Project Management Risk
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Transcript of Project Management Risk
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Risk Management for I/S Projects
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Risk Management for I/S
ProjectsWhy is Risk Management
Important?
What is Risk?
Risk Management Process
Identify project goals & objectives
Identify Risk
Analyze Risk
Plan for Risk
Control Risk
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Why are we here?
Information Technology
Projects are difficult to
manageProject failures occur
with alarming frequency
Prudent measures toassess and manage
risk can increase
probability of project
success
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What is Risk?
A potential
problem waiting
to happenMay adversely
impact schedule,
cost, objectivesWill vary in
probability, impact
and timeframe
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What is Risk Management?
Risk Management is a
systematic process
of identifying,analyzing and
responding to
project risk.
PMIs PMBOK
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Step 1: Identify Project Goals
and ObjectivesWhat are business objectives?
What are technical objectives?
What are project constraints?
Identify and state risks as they relate to
the ability to achieve objectives within
the known constraints
Note: If objectives arent well-defined -
that is a major risk.
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Case Study Introduction
Improving and
enforcing the
SoftwareDevelopment Life
Cycle
Small Shop
Not a process-oriented culture
Project Objectives:
Increase consistency
among all softwaredevelopment
projects
Utilize processes that
will increase the
probability of project
success
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Step 2: Identify Risks
Encourage input of perceived risk
Identify risk while there is time to take
action
Capture risk in readable format
Communicate risk to those who can
solve it
Goal: Prevent project surprises
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Risk Identification: examples
Inadequate
Management
CommitmentAmbiguous
requirements
Inadequate userinvolvement
New Technology
Undefined or
ambiguous Scope
Insufficient orinappropriate staffing
Inadequate tools or
technologyLarge and dispersed
project team
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Identifying Risks
Various publications
and organizations
have developedgeneric risk categories
and generic checklists.
Checklists help assure
arent overlookingsomething
Consider three
perspectives:
Project Managementand staffing
Technical
Quality of Product
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Project Management Perspective:
Tactical Considerations
Budget
Resource availability
and expertise
Adequacy of
Methodology /
process
Project Size &
Complexity
Schedule &
Estimating risks
Vendor
Management
Project
Communication
Sponsorship and
high-level support
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Technical Perspective
Data Conversion: (GIGO)
System Interfaces
Operations / Post-implementation Support
New or unproven
Technology
Implementation & rollout
Infrastructure support
Adequacy of Infrastructure
Legacy Impacts / Support
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Quality Risks
How well will
product meet
expectations? Ease of Use
Data Integrity
Understand impact
to users
Defects in
production
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Techniques to Identify Risk
Checklists: Several Checklists are
available as reminders of possible risk
areas to considerInterviews: Group or individual
Working Group / Workshop
Periodic meetings: Dialogue of riskinformation
Surveys: Selected categories of people
identify risks quickly
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Statement of Risk
May need to Drill Down to determine
the real risk to the project:
Asking Why?
Why is this situation a risk to the project?
What is the worst case scenario if the risk
is realized? Some less than ideal circumstances may
not be true risks
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Discussion
Case Study: Enhancing
and enforcing the
Software DevelopmentLife Cycle
What are some of the
risks?
(be creative- pretend you
know this company)
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Step 2: Risk Analysis
Quantify two factors:
Probability of a failure
Impact of a failure
Risk Exposure (RE) = P x I
Examples:
Tornado in Wisconsin (low probability, high impact)
My son forgetting to take out garbage (High
probability, low impact)
Others: What risk(s) have you taken today??
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Quantifying Risk
Early in Project
More difficult to be
preciseEstablish risk order
of magnitude
Continue to revisitas part of risk
management
process
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Quantifying Risk: Tools and
Techniques
Decision tree
Identify possible outcomes: associated
likelihood and impactIdentify expected monetary value:
(probability %) x (Risk event value)
Simulation: Prototype what if scenarios
Expert Judgement (Use a judgement
based scale)
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Quantifying Risk
Define scale you will be
using for Probability and
ImpactTry to define scale to
correspond to key
objectives andconstraints
Look at example
Checklist
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See GCs Risk Checklist
Work in Process
Based on Lessons Learned & Industry
standard risks
Tool for PMs
Includes a risk scale for probability and
impact
Weighted factors for size & complexity
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Discussion: Case Study Risks
What is probability
of each risk
occurring?What is impact if the
risk is realized?
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Step 4: Plan for Risk
Develop Risk
Management Plan
For each Risk Determine Time
Frame for action
Define Mitigation
Strategy
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Plan for Risk: Risk Management
PlanDefine the Process for
tracking and monitoring
riskRoles &
Responsibilities
What and how riskinformation will be
tracked
Establish Mitigation
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Possible Mitigation Strategies
Acceptance: Consciously choose to live
with the risk consequences
Avoidance: Eliminate the risk.
Protection: Backup / contingency plan,
i.e. Redundant system.
Reduction: Reduce either the
probability or impact of the risk.
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More Mitigation Strategies
Research: Need more information - i.e.
market research; prototypesRisk Reserves: Leave a contingency -
or margin for error.
Transfer: Shift risk to anotherorganization, person or group (retain
responsibility)
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Document Known Risks
Description of risk
Date identified
Who identified
Category
Status
Risk Owner
Who is assigned
Mitigation strategy
Action Plan
Time Frame to
actRE: Probability &
Impact
Other Measures: Quantitative
threshold
Leading indicators
Risk Leverage
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Discussion
Discuss possible
mitigation strategies
for case study risks
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Step 5: Control Risk - On-going
Periodic monitoring and reporting of risk
data
Visibility and accountability regarding riskstatus
Reports from risk repository
Periodic meetings / updates regardingrisk status
Periodic re-assessment of risk exposure
Update Risk data and project plan
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Summary
Why Risk Management is Important
Steps of a Risk Management Process
Identify Project Goals & Objectives
Identify Risk
Analyze Risk
Plan for Risk
Control Risk
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Thank you
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Bibliography
Project Management Institute: Project Management Body of
Knowledge
Keil, Mark; Cule, Paul; Lytinen, Kalle; Schmidt, Roy: A
Framework for identifying software project risks:Communications of the ACM, November 1998
Hall, Elaine. Managing Risk. Methods for software systems
development. Reading, MA: Addison-Wesley Publishing,
1998. Jones, Capers. Assessment and Control of Software Risks,
1994.
Mulcahy, Rita, Managing and Estimating Project Risks,
September 1999