Possible Risks and their Impacts on Software Projects

Discuss three possible risks that may arise on software projects. Determine what would be their impact and how can they be addressed

 Possible Risks and their Impacts on Software Projects

Risks are uncertain events of the future with a probability for occurrence and a potential for loss. For software projects, risk identification and management are primary concerns. Proper analysis of these risks will help in effectively planning and assigning work for the project. 

One of the major reasons for project failures is the presence of multiple risks in the software project environment. Software projects are a collection of larger programs that have several dependencies and interactions. The projects involve creating something that has not been previously done, even though the developmental process may be similar to some other projects. Therefore, software developmental projects have a variety of quality and usability problems, amongst others (Kwak & Stoddard 2004). It has been found that the different kinds of risks will affect user satisfactions, system performance, and budget (Jiang and Klein 1999).

Project managers require good tools to assess and manage these software project risks, in order to reduce the increasing rate of failure of software projects (Wallace, Keil, and Rai 2004). It has been suggested that software project managers must identify and control these risk factors to decrease the chances of failure (Karolak 1996). 

There are several types of risks that may arise in software projects. 

Here we look at three possible risks:

The Schedule Risk is a very complicating factor because it is not easy to estimate schedules accurately and consistently (Abdel, Sengupta, & Swett 1999). Generally, organizations begin with a large project without properly comprehending its size and complexity. This is a huge risk which leads to problems in correctly scheduling the project. However, performance with scheduling risk gets better with project experience (Ropponen and Lyytinen 2000). The most significant impacts of schedule risks or slipped schedules are usually changed scope, compromised quality, and increased project cost. Those companies that focus on time-to-market are most severely affected by this type of risk. Being behind on a market window by even a week or a month can disrupt profitability and demolish the market share. For a small company even a single missed opportunity could result in shut down, and for larger companies it could have negative long term consequences. Schedule risks can also impact the internal functions of companies by decreasing the turnover. All these problems can be avoided by keeping the project schedules on track and ultimately lowering project risks (Angotti & Greenstein 1999).

Requirement Inflation is another significant risk factor for software projects. As the projects progresses further, several features come up which were not recognized at the start of the assignment. This generally happens because it is difficult and time consuming to gather and record all the necessary details from prospective users. The result is that project team does not know what the requirements of successfully completing the project are (Martin et all. 1994). This raises the possibility a system that cannot be used because the system analysis to build an accurate and complete set of requirements has not been done (Addison & Vallabh 2000). 

People Risk arises from inadequate managerial and technical skills (McLeod & Smith 1996). The project personnel may not possess the required knowledge about the business and technology, and may not have adequate experience to manage the project (Keil et al. 1998). Inadequate knowledge and skills has a huge impact on the outcome of the project.

To begin the risk management process, first the risk needs to be identified so that appropriate measures can be taken to counter it (Schmidt et al. 2001). Software risk management is an overwhelming responsibility. However, it is effectual and necessary to reduce the failure rate of the projects. Organizations that have identified risks and implemented risk management processes for their software projects have been successful (Kwak & Stoddard 2004).

References

• Sengupta, Abdel-Hamid, Swett, K. and T.K., C. (1999). The Impression of Targets on Software Plan Organization: An Investigational Study. MIS Quarterly, 23 (4), p.531-555.

• T. and Vallabh , S. , Addison (2002). Calculating Software Project risk- an Experimental Study of Methods used by knowledgeable Project Managers. Proceedings of SAICSIT, p.28 – 140.

• Angotti, C. and Greenstein, D. (1999). Ten Project Schedule Risk Factors. Available: http://www.designshrink.com/Risk.wp.html

• Jiang, J.J. and Klein, G. (1999). Risks to different aspects of system success. Information and Management, 36 (5), p.263–272

• Karolak, D.W. (1996). Software Engineering Risk Management. Los Alamitos, CA: IEEE Computer Society Press.

• Keil, , Cule, Lyytinen, K. And Schmidt, R., P.E., M. (1998). A Structure for Identifying Software Plan Risks. Connections of the ACM, 41(11), p.77-83.

• Y.H., Kwak, and Stoddard, J. (2004). Project Risk Organization: Lessons well-read from software Expansion surroundings. Technovation, Vol. 24, p.915-920.

• Hoffer,Martin, , Dehayes, E.W.,  D.W., Perkins and J.A., W.C. (1994). Administrating Information Knowledge: What the Managers Need to Know.2^nd Edition, New Jersey: Prentice Hall.

• Mcleod, G. and Smith, D. (1996). Managing IT Projects. Massachusetts: Boyd and Fraser Publishing.

• Ropponen, J., and Lyytinen, K. (2000). Components of Software Development Risk: How to Address Them? IEEE Transactions on Software Engineering, 26 (2), p.98-111.

• Schmidt, R., K., M., Cule, P.and Keil, Lyytinen  (2001). Identifying Software Development Risk: A Global Delphi Study. Periodical of Association Information Systems, 17(4), pp. 5-36.

• Rai, Keil, A., L., M. and Wallace (2004). How Software plan Risk Affects Project act: A research of the magnitude of Risk and An Exploratory Model. Decision Sciences, 35 (2), US

Elad Shalom,
CTO at ITweetLive.com