chap6 Risk Analysis and Management Part1.pdf
- 1. 6.1 Risk Analysis & Management: Risk Mitigation, Monitoring and Management Plan (RMMM). 6.2 Quality Concepts and Software Quality assurance Metrics, Formal Technical Reviews, Software Reliability 6.3 The Software Configuration Management (SCM) ,Version Control and Change Control Chapter 6 Software Configuration Management, Quality Assurance and Maintenance
- 2. Risk Analysis and Management ⚫ Risks are potential problems that might affect the successful completion of a software project. ⚫ Risks involve uncertainty and potential losses. Risk analysis and management are intended to help a software team understand and manage uncertainty during the development process. ⚫ The important thing is to remember that things can go wrong and to make plans to minimize their impact when they do. ⚫ The work product is called a Risk Mitigation, Monitoring, and Management Plan (RMMM).
- 3. Risk Strategies ⚫ Reactive risk strategies: o Very common, resources are set aside to deal with likely risks, should they become a problem. o The software team does nothing about risks until something goes wrong. o At that point the team must work quickly to resolve the problem. ⚫ Proactive risk strategies: o Risk management begins before technical work starts. o Risks are identified, their probability and impact are assessed and they are ranked by importance. o The team builds a plan to avoid risks if they can or minimize them if the risks turn into problems.
- 4. “Risk& Reward” “Plan for the risk” to earn a “reward”
- 5. Characteristics of Software Risks ⚫ Uncertainty: the risk may or may not happen; that is there are no 100% probable risks. (A risk that is 100% probable is a constraint on the software project.) ⚫ Loss: if the risk becomes a reality, unwanted consequences or losses will occur ⚫ When risks are analyzed it is important to quantify the level of uncertainty and the degree of loss associated with each risk. Developed by Reneta Barneva, SUNY Fredonia
- 6. Software Risks Software Risks (Approach 1) ⚫ Project risks ⚫ Technical Risks ⚫ Business Risks Software Risks (Approach 2) ⚫ Known Risks ⚫ Predictable/Unpredictable Risks
- 7. Project Risks ⚫ Threaten the project plan. ⚫ Usually result in delays in project schedule and increased costs. ⚫ Identifies potential budgetary, schedule, personnel, resource, customer, and requirements problems and their impact on a software project.
- 8. Technical Risks ⚫ Threaten product quality and timeliness of the schedule. ⚫ Identifies potential design, implementation, interface, verification, and maintenance problems.
- 9. Business Risks ⚫ Threaten the viability of the software to be built. ⚫ Top 5 business risks: 1. Building an excellent product or system that no one really wants (market risk). 2. Building a product that no longer fits into the overall business strategy for the company (strategic risk). 3. Building a product that the sales force doesn’t understand how to sell (sales risk) 4. Losing the support of senior management due to a change in focus or a change in people (management risk). 5. Losing budgetary or personnel commitment (budget risks)
- 10. Known Risks ⚫ Known from careful evaluation of current project plan. ⚫ Examples: Unrealistic delivery date, lack of documented requirements or software scope, and poor development environment.
- 11. Predictable/Unpredictable Risks ⚫ Predictable Risks are extrapolated from past project experience. ⚫ Examples: staff turnover, poor communication with the customer, dilution of staff. ⚫ Unpredictable risks are extremely difficult to identify in advance.
