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Indy Risk School
Other Risk Management Issues
As documented Rob Thomsett [1992] and Tarek Abdel-Hamid and Stuart Madnick [1991], the risk of the project affects the estimates, staffing, project justification and strategies.
Estimates
Simply, the higher the risk of the project the higher the estimation error. Studies by the Rand Corporation, Charles Perrow [1984] and others of engineering projects reveal that for high risk projects, estimation errors of 5:1 are common.
Staffing
Given that people are the most significant risk factor in projects, the higher the risk of the project the higher the requirement for staffing the project with the best people and teams. Many organizations have increased risk in already risky projects by placing inexperienced people on the project and by under-investing in team-building.
Project Justification
A project with a Return-on-Investment of 25% per year looks totally different when management are informed that it is High risk with 15 major risk factors beyond the team's capability to manage. Simply, any project justification or Business Case is completely useless (and unprofessional) without a highly-structured and documented risk management process. As consultants, when we're reviewing a project, the first document we look for is the Risk Assessment and Risk Memorandums. Without these, we cannot evaluate the estimates, the strategy, the plans or any other project details.
Project Development Strategy
As discussed by Thomsett [op. cit.], there are numerous project development strategies available for system development. The choice of strategies such as release, fast-track, RAD, time-boxing and prototyping are highly dependent on the risk of the project. For example, in the construction industry, the fast-track strategy is associated with high risk construction. Many software projects have failed because the wrong strategy was applied and formal risk management can ensure that the appropriate strategy is being used for the project.
So what is really wrong with being an Indiana Jones?
Many project mangers, when first introduced to risk management, feel that there is something "macho" about undertaking high risk projects "without a net". Secretly, I guess that we all identify with Indy as he plunges from disaster to disaster just surviving by good luck and sheer guts.
However, there is nothing "wimpy" in asking for assistance in risk management. It is good business sense. If you want to be Indiana Jones try absailing or bungy-jumpy without a rope on your weekends. However, when it comes to the million dollar projects that your organization is entrusting you to manage, leave Indiana to the movies. After all, he gets paid more than you do.