Risk Management in International ICT Project Management

1 |

Page16

Table of Contents

Risk Management in International ICT Project Management

2 |

Page16

Introduction:

Risk management in international ICT project management has a growing concern these days. It is arapidly growing discipline and has varied description what it actually involves, how it should beconducted and what it is for. For this reason institutions like AIRMIC and IRM (2002) argue that someform of standard is needed to ensure,Terminology related to the words used is risk management or project management as ingeneral.Process by which risk management can be carried out.Organization structure for risk management.Objective for risk management.On the other hand as world advances, many high cost high risk projects are beginning to start off.Astonishingly, most of the big projects are failing. One of the key reasons point out by Matta andAshkenas (2005),

Managers use project plans, timelines and budgets to reduce what we call “execution risk”

- the

risk that the designated activities won’t be carried out properly –

but inevitably neglect thesetwo other critical risks

–

the “White Space Risk” that some required activities won’t be identifiedin advance, leaving gaps in the project plan, and the “Integration Risk” that the disparateactivities won’t come together at the end.

There are also other problems associated with the ICT project risks. Often project managers do not haveany risk cost estimation Staw and Ross (2005) and when the project cost grows way beyond budget,they do another mistake which is stated by Davis (2005),Project managers nevertheless attempt to solve the problem by making cuts. In general theyrarely perceive hardware cuts such as equipment

–

as feasible. Rather, they see as the easiestareas to cut those with least obvious benefits

–

managerial and design overhead, processcontrol software, quality assurance programs and test procedures. Ironically, these are the veryareas whose costs are often underestimated in the first place.So we can clearly understand that successful risk management in ICT project has both direct and indirectinfluence over the project outcome. It is for this reason risk management now is a very important factorin project management. In this paper first I will try to provide an acceptable definition of risk in ICTproject management. Then I will give a very brief description of the risk management process proposedby Project Management Body of Knowledge (PMBOK). I will then go on to provide a definition of crisismanagement, give an analysis of a case study of a project risk management.

Risk Management in International ICT Project Management

3 |

Page16

Definition of risk and risk management:

Every one of us takes risks in daily basis. I car might crash into us while we are walking down the street.This is not something that always happens. But there is always a probability of happening such things.Same is true for any project as well. Risks are events in any projects that are not always occur but thereare chances that those events come into effect. Project managers always make project plan, keepingthose events in mind. Not only that, being a project manager you also have to have a contingency plan if the risk might occur and for that you have to allocate adequate money and the resources. It is thereforea trade off between actual project and the contingency planning in terms of money, resource and time a

project manager is allowed to spend. That’s why risk identification and according management of the

risks are crucial factors of project management.Let me present two definition of risk,1.

Risk is an event that may occur and when it does it will threaten the successful delivery of theproject. Barker (2007)2.

Risk is any uncertainty in the project plan that you can potentially control or at least track.Barkley (2004).So if we combine the two definitions we get following feature of risk in projects. A risk is,An uncertainty in project.When it occurs, it threatens the successful delivery of the project in terms of money and time.It can be potentially controlled or at least track.

Risk management is a central part of any organization’s str

ategic management. It is the process wherebyorganizations methodically address the risks attaching to their activities with the goal of achievingsustained benefit within each activity and across the portfolio of all projects. The focus of good riskmanagement is the identification and treatment of these risks. Its objective is to add maximumsustainable value to all the activities of the organization. It marshals the understanding of the potentialupside and downside of all those factors which can affect the organization. It increases the probability of

success, and reduces both the probability of failure and the uncertainty of achieving the organization’s

overall objectives. Let us take look at two definitions,1.

Risk management is an approach to anticipating and dealing with events that can causesignificant deviation from the project plan. On another level, risk management helps you pin

point your plan’s

weaknesses

and gives a useful insight to your project’s health.

Barker and Cole(2007).2.

A successful risk management process is one in which risks are continuously identified andanalyzed for relative importance. Risks are mitigated, tracked and controlled to effectively useprogram resources. Problems are prevented before they occur and personnel consciously focuson what could affect product quality and schedules. (Software Engineering Institute, 2003 citedin Barkley, 2004)