Complex Project and Risk Management - Essay Example

RISK MANAGEMENT Introduction Software is a critical component of business or organization; its significance grows with the progresses in technology. Hence, software development is among the activities that are connected with a high level of knowledge and advanced technology; therefore, its development phases of the project face uncertainty manifested in the risk materialization. The risk involved is directly connected with the scale of success in software development that is, the project risks have to be mitigated successfully prior to software development project completion. The need for software is competitive and comparable; hence advanced software development solutions are required in the shortest time possible; a process that is associated with high risks. Many aspects of software development are influenced by the amount risks that could trigger the project’s failure; risk is like the price of opportunity that is, projects with increased numbers of risks have opportunities on the World’s software market given that the project is finished on time and within budgeted or planned expenses. The utilization of advanced or unproven technologies on the software development projects increases the number of risks (Wysocki, 2013). Risk management should take part in every part of the software development projects and the successful risk mitigation results into successful software development; additionally, well-implemented management on risks processes increase enterprises’ opportunities on the World’s software market whereby the software development processes, for instance, the Unified Process, illustrate risk management as any activity carried on development projects, the limitation is that they do not demonstrate strategies to utilized in risk management at the different levels of project development. Risks The World’s market needs software with additional or new capabilities and features that are developed in small planned periods. The World’s software market requires new levels of quality, usability, performance, and reliability from the software solutions. Development of software in regards to the market conditions is hard and further connected to high risks levels. Software development and engineering involve technology and knowledge; hence, risks influence the success or failure of the development program (Hopkin, 2012). A risk is defined as the degree of probability compromising the failure or success of the software development projects (Olson and Wu, 2010). Risks determine all the probabilities that software development projects experience in inadmissible or unwanted circumstances, for example, delays in schedule, termination, ad overrun of the development resources. Risk involves the possibilities of suffering loss from the project’s impacts; this could poor or inferior quality of the software solutions, failure, increased costs or delayed completion (McNeil, Frey and Embrechts, 2010). Software development risks are categorized under five impact areas: Software system’s requirements; utilization of new or unproven technologies; the software system architecture; non-functional and organizational area; and the software system performance (Kerzner, 2013). The improper utilization of new technologies eventually leads to project failure. The main problem associated with the use of new technologies is knowledge; development team must possess sufficient knowledge in order to implement the new technologies and efficiently exploit the technological features; the technological features should be predicted at the commencement of the project, and prototypes prove the predictions (Kloppenborg, 2011). The second vital risk impact area is associated with the software requirements; these terms for all users’ requirements concerning software system’s functionality or quality of service. Software solution designed up to the user expectations must incorporate a development team that looks at the whole set of user needs or requirements; both functional and non-functional features (Khan and Zsidisin, 2012). The third vital risk impact area concerns the architecture of the software solutions. Software architecture is set of critical decisions about the enterprise or organization and the components of the software solution; these are defined at the early software development phases for quality software solution development, and are defined by the requirements. The fourth risk impact area is non-functional and the organizational area. The risks associated with this field are known as the organizational problems or problems associated with the project schedule and resources (Roberts, 2011). Organizational difficulties affect the development and the realization of software solutions because an efficient organization in software development processes amounts to successful development project. A structured project schedule might turn into a risk since there are numerous unwanted events that would cause delays in the software development and realization; therefore it is an obligation of management in defining project schedule for both developers’ and customer’s satisfaction. Managers should fulfil the structured project deadlines, given that project resources are sufficient; this implies that the development project should have the right number project members with the required competencies and the stipulated resources for the structured or planned completion. The fifth risk area is associated with the software system performance; this is tested only on the real and the realized software solutions. This prompts to the necessity of making predictions about the performances