Project Risk Management. Learning Objectives. Understand what risk is and the importance of good project risk management. Discuss the elements involved in risk management planning and the contents of a risk management plan. List common sources of risks in information technology projects.
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*Cole, Andy, “Runaway Projects—Cause and Effects,” Software World, Vol. 26, no. 3, pp. 3–5 (1995).
KEY: 1 = LOWEST MATURITY RATING 5 = HIGHEST MATURITY RATING
*Ibbs, C. William and Young Hoon Kwak. “Assessing Project Management Maturity,”
Project Management Journal (March 2000).
*Kulik, Peter and Catherine Weber, “Software Risk Management Practices – 2001,” KLCI Research Group (August 2001).
Project Risk Management (Page 1 of 3)
Project Risk Management (Page 2 of 3)
Project Risk Management (Page 3 of 3)
1. Personnel Shortfalls
2. Unrealistic schedules and budgets
3. Developing the wrong software functions
4. Developing the wrong user interface
5. Gold plating
6. Continuing stream of requirements changes
7. Shortfalls in externally performed tasks
8. Shortfalls in externally furnished components
9. Real-time performance shortfalls
10. Straining computer science capabilitiesTop Ten Risk Items
Life Cycle and
Data Exchange Accuracy
Services, Plant, Materials:
Ref: Project and Program Risk Management, Wideman
Pr (Event #1) x Pr (Event #2) = Pr (Both Events)
P(t) = P(A) * P(B)
0.70 X 0.80 = 0.56 OR 56%
Note: This applies to independent events only
(a + ml + b) / 3
Median < Mean
Median = Mean
Median > Mean
Standard deviation = sum of the variances
Probability of Scope = 0.70
Probability of No Scope = 0.30
Probability of Approval = 0.80
Probability of No Approval = 0.20
Pr(Scope) x Pr(Approval) = 0.70 x 0.80 = 0.56
Pr(Scope) x Pr(No Approval) = 0.70 x 0.20 = 0.14
Pr(No Scope) x Pr(Approval) = 0.30 x 0.80 = 0.24
Pr(No Scope) x Pr(No Approval) = 0.30 x 0.20 = 0.06
Practical Application - Decision Tree Analysis
NOTE: The probability of both scope and approval is 56% (smaller than one would have thought with .7 and .8)
*Iosub, John C., “What the Sarbanes-Oxley Act Means for IT Managers,” TechRepublic,
(March 19, 2003) (http://techrepublic.com.com/5100-6313-5034345.html).