IT Project Risk Management - Term Paper Example

I.T PROJECT RISK MANAGEMENT The paper attempts to unearth all aspects of project risk management and their application to I.T project risk management. The need to understand the project risk management is a critical that ought to be given priority during project-initiation. Senior managers who are looking to make have effective initiation of projects ought to learn and practice the typology of project risk management, outlined in this research paper. To address uncertainty in both ambiguity and variability terms, there is need to utilize a more explicit focus on the management of uncertainty. Additionally, efficient and successful project management requires effective management of all avenues that bring uncertainty into the project. The paper is structured into phases that outline how project risk management typology can be achieved effectively. The phases include the define phase, focus phase, identify issue-phase, Structure the Issues phase, Clarify ownership phase, Estimate Variability phase, Evaluate Overall Implications phase, and manage implementation phase. Introduction Currently, knowledge has been earmarked as an indispensable ingredient to innovative companies and to their overall objective of maintaining a competitive advantage over their rivals. In particular, knowledge has become an important factor in the development of dynamic key competencies, as well as the vocal point for companies to meet their global ambitions (Talet, Zin & Houari, 2014). IT, in particular, has become an important tool in all-important sectors, and any organization will highly feel the impact of any failure of IT project management on competitive advantage. California Technology Agency (2011) asserts that most of the business managers are not privy of the magnitude IT-related risks in projects management a firm will be exposed. Most of these managers are only able to learn the value of IT-related risks after they have computed the amount of damage the risk has brought about. According to Leong California Technology Agency, (2011) past research studies have primarily been concerned with how effective IT-related risks may be analyzed and compensated for. Therefore, it would be imperative for IT managers constantly to embrace the holistic view of IT project risk management rather than just focusing only on financial issues. There exist little empirical research studies showing the correct way of handling the management of the IT-related projects risks during the launching of the project. Problem Statement Though a myriad of studies have been done in regards to I.T project risk management, (California Technology Agency, 2011, Haney, 2009, Talet, Zin &Houari, 2014, & Texas Tech University, n.d), there is still little empirical research on how effective IT risk management can be handled at the time of executing projects. In this research paper, I will seek to develop a typology of effective strategies that will guide managers to develop specific plans meant to control risk IT projects. Managing Uncertainty and Risk Significance of Uncertainty to Effective Project Management Uncertainty is a central feature in the process of an effective project management. Effective practice of project management is thought to be a product of an effective management of uncertainty. For instance, good practice in co-ordination, planning, change control procedures, and setting milestones seek to directly manage uncertainty. Threats and Opportunities Recognizing threats and opportunities is an important aspect in an effective project management. For instance if the implications of good luck are not captured and it is only the bad luck is seized, the accumulated impact on the project will be negative. Positive thinking and creativity, that looks beyond merely neutralizing or overcoming a problem associated with opportunities is a great incentive when it comes to effective project management (Nae, 2002). Though this aspect of problem solving is more subtle and not widely understood, it can be very significant to any project management. From a morale point of view, this aspect of problem solving can be central to effective risk management, much the same way it performs in the management of teams in general. The Scope of Project Risk Management Efficient and successful project management requires effective management of all avenues that bring uncertainty into the project. Chapman and Ward (2003) name five uncertainties that ought to be taken into account: uncertainty concerning the basis of estimates, variability related with estimates, uncertainty concerning logistics and design, uncertainty related with priorities and objectives, and uncertainty related with fundamental links between project parties. To address uncertainty in both ambiguity and variability terms, there is need to utilize a more explicit focus on the management of uncertainty. Uncertainty concerning anything that affects the project should be the starting point for an integrated and holistic project risk management. Define the Project The define phase is aimed at strengthening the effort of the project to date at a strategic level so as to define the project in a form that is appropriate to the rest of the process of risk management and solving any problems. Two different but somehow related tasks are involved: consolidating relevant existing information on the project and its management in the best form; and elaborating and resolving, to fill any gaps uncovered in the process of consolidation and resolving any inconsistencies (Project Management Institute, 2013). The above two tasks are referred as “specific tasks” because they are peculiar to the define phase. Besides these two tasks, four other tasks are involved four effective definition of the project. This includes recording in text and tables with diagrams accordingly; ensuring that all providers of information agree properly, and if not agreed they should be highlighted and referred to; evaluating the analysis to date in context, to ensure it right for the purpose; and releasing verified documents, presenting the findings according. Figure1: specific tasks of the define phase (Ward, 2003). As observed in figure 1, the objective deliverable for the define phase is unambiguous, clear, and its shared understanding of the project is suitable in the application of effective project management. To effectively how the four tasks relate to deliverable and purpose, it will be important to take into account the six Ws, that include Who, Why, What, Whichway, Wherewithal, and When. Ward (2003) explains the role of these six Ws in the following ways: in any organization, projects normally involve two or three parties working together. The relationship between these parties might be complex, and they might present fundamental complications that might affect the effective implementation of a project. Understanding all these parties properly, will help to identify any uncertainty each group might present, and will enhance developing of better ways of dealing with these uncertainties. The principle of the “Why” is an important element of the project risk analysis, and it involves appraising the implications of the objectives of the project as well as the performance criteria. Having a clear idea of the prevailing project objectives is a significant thing to the effective management of the project. The “What,” on the other hand, is an aspect that is concerned with the general design of the whole project. This is an important component of elaboration, consolidation, and resolving inconsistencies. A highly successful project that effectively deals with risks is that that is carefully drafted to deal with project design issues. The “Whichway” on its part is concerned with the general plan of the project. Effective project risk management requires a simple but effective drafting of a strategic-level project activity structure. A review of the resource requirements for the project should be part of the elaborate/consolidate and resolve tasks for an effective project risk management. This is what the principle of “wherewithal’ defines. Finally, the “when” is an important component that addresses the timing of project risk management, and it should capture key alternative approaches to dealing with any eventuality. Focus the Processes The opportunities project risk management is pervasive, considerable, and diverse. Undertaking any systematic project risk management should be carefully designed and managed to achieve cost-effective usage of resources for risk management. The deliverables offered by the focus phase may be a single element or parts of more elements (Verzuh, 2008). Whatever their form, a complete and comprehensive focus phase must clarify all-important aspects of the preferred model as a project in its own right and in a way accessible to every related staff. Here, the aimed target deliverable is unambiguous, clear, and shared understanding of the proposed model. Viewing the application of risk management project as just a project in its own right entails basic concerns related with the six Ws, as well as the life cycle of the risk management project: Who is in need of risk analysis to support a formal risk management project, and who is tasked to undertake the actual analysis? Managers ought to identify the parties that will be undertaking these roles. Why is it necessary to undertake the analysis? To answer this question, it requires mangers responsible for project management to clarify all the objectives of the intended analysis. What are the issues the analysis will consider? This question should be answered by structuring the sources of uncertainty through a top-down appreciation of the issue. In which way should the analysis be undertaken? Here, it requires the mangers to successfully select a process approach for the analysis. When should it be the right time to undertake the analysis? Here, the mangers ought to effectively determine the timing of undertaking the analysis. This way, it will be possible to understand where things have gone wrong and right and effectively solve them in due course. How would this analysis relate to the rest of the later stages of an analysis the life cycle of the risk management project? Here, it requires assessment of the process and effectively strategizing and planning. Figure 2: IT Project Management practices Guide (Texas Tech University, n.d). Identify the Issues Most processes of risk management descriptions emphasize the importance of recognizing “risks’ very early in the process, normally restricting this to threats and sometimes to risk events. Effective risk management requires addressing some uncertainty in a broad way, with prior considerations of all uncertainty sources and their associated responses (Haney, 2009). For convenience purposes, the term “issue” is used to refer to individual sources, secondary sources, and their associated responses. These ‘issues ‘are the real things that require proper identification and management, but not ‘risks.’ For proper identification of issues, there are two specific tasks involved: Searching for sources and responses, utilizing a myriad of techniques; and classifying to provide a suitable structure for proper definition of responses and sources, aggregating or disaggregating specific issues as appropriate. The crucial deliverable is a clear, common understanding of all the avenues of uncertainty facing the implementation of the project and how they can be solved. There is need to identify opportunities and managed with the same intensity as threats, and as part of the same process (Verzuh, 2008). At times, threats and opportunities are closely linked, but this should not be the scenario. Often, a risk management project is specifically successful because the process of reviewing and generating responses to threats results to the identification of crucial opportunities, with impacts well beyond the uncertainty that resulted to their identification. The identification phase can be taken as an iterative five-step process, with each step entailing both search and classify tasks. The initial step entails a very simple first cut at the identification of sources related with the critical performance criterion. Step 2 is an expansion of step one in three critical dimensions. Figure 3: project risk management (Verzuh, 2008). As shown in figure 3, step three is related with associated responses, whereas step four is concerned with associated secondary responses and sources. Step 5 is an elaboration on the very basic search process utilized to kick-start the first four steps. The identify phase entails the identification of more than one assumed response for each identified source. Though a generic, ‘do nothing’ can be an option, it might not be effective in some scenarios. On the first pass, a preliminary list of obvious response alternatives indicating preferences related with all sources is preferred output. Though detailed lists of response alternatives might be deferred to later passes for significant sources, earlier identification of response alternatives can form the foundation for a concerted identification of opportunity process that is beyond simple threat management (Chapman and Ward, 2003). Risk efficiency demands generating options that might lead to better responses, plans, responses providing the basis for an effective project risk management. Based on documentation, the identify phase entails the production of a list of sources. All sources ought to be classified as initiators of minor issuers, and initiators of major issues, and they should be treated separately. Earlier proactive approach to identifying responses is recommended. A proactive approach requires that key responses are not overlooked, sticking to the first thought response if it is effective, identifying opportunities that may have impacts beyond the issues that resulted to their consideration, considering the apparent minor problem that has no effective solution once it occurs, and exploring deeper levels of uncertainty where it is important. Structure the Issues The structure phase deals with reviewing as well as extending the earlier phases of issue identification. The primary objective of this phase to understand the relative significance of different sources provided identified responses, to investigate the interactions between issues, and examine the assumptions explicit or implicit in all other earlier steps. This may lead to the refinement of the existing responses and prompt the development of new and effective responses. This might also lead to new approaches or analyses. Precisely, the structure used ought to be simple as possible, but not one that is so misleading. The structure phase entails the testing the simplifying assumptions and building up a more complex structure when necessary (Chapman and Ward, 2003). Without this, project risk management will be rendered dangerously misleading. For instance, assuming that a large number of sources are independent will make their individual effects to seem to cancel out in relation to the overall effect, on a basis of “swings-and-round-abouts.’ If, in practice these effects are positively correlated, the cancelling effect will be drastically reduced, and such circumstances ought to be appreciated. Any failure to structure may also result into loss of opportunities. For instance, some responses to specific sources operate in practice as general responses in the sense that they can deal with whole sets of sources, including all sources up to that point in a project, and those sources that have not been identified. It is necessary to recognize the opportunities given by such general responses. Structuring process entails four specific tasks: Developing Orderings This task entails developing and ordering of sources and related responses for several purposes, including priorities for process and project planning, and for expository purposes. Additionally, this task is concerned with building up of priority ordering of responses that recognizes effects as well as secondary issues. Explore Interactions This tasks is concerned with reviewing as well as exploring possible interdependencies or relations between project activities, sources, other Ws, and responses, and then seeking to understand why this interdependence is the so the case. Refine Classifications This task entails the development, review of the existing issue classification, in the construct that a new response might be defined due to understanding related with an old response might be defined, and this might result into a new classification structure. Other Selective Restructuring