest: Frame of Reference for Public-Sector and Non-Profit Investment Selection Studies
Investment selection studies are conducted to develop, analyze, recommend, and choose the investments an organization will make. This report offers a frame of reference for planning and organizing public-sector and non-profit investment studies. It is written in support of studies that The MITRE Corporation conducts for its sponsors (government agencies) and for itself (a non-profit organization operating in the public interest).
The report addresses those investment decision-making situations, common in public and non-profit enterprises, where the important reasons for investing are substantially non-financial and the anticipated returns from investment are not easily measurable in monetary terms. For instance, the desired returns from such investments may be to improve national defense or public-safety.
The frame of reference includes ideas, conditions, and assumptions for planning how such invest-ment selection studies should be carried out. Its scope encompasses major inter-organiza-tional studies, such as the Department of Defense’s C4ISR Mission Assessment that MITRE led in 1997. It includes those aspects of organizational budgeting and source selection processes that are conducted to develop investment recommendations, as MITRE has done with the DoD, Federal Aviation Administration, and Internal Revenue Service. It also includes smaller studies, such as a DoD Analysis of Alternatives.
The frame of reference distinguishes two major types of investment selection study. First is simple selection, where one of several alternatives is selected. Second is complex selection, in which resources are allocated among many competing investment opportunities that are collectively unaffordable.
The report sketches a picture of all the activities an investment selection study might require. It distinguishes five major study activities: (1) Study initiation; (2) Searching for investment options; (3) Understanding the future; (4) Decision modeling; and (5) Developing investment recommendations. Not all activities will be appropriate for every investment study.
The report is based in part on E. S. Quade, Analysis for Public Decisions, 3rd ed., rev. by Grace M. Carter (Prentice Hall, 1989).
study, investment analysis, investment selection, decision analysis, resource allocation, budgeting, selection, source selection, design, capital planning and investment control (CPIC)
