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These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 1 Software Engineering: A Practitioner’s Approach, Software Engineering: A Practitioner’s Approach, 6/e 6/e Chapter 25 Chapter 25 Risk Management Risk Management copyright © 1996, 2001, 2005 R.S. Pressman & Associates, Inc. For University Use Only May be reproduced ONLY for student use at the university level when used in conjunction with Software Engineering: A Practitioner's Approach. Any other reproduction or use is expressly prohibited.

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Page 1: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 1

Software Engineering: A Practitioner’s Software Engineering: A Practitioner’s Approach, 6/eApproach, 6/e

Chapter 25Chapter 25Risk ManagementRisk Management

copyright © 1996, 2001, 2005

R.S. Pressman & Associates, Inc.

For University Use OnlyMay be reproduced ONLY for student use at the university level

when used in conjunction with Software Engineering: A Practitioner's Approach.Any other reproduction or use is expressly prohibited.

Page 2: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 2

Project RisksProject Risks

What can go wrong?What can go wrong?What is the likelihood?What is the likelihood?What will the damage be?What will the damage be?What can we do about it?What can we do about it?

Page 3: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 3

Reactive Risk Reactive Risk ManagementManagement

project team reacts to risks when they occurproject team reacts to risks when they occur mitigation—plan for additional resources in mitigation—plan for additional resources in

anticipation of fire fightinganticipation of fire fighting fix on failure—resource are found and applied fix on failure—resource are found and applied

when the risk strikeswhen the risk strikes crisis management—failure does not respond crisis management—failure does not respond

to applied resources and project is in jeopardyto applied resources and project is in jeopardy

Page 4: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 4

Proactive Risk Proactive Risk ManagementManagement

formal risk analysis is performedformal risk analysis is performed organization corrects the root causes of riskorganization corrects the root causes of risk

TQM concepts and statistical SQATQM concepts and statistical SQA examining risk sources that lie beyond the bounds examining risk sources that lie beyond the bounds

of the softwareof the software developing the skill to manage change developing the skill to manage change

Page 5: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 5

Seven PrinciplesSeven Principles

Maintain a global perspectiveMaintain a global perspective—view software risks within the context of —view software risks within the context of system and the business problem system and the business problem

Take a forward-looking viewTake a forward-looking view—think about the risks that may arise in the —think about the risks that may arise in the future; establish contingency plans future; establish contingency plans

Encourage open communicationEncourage open communication—if someone states a potential risk, don’t —if someone states a potential risk, don’t discount it. discount it.

IntegrateIntegrate—a consideration of risk must be integrated into the software —a consideration of risk must be integrated into the software processprocess

Emphasize a continuous processEmphasize a continuous process—the team must be vigilant throughout —the team must be vigilant throughout the software process, modifying identified risks as more information is the software process, modifying identified risks as more information is known and adding new ones as better insight is achieved.known and adding new ones as better insight is achieved.

Develop a shared product visionDevelop a shared product vision—if all stakeholders share the same —if all stakeholders share the same vision of the software, it likely that better risk identification and assessment vision of the software, it likely that better risk identification and assessment will occur.will occur.

Encourage teamworkEncourage teamwork—the talents, skills and knowledge of all stakeholder —the talents, skills and knowledge of all stakeholder should be pooledshould be pooled

Page 6: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 6

RISK

Risk Management Risk Management ParadigmParadigm

controlcontrol

identifyidentify

analyzeanalyze

planplan

tracktrack

Page 7: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 7

Risk IdentificationRisk Identification Product sizeProduct size—risks associated with the overall size of the software to be —risks associated with the overall size of the software to be

built or modified.built or modified. Business impactBusiness impact—risks associated with constraints imposed by —risks associated with constraints imposed by

management or the marketplace.management or the marketplace. Customer characteristicsCustomer characteristics—risks associated with the sophistication of the —risks associated with the sophistication of the

customer and the developer's ability to communicate with the customer customer and the developer's ability to communicate with the customer in a timely manner.in a timely manner.

