Management of Risks in Information Technology Projects - Essay Example

Globalization, internationalization, advanced technology and competition have made organizations respond to the challenges. To survive competition various factors demand attention – time, costs and human resources. These can be attained by the right project control and close monitoring at all stages. Coordination between different departments is essential for the success of any project. Current trends towards global competition, rapid technological change and reengineering are increasing the importance of project management processes since the project manager and their teams are “agents of change” (Leintz and Rea 1995, cited by Dooley, Lupton & O’Sullivan, 2006). This paper will discuss how, with the right strategy project monitoring and control can be implemented in a systematic way. It would also highlight how the timelines of control activity can impact on decision making in a project, particularly cost of changes and the level of influence over the project. Project control is carried out poorly due to various reasons. Most projects today are time critical if one has to remain ahead of competition. Projects require increased resources and have shorter schedules. Even though software tools are available, project control remains dependent on a leadership style that is outcome focused and not problem focused (Barber & Warn, 2006). In projects problems will always arise and deviation will occur but the firefighter approach has to be adopted – tackle the immediate problem. Projects have become complex and even the most efficient project manager overlooks unforeseen circumstances. Such oversight results in crisis. Unexpected events disrupt schedules and the project goes out of control of the project manager. A reactive manager would use all the software tools available to track and monitor progress but still risk planning has not been done. Managers do not give importance to risk management. They only perform a superficial examination to issues related to risk. Risk in projects is outside their control. Risks occur in projects due to lack of top management commitment to the project, failure to gain user commitment, misunderstanding the requirements, and failure to manage end user expectations (Cervone, 2006). The failure of the project London Ambulance System (LAS) was due to poor control and lack of risk management. One factor consistent with all IT projects is the fact that only 30% of the organizations applied risk analysis in their IT investment and project management processes (Bacarrini, Salm & Love, 2004). Risk analysis was limited to financial calculations. LAS project was primarily handled by the contract analyst with assistance from the systems manager (Beynon-Davies, 1999), which demonstrates lack of top management commitment. The ambulance crew who were handling the operations had no prior exposure to computers and was not given the appropriate training, shows failure to gain user commitment and misunderstanding the requirements of the project. At LAS mounting pressure imposed tight time-scales, and hasty selection was made for the lowest bidder without taking into consideration of the IS practices like testing, quality assurance, project management, user and stakeholder involvement (Goulielmos, 2003). Tenders were not evaluated properly. The LAS board was misled by the project team about the credentials of System Options. A report by Anderson Consulting that the project called for more finance and timescales was ignored by the project managers. This should lead the managers to monitor and control projects in a systematic way. Project management is defined as “the application of knowledge skills, tools and techniques to project activities in order to meet or exceed stakeholder needs and expectations from the project” (Duncan 1996 cited by Dooley, Lupton & Sullivan). Projects are temporary in nature and are primarily unique. Organizations never analyze to determine how successful they have been relative to their objectives. Monitoring projects help to effectively manage and evaluate their performance. Learning from past mistakes can help organizations to improve upon their innovation process management. The project life cycle consists of a number of key activities – defining the project objectives, formulation of the project plan, leading and monitoring plans for implementation, and project completion. Effective control and communication is another essential for the success of a project. Clear lines of authority should be defined so that conflicting priorities do not occur. This enables specific competencies to be developed and transfer of information across departments is easier. The goals, methodology, time frames, budgets, work quality, risks, and individual responsibilities have to be specified for a project. This requires excellent interpersonal communication, and team motivation. As Weinstein (2006) says, successful projects are the result of concentrated effort to control all the variables. Last-minute changes may occur but adaptability to change should be practiced. This involves