The above three tasks might result into some insights that might require revisions to precedence relations for those activities assumed in the define phase and comparable relation adjustment in terms of other Ws. Most frameworks for risk management project do not advance an explicit, separate, and stand-alone structure. This paper attempts to introduce five-step process based on the above-articulated tasks. Consider the Activities and the Associated Issues Part of the main objective of consider the activities and the associated issues is to make sure that there is no crucial sources of precedence flexibility have been left out and that the constraints on precedence flexibility are comprehensively defined when they are crucial. A simple, but direct approach to this task requires questioning each precedence assumption, to ensure there is no potentially crucial assumptions of convenience are handled as inflexible imperatives. Consider the Other Ws and the Related Issues On top of the whichway, analogous issues may require to be dealt with for the other Ws of the project. Additionally, some basic structural linkages between the Ws usually need attention. It might be crucial to recognize formal links between project when/whichway/withwithal, and what. Build Up Responses and Other Selective Restructuring The structure phase requires development of the responses for the same reasons as for the project’s six Ws and their associated sources. Two aspects of this phase are worth highlighting: Distinguishing between general and specific responses; and ordering general and specific responses. Responses can be categorized into specific or general. Therefore, this phase involves a careful and systematic searching of all specific and general responses. As a matter of urgency, all project managers ought to ensure that they have at least one general response to deal with the combinations of sources. Build Up Diagrams The application of diagrams is a critical thing throughout the structure phase, and it helps to document and develop insights into the structuring process. Chapman and Ward (2003) argue that Gantt and precedence charts should be preferred because they both capture critical aspects of the project plan. Nevertheless, other diagrams can also be utilized in case managers want to capture a range of wider aspects. Influence Diagrams The utilization of influence diagrams is an important feature when it comes to a more versatile representation of effects and causes. One advantage of influence diagrams is that they are able to capture much more interactions, including feed forward and feedback loop impacts. Clarify Ownership Principally, ensuring that every source of uncertainty and the associated responses have an owner and manager in financial terms is considered as basic good practice. In reality, this worthy ambition is not normally achieved. An obvious reason for this scenario is a failure to effectively identify issues at the earlier stages of the project life cycle (Project Management Institute, 2013). These are the issues that later come to be associated with the sources of difficulties or loss of opportunity. Additionally, a failure to identify relations between issues that turn out to be important is the cause for concern. These are failures in the other phases of project risk management, but not failures of the actual ownership. Nevertheless, even if issues are accordingly identified and relationships between them appreciated proper management of these issues needs appropriate and effective resource allocation to those parties involved in the project. Typically, failures of risk management related with the allocation of ownership of issues seem to emerge because this activity is not explicitly recognized, or is not given enough attention. Normally, issue allocation occurs in situations where more than one party is concerned with the execution of the project (California Technology Agency, 2011). The same way as responsibilities and roles are allocated to parties involved, so is the management of the issues of uncertainty associated with the enterprise. However, the allocation of issues, and the consequent risk, can both take place by default and require not be intentional, explicit, or clearly articulated. The implications of an allocation, mainly a default allocation, may not be appreciated fully, and the way in which allocated issues are to be managed may be unapparent, if they are managed at all. These efforts are meant to provide effective and efficient issue allocation processes. Undertaking the ownership phase issue before starting the estimate phase is essential because some ownership issues ought to be attended to at that stage to mitigate them before the project moves further. Estimate Variability The estimate phase addressed in this paper is essential on the first pass, size uncertainty, and on later passes, refine uncertainty estimates. Actually, a single-pass approach utilized in the shaping phases is neither efficient nor effective. The time spent on relatively minor sources via simple response options ought to be minimized, so as spend enough time on major issues that involve complex response options (Project Management Institute, 2013). Achieving this requires a first pass with a focus on uncertainty sizing can be utilized. Estimates of uncertainty that are identified as crucial can be refined by looping back from evaluate to estimate phase. Assessment of some sources may be handled best by identifying them as conditions, with related assumptions, that intentionally avoid estimation