Page 192 - DCAP304_DCAP515_SOFTWARE_PROJECT_MANAGEMENT

Software Project Management

Notes
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Caution However conflict is most likely to arise at this step as stakeholders are not typically
involved in the risk estimation process, and the uncertainties and value assumptions associated
with the methods may not be clearly communicated.
During the Risk Estimation stage, stakeholder’s knowledge and perceptions are assessed in
light of receiving new information resulting from the risk estimates and the stakeholder analysis
is updated. Third party review by third party experts and explicit communication of the methods,
assumptions and uncertainties will contribute to credibility and trust in the technical analyses.

Software Estimation Risks

The effects of inaccurate software estimation and schedule overruns are well known. The problem
stems from an inability to accurately assess risks associated with various software development
projects. Software estimation errors generally result from four major risk areas, which are:
1. The inability to accurately size the software project. This results in poor implementations,
emergency staffing, and cost overruns caused by underestimating project needs.
2. The inability to accurately specify a development environment which reflects reality.
This results in defining cost drivers which may be inappropriate, underestimated or
overestimated.
3. The improper assessment of staff skills. This results in misalignment of skills to tasks and
ultimately miscalculations of schedules and level of effort required, as well as either
underestimating or overestimating project staffing requirements.
4. The lack of well defined objectives, requirements, and specifications, or unconstrained
requirements growth during the software development life cycle. This results in forever
changing project goals, frustration, customer dissatisfaction, and ultimately, cost overruns.

All potential risks associated with the proposed software development project should be defined
and weighed, and impacts to project cost should be determined. This information should always
be included in the software estimation process.

10.2.3 Risk Exposure

Quantifying the effects of a risk by multiplying the risk impact by the risk probability yields
risk exposure.
Risk-exposure = Risk-impact x Risk-probability

For each risk, the Risk Exposure is defined as the probability of the undesirable outcome times
the size of the loss involved. Risk exposure helps us to list the risks in priority order, with the
risks of most concern given the highest priority. Next, we must take steps to control the risks.
The notion of control acknowledges that we may not be able to eliminate all risks.

Identifying Risk Exposure

It is the responsibility of project manager to ensure that team has an understanding of the
project’s exposure to risk. Gaining this understanding can be achieved through identifying
categories of risk and then answering questions associated with each of these categories. The
next section provides project managers with a set of questions to ask about their projects to help
categorize risk.

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