Process definitionProcess definition—risks associated with the degree to which the —risks associated with the degree to which the software process has been defined and is followed by the development software process has been defined and is followed by the development organization.organization.

Development environmentDevelopment environment—risks associated with the availability and —risks associated with the availability and quality of the tools to be used to build the product.quality of the tools to be used to build the product.

Technology to be builtTechnology to be built—risks associated with the complexity of the —risks associated with the complexity of the system to be built and the "newness" of the technology that is packaged system to be built and the "newness" of the technology that is packaged by the system.by the system.

Staff size and experienceStaff size and experience—risks associated with the overall technical and —risks associated with the overall technical and project experience of the software engineers who will do the work.project experience of the software engineers who will do the work.

Page 8: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 8

Assessing Project Risk-IAssessing Project Risk-I

Have top software and customer managers Have top software and customer managers formally committed to support the project?formally committed to support the project?

Are end-users enthusiastically committed to the Are end-users enthusiastically committed to the project and the system/product to be built?project and the system/product to be built?

Are requirements fully understood by the Are requirements fully understood by the software engineering team and their customers?software engineering team and their customers?

Have customers been involved fully in the Have customers been involved fully in the definition of requirements?definition of requirements?

Do end-users have realistic expectations?Do end-users have realistic expectations?

Page 9: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 9

Assessing Project Risk-IIAssessing Project Risk-II

Is project scope stable?Is project scope stable? Does the software engineering team have the Does the software engineering team have the

right mix of skills?right mix of skills? Are project requirements stable?Are project requirements stable? Does the project team have experience with the Does the project team have experience with the

technology to be implemented?technology to be implemented? Is the number of people on the project team Is the number of people on the project team

adequate to do the job?adequate to do the job? Do all customer/user constituencies agree on the

importance of the project and on the requirements for the system/product to be built?

Page 10: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 10

Risk ComponentsRisk Components

performance riskperformance risk—the degree of uncertainty that —the degree of uncertainty that the product will meet its requirements and be fit the product will meet its requirements and be fit for its intended use.for its intended use.

cost riskcost risk—the degree of uncertainty that the —the degree of uncertainty that the project budget will be maintained.project budget will be maintained.

support risksupport risk—the degree of uncertainty that the —the degree of uncertainty that the resultant software will be easy to correct, adapt, resultant software will be easy to correct, adapt, and enhance.and enhance.

schedule riskschedule risk—the degree of uncertainty that the —the degree of uncertainty that the project schedule will be maintained and that the project schedule will be maintained and that the product will be delivered on time.product will be delivered on time.

Page 11: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 11

Risk ProjectionRisk Projection

Risk projectionRisk projection, also called , also called risk estimation,risk estimation, attempts to rate each risk in two waysattempts to rate each risk in two ways the likelihood or probability that the risk is real the likelihood or probability that the risk is real the consequences of the problems associated with the the consequences of the problems associated with the

risk, should it occur. risk, should it occur. The are four risk projection steps:The are four risk projection steps:

establish a scale that reflects the perceived likelihood of a riskestablish a scale that reflects the perceived likelihood of a risk delineate the consequences of the riskdelineate the consequences of the risk estimate the impact of the risk on the project and the product,estimate the impact of the risk on the project and the product, note the overall accuracy of the risk projection so that there note the overall accuracy of the risk projection so that there

will be no misunderstandings.will be no misunderstandings.

Page 12: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 12

Building a Risk TableBuilding a Risk Table

RiskRisk ProbabilityProbability ImpactImpact RMMMRMMM

RiskRiskMitigationMitigationMonitoringMonitoring

& & ManagementManagement

Page 13: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 13

Building the Risk TableBuilding the Risk Table

Estimate the Estimate the probabilityprobability of occurrence of occurrence Estimate the Estimate the impactimpact on the project on a on the project on a

scale of 1 to 5, wherescale of 1 to 5, where 1 = low impact on project success1 = low impact on project success 5 = catastrophic impact on project success5 = catastrophic impact on project success

sort the table by probability and impactsort the table by probability and impact

Page 14: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 14

Risk Exposure (Impact)Risk Exposure (Impact)

The overall risk exposure, RE, is determined using the following relationship [HAL98]:

RE = P x C

where P is the probability of occurrence for a risk, and C is the cost to the project should the risk occur.