- 12. Seven Principles of Risk Management ⚫ Maintain a global perspective – View software risks within the context of a system and the business problem that is is intended to solve ⚫ Take a forward-looking view – Think about risks that may arise in the future; establish contingency plans ⚫ Encourage open communication – Encourage all stakeholders and users to point out risks at any time ⚫ Integrate risk management – Integrate the consideration of risk into the software process
- 13. Seven Principles of Risk Management ⚫ Emphasize a continuous process of risk management – Modify identified risks as more becomes known and add new risks as better insight is achieved ⚫ Develop a shared product vision – A shared vision by all stakeholders facilitates better risk identification and assessment ⚫ Encourage teamwork when managing risk – Pool the skills and experience of all stakeholders when conducting risk management activities
- 14. Risk Risk type 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 with different priorities. Hardware unavailability Project Hardware which is essential for the project will not be delivered on schedule. Requirements change Project and product There will be a larger number of changes to the requirements than anticipated. Specification delays Project and product Specifications of essential interfaces are not available on schedule Size underestimate Project and product The size of the system has been underestimated. CASE tool under- performance Product CASE tools which support the project do not perform as anticipated Technology change Business The underlying technology on which the system is built is superseded by new technology. Product competition Business A competitive product is marketed before the system is completed. Software Risks
- 15. 7 Steps for Risk Management high probability high impact Impact may be negligible, marginal, critical, catastrophic Identify possible risks Rank the risks by probability and impact Analyze each risk Develop a contingency plan
- 16. Steps for Risk Management 1)Identify possible risks; recognize what can go wrong 2)Analyze each risk to estimate the probability that it will occur and the impact (i.e., damage) that it will do if it does occur 3)Rank the risks by probability and impact - Impact may be negligible, marginal, critical, and catastrophic 4)Develop a contingency plan to manage those risks having high probability and high impact
- 17. The Risk Management Process Risk avoidance and contingency plans Risk planning Prioritised risk list Risk analysis List of potential risks Risk identification Risk assessment Risk monitoring
- 19. Background ⚫ • Risk identification is a systematic attempt to specify threats to the project plan ⚫ • By identifying known and predictable risks, the project manager takes a first step toward avoiding them when possible and controlling them when necessary ⚫ •Generic risks ⚫ – Risks that are a potential threat to every software project ⚫ •Product-specific risks ⚫ – Risks that can be identified only by those with a clear understanding of the technology, the people, and the environment that is specific to the software that is to be built ⚫ This requires examination of the project plan and the statement of scope ⚫ "What special characteristics of this product may threaten our project plan?"
- 20. Risk Item Checklist (Risk Categories) ➢ Product size – risks associated with overall size of the software to be built ➢ Business impact – risks associated with constraints imposed by management or the marketplace ➢ Customer characteristics – risks associated with sophistication of the customer and the developer's ability to communicate with the customer in a timely manner ➢ Process definition – risks associated with the degree to which the software process has been defined and is followed ➢ Development environment – risks associated with availability and quality of the tools to be used to build the project ➢ Technology to be built – risks associated with complexity of the system to be built and the "newness" of the technology in the system ➢ Staff size and experience – risks associated with overall technical and project experience of the software engineers who will do the work
- 21. Risk Assessment ⚫ What will change if Risk becomes a problem.
- 22. Questionnaire on Project Risk (Questions are ordered by their relative importance to project success) 1. Have top software and customer managers formally committed to support the project? 2. Are end-users enthusiastically committed to the project and the system/product to be built? 3. Are requirements fully understood by the software engineering team and their customers? 4. Have customers been involved in the definition of requirements? 5. Do end-users have realistic expectations? 6. Is project scope stable?
- 23. Questionnaire on Project Risk (Questions are ordered by their relative importance to project success) 7. Does the software engineering team have the right mix of skills? 8. Are project requirements stable? 9. Does the project team have experience with the technology to be implemented? 10. Is the number of people on the project team adequate to do the job? 11. Do all customer/user constituencies agree on the importance of the project and on the requirements for the system/product to be built?
- 24. Assessing Overall Project Risk ⚫ If any one of the previous questions is answered negatively, mitigation, monitoring and management steps should be instituted without fail. ⚫ The degree to which the project is at risk is directly proportional to the number of negative responses to these questions.
- 25. Risk Components and Drivers The project manager identifies the risk drivers that affect the following risk components ⚫ Performance risk: the degree of uncertainty that the product will meet the requirements and be fit for its intended use. ⚫ Support risk: the degree of uncertainty that the resultant software will be easy to correct, adapt, and enhance. ⚫ Cost risk: the degree of uncertainty that the project budget will be maintained. ⚫ Schedule risk: the degree of uncertainty that the project schedule will be maintained and that the product will be delivered on time. ⚫ The impact of each risk driver on the risk component is divided into one of four impact levels – Negligible, marginal, critical, and catastrophic
- 26. Developed by Reneta Barneva, SUNY Fredonia Fig 6.1
- 28. Background ⚫ impact of risks/likelihood of risk actually happening ⚫ Risk projection (or estimation) attempts to rate each risk in two ways – The probability that the risk is real – The consequence of the problems associated with the risk, should it occur
- 29. Risk Projection/Estimation steps ⚫ The project planner, along with other managers and technical staff, performs four risk projection activities: – 1. Establish a scale that reflects the perceived likelihood of a risk(e.g., 1-low, 10-high) – 2. Delineate the consequences of the risk – 3. Estimate the impact of the risk on the project and the product – 4. Note the overall accuracy of the risk projection so that there will be no misunderstandings.
