Project Risk Management

Topic:

Project Risk Management.

Presented by

Mr. Majid Hussain khalti, Mr. Nimat Ullah khattak.11-Ms(IT)-02, 11-Ms(IT)-27.

What is risk? Categories of risk. What is risk management? Importance of risk management. How can we control risks in a project?

Risk is an uncertainty. We don’t know whether a particular event will

occur or not but if it does has a negative impact on a project.

Risk is the probability of suffering loss. Risk provides an opportunity to develop a better

project There is a difference between a Problem and risk;

Problem is some event which has already occurred but risk is something that is

unpredictable.

Risk can also be positive. “The threat or possibility that an action or event

will adversely or beneficially effect an organization’s ability to achieve its objectives.”

“ An uncertain event or condition that, if it occurs, has a positive or negative effect on a project’s objectives.”

1. Schedule Risk: Project schedule get slip due to some reasons. Wrong time estimation. Resources are not tracked properly. All

resources like staff, systems, skills of individuals etc.

Failure to identify complex functionalities and time required to develop those functionalities.

Unexpected project scope expansions.

2. Budget Risk: Wrong budget estimation.  Cost overruns  Project scope expansion

3. Operational Risks: Risks of loss due to improper process

implementation, failed system or some external events risks.

Causes of Operational risks: Failure to address priority conflicts Failure to resolve the responsibilities Insufficient resources No resource planning No communication in team.

4. Technical risks: Technical risks generally leads to failure of

functionality and performance.

Causes of technical risks are: Continuous changing requirements  No advanced technology available or the

existing technology is in initial stages.  Product is complex to implement.  Difficult project modules integration.

5. Programmatic Risks: These are the external risks beyond the

operational limits. These are all the uncertain risks that are outside the control of the program.These external events can be:

Running out of fund. Market development Changing customer product strategy and priority Government rule changes.

Risk type Possible risks

Technology The database used in the system cannot process as many transactions per secondas expected.Software components that should be reused contain defects that limit theirfunctionality.

People It is impossible to recruit staff with the skills required.Key staff are ill and unavailable at critical times.Required training for staff is not available.

Organisational The organisation is restructured so that different management are responsible forthe project.Organisational financial problems force reductions in the project budget.

Tools The code generated by CASE tools is inefficient.CASE tools cannot be integrated.

Requirements Changes to requirements that require major design rework are proposed.Customers fail to understand the impact of requirements changes.

Estimation The time required to develop the software is underestimated.The rate of defect repair is underestimated.The size of the software is underestimated.

Some other examples of risks in the software process

Risk Affects Description

Staff turnover Project Experienced staff will leave the project before it is finished.

Management change Project There will be a change of organisational management withdifferent priorities.

Hardware unavailability Project Hardware that is essential for the project will not bedelivered on schedule.

Requirements change Project andproduct

There will be a larger number of changes to therequirements than anticipated.

Specification delays Project andproduct

Specifications of essential interfaces are not available onschedule

Size underestimate Project andproduct

The size of the system has been underestimated.

CASE tool under-performance

Product CASE tools which support the project do not perform asanticipated

Technology change Business The underlying technology on which the system is built issuperseded by new technology.

Product competition Business A competitive product is marketed before the system iscompleted. 11

Project risk management is the art and science of identifying, analyzing, and responding to risk throughout the life of a project and in the best interests of meeting project objectives

Risk management is an attempt to identify, to measure, to monitor and to manage uncertainty.

Not only negative (ensuring that bad things are less likely to happen), But also positive (making it more likely that good things will happen)

The art of managing the risks effectively so that the WIN-WIN situation and friendly relationship is established between the team and the customer is called Risk Management.

Risk Management is a software engineering practice which provides a disciplined environment for proactive decision-making to: Assess continuously what can go wrong (risks).

Determine what risks are important to deal with.

Implement strategies to deal with those risks. It maximizes the probability and consequences

of positive events and minimizes the probability and consequences of adverse events to project objectives.

The project should be managed in such a way that the risks don’t affect the project in a big way.

The Risks we encounter in a project should be resolved so that we are able to deliver the desired project to the customer.

If you don’t activelyattack the risks...

...the risks will activelyattack you –Tom Gilb

So Lets Attack Risks

1. Planning risk management: deciding how to approach and plan the risk management activities for the project

Methodology Roles and responsibilities Budget and schedule Risk categories Risk probability and impact Revised stakeholders tolerances Tracking Risk documentation Output = “Risk management plan”.

2. Identifying risks: determining which risks are likely to affect a project and documenting the characteristics of each Brainstorming The Delphi Technique Interviewing SWOT analysis Out put = Risk Register

3. Performing qualitative risk analysis: prioritizing risks based on their probability and impact of occurrence Probability/impact matrixes The Top Ten Risk Item Tracking

4. Performing quantitative risk analysis: Numerically estimating the effects of risks on project objectives Decision tree analysis Simulation Sensitivity analysis

5. Planning risk responses: Taking steps to enhance opportunities and reduce threats to meeting project objectives

Strategies for negative Risks Risk avoidance (continue whatever comes will be handled) Risk acceptance (accept risk due to unavailability of

resources ) Risk transference (transfer risk to a 3rd party.. insurance) Risk mitigation (reducing the probability of risk to occur) Strategies for positive Risks Risk exploitation (making sure positive risk to occur, i-e

holding public events) Risk sharing (partnership) Risk enhancement (identifying and maximizing the key driver

of positive risk) Risk acceptance (accept the bitterness, don’t try for best)

6. Monitoring and controlling risks: Monitoring identified and residual risks, identifying new risks, carrying out risk response plans, and evaluating the effectiveness of risk strategies throughout the life of the project

Any Question…?

Thanks for your attention!