IT-Project-Risk-Management---A-Glimpse-Into-The-New-Millennium
INTRODUCTION
Information technology (IT) has evolved to such an extent that it now dominates society in business and everyday life. The approach of the impending millennium had brought on a mad scramble of IT projects to tackle the Year 2000 bug. In the next century, there will be a whole host of other projects necessary to keep up with the deafening pace of technological advancement. In the midst of this furor, expert IT project management becomes key to the success of the projects.
IT Project Risk Management addresses the question of how to identify the risks of an IT project, evaluated and managed from the initiation of the project idea until the formal wrap-up of the IT project. The primary reason for using project management is to provide an organizational focus to these ad hoc activities needed to effect change in the organization.
PROJECT FAILURE
Almost all statistics around this topic show that a mere 25% of all IT projects succeed i.e. are completed on time, on budget and have achieved their objectives or what they set out to do. Around 35% of all IT projects are challenged i.e. they are late, over-budget and have not achieved all of their objectives. But more importantly, the remaining 40% of all IT projects ends up in failure. These are projects that may have never even seen the end, having been cancelled at some point during its lifetime.
Why do IT projects fail so often? A number of reasons come into play including:
• Lack of standard vision or communication on the progress of the IT project
• Project scope is poorly defined
• Poor project organization and management
• Incomplete definition of requirements and specifications
• Inaccurate project estimations on time, budget and resources
• Poor project quality control
• ‘Silo vision’ on IT projects and conflicts between IT projects
• Problems are hidden from management – ‘shoot the messenger’ syndrome
• Draining of resources and scheduling pressures
• Lack of proper project change management standards and procedures
• No study for technical feasibility
• Unresolved frictions when addressing project interdependencies
• Usage of immature or poor technology infrastructure
• Inadequate testing procedures or controls
• Project is viewed and executed as a solution in search of a problem
• Wrong focus on crisis management as opposed to project risk management
• No one is in charge or everyone is in charge
• Only team members are concerned with the desired end result
• Excessive or unrealistic expectations and hidden costs
THE WARNING SIGNS
What are the warning signs of an IT project headed for failure? You know you are headed for trouble when there is a lack of scope or change control. New objectives haphazardly added to the scope of the project without considerations for practical issues such as time, budget and resources might send the project spiraling out of control.
Sufficient attention should also be given to other project administrative matters. Out-of-date project documentation, overruns in project budgets, consumption of resources on non-issues and lack of any internal controls and security requirements are all signs of trouble in the project.
The success of a project is very much dependent on the team supporting the IT project. Trouble begins when project team members work excessively long hours, which can then result in a breakdown in project team communication due to the heightened stress and tensions. In the medium term, this could lead to waning team co-operation and enthusiasm.
Another sure sign of trouble is increasing the number of ad hoc crisis meetings that are held in an attempt to regain project control.
PROJECT SUCCESS – THE TEN CRITICAL SUCCESS FACTORS
No matter the complexity and size of the project, there are certain basic elements of project management that could lend itself to achievement of the final objectives of the project without too many painful moments. These are the 10 critical success factors that could spell success for your project and which should be kept in mind at all times during the project.
1. Management support
A project is almost doomed from the start if it does not have management support. Full executive and management buy-in and commitment to the project can throttle the project to success. Good management support would also include aligning the project objectives with the overall business strategy at group and operational levels. Management support also provides the authority required to make critical decisions, obtain the necessary budgets and resources, and enforce appropriate project incentive schemes.
2. Composition of the project team
The success to a project depends on the ability of members to work as a team. The project team should be cohesive and well-motivated with defined roles, responsibilities and authorities, defined effective communications strategy and clear project structure. All stakeholders to the project including suppliers, executives and users, should be represented on the team.
Key project personnel (including QA) should be available throughout the project. There should be active participation by non-IT departments with key user buy-in, enthusiasm and commitment to the project. Skills transfer (‘delegation power’) and empowerment strategies should be in place and planned to be delivered in a timely manner (including the eventual transfer of skills from external to internal personnel and from project team members to end-users). Appropriate skill retention strategies and fallback plans should also be in place (outsourcing and downsizing issues).