of the software system at the early developmental phases; the predictions assist in the possible development of software solutions that satisfy functional requirements or parameters, but it is sluggish in fulfilling performance requirements. Therefore, the development team, with expertise in specific technologies are required to catty the performance assumptions and predictions (Christoffersen, 2012). Based on the risk’s impact type and area, the above-mentioned risks can be restricted, avoided, mitigated or monitored; hence, the best way of addressing these risks is by avoiding them. Numerous risks can be completely averted or avoided by the utilization of different technologies, making changes to project plans or requirements. The next appropriate way of addressing these risks associated with the projects is by confining them. Risks can be confined to restrict the risks’ impact area on affecting only a lesser part of the development project. Some risks might be mitigated via the realization of the software prototype in predicting and trying the risks; finding out if or not they will materialize. In cases that risks cannot be mitigated, they have to be constantly monitored by tracking their materialization; contingency plans have to be done in defining activities that should be taken to materialize. Addressing the risks is also time-consuming; hence, it takes time when changing project plans for avoiding risks and prototyping; it is prudent for project manager in dividing risks into categories by priorities and planning software development on the risk priorities. Risk Management The solution to risk management is both the identification and mitigation of possible and accumulated true risks or developing a contingency plan to mitigate potential risk that might turn into reality. The risk management or risk mitigation processes are associated with prevention of losses incurred in software development processes. Risk management ought to focus on reduction and the prevention of risks. Risk management must assess the possible problems present in development project regularly and single out potential risks that are important to remove and implementing strategies for dealing with the risks. The first and vital step in risk definition is usually the risk identification that accounts for the recognizing potential losses and possible causes. Risk assessments ought to determine the level or limit of exposure to the possible or potential loss emanating from the risk materialization. Mitigation step is concerned with the creation or formulation of the risk avoidance plans while the conclusive step formulates the execution of risk mitigation or avoidance plans. The said steps lead to a thorough description of total risks that are to be captured in the document known as the ‘Risk List’. The document contain all possible and actual risks with their description of consequence, definition, likelihood, indicators, risk ranking, risk mitigation strategies and contagious plan for the possible risks on the development project (Schmidt, 2009). Risk management has to start with risk definition or identification, in order discover or single out factors that might lead to project’s failure. Majority the crucial factors have a direct linkage to the technology utilized in the project; the software planning and development process; and the team organizational factors. The said areas have to be observed and thoroughly assessed for the capturing all of the potential risks found in the project; therefore it is important to capture or extract all details in connection with the discovered risk, for example the risk descriptions, probability it occurring, costs associated with materialized risks and the possible risk avoidance and solutions strategies (Marchetti, 2012). The next step in the risk management processes involves the assessment of the level of exposure to individual risks. This step entails the discovery of risks in ranked levels of the risk impact; risks have to be classified by the level effects or degree of impact to ensure that important risks are chosen for first a solution. Risks characterized by the devastating impacts have to assess and addressed prior to the risks characterized by low impacts; it important since risks with characterized with huge impacts have to be considered in the early development phases due to the costs linked to risk materialization and that of project failure are smaller as compared to the later development phases. After the risk assessment, the risk mitigation is the third step in a proper risk management process. Mitigation of risks is trying to prevent or avoid the consequences of the risk materialization; the process involves three principal strategies in the mitigation process: risk reduction, risk avoidance, and risk transferring. Risk avoidance emanates as the best answer towards risk materialization, but it is difficult at times to avoid the risks. The only way of avoiding risks entails complete reorganization the software development project or program; sometimes it is impossible; in a scenario where risks unavoidable, they can be transferred or reduced. Risk reduction is concerned with re-planning of the project to reduce the risk’s probability occurring. Risk transfer is termed as the project reorganization strategies that forward the risks to areas that would lead to less damage. The final step is the risk conclusion that is defined by looking at all risk mitigation plans and is inclusive of the necessary that are required in the risk avoidance. The actions adopted at the conclusion stage should be well defined in the project’s contingency plan; the project’s contingency plan