System dynamics has been used to better understand the dynamics within complex natural and social systems. This understanding enables us to make decisions and define strategies that help to resolve the problematic behaviors associated within these systems. For example within an operating environment such as the US Navy, decisions taken today can have long lasting impact on system performance. The Navy has experienced large cost overruns during the new technology implementation process on ship systems that can also have an impact on total life cycle performance. The integration phase of the implementation process represents most of the cost overruns experienced in the overall new technology life cycle (development, integration, and operation/support/disposal). We have observed a general concern that there is a lack of understanding for the dynamic behavior of those processes which comprise the integration phase, among ship-builders and planners. One of the goals of our research effort has been to better understand the dynamic behavior of the new technology integration processes, using a dynamic modeling technique known as System Dynamics.

Our approach has also been to provide a comprehensive knowledge elicitation process in which members from the shipbuilding industry, the US Navy, and the Virginia Tech System Performance Laboratory take part in group model building exercises. The system dynamics model that is developed in this manner is based on data obtained from the experts. An investigation of these dynamics yields a dominant cost behavior that characterizes the technology integration processes. This behavior is S-shaped growth.

The following two dynamic hypotheses relative to lifecycle cost and performance of the inserted new technology were confirmed: (1) For the current structure of the model we observe the more the complexity of the new technology, the less affordable a technology becomes; (2) Integration of immature (less developed) technologies is associated with higher costs. Another interesting insight is that cost is very sensitive to the material procurement.

Future research can be addressed to a more detailed level of abstraction for various activities included in the technology integration phase, such as testing and evaluation, cost of rework and risks associated with inadequate testing etc. This will add to our evolving understanding of the behavior of individual activities in the technology integration process.