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Determining Project Risks

Determining Project Risks

Software risk management is the formal process in which risk factors are systematically identified, assessed, and mitigated. The determination of the risk in a project, either due to external or internal causes, is a major part of project management. The PMBOK defines risk as "a subset of project management that includes the processes concerned with identifying, analyzing, and responding to project risk. It consists of risk identification, risk quantification, risk response development, and risk response control." In order to aid the project manager in risk determination and management, this section will answer these questions:

●  What is risk management all about?

●  What are some risk management models?

●  How are risks identified?

●  How are risks analyzed and quantified?

●  How are risk responses developed and risks controlled?

●  What are the steps in developing a risk management plan?

Risk management is central to many other areas of project management. Figure 1 illustrates the PMBOK view of where risk management applies in other knowledge areas.

PMBOK Knowledge Areas Integration with Risk Management

Where We Are in the Product Development Life Cycle

Risk management begins with the exploration of the concepts leading up to acceptance of a software development project. A good project manager is a good risk manager. Risk management continues throughout the life cycle until the product is delivered. Risk analysis and contingency planning continue through the implementation stages of the product life cycle. Risks are analyzed and prioritized on no less than a weekly basis and the current "top-ten" risk list is presented at each weekly project status meeting. The only way risk mitigation occurs is through working the risks with the project team. Figure 2 illustrates how risk management fits within the software project management life cycle.

 Where Risk Management Occurs in the Product Development Life Cycle

"Determining Project Risks" Relation to the 34 Competencies

Although this section's focus is to define how a project manager determines risk, the key competency is number 16, managing risk. Handling risks is a key skill for any manager, but it is crucial for software project managers because so much can (and often does) go wrong-software projects are thought of as more complex because the product is intangible, and therefore difficult to test or assess.

In order to effectively manage risk, a project manager must also be competent in competencies 7 - performing the initial assessment, 18 - scheduling, 25 - holding effective meetings, and 31 - presenting effectively. Determining risk is an integral part of performing the initial assessment. The determined risk profile will affect any scheduling estimated and performed. The main way a project manager determines risk is through interviews and meetings. Meetings and presentations are the most-used communication mechanism for the project manager. As with other project management tasks, determining risk is impacted by several of our 34 competencies.

Learning Objectives for "Determining Project Risks"

Upon completion of this section, the reader should be able to:

●  Explain sources of risk on any software development project;

●  Develop a risk categorization table for any software development project;

●  Calculate risk exposure for top software development risks.


Tags

project management, project risk, risk management, software development, life cycle
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