has to describe actions taken in case risks turn out into reality. Strategies for Risk Management There are three management strategies utilized in the project development depending on amount or level of risk; typical, careful, and flexible. The Careful strategy is meant for inexperienced or fresh organizations that are new or unproven technology. Experienced software developers using defined or proven technologies utilize the flexible strategy. The mature software development firms with more experience in the software development utilize typical strategy. The careful risk management strategies are to be utilized in the state of the art development projects that completely unknown to the team or organization. The said strategy should be utilized in a software development projects that are characterized by new technology, high acceptable risks, and inexperienced people; the strategy is described as the highest priority risk management. The risks during or on software development projects are avoided through the careful management strategy, and they are taken with utmost priority or importance. The strategy entails rigorous risk analysis at multiple or different levels; risks are traced and analysed by a team, individuals, and at the organizational levels (Meredith and Mantel, 2012). For successful implementation of strategies towards the management of the risks, an organization has to define the risk management roles properly in terms of the software development project, that is, there must be project members whose major activities or objective relates to risk management (Chew, 2008). An organization should also define the risk’s interpretations or ranking policies; assisting towards the separation of important and unimportant risks for the addressing of important risks sooner. The careful management strategy is presented as in Fig. 1 using the UML (the Unified Modelling Language) Activities Diagram. Figure 1. Activities of careful risk management strategy(Borghesi, Gaudenzi and Borghesi, 2013). The careful strategy always the risks to guide the software development processes in order to address the important risks early; this because small amounts of risks influence the project’s plans, and hence should be stable if and if sporadically changed. Conclusion Proposed careful strategy is the resultant of the theoretical study carried on real experiences or activities from the software development projects and programs at the Ericsson Nikola Tesla. The activities defined in the strategy are from the experiences during the development of the IP Telex; a telecom exchange project solution relying on a common computer platform. From the global organizational perspective, success of numerous organizations is dependent on the failure or success of the software they develop or build. There, risk management is a vital development practice and an important business practice. References Borghesi, A., Gaudenzi, B. and Borghesi, A. (2013). Risk management. Milan: Springer. Chew, D. (2008). Corporate risk management. New York: Columbia University Press. Christoffersen, P. (2012). Elements of financial risk management. Amsterdam: Academic Press. Dinsmore, P. and Cabanis-Brewin, J. (2011). The AMA handbook of project management. New York: American Management Association. Hopkin, P. (2012). Fundamentals of risk management. London: Kogan Page. Kerzner, H. (2013). Project management. Hoboken, New Jersey: John Wiley & Sons, Inc. Khan, O. and Zsidisin, G. (2012). Handbook for supply chain risk management. Ft. Lauderdale, Fla.: J. Ross Pub. Kloppenborg, T. (2011). Contemporary Project Management. Place: South-Western College Pub. Marchetti, A. (2012). Enterprise risk management best practices. Hoboken, N.J.: Wiley. McNeil, A., Frey, R. and Embrechts, P. (2010). Quantitative Risk Management. Princeton: Princeton University Press. Meredith, J. and Mantel, S. (2012). Project management. Hoboken, NJ: Wiley. Olson, D. and Wu, D. (2010). Enterprise risk management models. Heidelberg: Springer. Roberts, P. (2011). Effective project management. London, UK: Kogan Page. Schmidt, T. (2009). Strategic project management made simple. Hoboken, N.J.: John Wiley & Sons. Wysocki, R. (2013). Effective software project management. Hoboken, N.J.: Wiley PART B Activity Optimistic Duration(O) Most likely(M) Pessimistic(P) Expected Variance A 4 6 10 6 1.00 B 3 3 7 4 0.44 C 4 5 9 6 0.69 D 2 6 9 6 1.36 E 5 7 10 7 0.69 F 4 4 7 5 0.25 G 3 3 8 4 0.69 H 3 4 7 4 0.44 I 3 4 8 5 0.69 J 3 4 7 4 0.44 K 4 4 7 5 0.25 L 1 4 7 4 1.00 M 4 5 11 6 1.36 N 9 10 15 11 1.00 O 7 8 11 8 0.44 The expected duration= (4M+O+P)/6 Variance =(P-O)2/36 Critical Activities The critical path is B-F-J-N; since it forms a continuous path via the network. There expected duration time is 4+5+4+11=24, and projected variance is 0.44+0.25+0.44+1.00=1.14  =1.07 The project has (24-23)/1.07= 0.94 standard deviations Probability for completing before 23 months = 1-0.1762=0.8238 Probability of the project being completed after 22 months is (24-22)/1.07= 1.87 standard deviations Probability for completing before 22 months= 1-0.0307=0.9693 From the analysis, most the activities are flexible in their timing, for example activity A can begin as early as the first week or as late as week 24, while activity H can begin as early as week 6 or as late as week 24; the trend is similar for C, D, E, G, I,K, L, M, and O. Other activities are not flexible for example B, F,J and N since their latest start time is equal or the similar to their earliest starting time. Hence the activities have to be carried out at fixed time periods are the critical activities, so B, F, J and N are critical activities. Read More