Most people have an intuitive understanding what is risk, but risk management in project management is defined in the context of enterprise environment, where various software tools are used to minimize, manage, or avoid risks. In general, project managers accept that a risk is the probability for some undesired event to occur within the framework of a project over time. Hence, threats have to be identified, and assessed in terms of potential harm they might cause to a particular project.
For example, software vendors and developers reduce risks related to major software failures by developing their products in batches, thus allowing software developers to test how the software is functioning after implementing any major change. In result, an IT company is able to manage its projects without facing the risk to produce non-functioning software that would require significant effort to re-design.
As far as no zero-risk scenarios exist in business, project managers have to identify and assess major risks related to a project at an early stage of the project development, while project management software is used to assess, locate and re-locate resources, and manage multiple aspects of the project in question. Correct assessment of available resources is crucial because software development may require significant non-planned efforts due to the inter-dependent nature of software modules developed under a larger project.
In fact, a project manager dealing with a software development project may safely split the project into smaller sub-projects, taking advantage of the lesser impact the failure of a small piece of software code would have on the system as a whole. In other words, sometimes it is far more beneficial to manage multiple small-scale projects under the roof of a broader project than to try dealing with an extremely complex project for software development.
Software development projects are often characterized by lack of statistical information on risk occurrence; a project manager may have at his disposal historical data how often other projects have failed on various software tests in the past, but these data cannot produce a reliable risk assessment in the case where brand new software is entering development stage. Thus, the best approach is to share or accept the risks related to IT projects and budget the possible costs associated with those risks.
For example, there is a fair probability that at least one software module within a complex integrated business application will fail at least once during the process of integration of the software modules. As a result, the module should undergo re-development and re-testing, which in turn generates additional payroll and other expenditures. What can be done is to take advantage of best practices and utilize the full capacity of project management software to allocate all available resources in a proper and timely fashion to reduce the occurrence of software failures. Using the project management system to schedule and track how software development is progressing through frequent tests is another option, while all decent project management applications feature scheduling and project tracking functionality.
Proper resource allocation is probably the most vulnerable part of the entire process of managing a software development project. Risk management in project management includes processes and indicators that cannot be measured quantitatively, and resource allocation is one of those processes that cannot be assessed statistically and in terms of quantity. Project management applications can only provide data on a project’s progress and available resources, thus assisting managers in taking informed and educated decisions related to the respective project. One should always remember that software cannot mitigate or avoid risks per se, it can help in a complex process of decision making and resource allocation, in which risk management in project management is playing an important role.
This is a guest post by Rajesh S Ullal. Risk management in project management includes processes and indicators that cannot be measured quantitatively, and resource allocation is one of those processes that cannot be assessed statistically and in terms of quantity.