3. Understanding of the project scope
Before plunging head-on into a project, the scope to be covered should be clearly defined, approved and controlled. The overall scope should then be translated into a more detailed project plan with project estimates on time, resources and budgets and project inventories. A business case (cost/benefit analysis and risk assessment) should be done in relation to the project and the organization as a whole. Quality criteria should be defined and the whole process should include active user involvement. A complete scope statement should also clearly state what your project will not attempt to do. Scope exclusion is extremely important especially for IT projects. Eventually, the scope of the project should be communicated to all parties directly involved.
4. Level of exposure
The necessary steps should be taken to ensure that no regulations or contractual obligations would be contravened by embarking on the project. Detailed analyses of business impacts (including external dependencies and performance requirements) and legal exposures (including contract and Service Level Agreement or SLA, liability and indemnification, and ownership of project product/result) should be conducted. An industry-based comparison of similar projects could be useful to levitate on the strengths and avoid the pitfalls.
5. Detailed and workable project plan
Formal project management should set out standards and rules to ensure that appropriate project logistics and infrastructures are in place. Large projects should be broken up into smaller, more manageable ‘sub-projects’. The plan should contain detailed programs with a functional breakdown into tasks, dependencies and milestones. It should also set the time frame, budgets and priorities, incorporating reasonable buffers on time and costs.
Another element of the plan is set to threshold levels, which can signal when it is necessary to ring alarms bells. Projects don’t fail overnight. Bad news is never welcome but it goes down more easily earlier than later. Project managers must look for early warning signs and set those against tolerance levels to determine what actions need to be taken and if escalation to management level is necessary.
6. Detailed and workable contingency plan
It is important to include a detailed and workable contingency plan as part of the overall project plan. The contingency is necessary to cover project residual risks that could jeopardize the success of the project. Proper contingency resources such as cost budgets, timing and people should be addressed. In addition, alternative project plans should be available to fall back on. Early warning signs could signal the need for escalation and possible invocation of the contingency plans.
7. Appropriate change management
Project Scope Change Management addresses the adaptability of the project to the changes affecting it, whether directly or indirectly. There should be enough flexibility in the project to rapidly and effectively respond to changes within the business and global environment (scope changes). Scope review should be an ongoing iterative process. In addition, there should be mechanisms in place to enable rapid and effective decision-making (documentation, validation, verification and communication).
Another aspect of change management is Project Transition Management. Effective change management strategies must be in place throughout the project, which entails business readiness assessment prior to conversion, accurate and timely conversion of data, and identification and motivation of business change-agents/project champions.
8. Proper project resources
It is essential to ensure at the onset of the project that there are adequate project resources to see the project through in its entirety. These resources include financial resources, personnel resources (technical, user and supplemental), etc. Other expertise required might include tax and legal personnel for legal and contractual arrangements and top management who will determine approach under strenuous conditions. It is important to recognize that the human element is vital for success and that one should allow for a margin of error.
9. Proper project quality assurance
Quality assurance involves the review of the project, whether expectations have been met, communication matters, use of resources, assessment of risks, and documentation of key issues and decisions. This should be compared against QA project standards and procedures. At the end of a project, a post-project survey should be conducted and ‘lessons learned’ documented and communicated.
10. Project communication
Communication is key to project management. New projects traditionally start with a lot of enthusiasm and support that slowly fades away. This can be combatted by regular distribution of concise status reports to all relevant people involved, such as project team, users, managers, executives with an emphasis on each success and focus on benefits realized from each failure.
CONCLUSION
The speed of the technological evolution at the end of the last millennium had accelerated at an astonishing rate. The number and quality of IT developments has grown so much that in one lifetime, it has created, effectively, a new kind of world. IT Project Risk Management has become such an integral part of this world that it transients into every aspect of a project and has become one of the critical elements to its success.
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More About Sharon Antonio: This article was first published in an Arthur Andersen publication. It has also been published in French and Dutch. |
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