Information Management Technology Questionnaire by qfs64700

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									       HIT241 - RISK MANAGEMENT
       Introduction
       Project risk management is the art and science
       of identifying, assigning, and responding to risk
       throughout the life of a project and in the best
       interests of meeting project objectives.
       Risk management is often overlooked on
       projects, but it can help improve project
       success by helping select good projects,
       determining project scope, and developing
       realistic estimates.


CDU – School of Information Technology       Risk Management - Slide 1
       HIT241 - RISK MANAGEMENT
       What is Risk?
       A dictionary definition of risk is “the possibility
       of loss or injury”.
       Project risk involves understanding potential
       problems that might occur on the project and
       how they might impede project success.
              Risk management is like a form of
                insurance; it is an investment.




CDU – School of Information Technology           Risk Management - Slide 2
       HIT241 - RISK MANAGEMENT
       Risks & Opportunities




                         Try to balance risks and opportunities


       Risks                                               Opportunities
CDU – School of Information Technology                       Risk Management - Slide 3
       HIT241 - RISK MANAGEMENT
       Risk Utility
       Risk utility or risk tolerance is the amount of
       satisfaction or pleasure received from a potential
       payoff:
         Utility rises at a decreasing rate for a person

          who is risk-averse.
         Those who are risk-seeking have a higher

          tolerance for risk and their satisfaction
          increases when more payoff is at stake.
         The risk neutral approach achieves a balance

          between risk and payoff.
CDU – School of Information Technology       Risk Management - Slide 4
       HIT241 - RISK MANAGEMENT
       Risk Utility Function & Risk Preference




CDU – School of Information Technology   Risk Management - Slide 5
       HIT241 - RISK MANAGEMENT
       What is Project Risk Management?
       The goal of project risk management is to minimize
       potential risks while maximizing potential
       opportunities. Major processes include:
         Risk identification: determining which risks are likely

          to affect a project.
         Risk quantification: evaluating risks to assess the

          range of possible project outcomes.
         Risk response development: taking steps to enhance

          opportunities and developing responses to threats.
         Risk response control: responding to risks over the

          course of the project.

CDU – School of Information Technology             Risk Management - Slide 6
       HIT241 - RISK MANAGEMENT
       Common Sources of Risk on IT Projects
       Several studies show that IT projects share
       some common sources of risk.
       The Standish Group developed an IT success
       potential scoring sheet based on potential risks.
       McFarlan developed a risk questionnaire to
       help assess risk.
       Other broad categories of risk help identify
       potential risks.



CDU – School of Information Technology        Risk Management - Slide 7
       HIT241 - RISK MANAGEMENT
       IT Success Potential Scoring Sheet
        Success Criterion                 Points
        User Involvement                  19       Standish Group
        Executive Management support      16
        Clear Statement of Requirements   15
        Proper Planning                   11
        Realistic Expectations            10
        Smaller Project Milestones        9
        Competent Staff                   8
        Ownership                         6
        Clear Visions and Objectives      3
        Hard-Working, Focused Staff       3
         Total                            100
CDU – School of Information Technology                 Risk Management - Slide 8
                                         1.   What is the project estimate in calendar (elapsed) time?
                                              ( ) 12 months or less                 Low = 1 point
     HIT241 - RISK                            ( ) 13 months to 24 months            Medium = 2 points
     MANAGEMENT                               ( ) Over 24 months                    High = 3 points
                                         2.   What is the estimated number of person days for the system?

     McFarlan’s
                                              ( ) 12 to 375                         Low = 1 point
                                              ( ) 375 to 1875                       Medium = 2 points

     Risk                                     ( ) 1875 to 3750                      Medium = 3 points
                                              ( ) Over 3750                         High = 4 points
     Questionnaire                       3.   Number of departments involved (excluding IT)
                                              ( ) One                               Low = 1 point
                                              ( ) Two                               Medium = 2 points
                                              ( ) Three or more                     High = 3 points
                                         4.   Is additional hardware required for the project?
                                              ( ) None                              Low = 0 points
                                              ( ) Central processor type change     Low = 1 point
                                              ( ) Peripheral/storage device changes Low = 1
                                              ( ) Terminals                         Med = 2
                                              ( ) Change of platform, for example High = 3
                                              PCs replacing mainframes

CDU – School of Information Technology                                            Risk Management - Slide 9
         HIT241 - RISK MANAGEMENT
         Market, Financial, & Technology Risk
         Market risk: Will the new product be useful to
         the organisation or marketable to others? Will
         users accept and use the product or service?
         Financial risk: Can the organisation afford to
         undertake the project? Is this project the best
         way to use the company’s financial resources?
         Technology risk: Is the project technically
         feasible? Could the technology be obsolete
         before a useful product can be produced?


