Risk Analysis Based on E.M. Bennatan, On Time, Within Budget. John Wiley & Sons, 1995.
Risk Analysis • A project management technique in which potential problems are identified, their probability and severity of impact estimated, and plans devised to address them should they occur. • A problem that has been anticipated and planned for is far easier to solve than one that occurs unexpectedly.
Risk Analysis Procedure • Anticipate problems. • Estimate the probability that the problem will occur. • Estimate the impact of the problem on the project. • Attribute a measure of severity to the problem. • Identify contingency plans for severe-impact problems.
Anticipate Problems • Common SD problems: • Inadequate definition of requirements • Frequent changes (creeping requirements) • Poor estimates • Dependence on external sources • Difficulties in concluding the project • Staff turnover • Inadequate tracking and supervision
Anticipate Problems …. • Review project technical and administrative plans: • Project plan (resources, schedule, task dependencies) • Requirements specification (difficulty in satisfying performance objectives) • Design specification (implementation decisions that may create problems)
Anticipate Problems …. • Compile a list of potential problems, briefly describing each problem and its effect on the project, e.g., • Staff turnover: Given the tight schedule and dependence on staff expertise, the loss of Developer A or any long-term loss of other personnel will cause the project to slip significantly.
Estimate Probability and Impact • Estimate the probability that the problem will occur, assigning an expectation number between 1 (low) and 10 (high) to each problem. • Estimate the severity of the problem’s impact, assigning a number between 1 (low impact) and 10 (high impact) to each problem. • Multiply the expectation number by the impact number to produce the measure of severity for each problem.
Identify Contingency Plans • Decide the “cut-off point” in severity ratings (e.g., 15 or 20). • Devise a contingency plan for each high-severity problem. • Assign a “tracker” to track the problem and to alert the project manager when the contingency plan needs to be implemented.
When to Perform Risk Analysis • As part of the Project Plan • As planning for each major development stage: • Requirements Analysis • Design Specification • Implementation • Whenever a “significant event” occurs • Just as planning is an iterative process, so is risk analysis!
Risk Analysis Costs and Benefits • RA is a kind of insurance. • Costs: • Time & effort to perform analysis • Cost of any fall-backs implemented • Benefits: • Minimized cost of problem resolution • Greater probability of successful project completion • Greater “peace of mind”