Page 15: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 15

Risk Exposure ExampleRisk Exposure Example

Risk identification.Risk identification. Only 70 percent of the software Only 70 percent of the software components scheduled for reuse will, in fact, be integrated into components scheduled for reuse will, in fact, be integrated into the application. The remaining functionality will have to be the application. The remaining functionality will have to be custom developed.custom developed.

Risk probability.Risk probability. 80% (likely). 80% (likely). Risk impact.Risk impact. 60 reusable software components were planned. 60 reusable software components were planned.

If only 70 percent can be used, 18 components would have to be If only 70 percent can be used, 18 components would have to be developed from scratch (in addition to other custom software developed from scratch (in addition to other custom software that has been scheduled for development). Since the average that has been scheduled for development). Since the average component is 100 LOC and local data indicate that the software component is 100 LOC and local data indicate that the software engineering cost for each LOC is $14.00, the overall cost engineering cost for each LOC is $14.00, the overall cost (impact) to develop the components would be 18 x 100 x 14 = (impact) to develop the components would be 18 x 100 x 14 = $25,200.$25,200.

Risk exposure. Risk exposure. RE = 0.80 x 25,200 ~ $20,200. RE = 0.80 x 25,200 ~ $20,200.

Page 16: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 16

mitigationmitigation—how can we avoid the risk?—how can we avoid the risk? monitoringmonitoring—what factors can we track that —what factors can we track that

will enable us to determine if the risk is will enable us to determine if the risk is becoming more or less likely?becoming more or less likely?

managementmanagement—what contingency plans do —what contingency plans do we have if the risk becomes a reality?we have if the risk becomes a reality?

Risk Mitigation, Risk Mitigation, Monitoring,Monitoring,

and Management and Management

Page 17: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 17

Risk Due to Product SizeRisk Due to Product Size

• • estimated size of the product in LOC or FP?estimated size of the product in LOC or FP?

• • estimated size of product in number of programs, estimated size of product in number of programs, files, transactions?files, transactions?

• • percentage deviation in size of product from percentage deviation in size of product from average for previous products?average for previous products?

• • size of database created or used by the product?size of database created or used by the product?

• • number of users of the product?number of users of the product?

• • number of projected changes to the requirements number of projected changes to the requirements for the product? before delivery? after delivery?for the product? before delivery? after delivery?

• • amount of reused software?amount of reused software?

Attributes that affect risk:Attributes that affect risk:

Page 18: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 18

Risk Due to Business Risk Due to Business ImpactImpact

• • affect of this product on company revenue?affect of this product on company revenue?• • visibility of this product by senior management?visibility of this product by senior management?• • reasonableness of delivery deadline?reasonableness of delivery deadline?

• • number of customers who will use this product number of customers who will use this product

• • interoperability constraintsinteroperability constraints

• • sophistication of end users?sophistication of end users?

• • amount and quality of product documentation that amount and quality of product documentation that must be produced and delivered to the customer?must be produced and delivered to the customer?

• • governmental constraintsgovernmental constraints

• • costs associated with late delivery?costs associated with late delivery?

• • costs associated with a defective product?costs associated with a defective product?

Attributes that affect risk:Attributes that affect risk:

Page 19: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 19

Risks Due to the Risks Due to the CustomerCustomer

• • Have you worked with the customer in the past?Have you worked with the customer in the past?

• • Does the customer have a solid idea of requirements?Does the customer have a solid idea of requirements?

• • Has the customer agreed to spend time with you? Has the customer agreed to spend time with you?