CDU – School of Information Technology       Risk Management - Slide 10
       HIT241 - RISK MANAGEMENT
       Risk Identification
       Risk identification is the process of
       understanding what potential unsatisfactory
       outcomes are associated with a particular
       project.
       Several risk identification tools include:
           Checklists,
           Flowcharts, and
           Interviews.


CDU – School of Information Technology      Risk Management - Slide 11
       HIT241 - RISK MANAGEMENT
       Potential Risk Conditions & Knowledge Area
         Knowledge Area        Risk Conditions
         Integration           Inadequate planning; poor resource allocation; poor integration
                               management; lack of post-project review
         Scope                 Poor definition of scope or work packages; incomplete definition
                               of quality requirements; inadequate scope control
         Time                  Errors in estimating time or resource availability; poor allocation
                               and management of float; early release of competitive products
         Cost                  Estimating errors; inadequate productivity, cost, change, or
                               contingency control; poor maintenance, security, purchasing, etc.
         Quality               Poor attitude toward quality; substandard
                               design/materials/workmanship; inadequate quality assurance
                               program
         Human Resources       Poor conflict management; poor project organization and
                               definition of responsibilities; absence of leadership
         Communications        Carelessness in planning or communicating; lack of consultation
                               with key stakeholders
         Risk                  Ignoring risk; unclear assignment of risk; poor insurance
                               management
         Procurement           Unenforceable conditions or contract clauses; adversarial relations
CDU – School of Information Technology                                            Risk Management - Slide 12
       HIT241 - RISK MANAGEMENT
       Risk Quantification
          Risk quantification or risk analysis is the process of
          evaluating risks to assess the range of possible project
          outcomes.
          It determines the risk’s probability of occurrence and
          its impact to the project if the risk does occur.
          Risk quantification techniques include:
             Expected monetary value analysis,

             Calculation of risk factors,

             PERT estimations,

             Simulations, and

             Expert judgment.


CDU – School of Information Technology               Risk Management - Slide 13
       HIT241 - RISK MANAGEMENT
       Expected Monetary Value (EMV)




CDU – School of Information Technology   Risk Management - Slide 14
     HIT241 - RISK MANAGEMENT
     Chart Showing High-, Medium-, and Low-Risk Technologies




CDU – School of Information Technology       Risk Management - Slide 15
       HIT241 - RISK MANAGEMENT
       Simulation for Risk Analysis
       Simulation uses a representation or model of a
       system to analyze the expected behavior or
       performance of the system.
       Monte Carlo analysis simulates a model’s
       outcome many time to provide a statistical
       distribution of the calculated results.




CDU – School of Information Technology     Risk Management - Slide 16
       HIT241 - RISK MANAGEMENT
       Expert Judgment
       Many organisations rely on the intuitive feelings
       and past experience of experts to help identify
       potential project risks.
       The Delphi method is a technique for deriving
       a consensus among a panel of experts to
       make predictions about future developments.




CDU – School of Information Technology        Risk Management - Slide 17
       HIT241 - RISK MANAGEMENT
       Risk Response Development
       Risk avoidance: eliminating a specific threat or
       risk, usually by eliminating its causes.
       Risk acceptance: accepting the consequences
       should a risk occur.
       Risk mitigation: reducing the impact of a risk
       event by reducing the probability of its occurrence.




