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Risk Management

Six Sigma is a set of techniques for process improvement that was developed by Motorola in 1986. It seeks to improve quality by identifying and removing defects. A six sigma process produces 99.9999966% defect-free products. Six Sigma uses statistical quality control, is data-driven, and focuses on projects, objectives, customers, and teamwork. Its goals are overall business improvement, reducing costs and variability, and improving cycle time and satisfaction. DMAIC is used for improving processes while DMADV designs new processes and products. Risk management identifies, analyzes, and manages project risks through risk identification, estimation, mitigation, monitoring, and management.

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56 views30 pages

Risk Management

Six Sigma is a set of techniques for process improvement that was developed by Motorola in 1986. It seeks to improve quality by identifying and removing defects. A six sigma process produces 99.9999966% defect-free products. Six Sigma uses statistical quality control, is data-driven, and focuses on projects, objectives, customers, and teamwork. Its goals are overall business improvement, reducing costs and variability, and improving cycle time and satisfaction. DMAIC is used for improving processes while DMADV designs new processes and products. Risk management identifies, analyzes, and manages project risks through risk identification, estimation, mitigation, monitoring, and management.

Uploaded by

shital2013
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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SIX SIGMA

• Six Sigma is a set of techniques, and tools for process


improvement. It was developed by Motorola in 1986.

• Six Sigma seeks to improve the quality of process outputs


by identifying and removing the causes of defects.

• A six sigma process is one in which 99.9999966% of the


products manufactured are statistically expected to be
free of defects
The Characteristics of Six Sigma
• Statistical Quality Control
• Methodical Approach
• Fact and Data Based Approach
• Project and Objective Based Focus
• The Customer Focus
• Teamwork Approach to Quality Management
Six Sigma Objectives
• Overall Business Improvement
• Remedy Defects/Variability
• Reduce Costs
• Improve Cycle Time
• Increase Customer Satisfaction
Methodologies
• 1. DMAIC
– DMAIC is used for projects aimed at improving an
existing business process.
• 2. DMADV
– DMADV is used for projects aimed at creating new
product or process designs.
DMAIC DMADV
RISK MANAGEMENT

Unit V
Project Management
RISK?
• Risk is a potential problem-it might happen, it
might not.
• Risk concerns future happenings.
• Risk involves change.
• Risk involves choice and the uncertainty that
choice entails itself.
• We can not eliminate the risk properly ,but we
can try to minimize it.
Risk management:
• Risk analysis and management
• it’s a really good idea to identify the risk, asses
its probability of occurrence and estimate its
impact.
Risk strategies
• Reactive risk strategy
• Proactive risk strategy
Types of Risks
• Project risk
• Technical risk
• Business risk
• Known risks
• Predictable risks
• Unpredictable risk
Project risks:
• Threaten the project plan.
• Risk factors:
– Potential budgetary
– Schedule employees
– Resource
– Stakeholders
– Project complexity and size
– Degree of structural uncertainty.
Technical risks
• Threaten the quality and timeliness of the
software to be produced
• Risk factors:
– Potential design and implementation
– Interface
– Verification
– Maintenance problems
– Specification ambiguity
– Technical uncertainty
Business risks
• Threaten the viability of the software to be
built and often threaten the project or
product.
• Top five business risks are:
– Market risk
– Strategic risk
– Sales risk
– Management risk
– Budget risk
Known risks
• Those that can be uncovered after careful
evaluation of the project plan
• e.g. unrealistic delivery date ,lack of
documented requirements ,poor development
environment.
Predictable risks:
• Risks that are induced from past project
experience

e.g. staff turnover ,poor communication with


the customer ,reduction of staff effort as
ongoing maintenance requests are serviced.
Unpredictable risks:
• Risks that are extremely difficult to identify in
advance (joker in the desk)
Risk Identification
• Systematic attempt to specify threats to the project plan.
• Predictable and known risks can be avoided and controlled
possibly by identification.
• There are two types of risks for each categorized risk:
– Generic risks : potential threat to every software project.
– Product-specific risks : can be identified by those with a clear
understanding of technology ,the people and the environment
specific for building the project.
• One method for identifying risks is to create a
risk item checklist.
Product size
Business impact
Stakeholders characteristics
Process identification
Development environment
Technology to be build
Staff size and experience
Risk components and Drivers
• Risk components:
 Performance
 Cost
 Schedule
 Support
RISK PROJECTION /RISK ESTIMATION
• Attempts to rate each risk in two ways:
• i. Probability that the risk is real.
• ii. Consequences of the problems associated with the risk.
• There are four risk projection steps intended to
consider risks in a manner that leads to prioritization.
• Estimate a scale that reflects the supposed probability
of a risk.
• Define the consequences of the risk.
• Estimate the impact of the risk on project and product.
• Asses the overall accuracy of the risk projection.
Risk table
• A risk table provides simple techniques for
risk projection.
• Begin by listing all the risks in the table with the help
of risk item checklist.
• Each risk is categorized in the second table.
• Probability of occurrence of each risk is entered in the
next column.
• Next, the impact of each risk is assessed.
Sample risk table prior to sorting
• Risk impacts on risk components:
• Negligible 4
• Marginal 3
• Critical 2
• Catastrophic 1
• Factors affecting impacts of risk:
• Nature
• Scope
• Timing
RISK EXPOSURE(RE)
RE=P*C
P=probability of occurrence for each risk
C=cost of project when risk occurs

• RE can be used to predict the probable increase in staff resources


required at various points during the project schedule.
RISK MITIGATION,
MONITORING,MANAGEMENT(RMMM)
• An effective risk strategy must consider three
issues:

Risk avoidance
Risk monitoring
Risk management
RISK MITIGATION
• If a software team adopts a proactive approach to risk,
avoidance is best strategy, achieved by developing a plan
for mitigation.

• For ex, assume that high staff turnover is noted as a project


risk r1.Based on past history and management intuition,
the likelihood l1 of high turnover is estimated to be 0.70
and the impact x1 is produced as critical. i.e. high turnover
will have a critical impact on project cost and schedule.

• To mitigate this risk, you would develop a strategy for


reducing turnover
RISK MONITORING
• After risk mitigation ,risk monitoring activity commence.

• The project manager monitors the factors that may


provide an indication of whether the risk is becoming
more or less likely.
• e.g. In case of high staff turnover, the general attitude of
team members based on project pressures ,interpersonal
relationships among team members, potential problems
with compensation and benefits, availability of jobs within
the company and outside the company is monitored

• Project manager should also monitor the effectiveness of


risk mitigation steps.
• Project manager should monitor work products carefully
to ensure that each can stand on its own.
END
Unit V

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