Every project is associated with some risks. To presume that a project is invulnerable to risks or that and you have it all covered is unrealistic and potentially expensive. With project risk management brought into every phase of software development, you can assess risks, analyze impact, and finally eliminate or minimize their effect on the whole project.
What exactly is project risk though? According to Larry Krantz, Chief Executive of Euro Log Ltd., UK, ‘A risk is a combination of constraint and uncertainty.’ That’s a very apt definition. All project teams work under constraints tied to the client’s requirements, supporting infrastructure, and even their own environment. However much you may try to work around these constraints, it’s not really possible. Instead, you should focus on project uncertainties. Even then, you cannot achieve a zero risk state. You can, however, prepare for and manage risk more effectively.
Making Project Risk Management part of approach
There is huge pressure on developers and executives to over-achieve in today’s competition. In a bid to accelerate time-to-market, project managers often sideline project risk management. Either risk assessment is not carried out at all or if it is, not much is done about them. Then when risk takes a toll, things fall apart, leaving you with a big hole in your pocket and a dent in your reputation.
Another incentive for carrying out project risk management is the discovery of opportunities. Just like you can discover possible loopholes, you could also discover avenues that add value to the project and the customer relationship.
What makes Project Risk Management effective?
Communication between teams and project managers is critical to the early discovery of risks. Project meetings should include some time for ‘risk storming’ – identifying risks (via interviews, meetings, study of documentation, consultations with industry or project experts, etc.), analyzing risks (their effect in terms of cost, time, performance or not meeting users’ requirement), and prioritizing risks (deal breakers have to be eliminated totally, some risks require management’s attention, minor risks can be ignored, etc.).
Once risks are identified and assessed, you need to assign ownership. That’s not always comfortable for people but it makes sure they take risk management seriously. On the flip side, the risk owner also gets credit when she discovers opportunities with a high pay-off.
You also need to work on a risk recovery plan. You have three choices – risk avoidance, risk minimization, and risk acceptance. If the cause of risk is something that can be changed without impacting the whole project, you can remove the risk. If the risk is very severe, you could even throw in the towel rather than pursuing a doomed project. You can minimize risk by controlling the causative factors or reducing the negative effects of it. Low severity risks can be accepted if influencing them is too expensive, time-consuming or resource-intensive.
Maintain a risk log to track risks, ownership and risk mitigation actions. Analyze it on an ongoing basis during the project to accommodate changes as and when required, and use learnings to implement improvements in the project risk management plan.
That’s the secret sauce to customer trust and project success.
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