Software project management (intro) Risk Management.
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Transcript of Software project management (intro) Risk Management.
Software project management (intro)Software project management (intro)
Risk ManagementRisk Management
IntroductionIntroduction
Risk of the development project’s not Risk of the development project’s not proceeding according to planproceeding according to plan The risk of the project’s running late or over The risk of the project’s running late or over
budget andbudget and The identification of the steps to avoid or to The identification of the steps to avoid or to
minimize those risksminimize those risks
The nature of riskThe nature of risk
Estimation errorsEstimation errors
Planning assumptionsPlanning assumptions
Eventualities (unforeseen events)Eventualities (unforeseen events)
Managing riskManaging riskObjective:Objective:
To avoid or minimize the adverse effects of unforeseen To avoid or minimize the adverse effects of unforeseen events by avoiding the risks or drawing up contingency events by avoiding the risks or drawing up contingency plans for dealing with themplans for dealing with them
Risk Risk EngineeringEngineering
Risk AnalysisRisk Analysis
Risk Risk ManagementManagement
Risk IdentificationRisk Identification
Risk EstimationRisk Estimation
Risk EvaluationRisk Evaluation
Risk PlanningRisk Planning
Risk ControlRisk Control
Risk MonitoringRisk Monitoring
Risk DirectingRisk Directing
Risk StaffingRisk Staffing
Managing risk (2)Managing risk (2)Task breakdownTask breakdown
Risk identificationRisk identificationListing all of the risks that can adversely affect the successful Listing all of the risks that can adversely affect the successful execution of the projectexecution of the project
Risk estimationRisk estimationAssessing the likelihood and impact of each hazardAssessing the likelihood and impact of each hazard
Risk evaluationRisk evaluationRanking the risks and determining risk aversion strategiesRanking the risks and determining risk aversion strategies
Risk planningRisk planningDrawing up contingency plan and, where appropriate, adding these Drawing up contingency plan and, where appropriate, adding these to the project’s task structureto the project’s task structure
Risk controlRisk controlMinimizing and reacting to problemsMinimizing and reacting to problems
Risk monitoringRisk monitoringAn ongoing activity, as the importance and likelihood of particular An ongoing activity, as the importance and likelihood of particular risks can change as the project proceedsrisks can change as the project proceeds
Risk directing & risk staffingRisk directing & risk staffingDay-to-day management of riskDay-to-day management of risk
Risk IdentificationRisk Identification
Identify hazard:Identify hazard: Hazard -- an event that might occur and will, if it does Hazard -- an event that might occur and will, if it does
occur, create a problem for the successful completion occur, create a problem for the successful completion of the project.of the project.
To identify hazard:To identify hazard: Use a checklist listing all the possible hazards and Use a checklist listing all the possible hazards and
factor that influence themfactor that influence them
Some hazards are:Some hazards are: Generic risks – relevant to all software projectsGeneric risks – relevant to all software projects Specific risks – relevant to an individual projectSpecific risks – relevant to an individual project
Categories of factorsCategories of factorsApplication factors Application factors -- -- The nature of the applicationThe nature of the application
Staff factors Staff factors -- -- The experience and skills of the staffsThe experience and skills of the staffs
Project factors Project factors -- -- Project and its objectives well definedProject and its objectives well defined
Project methods Project methods -- -- Using well specified and structured methodUsing well specified and structured method
Hardware/software factors Hardware/software factors -- -- Installation riskInstallation risk
Changeover factors Changeover factors -- -- All-in-one vs gradual changeoverAll-in-one vs gradual changeover
Supplier factors Supplier factors – reliance on external organization– reliance on external organization
Environment factors Environment factors – – eg. Taxation regulationeg. Taxation regulation
