Oct 16 2007
Project risk management and Agile
Project risk management
In terms of project management theory, risk management in a project can be defined into three main activities:
- Risk assessment and analysis
- Risk reduction and monitoring
- Risk management process and methodology
It might be difficult to understand the boring theory. Let me give a real example to talk through how these activities happen in a project.
Imagine, you and your partner plan to have dinner in a fancy restaurant on the Fifth Revenue for your three years anniversary. Basically, you guys need go through the following steps in order to make your wife/husband happy.
- Find the number of the restaurant
- Call the number and book the table
- travel to the restaurant
- Order
- Eat, drink, sweet talk, eye contact, and etc…. wait, drink more
- Pay
In the above steps, if everything is going well, brilliant! However, as you know anything could go wrong in real life, you would not know beforehand. Such as “the number is wrong”, “No table available”, “No texi, or huge traffic prevent u getting there”, “the restaurant forgets booking your table”, “Your wife/husband is not happy with the dishes”, “They do not accept credit card or your credit card does not work” and etc. There are many of them. On contrast, they might not happen if you are lucky. You might discover more risks than I list out. So generally, a brainstorming is absolutely necessary on this stage. Just remember, the brainstorming starts earlier than your anniversary and go through the whole process.
Yes, first thing we need do is to assess and analyse these potential risks and their threats so that you can decide which one you need pay more attention and which not. Let’s make a matrix for these risks.
| Risk description | Status | Impact*likelihood | Date |
|---|---|---|---|
| the number is wrong | Undefined | unknown | 15Oct2007 |
| No table available | defined | Small | 15Oct2007 |
| the restaurant forget booking your table | identified | medium | 15Oct2007 |
| Your wife/husband is not happy with the dishes | identified | critical | 15Oct2007 |
You can easily figure out why “Your wife/husband is not happy with the dishes” is critical for this “project”. Because it might cause a big fight and ruin your “perfect plan”. The impact*likelihood of “No table available” is small because it is not some special occasion or holidays. Generally it is not that difficult to figure out based on brainstorming, assessment and analysis.
During the analysis, you can prioritize the risks by “Impact*likelihood” to determine which risk should be pay more attention and focused on.
So, when we know these risks and their threats, impact and likelihood, how do you manage them in order to reduce the impact to the lowest level? There are four ways to manage risks. They are
- Mitigation
- Transference
- Acceptance
- Avoidance
In most of the circumstance, we acceptance those risks with small “impact*likelihood” and try to avoid or transfer some risks which can be. For the rest, you might not find a way to get rid of them, so mitigation is the only thing that you can do.
For the risks specified in the matrix above, we can add columns “Strategy”, “action” and “Owner”. The duration of the action would be nice to have.
| Risk description | Date | Status | Impact *likelihood |
Strategy | —-Action—- | Owner | Others |
|---|---|---|---|---|---|---|---|
| the number is wrong | 15Oct2007 | Transferred | small | Transfer | Find the number on a popular online restaurant service | Me | N/A |
| No table available | 15Oct2007 | Transferred | Small | Transfer | Go to the nice drink place besides the restaurant, and wait for the table to be ready | Me | N/A |
| the restaurant forget booking your table | 15Oct2007 | Migrated | small | Migrate | Call the restaurant twice to ensure that the table is booked | Me | N/A |
| Your wife/husband is not happy with the dishes | 15Oct2007 | Migrated | critical | Migrate | Ask around or search online to select those nice food | Me | It really depend on my wife’s mood |
Next thing that you need do is monitoring the risks and guarantee that all the known risks are under control.
Agile project risk management
Even in agile projects, risk could be much less against waterfall model. There are still going to be risks for a project management team do deal with. So how and when to do it? Who should responsible for the risk management in an agile project?
- During the inception phase, much brainstorming will be done, so why not identify, assess and analyse some potential risks?
- During daily stand up, why not the team give a brief update of risk matrix and new risks that you can think of?
- Any time during the day, when an idea pop up your mind, why not have a discussion with the team members? If it is a risk, record it into the matrix.
- PMT, as everyone in the team is responsible for risk management
- PM, as project manager is responsible for maintain the matrix and facilitate weekly risk update meeting.
There are more that we can do for agile project risk management.
Based on our experience, where could risk come from and how it look like could be forecast and pre-prepared. However do not pre-prepare too much. Because every project is different, it might have all different risks across different projects.
There is no short cut to do risk management, just keep an eye on and make sure everything is followed up by someone.
Interestingly, by using lean project management, it could help to identify the risk priority but it does not mean that we could ignore the risk management by focusing on the bottle neck.
