notes_Lecture9 RISK COMPONENTS AND DRIVERS

Software Project Management
Lecture # 9

Outline
 Chapter 25 – risk management (contd)
 Risk Identification
 Risk Components and Drivers
 Risk Projection
 Developing a Risk table
 Assessing risk impact
 Risk Refinement
 What is RMMM?
 RMMM Plan

Risk Components and Drivers (1)
 The U.S. Air force has published an excellent
guideline for software risk identification and
abatement.
 Their approach requires project manager to
identify risks drivers that affect software risk
components
 Following are the Risk Components
 Performance
 Cost
 Support
 Schedule

 These risk components are defined as follows in
context of these guidelines:
 Performance risk
 The degree of uncertainty that the product will meet its
requirements and be fit for its intended use
 Cost risk
 The degree of uncertainty that the project budget will be
maintained
 Support risk
 The degree of uncertainty that the resultant software will
be easy to correct, adapt and enhance
 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 determined. This impact can
be any of these four impact categories
 Negligible
 Marginal
 Critical
 Catastrophic

Risk Projection (1)
 Risk Projection is also known as Risk Estimation
 Risk projection rates each risk in two ways:
 the probability that the risk is real and
 the consequences of the problems associated with the
risk, should it occur
 4 Risk projection steps performed by project
planner along with other managers & tech staff
1. Establish a scale that reflects the perceived likelihood of a
risk
2. Delineate the consequences of the risk
3. Estimate the impact of the risk on the project and the
product
4. Note overall accuracy of the risk projection so that there
will be no misunderstandings

Risk Projection (2)
 The aim of these steps is to eventually
determine prioritization of the risk
 By prioritizing risks, the software team can
allocate resources where they will have the
most impact.

Developing a Risk Table (1)
 A risk table provides a project manager with a
simple technique for risk projection (estimation)
 The risk table can be implemented as a spread
sheet model (enabling easy manipulation & sorting
of entries)
 The table has the following content:
 1st column: list of all risks
 2nd column: categorization of risks, e.g., PS
(Project Size risk), BU (Business risk)
 3rd column: probability of risk occurrence
 4th
column: risk impact category
 determined by averaging the impact categories of the 4
risk components – performance, support, cost, schedule)

Developing a Risk Table (2)
 After the first four columns are completed, the table is
sorted by probability and by impact.
 High probability and high impact risks move to the top
of the table and low ones drop to bottom
 Project Manager studies the resultant (1st
order risk
prioritization) table and defines a cutoff line.
 Risks above the cutoff line must be managed
 Risks below cutoff line are reevaluated for 2nd
order
prioritization.
 5th
column: contains a pointer into a Risk Mitigation,
Monitoring and Management Plan (RMMM) or
alternatively, a collection of risk information sheets
developed for all risks above the cutoff

Assessing Risk Impact
 If a risk does occur, then the consequences (that are likely)
are affected by 3 factors
 nature of risk
 scope (severity & its distribution) of risk
 timing of risk
 Following are the recommended steps to determine overall
consequences of risk
 Determine the avg probability of occurrence value for each risk
component
 Using impact assessment (fig. 25.1), determine impact for each
component based on the criteria.
 Complete the risk table & analyze the results as described in the
preceding sections.
 The overall risk exposure RE is determined using the
following relationship:
 RE = P x C
where P = probability of occurrence for risk
C = cost to the project, if risk occurs

Risk Refinement (1)
 During early stages of the project, a risk is
stated generally
 As time passes, learning about project work
and related risks improves
 Hence, risks stated earlier can be refined,
making them more detailed so that they are
easier to handle
 Risk can be represented in condition-transition-
consequence (CTC) format
 Given that <condition> then there is a concern that
(possibly) <consequence>

Risk Refinement (2)
 Example:
 Given that all reusable components must conform to specific design
standards and that some do not conform, then there is a concern that
possibly only 70 percent of the planned reusable modules may actually
be integrated into the as-built system, resulting in the need to custom
engineer the remaining 30 percent of components
 Refinement:
 Subcondition1
 Certain reusable components were developed by a third party with no
knowledge of internal design standards
 Subcondition2
 The design standard for component interfaces has not been solidified and
may not conform to certain existing reusable components
 Subcondition3
 Certain reusable components have been implemented in a language that is
not supported on target environment
 The consequence (of custom engg of 30% components) remains
same for all refined subconditions but refinement helps in easy risk
analysis

