Risk Factors in Technology Projects

Stephen R. Toney
President & CTO, Systems Planning
http://systemsplanning.com
 
May 10, 1996, revised May 10, 1998
Copyright 1996-1998 Systems Planning


En français

Background: The Six Risk Factors

Technology projects, unlike most others, have a potential to fail to meet their goals. Over the past few years we have isolated six factors that influence the risk of failure.

Factor 1: Achievable goals

Failure is defined as "Results not meeting expectations". Excellent results can still fail to meet expectations, if the expectations are too high or too vague. Thus it is important to specify realistic, concrete, and written goals in order to guide the project.

As important as achievable goals are well-defined goals. They should as explicit and precise as possible without being limiting. In order clarify expectations, goals must be defined in three areas: technical, schedule, and cost.

The most obvious example of well-defined goals are systems that are a 1-to-1 replacement for existing systems. This never occurs, however, since a new system always has additional goals.

Other ways of looking at whether goals are achievable is to consider their size, their complexity, whether they are replacing more than one existing system, how stable is the process being automated, numbers of interfaces with other systems (or this may be part of factor 4), and stability of requirements.

The total duration of the project might give a clue also. Projects that take more than one year are automatically higher risk.

Factor 2: Activity type

The activity for which the technology system is targeted is a factor in the probability of success.

Activities can be placed into a 2x2 matrix according to whether they are Critical or Noncritical to achieving the mission, and whether they are Focus or Nonfocus. Focus activities are those for which the organization was founded and those the staff are specialists in.

Factor 3: Resources and commitment

Resources include money and people, but might also consider computer systems, space, etc.

Factor 4: Organizational setting

Organizational Setting describes to what extent the proposed project requires cooperation and interrelationship between organizational units. In organizational theory, there are three ways that organizations can be affected by their technologies. "Long-linked" technologies imply close coordination among departments, especially time-dependent coordination. "Mediating" technologies are common standards and practices. "Intensive" technologies do not imply any relationship between departments but are used by individuals focusing on the problem at hand.

Long-linked technologies are the most costly and hardest to change; intensive the least costly and easiest to change. In other words, the riskiest projects are those that require close, time-dependent interactions among organizational units. The least risky projects are those that are done by a small team of specialists, apart from the main organization.

Other organizational considerations are the policies in place, methodologies (for planning, analysis, systems development), an information architecture, etc.

Factor 5: Project participants

The most important aspect of the project participants is their experience in the use of the proposed technology. Low experience means high risk.

Other aspects are their commitment to the project, their time and attention available, their skills, and their attitudes.

Appointment of a single project manager who bears responsibility for success is also a factor.

Factor 6: Technology age

Technology Age describes whether the technology proposed is New, Old, or Current. The newer the technology, the higher the risk.

One might also consider the availability, quality, staffing, and stability of the infrastructure, such as databases, data administration, languages and tools, networks, etc.

Scoring the risks

Each of the six factors is scored from 1 to 5, with low numbers indicating low risk. Scores are then added.

Factor Scale Score
     
Factor 1: Achievable goals High achievability 1
  Medium achievability 3
  Low achievability 5
     
Factor 2: Activity type Critical Focus 3
  Noncritical Focus 1
  Critical Nonfocus 5
  Noncritical Nonfocus 3
     
Factor 3: Resources and commitment High 1
  Medium 3
  Low 5
     
Factor 4: Organizational setting Intensive 1
  Mediating 3
  Long-linked 5
     
Factor 5: Project participants High experience 1
  Medium experience 3
  Low experience 5
     
Factor 6: Technology age Old 1
  Current 3
  New 5


Total scores can range from 6 to 30. Our experience is that scores over 15 are rather risky, and over 20, extremely so. Scores of 10-15 are feasible. Scores under 10 may indicate that the project is so low risk that it may not accomplish anything worthwhile.

The purpose of scoring the risks is not to find a number, but to look for areas where risk can be reduced without compromising project goals. For example, here are ways risk can be reduced for each of the factors.

By these means it may be possible to reduce the total risk by 5-15 points without compromising the goals of the project.


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