Most development companies jump into a project the moment they get their hands on one – why not? That is what we are here to do – solve problems for our prospects and customers and hopefully make a decent living doing it! But how many go the extra mile and actually analyze the risks to a project before jumping in with both feet?
I am not sure about the answer about how many, but from my experiences of being a customer and consumer of custom software, I can say with some confidence that the number is slim.
Why, you may ask? Why do most companies do not analyze project risks? Well it is not a project deliverable, nor part of most project scopes and why worry about the risk when the development company has all the control on the deliverable?
Wrong (sorry to say)! Not analyzing project risks and not planning for risks is like starting a project blindfold.
Here are some of the things you can and should do at the start of the project.
(1) Once you have defined your milestones, meet with the project team – involve the stakeholders, if possible and the customer/users. Ask them 1 question – what do you think will prevent us from meeting milestone a, b, c…
(2) Once you get the answers – list the risks and discuss 2 things (a) the likelihood of the risk happening (probability or a %) and (b) the impact of the risk to the milestone – high, medium and low (you can also rate if from 10 to 1)
(3) Next multiply the probability with the impact to get a risk number against each risk and sort them from high to low – there you have it – your “Risk Register”
(4) Finally you figure out ways to mitigate each risk – there are many ways to mitigate risks (avoid, transfer, mitigate, accept etc) but that is a different blog post (coming soon!) – as long as you plan for it you are better prepared than most.
(5) You can even put a $ value to each risk – the cost of the risk multiplied by the probability of the risk – some keep this as a management reserve (if you are really risk averse!)
It is important to assess your risk register every time you are nearing a milestone (or more frequently). Both you and your customer will sleep better at night!
Roni has 16 years of experience in leading small to large scale IT projects for various markets. Roni successfully founded 2 companies spanning multiple locations and time-zones. He rolls up his sleeves and gets into software development anytime you ask him and database development is his passion – we call him “our sequel junkie”! Roni has a Bachelor’s in Engineering, his very valued PMP and is close to finishing his Global MBA from the coveted Warwick Business School in the UK. When asked about his personal life he says “We, my wife and 2 boys, live in the picturesque Hudson Valley region of New York. A Yankees and New York Giants fan, I also enjoy strumming my guitars every day, mixing recipes from different cultures when I get some time and hack away during an occasional round of golf.”