Thomsett Risk Tool Set
thomsett
INTERNATIONAL
n abn 85119749370 n office: 121 barringo road, new gisborne, vic 3438 n ph: 61 3 5428 2571 n fax: 61 3 5428 1435 n www.thomsettinternational.com
PROJECT MANAGEMENT
Risk in Projects The Total Tool Set
©
Rob Thomsett 2004
INTERNATIONAL
thomsett
Risk In Projects – The Total Tool Set
Eyes Wide Shut (without Nicole and Tom to help)
Many project mangers, when first introduced to risk management, feel that there is something “macho” about undertaking high risk projects “without a net” and that formal risk management is a sign of weakness. Secretly, I guess that we all identify somewhat with Indiana Jones as he plunges from disaster to disaster just surviving by good luck and sheer guts. The good news is that if you run into another high risk project with your eyes shut at least you won’t see the risk until it hits you. Then, it is over suddenly.
Introduction
Organisations have been practicing formal risk management for many years. For example, in the financial sector, there is a highly formalized process of risk assessment and risk control in lending. Upon receiving an application for a loan, the Loans Manager would undertake a risk assessment based on the applicant's current financial position, length and stability of employment, credit rating, amount of money requested, proposed term, proposed security and so on. Risk control would then be applied to the loan including offloading the loan, insurance, monitoring of payments, late payment patterns, etc. The popularity of Peter Berstein’s Against the Gods: The Remarkable Story of Risk [1996] indicates that many Organisations are beginning to see risk management as a major issue for 21st Century management1. However, studies by Accenture2 and Cutter Information 3 show that in the general area of projects and software/technology projects, in particular, the understanding and implementation of formal risk management is extremely inconsistent. A few years ago, our group observed this situation
INTERNATIONAL
n abn 85119749370 n office: 121 barringo road, new gisborne, vic 3438 n ph: 61 3 5428 2571 n fax: 61 3 5428 1435 n www.thomsettinternational.com
PROJECT MANAGEMENT
Risk in Projects The Total Tool Set
©
Rob Thomsett 2004
INTERNATIONAL
thomsett
Risk In Projects – The Total Tool Set
Eyes Wide Shut (without Nicole and Tom to help)
Many project mangers, when first introduced to risk management, feel that there is something “macho” about undertaking high risk projects “without a net” and that formal risk management is a sign of weakness. Secretly, I guess that we all identify somewhat with Indiana Jones as he plunges from disaster to disaster just surviving by good luck and sheer guts. The good news is that if you run into another high risk project with your eyes shut at least you won’t see the risk until it hits you. Then, it is over suddenly.
Introduction
Organisations have been practicing formal risk management for many years. For example, in the financial sector, there is a highly formalized process of risk assessment and risk control in lending. Upon receiving an application for a loan, the Loans Manager would undertake a risk assessment based on the applicant's current financial position, length and stability of employment, credit rating, amount of money requested, proposed term, proposed security and so on. Risk control would then be applied to the loan including offloading the loan, insurance, monitoring of payments, late payment patterns, etc. The popularity of Peter Berstein’s Against the Gods: The Remarkable Story of Risk [1996] indicates that many Organisations are beginning to see risk management as a major issue for 21st Century management1. However, studies by Accenture2 and Cutter Information 3 show that in the general area of projects and software/technology projects, in particular, the understanding and implementation of formal risk management is extremely inconsistent. A few years ago, our group observed this situation
References: P. L. Bernstein, Against The Gods: the Remarkable Story of Risk. New York, N.Y., John Wiley & Sons, 1996. T. Abdel-Hamid & S.E.Madnick, Software Project Dynamics. Englewood Cliffs, N.J., Prentice-Hall, 1991. B.W. Boehm, Software Engineering Economics. Englewood Cliffs, N.J., Prentice-Hall, 1981. R.N. Charette, Software Engineering Risk Analysis and Management. New York, N.Y., McGraw-Hill, 1989. Jardine Insurance Brokers, Risk Management. London, Kogan Page Ltd, 1987. C. Jones, Applied Software Measurement. New York, N.Y., McGraw-Hill, 1992, 1996. T. DeMarco & T. Lister, Waltzing with Bears: Managing Risk on Software Projects. New York, N.Y., Dorset House, 2003. C. Perrow, Normal Accidents: Living With High-Risk Technologies. New York, N.Y., Basic Books, 1984. L.H. Putnam & W. Myers, Measures for Excellence. Englewood Cliffs, N.J., Prentice-Hall, 1992. R.Thomsett, Third Wave Project Management. Englewood Cliffs, N.J., Prentice-Hall, 1992. R. Thomsett, Radical Project Management. Upper Saddle Creek, N.J., Prentice-Hall, 2002. 9 One of the great advantages of Agile and XP development approaches is that by greatly reducing the elapsed time of development they minimize the probability of change during the development/build cycle. Page 15 thomsett INTERNATIONAL