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Using Risk Management in Engineering

Using Risk Management in Engineering

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Engineering requires a dedicated team of professionals with the right skills to achieve project goals. Most IT managers report more than 75 percent victory in delivering software engineering projects, but many observers claim the success rate is less than 50 percent.

Organizations expect engineers to deliver products that meet their objectives within the projected timeframe and budget. The product should also function smoothly through the estimated lifespan. If we use these parameters to define a finished project, the average success rate is about 30 percent.

The leading cause for failure in engineering projects is inadequate preparation. Even with a good plan, unexpected eventualities can disrupt your blueprint. Technical project managers must be skilled in managing risks as soon as they encounter them.

Risk Management

Each software development project has a degree of uncertainty, known as a project risk. The level of risk has a significant impact on the possibility to complete the job. The potential resultant loss depends on the extent of exposure. Lack of risk management can lead to delays, overrun of project resources, discontinuation of some activities, or termination of projects.

The acknowledgment of the existence of risks in a project is commendable but not enough. Managers must identify, evaluate, and manage various risks based on their magnitude.

The inspiration behind new software engineering projects is to advance the available systems by exploiting tech advancements, adding more features, and enhancing efficiency. Exploring these developments comes with risks.

Risk Management in Software Engineering

The process of managing and monitoring risks should be proactive, not after problems. A project management plan should have the following elements:

1. Planning for Risks

The engineer or project manager should start by writing a risk management strategy highlighting the methods of executing the risk management plan of the project. The document is usually part of the project management plan. There has to be sufficient resource allocation for managing risks.

A good Engineering Risk Management Plan contains essential information regarding the project which the development team requires. It explains the objective and goals of the project, the necessary tools and techniques, documentation, reporting, and the roles and responsibilities of each individual.

2. Risk Identification

Now it’s time to examine risks to understand their causes and the threat they pose to your project. For an in-depth understanding, consider the views of end-users, customers, and other stakeholders.

Some of the risks that project managers should foresee are:

Scope Uncertainty

The project can change in scope in the course of its development. Possible reasons for this include the project becoming more complex as clients add more requirements. There may also be integration problems, hardware and software defects, or changes in dependencies.

Resource Challenges

One issue that faces many project managers is underfunding. Some businesses view IT as expensive and allocate the department fewer resources than required. In such circumstances, projects can discontinue or extend beyond schedule. In the case of clients who pay per milestone, you cannot continue with the work if the customer faces a financial impasse.

Resource risks may emanate from issues with the development team or outsourcing. When managing an expansive project team, there is a possibility of personnel turnover. Onboarding new programmers in the middle of a project can cause interruptions.

Another problem can be a shortage of talent in specific areas. If the project requires a programming language unpopular with most of your team, the project might have to slow down.

Scheduling Issues

A project may not fit in your schedule for reasons like external vendor delays and late completion of some modules. If the programmers, for example, take too much time in finishing their first milestone, testers might also end up being late.

The success of the entire project relies on the input of each individual. Also, you cannot rule out estimation errors and natural factors. You can reduce scheduling risks with tools like the Work Breakdown Structure (WBS) and Gantt charts.

Technology Risk

This problem can result from the failure of an underlying platform or service as well as hardware and software defects. For instance, a software update of a tool or a platform patch can threaten the continuity of a software project. If you are using SaaS, you might realize that your cloud service does not meet all your needs when you are already working on the project.

3. Risk Analysis

The process of analyzing risks aims to estimate the threat posed by identified and approved risks. An excellent tool for assessing risks is the qualitative risk matrix.

It quantifies the possibility and impact of risk and assigns a risk level, usually an alphabet. Each letter in the scale has a verbal description. For quantitative analysis, decision trees and the Monte Carlo process help to determine the probability of the defined risks.

4. Responding to Risks

The risk management plan classifies risk response strategies into four groups:

  • Avoidance: The project manager removes the requirements that cause risk.
  • Acceptance (Retention): If the organization can live with the risk, the project manager ignores it.
  • Transfer: Sometimes, you can transfer a risk to a third party to deal with it.
  • Control (Mitigation): It involves placing measures to minimize risks and developing contingency plans or fallback strategies.

5. Monitoring Risks

Your risk management plan should be able to monitor and weigh the success of risk response provisions in place against defined metrics. Here are three techniques you can utilize to monitor and control risk.

  • Earned Value: It’s a comparison between the completed work and what the team should have achieved at a particular point.
  • Program Metrics: This refers to an official evaluation for checking if a risk management plan is working as expected.
  • Technical Performance Measurement: TPM assesses the technical performance of a project against the professional specifications for project success.

Accepting that risks exist in engineering projects is the first step towards effective risk management. Meticulous planning and management will help you to deliver an acceptable product within a reasonable timeframe and budget.

Planning for Recovery Can Prevent Failed Projects

Things can go haywire in project development and implementation, even with careful preparation. You can run out of resources, be behind schedule, overspend, or face rejection due to substandard deliverables.

Some unanticipated events can challenge the validity of the entire project. Take the steps below to save your engineering project from sudden death.

Evaluate the Entire Project

If there are signs of difficult times ahead, assess the project through an audit or project review. A set of standard questions can help unearth the fundamental problems and the seriousness of each. Prioritize the issues and solve them, starting with the critical ones.

The nature of the project may necessitate an immediate halt of all the work to allow you to devise a recovery plan. For instance, you may have to redefine the scope or redo the project plan. In other cases, isolating the problematic part of the project can allow other tasks to continue as you fix the issue.

Know When to Terminate a Project

After assessing the project, you might find reasons to discontinue it. For instance, the user requirements may have evolved to the extent that the end product will not be useful. Again, recovery from risk may be too arduous or expensive for the company.

A Recovery Project Manager should look at the project before declaring it failed.  If recoverable, the professional can help to minimize costs, recovery time, and residual damage. Otherwise, you should abort it immediately.

Create a Recovery Plan

If you feel the project is viable, design a prioritized recovery plan and lobby for it to all stakeholders. All eyes are usually on the project manager when a project has worrisome glitches. You will have to keep your team motivated and reassure the management and client that things are under control. Constant communication is vital at this stage.

Once the management approves the plan and you launch the recovery plan, guide your team, and motivate it. Explain to the customer that everything has resumed and updated them whenever you reach a milestone.

Monitoring, controlling, and reporting the progress throughout the recovery period is critical. Track all risks and respond to them decisively, fast, and effectively to avoid more deadlocks.

Wrap Up

Project planning and managing technological risks can increase the success rate of engineering projects. With a well-constructed Work Breakdown Structure and controls, you can diminish the chance of failure significantly. Risk assessment, monitoring, and management should help you to devise tight measures to ensure a smooth development process. 

If you see signs of failure, minimize its effect, and strive to get to its root. Create a recovery plan and involve the relevant stakeholders to save the project at the soonest possible moment.

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Ken Lynch is an enterprise software startup veteran, who has always been fascinated about what drives workers to work and how to make work more engaging. Ken founded Reciprocity to pursue just that. He has propelled Reciprocity's success with this mission-based goal of engaging employees with the governance, risk, and compliance goals of their company in order to create more socially minded corporate citizens. Ken earned his BS in Computer Science and Electrical Engineering from MIT.

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