Health and safety factors Health and safety factors – – though not generally a majorthough not generally a major issueissue
Risk AnalysisRisk Analysis
Risk Likelihood:Risk Likelihood: The probability of a hazard’s occurringThe probability of a hazard’s occurring
Risk Impact:Risk Impact: The effect that the resulting problem will have The effect that the resulting problem will have
on the projecton the project
Risk Value or Risk ExposureRisk Value or Risk Exposure The importance of the riskThe importance of the risk
Risk exposure = risk likelihood * risk impactRisk exposure = risk likelihood * risk impact
Risk Analysis (2)Risk Analysis (2)
Simple scoring to provide a quantitative measure for Simple scoring to provide a quantitative measure for assessing the riskassessing the risk
Eg., 1 to 10 whereEg., 1 to 10 where1 is the least likely1 is the least likely10 is the most likely10 is the most likely
HazardHazard LikelihoodLikelihood ImpactImpact Risk Risk ExposureExposure
R1 – changes in requirementsR1 – changes in requirements 55 77 3535
R2 – specification takes longerR2 – specification takes longer 1010 33 3030
R3 – staff sicknessR3 – staff sickness 11 1010 1010
R … R …
Prioritizing the risksPrioritizing the risks
Managing the risk involves the use of two Managing the risk involves the use of two strategiesstrategies Reducing the risk exposure by reducing the Reducing the risk exposure by reducing the
likelihood or impactlikelihood or impact Drawing up contingency plans to deal with the Drawing up contingency plans to deal with the
risk should it occurrisk should it occur
Prioritizing the risks (2)Prioritizing the risks (2)
The risk exposures allow us to obtain an The risk exposures allow us to obtain an approximate ranking in order of importanceapproximate ranking in order of importance
HoweverHowever We cannot interpret the risk exposure value We cannot interpret the risk exposure value
quantitativelyquantitativelyEg., is value of 20 is twice as risk as value of 10?Eg., is value of 20 is twice as risk as value of 10?
The exposure value are too close for us to The exposure value are too close for us to distinguish between themdistinguish between them
Eg., which one is more risky, value of 20 or 21?Eg., which one is more risky, value of 20 or 21?
Prioritizing the risks (33)Prioritizing the risks (33)
In addition to the risk exposure value, In addition to the risk exposure value, there are generally there are generally other factorsother factors to to consider when prioritizing the risks:consider when prioritizing the risks: Confidence of the risk assessmentConfidence of the risk assessment Compound risks – Compound risks – ie, dependency between risksie, dependency between risks The number of risksThe number of risks Cost of actionCost of action
Method: Risk Reduction Leverage (RRL)Method: Risk Reduction Leverage (RRL)
cost reducingrisk
RE - RERRL
afterbefore
Strategies for risk reductionStrategies for risk reduction
Hazard preventionHazard prevention Eg. Early scheduling for unavailability of staffEg. Early scheduling for unavailability of staff
Likelihood reductionLikelihood reduction Eg by prototypingEg by prototyping
Risk avoidanceRisk avoidance Eg, by increasing the duration estimates or reducing functionalityEg, by increasing the duration estimates or reducing functionality
Risk transferRisk transfer Eg., contracting or taking insuranceEg., contracting or taking insurance
Contingency planningContingency planning Eg. Using agency programmers for the absence of staffEg. Using agency programmers for the absence of staff
Evaluating risks to the scheduleEvaluating risks to the schedule
Not all risks can be eliminatedNot all risks can be eliminated
Two methods for assessing the effects of Two methods for assessing the effects of these uncertainties on the project these uncertainties on the project schedule:schedule: Using PERT to evaluate the effects of Using PERT to evaluate the effects of
uncertaintyuncertaintyMost likely timeMost likely time
Optimistic timeOptimistic time
Pessimistic timePessimistic time 6
b4mate
Using expected durationsUsing expected durations
Examples: PERT activity time estimatesExamples: PERT activity time estimates
ActivityActivity Activity durations (weeks)Activity durations (weeks)
Optimistic Optimistic
(a)(a)
Most likely Most likely
(m)(m)
Pessimistic Pessimistic
(b)(b)
