SIX: Project Risk Management
Dealing With The Unknown
You have come a long way, all the way up to this chapter. I have discussed expectations, estimations and anticipations withing a project. I tried to make it sound as good as possible, but let's face it, it's all vague stuff. You have to think about how someone else thinks, and base your complete approach on that assessment. We handled requirements, and stated that it's best to assume that they are wrong and will change anyway. It, it's like flipping a coin or laying cards.
Software project management cannot be performed without a good practice to handle all these unknown parameters. A project manager has to be able to live with uncertainties, and have a good way to structure his approach to handle them. The first is a personal aspect, which you have to do all by yourself. The latter is where "project risk management" comes in…
"Project risk management focuses the project manager's attention on those portions of the project most likely to cause trouble and to compromise participants' win conditions." [Boehm,1989 ]
So, in other words, it's a set of actions which helps the project manager structure his approach on dealing with the unknown or the "things not sure".
"… we define risk as the possibility of loss. We obtain an instance of risk by specifying values for the risk attributes of probability (the possibility) and consequence (the loss). Probability is the likelihood that the consequence will occur. Consequence is the effect of an unsatisfactory outcome." (Hall, 1998)
So, the idea is to specify explicitly the items that you are not sure about and define what will happen if what is expected (or assumed) is not true.
If you are not sure about the estimate ending of a certain task, you can define the risk for this situation as follows: delay of the actual end of the activity * very likely to happen. What the consequences and advantages are of this approach, is the subject of this section.
Risk is not a bad thing
The problem with risk management is the negative image of the word "risk". Of course, unless there is a potential for loss, there is no risk. The loss can be either a bad outcome or a lost opportunity. The tendency of most stakeholders is to jump very stressfully at the statement "this is a risk". Therefore most of the time it's not very easy to discuss about risks, because that's always a conversation about problems. It's very important the risk is not perceived as a bad thing, but as a positive attitude to make sure everyone will become a winner in the end.
Remember, risk management helps you being aware of the goals you have to achieve, and what can happen if you don't satisfy the goals. It supports you in making the right choices!
So, risk is not a bad thing! Say it loud! Spread the word!
Related links