Risks in large scale IT projects

As always happens, large IT projects are exposed to adverse influences, the so called project risks, which may result in delaying the timely completion of the project, increasing the cost or reducing the final quality of the product. Project risks affect all aspects of a software project: the organization, the personnel, the technology etc. and can prevent the intended benefit of the project being realised. Generally speaking, various types of risks leading to project failure exist.

First, the so-called schedule risks reflect the fact that schedules often slip and the product is not delivered on time. Among the reasons for these risks are wrong time estimation, resources not tracked properly, failure to identify complex functionalities and time required to develop them, unexpected project scope expansions and lack of agreement between customer and developer.

Furthermore, schedule risks may often lead to cost risks and wrong budget estimation due to missing requirements, complexity of the architecture of the system, or sudden project scope expansions.

Moreover, an organization should be aware that there may be some execution risks, which concern the actual execution of the project. Examples of specific risk factors in this area include many of the traditional pitfalls associated with poor project management such as issues of inappropriate or insufficient staffing, lack of management commitment, lack of effective development process methodology and improper definition of roles and responsibilities.

Likewise, projects that fail often miss the commitment of either senior management or those who will actually use the system, or both. Projects in which top management and user commitment are lacking could be regarded very risky. On the other hand, projects that enjoy the support across multiple stakeholders are less risky than those narrowly aimed at gaining the commitment of just few of them. Failure to gain user commitment is viewed critical because it helps ensure that users are actively involved in the requirements determination process, minimizing the risk that the system will be rejected after completion. That is why the risks involving the ambiguities and uncertainties that arise in establishing the project’s scope and requirements or not managing change in them are crucial. And yet, misunderstanding the requirements is viewed as a critical risk factor because requirements drive the entire project.

In addition, an organisation has not to underestimate the technical risks that may be present in a project, which generally lead to failure of functionality and performance of the final product. Causes of technical risks include continuous changing requirements, no advanced technology available, product complex to implement, difficulties in project modules integration, difficulties to enhance or maintain the product.

Finally, the so-called external risks should be prevented, which include external events that are beyond the control of the organisation. These external events can be market development, changing customer product strategy and priority, government rule changes or changes in the competitive environment.