AA 55 66 88
BB 33 44 55
CC 22 33 33
DD 3.53.5 44 55
EE 11 33 44
FF 88 1010 1515
GG 22 33 44
HH 22 22 2.52.5
Expected times and Standard DeviationExpected times and Standard Deviation
ActivityActivity Activity durations (weeks)Activity durations (weeks)
Optimistic Optimistic
(a)(a)
Most likely Most likely
(m)(m)
Pessimistic Pessimistic
(b)(b)
ExpectedExpected
(t(tee))
Std DevStd Dev
(s)(s)
AA 55 66 88 6.176.17 0.500.50
BB 33 44 55 4.004.00 0.330.33
CC 22 33 33 2.832.83 0.170.17
DD 3.53.5 44 55 4.084.08 0.250.25
EE 11 33 44 2.832.83 0.500.50
FF 88 1010 1515 10.5010.50 1.171.17
GG 22 33 44 3.003.00 0.330.33
HH 22 22 2.52.5 2.082.08 0.080.08
Std Dev Std Dev s = (b – a) / 6 s = (b – a) / 6
PERT NetworkPERT Network
Rather than say “the completion date for the project is …”, Rather than say “the completion date for the project is …”,
we are lead to say “we expect to complete the project by …”we are lead to say “we expect to complete the project by …”
11
00
22
6.176.17
33
44
44
99
66
13.513.5
55
10.510.5
AAt = 6.17t = 6.17
BBt = 4.00t = 4.00
CCt = 2.83t = 2.83
FFt = 10.5t = 10.5
DDt = 4.08t = 4.08
EEt = 2.83t = 2.83
HHt = 2.08t = 2.08
GGt = 3.00t = 3.00
Event Event numbernumber
Target Target datedate
Expected Expected datedate
Standard Standard deviationdeviation
The likelihood of meeting The likelihood of meeting targetstargets
The PERT techniques uses the following three The PERT techniques uses the following three step method for calculating the probability of step method for calculating the probability of meeting or missing a target date:meeting or missing a target date: Calculate the standard deviation of each project eventCalculate the standard deviation of each project event Calculate the z value for each event that has a target Calculate the z value for each event that has a target
datedate Convert z values to a probabilitiesConvert z values to a probabilities
The likelihood of meeting targets (2)The likelihood of meeting targets (2)
Suppose that we must complete the project Suppose that we must complete the project within 15 weekswithin 15 weeks
We expect it will take 13.5 weeks but it could We expect it will take 13.5 weeks but it could take more or, perhaps, lesstake more or, perhaps, less
Suppose that activity C must be completed by Suppose that activity C must be completed by week 10week 10
Event 5 represents the delivery of intermediate Event 5 represents the delivery of intermediate products to the customerproducts to the customer
PERT NetworkPERT Network
PERT Network with three target dates and calculated event PERT Network with three target dates and calculated event standard deviationsstandard deviations
11
00 00
22
6.176.17 0.500.50
33
44 0.330.33
44 1010
99 0.530.53
66 1515
13.513.5 1.221.22
55 1010
10.510.5 1.171.17
AAt = 6.17t = 6.17s = 0.50s = 0.50
BBt = 4.00t = 4.00s = 0.33s = 0.33
CCt = 2.83t = 2.83s = 0.17s = 0.17
FFt = 10.5t = 10.5s = 1.17s = 1.17
DDt = 4.08t = 4.08s = 0.25s = 0.25
EEt = 2.83t = 2.83s = 0.50s = 0.50
HHt = 2.08t = 2.08s = 0.08s = 0.08
GGt = 3.00t = 3.00s = 0.33s = 0.33
Calculating the z valuesCalculating the z values
It is equivalent to the number of standard It is equivalent to the number of standard deviations between the node’s expected deviations between the node’s expected and target datesand target dates
s
t- T z
e
Where:Te = the expected dateT = the target date
Converting z values to probabilitiesConverting z values to probabilities
Example:Z value for project completion (event 6) is 1.23The probability is about 11%
There is an 11% risk of not meeting the target date of the end of week 15
The advantages of PERTThe advantages of PERT
The technique can be used to calculate the The technique can be used to calculate the standard deviation for each task and use this to standard deviation for each task and use this to rank them according to their degree of riskrank them according to their degree of risk
The probability of meeting any target set can be The probability of meeting any target set can be estimated using the expected times and estimated using the expected times and standard deviationsstandard deviations
By setting target dates along the critical path, we By setting target dates along the critical path, we can focus on those activities posing the greatest can focus on those activities posing the greatest risk to the project’s schedulerisk to the project’s schedule