Staged Investment and Commitment Pathways

Decide which commitments should wait for better evidence, and what preserving that choice will cost.

When the finding arrives after the order

A pilot can answer the investment question after the equipment order has already become binding. You may learn that an upgrade offers poor value when cancelling it is more expensive than finishing it.

Compare evidence timing with commitment exposure

For each milestone, calculate what stopping would cost. Include irrecoverable spending, signed future obligations and exit costs, then deduct recoveries. Compare that exposure with the date when usable evidence will arrive and the last viable order date. Check whether the evidence will arrive while you can still change the next commitment.

Illustrative cancellation exposure rises at week 4 before evidence at week 6. Reserving the same delivery slot keeps exposure lower until the week 8 decision.

Illustrative example.

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The same finding can lead to a different choice

In this illustrative control-system upgrade, a week-6 pilot supports AUD 1.80m of benefits. Both routes start with AUD 0.50m committed to the pilot and design at week 0. At week 4, the original order raises cancellation exposure to AUD 3.00m; the reservation raises its route to AUD 0.60m.

Completing the original route costs another AUD 1.00m. Proceeding therefore recovers AUD 0.80m more than stopping, even though the whole investment loses AUD 2.20m. A AUD 0.10m reservation preserves the same delivery slot until week 8 and keeps the week-6 cancellation exposure at AUD 0.60m.

Illustrative amounts use one present-value basis over six years. The existing service can continue without further material cost. At week 8, the diagram shows exposure immediately before the proceed-or-stop decision.

At the week-6 finding
Original order
Reserved order
Cost if you stop
Original orderAUD 3.00m
Reserved orderAUD 0.60m
Further cost to complete
Original orderAUD 1.00m
Reserved orderAUD 3.50m
Value of proceeding rather than stopping
Original order+AUD 0.80m
Reserved order−AUD 1.70m
Whole-investment result if completed
Original order−AUD 2.20m
Reserved order−AUD 2.30m

Illustrative amounts use one present-value basis over six years. The existing service can continue without further material cost. At week 8, the diagram shows exposure immediately before the proceed-or-stop decision.
At the week-6 finding	Original order	Reserved order
Cost if you stop	AUD 3.00m	AUD 0.60m
Further cost to complete	AUD 1.00m	AUD 3.50m
Value of proceeding rather than stopping	+AUD 0.80m	−AUD 1.70m
Whole-investment result if completed	−AUD 2.20m	−AUD 2.30m

Use it before the next material commitment

Compare credible encouraging, disappointing and late findings before agreeing a reservation or placing the next order. Revisit the comparison when evidence timing, supplier terms or the operating requirement changes.

What you bring

The required operating outcome and date; evidence scenarios and availability; commitment milestones, cancellation terms and recoveries; supplier reservation terms; benefits and costs on a common valuation basis.

What the comparison provides

Cancellation exposure, remaining avoidable cost, incremental value, whole-investment outcome and the usable decision window, with the next commitment and review conditions recorded.

Preserving a choice has a cost

With AUD 5.00m of benefits, the original route gains AUD 1.00m and the reserved route AUD 0.90m. If evidence arrives in week 9, the week-8 reservation no longer provides an open choice. Confirm evidence quality, supplier terms and the cost of keeping the service operating if you stop. The model does not price evidence quality or assign probabilities to the scenarios.