Managing Project Quality and Risk: Lecture Review

1. Lecture 9

2. Review Lecture 8Managing Project Quality • Project quality is defined as “the degree to which a set of inherent characteristics fulfill requirements.” • Required in all stages • Less quality - Expensive • Quality Standards: ISO 9000, Sic Sigma

3. Quality planning – techniques: Cost/benefit analysis, benchmarking, Capability Maturity Model, design of experiments, cost of quality analysis. • Quality assurance: The process of ensuring that the project meets the quality standards outlined during the quality planning phase. Techniques: quality audits, process analysis. • Quality control: The monitoring of project activities in order to determine if specified quality standards are being met.

4. Lecture 9Managing Project Risk

5. Project Risk • “…an uncertain event or condition that, if it occurs, has a positive or a negative effect on a project objective.”

6. Information Systems Associated Risks • Technology and project management related • Positive • Availability of new project management tools • Negative • Rate of change in technologies • Upgrades and new releases • Assumptions computer-generated output is always correct • Formation of teams

7. Risk & Project Life Cycle • Initiation stage • Identification and selection of specific projects • Inside or outside of organization’s core competencies • Planning stage • Procurement • Unreliability of new technology delivery timeframe • Development of accurate project schedule

8. Risk & Project Life Cycle (cont.) • Execution stage • Missed scheduled delivery date • Technology upgrades • Control stage • Implementation of risk plan • Modification of project schedule • Closing stage • Acceptance of project as finished

9. Project Risk Examples • New or different project management methodologies • Different: • Cultures • Organization structures • Human resources

10. General Categories of IS Project Risk • Ongoing changes to technology • Finding, assigning, and retaining skilled personnel • Gaining user acceptance • Choosing the correct development methodology

11. Outsourcing / Offshoring • Positives: • Expanded skill set availability • Cheaper labor • Reduced requirements for non-core competencies • Negatives: • Internal resistance • Possible solutions to reduce risk: • Ensure strong upper management support • Select the right personnel • Involve managers early in the outsourcing process • Educate and reassure internal employees

12. Outsourcing / Offshoring (cont.) • Negatives (cont.): • Increased security and privacy concerns • Possible solutions to reduce risk: • Increase physical security measures • Use software event logging and monitoring tools • Intrusion detection systems and firewalls • Encryption hardware/software

13. Top Five Software Project Risks • Lack of top management commitment to the project • Failure to gain user commitment • Misunderstanding the requirements • Lack of adequate user involvement • Failure to manage end user expectations

14. Risk Management Planning • A systematic approach to planning the risk management activities of a given project

15. Risk Management Planning – Inputs • Enterprise environmental factors • Attitudes toward risk and risk tolerance • Organizational process assets • Processes in place to handle risk • Project scope statement • Defining the project • Project management plan • Project summary document

16. Risk Management Planning – Tools & Techniques • Risk planning meetings • Senior managers, project team leaders, stakeholders, project members with decision-making responsibilities • Development of specific risk management plans • Inclusion of risk-related items in budget and schedule • Creation of risk management templates

17. Risk Management Planning – Outputs • Risk Management Plan • Methodology or approach to risk management • Roles and responsibilities of project members • Risk management budget • Integration of risk management activities into project life cycle • Scoring and interpretation of risk analysis • Risk thresholds • Reporting formats • Tracking

18. Risk Identification • The process of identifying potential risks to a project and documenting them

19. Risk Identification – Inputs • Enterprise environmental factors • Organizational process assets • Project scope statement • Project management plan • Risk management plan

20. Risk Categories • Defined in a Risk Register • A formal recording of all project risks, explaining the nature of the risk and management of the risk

21. Risks

22. Risk Identification – Tools & Techniques • Documentation reviews • The review of organizational information to aid during risk identification • May include: • Project profiles (previous project information and related lessons learned) • Published information • Articles/studies/benchmarking information

23. Risk Identification – Tools & Techniques (cont.) • Information gathering techniques • Brainstorming • Delphi technique • Interviewing • Strengths, weaknesses, opportunities, and threats (SWOT) • Checklists

24. Risk Identification – Tools & Techniques (cont.) • Diagramming techniques • Cause and effect (Fishbone) • System or process flowcharts • Influence diagrams

25. Qualitative Risk Analysis • Establishment of probabilities regarding both the impact and likelihood of specific risk occurrences

26. Qualitative Risk Analysis – Inputs • Organizational process assets • Project scope statement • Risk management plan • Risk register

27. Qualitative Risk Analysis – Tools & Techniques • Risk probability and impact assessment • Probability/impact risk rating matrix • Risk data quality assessment • Risk categorization • Risk urgency assessment

28. Probability/Impact Risk Rating Matrix • A technique used to analyze project risk in terms of its probability of occurrence and its impact on project outcomes

29. Risk Data Quality Assessment • Assessment of the quality of the data used to assess risk • May include: • Extent to which a risk is understood • Available risk data • Data quality • Data integrity and reliability

30. Qualitative Risk Analysis – Outputs • Updated risk register

31. Quantitative Risk Analysis • Analysis of the probability of occurrence and impact of risk on project objectives using numerical techniques

32. Quantitative Risk Analysis – Inputs • Organization process assets • Project scope statement • Risk management plan • Risk register • Project management plan

33. Quantitative Risk Analysis – Tools & Techniques • Data gathering through interviewing • Quantitative procedures • Sensitivity analysis • Technique used to examine the potential impact of specific risks to a project (Tornado analysis) • Decision tree analysis • Diagramming technique used to evaluate courses of action in terms of their potential cost and benefits relative to other courses of action

34. Quantitative Risk Analysis – Tools & Techniques (cont.) • Expected monetary value analysis (EMV) • Statistical technique which captures the average value of potential projects by analyzing the likelihood of possible project outcomes as well as each outcome’s financial consequences • Simulation • Statistical technique where what-if analyzes are run to determine the impact of a given situation on a project objective (Monte Carlo)

35. Tornado Analysis

36. Expected Monetary Value + Decision Tree Analysis

37. Quantitative Risk Analysis – Outputs • Updated risk register

38. Risk Response Planning • The process of developing methods for responding to project risks

39. Risk Response Planning – Inputs • Risk management plan • Risk register

40. Risk Response Planning – Tools & Techniques • Avoidance • Identified risks are avoided through a different course of action • Transference • Transfer of risk to another party through the use of contracts • Mitigation • Steps are taken to reduce the occurrence or impact of stated risks • Acceptance • Risks are accepted and contingency strategies are planned

41. Risk Response Planning – Outputs • Updates to: • Risk register • Project management plan • Risk-related contractual agreements

42. Risk Response Plan Contents(Project Management Institute) • Any risks that have been identified along with a description and the areas and objectives the identified risk may affect • The roles and responsibilities of any risk owners • Qualitative and quantitative risk analysis results as well as any trends identified during either of these processes • A description of the risk response strategies including avoidance, transference, mitigation, and acceptance, and the risk that the strategies will be applied to • An acknowledgement of any residual risk projected to remain after any risk response strategies have been applied • A list of actions to be used to implement the risk response strategies • Budget and schedule information in terms of risk response • Any contingency plans used as part of an active response to accept risks

43. Additional Risk Terms • Residual risks • Any risks remaining after risk response strategies have been applied • Secondary risks • Any risks resulting from the application of a risk response strategy • Contractual agreements • Any contracts for the purpose of risk transference during the project

44. Risk Monitoring & Control • The process of monitoring identified risks for change and controlling those changes

45. Questions?