- 30. Contents of a Risk Table ❑ A risk table provides a project manager with a simple technique for risk projection ❑ It consists of five columns ▪ Risk Summary – short description of the risk ▪ Risk Category – one of seven risk categories ▪ Probability – estimation of risk occurrence based on group input ▪ Impact – (1) catastrophic (2) critical (3) marginal (4) negligible ▪ RMMM – Pointer to a paragraph in the Risk Mitigation, Monitoring, and Management Plan
- 31. Developing a Risk Table • List all risks in the first column (by way of the help of the risk item checklists) • Mark the category of each risk • Estimate the probability of each risk occurring • Assess the impact of each risk based on an averaging of the four risk components to determine an overall impact value • Sort the rows by probability and impact in descending order • Draw a horizontal cutoff line in the table that indicates the risks that will be given further attention
- 32. Fig 6.2
- 33. Risk Projection Cutoff Line ⚫ This line is defined by the project manager on the risk table. ⚫ Implies that only risks that lie above the line will be given further attention. ⚫ Risks that fall below the line are re-evaluated to accomplish second-order prioritization.
- 34. Assessing Risk Impact ⚫ Three factors affect the consequences that are likely if a risk does occur: – Its nature – problems that are likely if it occurs – Its scope – combines the severity with its overall distribution – Its timing – when and how long the impact will be felt
- 35. The overall risk exposure formula is RE = P x C P = the probability of occurrence for a risk C = the cost to the project should the risk actually occur Example P = 80% probability that 18 of 60 software components will have to be developed C = Total cost of developing 18 components is $25,000 RE = .80 x $25,000 = $20,000
- 36. Assessing Risk Impact Example Problem • Risk identification. Only 70 percent of the software components scheduled for reuse will, in fact, be integrated into the application. The remaining functionality will have to be custom developed. • Risk probability. 80% (likely). • Risk impact. 60 reusable software components were planned. If only 70 percent can be used, 18 components would have to be developed from scratch (in addition to other custom software that has been scheduled for development). Since the average component is 100 LOC and local data indicate that the software engineering cost for each LOC is $14.00, the overall cost (impact) to develop the components would be 18 x 100 x 14 = $25,200. • Risk exposure. RE = 0.80 x 25,200 ~ $20,200.
- 37. Risk Assessment The referent point (break point): the point at which the decision to proceed with the project or terminate it are equally weighed.
- 38. Risk Mitigation, Monitoring, and Management (RMMM)
- 39. Risk Mitigation, Monitoring, and Management
- 40. RMMM • An effective strategy for dealing with risk must consider three issues (Note: these are not mutually exclusive) – Risk mitigation (i.e., avoidance) – Risk monitoring – Risk management and contingency planning • Risk mitigation (avoidance) is the primary strategy and is achieved through a plan – Example: Risk of high staff turnover • Risk monitoring – assessing whether predicted risks occur or not – ensuring risk aversion steps are being properly applied – collect information for future risk analysis – attempt to determine which risks caused which problems • Risk management – contingency planning – actions to be taken in the event that mitigation steps have failed and the risk has become a live problem
- 41. Foreground
- 42. Risk Information Sheets ⚫ Alternative to RMMM in which each risk is documented individually. ⚫ Often risk information sheets (RIS) are maintained using a database system. ⚫ RIS components - risk identification, date, probability, impact, description, refinement, mitigation/monitoring, management/contingency/ trigger, status, originator, assigned staff member.
- 52. Risk: Late Delivery • Mitigation The cost associated with a late delivery is critical. A late delivery will result in a late delivery of a letter of acceptance from the customer. Without the letter of acceptance, the group will receive a failing grade for the course. Steps have been taken to ensure a timely delivery by gauging the scope of project based on the delivery deadline. • Monitoring A schedule has been established to monitor project status. Falling behind schedule would indicate a potential for late delivery. The schedule will be followed closely during all development stages. • Management Late delivery would be a catastrophic failure in the project development. If the project cannot be delivered on time the development team will not pass the course. If it becomes apparent that the project will not be completed on time, the only course of action available would be to request an extension to the deadline form the customer.
- 53. Risk Mitigation Example: Risk: loss of key team members • Determine causes of job turnover. • Eliminate causes before project starts. • After project starts, assume turnover is going to occur and work to ensure continuity. • Make sure teams are organized and distribute information widely. • Define documentation standards and be sure documents are produced in a timely manner. • Conduct peer review of all work. • Define backup staff.