CDU – School of Information Technology        Risk Management - Slide 18
       HIT241 - RISK MANAGEMENT
       General Risk Mitigation Strategies
      Technical Risks                    Cost Risks                    Schedule Risks
      Emphasize team support             Increase the frequency of     Increase the frequency of
      and avoid stand alone              project monitoring            project monitoring
      project structure
      Increase project manager           Use WBS and PERT/CPM          Use WBS and PERT/CPM
      authority
      Improve problem handling           Improve communication,        Select the most experienced
      and communication                  project goals understanding   project manager
                                         and team support
      Increase the frequency of          Increase project manager
      project monitoring                 authority
      Use WBS and PERT/CPM

      General Risk Mitigation Strategies for Technical, Cost, and Schedule Risks


CDU – School of Information Technology                                       Risk Management - Slide 19
       HIT241 - RISK MANAGEMENT
       Risk and Contingency
       A risk management plan documents the
       procedures for managing risk throughout the
       project.
       Contingency plans are predefined actions that
       the project team will take if an identified risk event
       occurs.
       Contingency reserves are provisions held by the
       project sponsor for possible changes in project
       scope or quality that can be used to mitigate cost
       and/or schedule risk.

CDU – School of Information Technology          Risk Management - Slide 20
     HIT241 - RISK MANAGEMENT
     Questions for a Risk Management Plan
       Why is it important to take/not take this risk in relation to
       the project objectives?
       What specifically is the risk and what are the risk
       mitigation deliverables?
       How is the risk going to be mitigated? (What risk
       mitigation approach is to be used?)
       Who are the individuals responsible for implementing
       the risk management plan?
       When will the milestones associated with the mitigation
       approach occur?
       How much is required in terms of resources to mitigate
       risk?
CDU – School of Information Technology               Risk Management - Slide 21
       HIT241 - RISK MANAGEMENT
       Risk Response Control
       Risk response control involves executing the
       risk management processes and the risk
       management plan to respond to risk events.
       Risks must be monitored based on defined
       milestones and decisions made regarding risks
       and mitigation strategies.
       Sometimes workarounds or unplanned
       responses to risk events are needed when there
       are no contingency plans.


CDU – School of Information Technology     Risk Management - Slide 22
       HIT241 - RISK MANAGEMENT
       Top 10 Risk Item Tracking
       Top 10 risk item tracking is a tool for maintaining
       an awareness of risk throughout the life of a
       project.
       Establish a periodic review of the top 10 project
       risk items.
       List the current ranking, previous ranking, number
       of times the risk appears on the list over a period
       of time, and a summary of progress made in
       resolving the risk item.

CDU – School of Information Technology       Risk Management - Slide 23
       HIT241 - RISK MANAGEMENT
       Top 10 Risk Item Tracking
                                  Monthly Ranking
        Risk Item          This          Last    Number    Risk Resolution
                                                 of Months Progress
                           Month         Month
        Inadequate         1             2       4          Working on revising the
        planning                                            entire project plan
        Poor definition    2             3       3          Holding meetings with
        of scope                                            project customer and
                                                            sponsor to clarify scope
        Absence of         3             1       2          Just assigned a new
        leadership                                          project manager to lead
                                                            the project after old one
                                                            quit
        Poor cost          4             4       3          Revising cost estimates
        estimates
        Poor time          5             5       3          Revising schedule
        estimates                                           estimates
CDU – School of Information Technology                                     Risk Management - Slide 24
     HIT241 - RISK MANAGEMENT
     Software to Assist in Risk Management

      Databases can keep track of risks.
      Spreadsheets can aid in tracking and quantifying
      risks.
      More sophisticated risk management software
      helps develop models and uses simulation to
      analyze and respond to various project risks.




CDU – School of Information Technology     Risk Management - Slide 25
     HIT241 - RISK MANAGEMENT
     Sample Monte Carlo Simulation for Project Schedule




CDU – School of Information Technology   Risk Management - Slide 26
       HIT241 - RISK MANAGEMENT
       Sample Monte Carlo Simulations Results for Project Costs




CDU – School of Information Technology          Risk Management - Slide 27
      HIT241 - RISK MANAGEMENT
      Conclusion
     Unlike crisis management, good project risk
     management often goes unnoticed.
     Well-run projects appear to be almost effortless,
     but a lot of work goes into running a project
     well.


      Project managers should strive to make their
       jobs look easy to reflect the results of well-
                      run projects.

CDU – School of Information Technology      Risk Management - Slide 28

								
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