in the usual sense. The crucial deliverable of the estimate phase is the provision of the basis upon which the understanding which sources and related responses are important. Three specific tasks are essential to providing this deliverable, as follows: Select the right issue: being the basis of a process of successive estimation for a group of issues choose the right place to commence and each successive issue based on initial estimates as well as refinement of those issues. Size the uncertainty: Give a simple numeric, and subjective probability estimate, following on the current perceptions on group or individual with the right knowledge, in sizing the uncertainty related with the issue. Refine earlier estimates: Refine the initial sizing estimate if the implication of uncertainty demands it. This can be achieved in conjunction with the refinement of the response-related decision analysis or the earlier definition of both the source and its context. Evaluate Overall Implications The evaluate phase is crucial to an effective development the insight about the nature of the project uncertainty, which is subsequently crucial to the understanding of an effective response to the management of uncertainty in an efficient manner. Based on this sense, the estimate phase is central to the understanding of the uncertainty to respond to it (Project Management Institute, 2013). The objective the evaluate phase is mixing up the results of the estimate phase in the construct of the earlier phases and then evaluating all appropriate decisions and judgments. This evaluate phase entails the synthesis of individual issue estimates, the interpretation of results, the presentation of results, and processing the decisions. The evaluate phase ought to be used to driving and developing the distinction between the two major tasks involved in the estimate phase. With this phase, the first pass can be utilized to portray the relative size of all the contributing factors and overall uncertainty. On the other hand, the second phase can be utilized to investigate and confirm the significance of crucial issues, getting additional data and pursuing further analysis of issues where necessary. Additional passes via the estimate and evaluate phases will further refine the understanding of the project risk management. The evaluate phase should be utilized under the following tasks: Selecting the right subset of issues: Managers ought to select the appropriate place to commence a each successive issue, utilizing a structure that portrays the causal structure of dependence, the most efficient storyline to supporting the case change, and the structure of the overall approach being used. Specific dependence: Managers ought to specify the level of dependence in a best manner structure. Portray the effect: Managers ought to design a presentation for overall as well as intermediate results to give insights for analysts in the first scenario, and provide useful stories for the users of the analysis as the plot of the story unfolds. Diagnose the implications: Managers ought to utilize the presentation of results to provide the insight to write the right story that supports the related decision taking. Manage Implementation The main aim of this phase is to integrate four main tasks to the general project risk management. These four tasks include manage planned actions, monitor and control, roll action plans forward, and manage crises and then get ready to respond to disasters. As indicated in figure 4, for effective results, these four tasks ought to be managed in conjunction with one basic ‘asses’ common task. Figure 4: specific tasks in the manage phase (Chapman and Ward, 2003). Conclusion Conclusively, I.T project risk management can also follow the same models outlined in the paper. As observed in the phases outlined in this paper, project risk management is a wide and comprehensive task that ought to be carefully undertaken. The models outlined are effective and if followed carefully, they will lead to effective risk project management. The onus of project risk management is down upon the managers responsible for the implementation of the projects to ensure all the above outlined phases are adhered to the letter. References Chapman, C., & Ward.,S.(2003). Project Risk Management Processes, Techniques and Insights (2nd ed.). Hoboke. John Wiley & Sons, Ltd. California Technology Agency. (2011). Information Technology Project Oversight Framework. Retrieved 14th April 2015, from,http://www.cio.ca.gov/Government/IT_Policy/pdf/SIMM_45_IT_Project_Oversight_Framework_03092011.pdf Haney, V. (2009).Top IT Project Risks And What To Do About Them. Retrieved 14th April 2015, from,http://www.vbhconsulting.com/Articles/Top%20IT%20Project%20Risks%20and%20What%20to%20do%20about%20them-3.pdf Project Management Institute. (2013). A Guide to the Project Management Body of Knowledge (5th ed.). 14 Campus Boulevard. Project Management Institute, Inc. Nae,N.(2002). Kokoro and the Agony of the Individual. Retrieved 14th April 2015, from, http://www.nucba.ac.jp/themes/s_cic@cic@nucba/pdf/njlcc042/02NAE.PDF Nehari Talet, A., Mat-Zin, R., & Houari,M. Risk Management and Information Technology Projects. Retrieved 14th April 2015, from, http://sdiwc.us/digitlib/journal_paper.php?paper=00000876.pdf Texas Tech University. (n.d). IT Project Management Practices Guide. Retrieved 14th April 2015, from, https://www.depts.ttu.edu/infotech/pmguide.pdf Verzuh, E. (2008). The Fast Forward MBA in Project Management (3rd ed.). Hoboken, NJ. John Wiley & Sons, Inc. Read More