Risk Analysis

1
Risk Analysis

• Based on E.M. Bennatan, On Time, Within Budget.
  John Wiley Sons, 1995.

2
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.

3
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.

4
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

5
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)

6
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.

7
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 problems 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.

8
Estimate Probability and Impact.
9
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.

10
Identify Contingency Plans.
11
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!

12
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