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Risk Management
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A risk is a potential future harm that may arise from some present action (Wikipedia, 2004), such as, a schedule slip or a cost overrun. The loss is often considered in terms of direct financial loss, but also can be a loss in terms of credibility, future business, and loss of property or life.
This chapter is about doing proactive planning for your software projects via risk management. Risk management is a series of steps whose objectives are to identify, address, and eliminate software risk items before they become either threats to successful software operation or a major source of expensive rework. (Boehm, 1989) The software industry is fraught with failed and delayed projects, most of which far exceed their original budget. The Standish Group reported that only 28 percent of software projects are completed on time and on budget. Over 23 percent of software projects are cancelled before they ever get completed, and 49 percent of projects cost 145 percent of their original estimates. (Standish, 1995) In hindsight, many of these companies indicated that their problems could have been avoided or strongly reduced if there had been an explicit early warning of the high-risk elements of the project. Many projects fail either because simple problems were reported too late or because the wrong problem was addressed. (Bruegge and Dutoit, 2000)