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Information Technology Project Management


Information Technology Project Management Managing IT Project Risk – PowerPoint PPT presentation

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Title: Information Technology Project Management

Information Technology Project Management
  • Managing IT Project Risk

  • Defining IT Failure
  • Defining Risk and Risk Management
  • Risk Management Cycle
  • Risk Identification
  • Risk Analysis
  • Risk Handling
  • Risk Monitoring

What do we mean by failure?
  • Lyytinen (1988) distinguishes between
    development failure and use failure
  • A more detailed categorization of IT failure
    would include
  • system grossly exceeds original budget
  • system grossly exceeds original schedule
  • system never functions technically
  • system functions, but quality is so poor that,
    for all practical purposes, system is not usable
  • system functions but is not used--users reject
    the system because it is cumbersome to use or
    because they have no incentive to use it
  • system functions, but completely lacks originally
    promised functionality or fails to fit the task
    it was designed to support

Runaway Systems
Some Observations about Success/Failure
  • Success/Failure is often viewed as a binary
  • Success/Failure should be viewed along a
  • Success is in the eyes of the beholder

Why IT Projects FailThe Traditional Wisdom
  • Systems are specified and initiated by IS without
    sufficient input from the user(s)
  • Inadequate estimates of development cost and time
  • Lines of responsibility not clearly specified
  • User acceptance test delayed until the project is
  • Inadequate system testing
  • Implementation difficulties

Warning Signs(Keider, 1984)
  • Inadequate status reporting
  • Isolation
  • Lack of schedule changes
  • Overemphasis on how a system will be built
  • Premature programming
  • Staff reassignments

Defining Risk and Risk Management
  • A project risk is a potential problem that would
    be detrimental to a projects success should it
  • Risk management is the identification and
    response to potential problems with sufficient
    lead time to avoid a crisis

Risk Management Cycle
Risk Monitoring
Risk Identification
Risk Analysis
Risk Handling
Risk Identification
  • Business risk
  • Market risk
  • Shifts in business strategy or senior management
  • Technical risk
  • Design and development problems
  • Testing and maintenance problems
  • Technical uncertainty
  • Project risk
  • Budget
  • Schedule
  • Personnel
  • Requirements problems

Tools for Identifying Risks
  • Checklists (e.g., Boehms top ten risk list)
  • Frameworks (e.g., McFarlans framework)
  • Questionnaires (e.g., Barki, Rivard, and Talbot

Risk Factors What the Literature Says . . .
  • Technological newness
  • Application size
  • Application complexity
  • Task complexity
  • Project team expertise
  • Organizational environment
  • Magnitude of potential loss

Barki, Rivard, and Talbot, 1993
What Project Managers Say
Risk Analysis
  • For each identified risk, evaluate the
    probability of occurrence
  • For each identified risk evaluate the impact if
    the risk should occur
  • Prioritize your risk handling effort based on
    both probability and impact

Assigning Probabilities
  • Here we ask What is the likelihood that
    something will go wrong?
  • Establish a scale that reflects the perceived
    likelihood of a risk
  • Probability scales are commonly used
  • Can be qualitative or quantitative
  • e.g. highly improbable, improbably, moderate,
    likely, highly likely
  • e.g. 0-100 probability

Example Scale for Evaluation of Probability
Score Probability
0 Highly unlikely (1 or less)
1 Very unlikely (1 - 24)
2 Unlikely (25 - 49)
3 Likely (50 - 74)
4 Very likely (75 -94)
5 Highly likely (95 or more)
Assessing Impact
  • Here we ask What is the damage or impact if
    something does go wrong?
  • Three factors can be used to assess impact
  • Nature of the risk (i.e. the problems that are
    likely if it occurs)
  • Scope of the risk (i.e. how serious is the risk
    and how much of the project will be affected?)
  • Timing of the risk (i.e. when and for how long
    will the impact be felt)

Example Scale for Evaluation of Impact
Score Impact
0 Ignorable
1 Unimportant
2 Less important
3 Important
4 Very important / serious
5 Catastrophic / critical
Risk Matrix Example
Risk Factor Probability Impact Probability x Impact Priority
A 2 5 10 1
B 4 2 8 3
C 3 3 9 2
Risk Handling
  • Risk prevention
  • Develop options to reduce the potential of the
    problem occurring
  • Risk avoidance
  • Accepting a lower risk (another solution) to
    avoid a high risk
  • Risk remedy
  • Monitoring risk status and developing solutions
    to reduce effect when risk becomes a problem
  • Risk assumption
  • Decision to accept the risk should it occur
  • Risk reduction
  • Obtaining additional information that will reduce
    risk (e.g., prototyping, incremental development)

Risk Monitoring
  • Should be done periodically
  • (e.g., when certain milestones are reached, at
    the end of project phases, at steering committee
    meetings, etc.)
  • Useful to regularly assess and update project
    risk exposure
  • Senior management should be involved in
    monitoring and should be aware of exposures
  • Listen to the project group

Establishing Risk Referent Levels
  • Risk referent levels can be set to define regions
    of acceptable and unacceptable risks
  • Three typical risk referent levels
  • Cost overrun
  • Schedule slippage
  • Performance criteria
  • Example