• • Is the customer willing to participate in reviews?Is the customer willing to participate in reviews?

• • Is the customer technically sophisticated?Is the customer technically sophisticated?

• • Is the customer willing to let your people do their Is the customer willing to let your people do their job—that is, will the customer resist looking over your job—that is, will the customer resist looking over your shoulder during technically detailed work?shoulder during technically detailed work?

• • Does the customer understand the software Does the customer understand the software engineering process?engineering process?

Questions that must be answered:Questions that must be answered:

Page 20: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 20

Risks Due to Process Risks Due to Process MaturityMaturity

• • Have you established a common process framework? Have you established a common process framework? • • Is it followed by project teams?Is it followed by project teams?• • Do you have management support for Do you have management support for software engineering software engineering • • Do you have a proactive approach to SQA? Do you have a proactive approach to SQA? • • Do you conduct formal technical reviews?Do you conduct formal technical reviews?

• • Are CASE tools used for analysis, design and Are CASE tools used for analysis, design and testing?testing?• • Are the tools integrated with one another?Are the tools integrated with one another?

• • Have document formats been established?Have document formats been established?

Questions that must be answered:Questions that must be answered:

Page 21: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 21

Technology RisksTechnology Risks

• • Is the technology new to your organization?Is the technology new to your organization?• • Are new algorithms, I/O technology required?Are new algorithms, I/O technology required? • • Is new or unproven hardware involved?Is new or unproven hardware involved?• • Does the application interface with new software?Does the application interface with new software?• • Is a specialized user interface required? Is a specialized user interface required? • • Is the application radically different?Is the application radically different?• • Are you using new software engineering methods?Are you using new software engineering methods?

• • Are you using unconventional software development Are you using unconventional software development methods, such as formal methods, AI-based approaches, methods, such as formal methods, AI-based approaches, artificial neural networks?artificial neural networks?

• • Are there significant performance constraints?Are there significant performance constraints?

• • Is there doubt the functionality requested is "do-able?"Is there doubt the functionality requested is "do-able?"

Questions that must be answered:Questions that must be answered:

Page 22: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 22

Staff/People RisksStaff/People Risks

• • Are the best people available?Are the best people available?• • Does staff have the right skills?Does staff have the right skills?• • Are enough people available?Are enough people available?• • Are staff committed for entire duration?Are staff committed for entire duration?• • Will some people work part time? Will some people work part time? • • Do staff have the right expectations?Do staff have the right expectations?• • Have staff received necessary training?Have staff received necessary training?• • Will turnover among staff be low?Will turnover among staff be low?

Questions that must be answered:Questions that must be answered:

Page 23: Risk Management by Roger Pressman

These courseware materials are to be used in conjunction with Software Engineering: A Practitioner’s Approach, 6/e and are provided with permission by R.S. Pressman & Associates, Inc., copyright © 1996, 2001, 2005 23

Project:Project: Embedded software for XYZ system Embedded software for XYZ systemRisk type:Risk type: schedule risk schedule riskPriority (1 low ... 5 critical):Priority (1 low ... 5 critical): 4 4Risk factor:Risk factor: Project completion will depend on tests which require Project completion will depend on tests which require hardware component under development. Hardware component hardware component under development. Hardware component delivery may be delayeddelivery may be delayedProbability:Probability: 60 % 60 %Impact: Impact: Project completion will be delayed for each day that Project completion will be delayed for each day that hardware is unavailable for use in software testinghardware is unavailable for use in software testingMonitoring approach:Monitoring approach: Scheduled milestone reviews with hardware groupScheduled milestone reviews with hardware groupContingency plan:Contingency plan: Modification of testing strategy to accommodate delay usingModification of testing strategy to accommodate delay using software simulationsoftware simulationEstimated resources:Estimated resources: 6 additional person months beginning 7-1-96 6 additional person months beginning 7-1-96

Recording Risk Recording Risk InformationInformation