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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.

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### 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”

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