realigning with project objectives and requirements with client’s satisfaction. The success of a project also depends on remaining within the budgets specified. The project manager has to remain focused and instill a sense of urgency amongst the team members. Strategic project planning needs to be done before starting operations. Decisions may have to be taken almost daily and at the end of the day notes should be exchanged and suggestions taken. This motivates the team members especially when their ideas are accepted. Success is not just the efficiency of the project manager but requires dedicated teamwork. Communication is very important; it is not enough to give instructions of change; it is equally important to communicate why change is essential and how the change should be incorporated. Brown et al., (1964) quote from a Harvard Business Study that says that a successful team leader is one who “is able to communicate, make sound decisions, and to get things done with and through people” (cited by Barrett, 2006). Front-end planning has to be strong (Billows, 2004). Adaptability to change is another vital responsibility and the organization should be prepared should the project’s scope and budget change mid-way. Time needs to be invested to develop quantified data about the 4 corners of the project – measured business value (MOS), budget, duration, and risk (Billows). Team participation ensures commitment from people and individual scheduling conflicts can be easily resolved (Martin, 2001). It is essential that each member in the project understands the consequences and risks of each action. An investigation into the Terminal 5 project at Heathrow Airport would demonstrate the prerequisites for efficient monitoring and control of the project. Heathrow Airport will handle 87 million passengers a year by 2015 if it continues to operate within its existing limits and thereafter 90-95 million passengers a year (SEEDA, 2005). The T5 construction at Heathrow Airport is currently one of the largest construction projects in Europe. The construction started in September 2002 and the terminal is scheduled to open in 2008. The T5 site covers 260ha and entails an investment of £4.2 billion. It will take 37 million-person hours to complete the project (IEMA, n.d.). The success of Terminal 5 project lies in the identification and application of tools and techniques to solve the problems of project development. Flexibility in finance and time scales is essential in any project, which is another important reason for the success of Terminal 5. There has to be a balance between formal procedures and social attitude to minimize risk. Innovatively and positively integrated team with shared values can make a major contribution to the success of the project. Terminal 5 (T5) program is one of the great engineering success of the 21st century, which will be completed on time, under budget and with no impact on airport’s day to day business operations (Mottmac, 2006). BAA’s sustainability focus is on understanding risk and planning responses to these (BITC, 2006). T5 adopted an integrated team approach (Mottmac). T5 has created an environment where innovation and inspiration lead to novel solutions resulting in new levels of efficiency. T5 project team consults with external experts for advice and to challenge its approach. It also conducts regular meetings with the regulators. T5 project has not even ignored the environmental impact and environmentally preferable options have been specified. Lane & Woodman emphasize BAA adopted a long-term partnering approach with its suppliers that has enabled an integrated team including designer, manufacturer and assembler of all the primary systems. The prototypes were undertaken within fixed time scales. BAA adopted the Last Responsible Moment (LRM) which provided maximum flexibility without compromising on costs (Lane & Woodman). Information flows between systems and the dates were established by working backwards for end dates for each major system of the project. Information is required before activity can be started and each activity produces information once it is completed. Understanding, tracking and controlling flow of information is critical to any project. Sufficient time has to be allocated to achieve the right output. At T5, it is an integrated approach with shared values, where they started rethinking together. There is cohesiveness amongst the partners in the T5 project. The T5 project also demonstrates how timelines of control activity can impact decision making in a project. Besides, BAA also had the flexibility to absorb the cost of changes, which is inevitable in any project. Another project that had to be abandoned due to ineffective project controls is the Taurus Project, which the London Stock Exchange (LSE) had been developing for more than six years (Lyytinen & Robey, 1999). This project was supposed to be the backbone of the LSE. The project cost LSE $130 million and another $600 million was contributed by the securities companies. The project had to be cancelled before a single module could be implemented as the required