spm chapter 7

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1 ©The McGraw-Hill Companies, 2005

Software ProjectManagement

4th Edition

Risk management

Chapter 7




Risk management

This lecture will touch upon:• Defnition o ‘risk’ and ‘risk management’

• Some ways o categorizing risk

• isk management! isk identifcation ! what are the risks to a pro"ect#! isk analysis ! which ones are really serious#

! isk planning ! what shall we do#

! isk monitoring ! has the planning worked#

•$e will also look at %&T risk and critical chains




Some denitions of risk

‘the chance of exposure to the adverseconsequences of future events’ %'()&*

• %ro"ect plans ha+e to ,e ,ased on

assumptions

• Risk is the possi,ility that an assumptionis wrong

• $hen the risk happens it ,ecomes a problem or an issue




)ategories o risk




ISPL situationa factors!the target domain

class

inormation system

computer system

description

the characteristics o theinormation system -

these are independento the technologiesthat might ,e used

the characteristics o thepart o the inormationsystem that ha+e ,eencomputerized




ISPL situationa factors!project domain

%ro"ect

Structure

.ctors

Technology

• the types o task to ,eundertaken

• the communicationsystems/ managementstructures/ work 0ows etc

• the people in+ol+ed in the

pro"ect• the methods/ techni1ues

and tools to ,e used




" framework for deaingwith risk

The planning or risk includes these steps:

• isk identifcation ! what risks mightthere ,e#

• isk analysis and prioritization ! whichare the most serious risks#

• isk planning ! what are we going to doa,out them#

isk monitoring ! what is the current stateo the risk#




Risk identication

.pproaches to identiying risks include:

• 2se o checklists ! usually ,ased on

the e3perience o past pro"ects• 4rainstorming ! getting

knowledgea,le stakeholders together

to pool concerns• )ausal mapping ! identiying possi,le

chains o cause and e5ect




4oehm’s top 67 de+elopmentrisks

Risk Risk reduction techniques

Personnel shortfalls Staffing with top talent; job matching; teambuilding;

training and career development; early

scheduling of key personnel

Unrealistic time and cost

estimates

Multiple estimation techniques; design to cost;

incremental development; recording and analysis

of past projects; standardization of methods

Developing the wrong

software functions

Improved software evaluation; formal specification

methods; user surveys; prototyping; early user

manuals

Developing the wrong

user interface

Prototyping; task analysis; user involvement




4oehm’s top ten risk -continued

8old plating e1uirements scru,,ing/ prototyping/design to cost

9ate changes tore1uirements

)hange control/ incrementalde+elopment

Shortalls ine3ternally suppliedcomponents

4enchmarking/ inspections/ ormalspecifcations/ contractual agreements/1uality controls

Shortalls ine3ternallyperormed tasks

uality assurance procedures/competiti+e design etc

eal timeperormancepro,lems

Simulation/ prototyping/ tuning

De+elopment

technically toodi;cult

Technical analysis/ cost-,eneft analysis/

prototyping / training




Causa mapping




)ausal mapping -

inter+entions




Risk prioriti#ation

isk e3posure <&= > <potential damage= 3 <pro,a,ility o

occurrence=

Ideally

Potentia damage: a money +alue e?g? a 0oodwould cause @7?A millions o damage

Pro$a$iit% 7?77 <a,solutely no chance= to 6?77<a,solutely certain= e?g? 7?76 <one in hundredchance=

& > @7?Am 3 7?76 > @A/777

)rudely analogous to the amount needed or aninsurance premium




Risk pro$a$iit%!

&uaitati'e descriptorsProbability

level

Range

High Greater than 50% chance of happening

Significant 30-50% chance of happening

Moderate 10-29% chance of happeningLow Less than 10% chance of happening




Qualitative descriptors of impact on cost

and associated range values

Impact level Range

High Greater than 30% above budgeted

expenditure

Significant 20 to 29% above budgeted

expenditure

Moderate 10 to 19% above budgeted

expenditure

Low Within 10% of budgeted

expenditure.




%ro,a,ility impact matri3




Risk panning

isks can ,e dealt with ,y:

• isk acceptance

• isk a+oidance• isk reduction

• isk transer

• isk mitigationBcontingencymeasures




Risk reduction e'erage

isk reduction le+erage > <&,eore- &ater=B <cost o risk reduction=

&,eoreis risk e3posure ,eore risk reduction e?g?

6C chance o a fre causing @*77k damage

&ater is risk e3posure ater risk reduction e?g?

fre alarm costing @A77 reduces pro,a,ility ofre damage to 7?AC

9 > <6C o @*77k=-<7?AC o @*77k=B@A77 > *9 6?77 thereore worth doing




Pro$a$iit% chart




(sing PER) to e'auatethe e*ects of uncertaint%

Three estimates are produced or eachacti+ity

• Most likely time (m)• Optimistic time (a)

• essimistic (b)

• ‘e3pected time’ te > <a E Fm E,= B G• ‘acti+ity standard de+iation’ S > <,-

a=BG




" chain of acti'ities

Task A Task B Task C

Task a m , te s

. 67 6* 6G # #

4 H 67 6F # #

) *7 *F IH # #




" chain of acti'ities

• $hat would ,e the e3pected duration othe chain . E 4 E )#

• .nswer: 6*?GG E 67?II E *A?GG i?e?

FH?GA

• $hat would ,e the standard de+iationor . E 4E )#

• .nswer: s1uare root o <6* E 6* E I*= i?e?

I?I*




"ssessing the ikeihoodof meeting a target

• Say the target or completing .E4E)was A* days <T=

• )alculate the z +alue thusz > <T ! te=Bs

• 'n this e3ample z > <A*-FH?II=BI?I*

i?e? 6?76• 9ook up in ta,le o z +alues ! see

ne3t o+erhead




+raph of # 'aues




Critica chain approachJne pro,lem with estimates o task

duration:

• &stimators add a saety zone to estimateto take account o possi,le di;culties

• De+elopers work to the estimate E saetyzone/ so time is lost

• (o ad+antage is taken o opportunitieswhere tasks can fnish early ! and pro+ide

a ,u5er or later acti+ities




Critica chain approach

Jne answer to this:

• 4ase targets on midpoints <i?e? te=

• .ccumulate A7C o the saety

zones <,etween te and ,= into a,u5er at the end o the pro"ect

• $ork ,ackwards and start all

acti+ities at their latest start dates• During pro"ect e3ecution use relay

race model

spm chapter 7

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