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SPM lecture 22 -

The document discusses the importance of project risk management in software projects, emphasizing the need to identify, assess, and manage risks to improve project outcomes. It outlines the processes involved in risk management, including planning, identifying, analyzing, and responding to risks, while also categorizing risks into various types such as technical, schedule, and resource risks. The document highlights the benefits of effective risk management, such as minimizing negative impacts and enhancing project success.

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3 views

SPM lecture 22 -

The document discusses the importance of project risk management in software projects, emphasizing the need to identify, assess, and manage risks to improve project outcomes. It outlines the processes involved in risk management, including planning, identifying, analyzing, and responding to risks, while also categorizing risks into various types such as technical, schedule, and resource risks. The document highlights the benefits of effective risk management, such as minimizing negative impacts and enhancing project success.

Uploaded by

mediasales345
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Course Name: Software Project Management

Course Code: SESM-470

Semester: [BSCS-7] Credit hours: [3+0]

Presented by: Hina Mehjabeen

Week 13: The Importance of Project Risk Management, Planning Risk Management,
Identifying Risks

The Importance of Project Risk Management


Risk management in software projects involves identifying, assessing, and managing
potential risks that could impact the project's success. Risks can arise from various
sources and affect different aspects of the project, including technical feasibility,
scheduling, resources, and external factors. Effective risk management helps in
minimizing negative impacts on project outcomes.

 Benefits:
o Improves project selection, scope determination, schedules, and cost
estimates.
o Involves team members in understanding project strengths and
weaknesses.
o Leads to fewer crises and quicker problem resolutions.
 Key Observations:
o Risk management is often unnoticed compared to crisis management but
is crucial for project success.
o PMI introduced the Risk Management Professional (PMI-RMP)
credential in 2008.
 Industry Studies:
o Research by Ibbs & Kwak (38 organizations): Risk management had
the lowest maturity score among project management areas (<3 out of
5).
o Mauritius survey (software companies): Risk management had the
lowest average maturity score (1.84 out of 5).
o Link between low maturity in risk management and higher project
failure rates.
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 Benefits of Risk Management (KLCI Research Survey):


o Anticipates and avoids problems (80%).
o Reduces surprises, schedule slips, and cost overruns.
o Improves negotiations and meeting customer commitments.
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Understanding Risk

Risk involves uncertainty that could have negative (threats) or positive


(opportunities) effects on a project.

 Risk Utility Theory:


o Risk-Averse: Prefers certainty, avoids high-stake decisions.
o Risk-Seeking: Embraces uncertainty for potentially higher payoffs.
o Risk-Neutral: Balances risk and reward, makes decisions based on
multiple factors.
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Project Risk Management Goals

 Minimize negative risks and maximize positive opportunities.


 Address both known risks (identified and analyzed) and unknown risks
(unpredictable).
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Processes in Project Risk Management


Project Risk Management involves identifying, analyzing, and addressing risks
throughout a project's lifecycle to minimize threats and maximize opportunities.

1. Planning Risk Management: Determines how to approach, plan, and document


risk management for a project.

2. Identifying Risks: Identifies potential risks and documents their characteristics.

3. Performing Qualitative Risk Analysis: Prioritizes risks based on their probability


and impact.

4. Performing Quantitative Risk Analysis: Numerically evaluates the impact of


identified risks on project objectives.

5. Planning Risk Responses: Develops strategies to enhance opportunities and


reduce threats.

6. Implementing Risk Responses: Executes agreed-upon risk response plans.

7. Monitoring Risks: Tracks identified risks, monitors residual risks, and identifies
new risks throughout the project.
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Planning Risk Management


Risk Management planning determines how to approach, plan, and document risk
management for a project.

 Inputs:
o Project Charter: Defines initial high-level risks and objectives.
o Project Management Plan: Includes all baseline and subsidiary plans.
o Enterprise Environmental Factors (EEFs): External factors like risk
tolerance.
o Organizational Process Assets (OPAs): Policies, templates, and past
project lessons.
 Tools & Techniques:
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o Expert Judgment: Leverages experience from stakeholders and


specialists.
o Data Analysis: Includes stakeholder analysis to understand risk
tolerance.
o Meetings: Facilitates brainstorming and collaboration among project
teams.
 Outputs:
o Risk Management Plan: Documents the framework for managing
project risks.

Identifying Risks
The process of identifying risks involves discovering potential events or conditions
that may affect a project positively or negatively.

Inputs:

 Project Management Plan (risk management plan, scope baseline, schedule


baseline, cost baseline)
 Project Documents (assumption log, cost estimates, duration estimates,
stakeholder register, issue log)
 Agreements (contracts with suppliers or vendors)
 Enterprise Environmental Factors (EEFs) (market conditions,
organizational culture)
 Organizational Process Assets (OPAs) (lessons learned repository, risk
templates)

Tools & Techniques:

 Document Analysis: Reviewing project documents to identify potential risks.


 Information-Gathering Techniques:
o Brainstorming: Generating a comprehensive list of risks through team
discussions.
o Delphi Technique: Gaining consensus from a panel of experts
anonymously.
o Interviewing: Asking experienced individuals about potential risks.
o SWOT Analysis: Identifying strengths, weaknesses, opportunities, and
threats.
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o Root Cause Analysis: Analyzing the underlying causes of identified


risks.
 Checklist Analysis: Using a predefined checklist to identify risks.
 Assumptions and Constraints Analysis: Examining project assumptions and
constraints for potential risks.
 Expert Judgment: Consulting experts with specific knowledge or experience.
 Meetings: Collaborating with stakeholders and team members to identify risks.

Outputs:

 Risk Register: A document containing a list of identified risks with their


details (e.g., description, root cause, triggers, potential responses).
 Risk Report: A summary of overall project risks, their sources, and key
metrics.
 Project Document Updates: Updates to the assumption log, issue log, and
lessons learned repository.

Types/Identification of Risks
Once risks are identified, they should be categorized into appropriate types. This
categorization helps in understanding the nature of the risk and selecting appropriate
mitigation strategies.

Common Risk Categories/Types:

1. Technical Risks:
o Risks related to technology, software tools, platforms, or design
complexity.
o Examples: Software defects, integration issues, technology failure.
2. Schedule Risks:
o Risks related to delays or changes in the project schedule.
o Examples: Unclear deadlines, resource availability, dependency delays.
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3. Resource Risks:
o Risks related to the availability and capability of project resources.
o Examples: Shortage of skilled personnel, equipment failure, high team
turnover.
4. Regulatory Risks:
o Risks arising from legal or regulatory compliance issues.
o Examples: Changing laws, new industry regulations, compliance with
standards.
5. Operational Risks:
o Risks related to the operational environment or organizational processes.
o Examples: Process inefficiencies, communication breakdowns,
ineffective project management.
6. Market Risks:
o Risks related to changes in the market environment, such as customer
preferences, competition, or economic conditions.
o Examples: Shifts in market demand, competition from new products,
changes in customer needs.
7. Security Risks:
o Risks related to the confidentiality, integrity, and availability of project
data.
o Examples: Data breaches, cyberattacks, unauthorized access to sensitive
information.

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