functionality and performance could never be delivered. Taurus was a complex project, involved novel technologies and was of a massive scale. Requirements changed continuously but this was due to ineffective project controls. There was confusion over the systems purpose and design but these warning signals about technical risks were ignored by the management. They ignored all the inputs and information when the project started deviating and it is believed that the failure could have been averted with timely decisions. Large scale projects are extremely complex and consist of several interdependent controls. This involves multiple feedback processes and nonlinear relationships. Both hard and soft data is required to analyze and take decisions (Sterman, 1992). Change in requirement in one process may affect another system. For instance, changing the location of fitting in an engineering drawing may cause subsequent changes in other subsystems. These changes in turn may require workers to be rescheduled. It may also reschedule some tasks or delay some. Juggling of resources may affect other projects which find themselves dependent on completion of deferred tasks. Such interdependencies have to be captured so that the causal impact of changes can be traced throughout the project. Scheduling tools like critical path methods, GNATT charts and PERT have also not found to be effective in getting feedbacks. Even experts misperceive the feedback in projects (Sterman). Maintaining time schedules may require new workers to be hired midway which would eventually add to the capabilities of the organization but in the short run, the experienced workers would have to be diverted to train the fresh recruits. These situations should not be allowed to occur mid-way. A well planned project helps to overcome such losses in time. When projects fall behind schedule, managers tend to increase the use of overtime. This may be feasible if a short tenure of overtime brings the project back on schedule because long term would result in cost escalations; workers may be burned out leading to lower productivity, higher rate of errors, high employee turnover further delaying the project. These affect the timeliness of projects. These can be eliminated by a proper feedback process. The success or failure of a project depends upon long-term vision, flexibility, risk analysis, the ability to cope with changes, motivated personnel wiling to accept change, and the right process at the right pace at the right time. It is a business issue, which requires accountability, proper communication, commitment, and understanding of the problem. One has to be prepared for the numerous problems that can occur. The time frame and expectations both have to be realistic, and the objectives outlined. The team should be equipped to identify, manage, and mitigate risks that are likely to arise during the implementation of the project (Mochal, 2003). References: Bacarrini, D., Salm, G., & Love, P. E. D., (2004), Management of risks in information technology projects, Industrial Management & Data Systems Volume 104 · Number 4 · 2004 · pp. 286-295 Barber, E., & Warn, J., (2006), Leadership in project management: from firefighter to firelighter, Management Decision Vol. 43 No. 7/8, 2005 pp. 1032-1039 Barrett D J (2006), Strong Communication Skills a must for todays leaders, Handbook of Business Strategy, pp. 385-390 Beynon-Davies, P (1999), Human error and information systems failure: the case of the London ambulance service computer-aided despatch system project, Interacting with Computers 11 (1999) 699–720 Billows D (2004), Project Planning: The Really Creative 1st Step, The Hamilton Group, 12 Dec 2006 BITC (2006), BAA - Sustainability at Heathrow Terminal 5, 12 Dec 2006 Cervone, H. F., (2006), Project risk management, OCLC Systems & Services: International digital library perspectives Vol. 22 No. 4, 2006 pp. 256-262 Dooley, L., Lupton, G., & OSullivan, D., (2006), Multiple project management a Modern competitive necessity, Journal of Manufacturing Technology Management Vol. 16 No. 5, 2005 pp. 466-482 Goulielmos, M (2003), Outlining organizational failure in information systems development, Disaster Prevention and Management, Vol. 12 No. 4 pp. 319-327 IEMA (n.d.), BAA – Sustainable Construction at Terminal 5, < http://www.iema.net/download/library/casestudy/BAA%20%20Sustainable%20 Construction%20Terminal%205/BAA%20%20Sustainable%20Construction%2 0Terminal%205.pdf.< 12 Dec 2006 Lyytinen, K., & Robey, D., (1999), Learning Failure in Information Systems Development, 12 Dec 2006 Martin P K (2001), The New Role of the Project Manager, 12 Dec 2006 Mochal T (2003), Project Management Tips and Techniques - The Role of a Project Manager, 12 Dec 2006 Mottmac (2006), Heathrow Terminal 5, UK, 12 Dec 2006 SEEDA (2005), Heathrow Airport Master Plan Consultation, < http://www.seeda.co.uk/About_SEEDA/Board_Members/Board_Meetings/papers/Sept20 05/Item7-He athrowAirportSept05.doc.> 12 Dec 2006 Sterman, J. D., (1992), System Dynamics Modeling for Project Management, 12 Dec 2006 Weinstein B (2006), The Change Game, 12 Dec 2006 Read More