Original Date: 06/02/2003
Revision Date: 01/18/2007
Best Practice : Identify and Plan for Risk
ABC Virtual Communications, Inc. manages software development risk by identifying risks early, developing mitigation and contingency plans for those risks, and building time into the project schedule to monitor and deal with those risks. The result is that ABC Virtual Communications, Inc. prevents costly overruns associated with late risk realization, and projects are completed on time and within budget.
One of the keys to ABC Virtual Communications, Inc.’s (ABCV’s) success in meeting contractual deadlines is a robust risk management strategy. In the company’s early years, risk management was largely ignored, and problems and issues would be dealt with as they arose over the course of a project. Responding to these issues required significant resources (both time and personnel), causing projects to fall behind schedule, and requiring “heroic” efforts from the developers to get the product to the customer on time.
The company realized that in order to succeed, it had to identify and document risks early, and establish appropriate mitigation strategies. ABCV’s approach to handling software development risk begins by allocating time at the beginning of each software development. The program manager and project architect define the boundaries of the system and identify potential impacts to project success. These are all recorded in a database. The next step is to develop mitigation (prevention) and contingency (reaction) plans for all identified risks. Time can then be built into the project’s schedule for the following phase to deal with these risks.
One of the significant factors in ABCV’s success in this area is the emphasis on the importance of risk management. The company is totally committed to the risk management process, from the very top of its corporate structure down to the individual developers. The risk management program is considered a critical part of its process, and resources are allocated accordingly. Managers review the current risk status of their programs as often as twice a week to “stay on top of things.”
While this appears to be a lot of effort at first glance, ABCV’s experience has proven that the benefits (and payoffs) of this approach are significant. The amount of effort spent on mitigating risks and/or resolving them early is less than a tenth of the effort that was expended resolving problems after they surfaced on their own. In addition, since the time spent on risk mitigation is more consistent, the overall project schedule is easier to predict and can be calculated with much greater accuracy and confidence.
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