What is RMMM?
 RMMM = Risk Mitigation, Monitoring and
Management
 An effective strategy to deal with risks must
consider issues such as:
 Risk avoidance
 Risk monitoring
 Risk management and contingency planning
 RMMM steps incur additional project cost

Example Scenario of a RISK…
 Scenario
 Assume that high staff turnover is a project risk r1.
 Based on past history, the likelihood l1, of high turnover is
estimated to be 70%
 The impact x1, is projected as critical
 So, high turnover will have a critical impact on project cost
and schedule
 Steps to mitigate r1:
 Meet the staff to find the causes of turnover (poor working
conditions, low pay, etc.)
 Try to reduce the causes of turnover (if possible) before
project starts
 Once project starts, assume turnover will occur and
develop techniques to ensure continuity when people
leave

 Organize project teams so that information about each
development activity is widely dispersed.
 Define documentation standards & establish mechanisms
to ensure that documents are timely developed.
 Conduct peer reviews of all work.
 Assign backup staff member for every critical technologist.
 Risk Monitoring for r1:
As project proceeds, risk monitoring activities commence
to find indications whether the risk is becoming more or
less likely. Following factors are considered for r1:
 General attitude of team members based on project
pressures.
 The degree to which the team is jelled.

 Interpersonal relationships among team members.
 Potential problems with compensation and benefits.
 The availability of jobs within or outside the company.
 Risk Management & Contingency Planning:
This stage comes into play when mitigation efforts have
failed and risk has become a reality.
 Considering again scenario for r1.
 The project is underway and a number of people
announce that they will be leaving.
 If mitigation strategy has been followed, backup is
available, information is documented and knowledge is
dispersed across the team.

 Project manager may refocus resources to those
functions that are fully staffed and re-adjust schedule
accordingly.
 The newcomers can “get up to speed” in the mean time.
 Individuals who are leaving are asked to stop all work and
spend their last weeks in “knowledge transfer mode”.
 This may include
 video-based knowledge capture,
 development of “commentary documents”,
 And / or meeting with other team members who will stay on the
project team

 Cost/benefit analysis:
 Since RMMM steps incur additional cost, the
project managers & planners must consider if
the benefit of these steps are outweighed by
costs associated in implementing them.
 If risk management steps are projected to
increase costs by 5% and duration by only 3%,
then there is no harm in putting them in place.
 If these steps increase both project cost and
duration by 15%, then they may not be
undertaken.

Risk Management
 For a large project, 30 to 40 risks can be identified. If
between 3 & 7 risk management steps are identified for
each risk, risk management may become a project itself!
 For this reason, we adapt the Pareto 80-20 rule to
software risks
 Experience indicates that 80% of overall project risk (potential
for failure) can be accounted for by 20% of the identified risks
(the critical 20 risks with highest project priority).
 Risks can even occur after the software has been
successfully developed & delivered to the customer.
 Software safety and hazard analysis (SQA activities) focus
on identification & assessment of potential hazards that
have negative affect and may cause entire system to fail.

The RMMM Plan
 The RMMM plan documents all work performed as
part of risk analysis.
 It is used by project manager as part of overall
project plan.
 Some software teams do not develop formal RMMM
document. Rather, each risk is documented
individually using a risk information sheet (RIS).
 In most cases, RIS is maintained using a database
system so that creation & information entry, priority
ordering, searches, and other analysis may be
accomplishes easily.

The RMMM Plan
 RIS contains the following information (Fig. 25.4)
 Risk ID, Date, Probability & Impact
 Description
 Refinement/context
 Mitigation/monitoring
 Management/Contingency Plan/trigger
 Current Status
 Originator & Assigned (to whom) information
 Once RMMM has been documented & project has
begun, risk mitigation and monitoring steps
commence.

The RMMM Plan
 Risk mitigation is problem avoidance activity
 Risk monitoring has three main objectives:
 To assess whether predicted risks do, in fact,
occur
 To ensure that risk aversion steps defined for
the risk are properly applied
 To collect info that can be used for future risk
analysis
 A part of monitoring is to find causes (origin)
of risks.

notes_Lecture9 RISK COMPONENTS AND DRIVERS

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