Financial Project Risk Assessment
What Are The Benefits?
PRA is an excellent way to pro-actively detect and implement possible risk mitigation plans to de-risk IT projects and to incorporate proper governance and monitoring processes into project management disciplines. PRA can often identify patterns and risks comparing with other similar projects, and can minimize negative impacts during project's most critical phases. This practice has been adopted by one of the largest global insurance brokerage service companies on its own internal IT projects.
Why do Projects Fail?
- Unrealistic schedule dictated solely by business drivers
- Lack of project governance and monitoring
- Underestimation of overall efforts from planning to execution
- Underestimation of time and effort to set up the production environment
- Bottom-up project management run by IT technical personnel
- Lack of risk identification and management
- Tight schedule that leaves no room for error
- Misalignment between business needs and IT solutions
- Continuous changes to initial requirements
- Lack of governance to early detect potential problems
- Too many tasks pushed or delayed to meet early project milestones
- Lack of quality that causes rework and added complexity
- Underestimation of vendor relationship and expectations
Searching the keywords “Project Failure” on Google will result in over 32M hits on the topic. The Gartner group estimated over 75% of IT projects are considered failures, and over half of them resulted in systems that are either unusable or do not meet the minimum business requirements. Tim Bray (respected Internet pioneer, entrepreneur, and one of the inventors of XML) stated in January 2010 “The Fortune 1,000 are bleeding money and missing huge opportunities to excel and compete”. The new paradigms of web 2.0, agile development, SOA/BPM and cloud computing throw additional wrinkles into the art and science of delivering flexible and usable solutions that meet business objectives.
Top Over-spend Reasons:
- Poor forecasting (50%)
- Increasing project scope during implementation (39%)
- Interdependencies issues and conflicts between multiple projects (36%)
New research from CA, conducted by the independent research company Loudhouse of 100 IT Directors across the UK and Ireland, reveals that poor visibility of IT project status and a lack of management control over projects are costing the UK over a quarter of a billion pounds each year. A third of all projects implemented each year end up over budget with the typical over-spend between 10% and 20% of the original budget. The survey also highlighted the increased complexity of IT projects with a typical company running 29 projects at any one time and an average IT budget of between £1m and £5m.
This isn't helped by the lack of visibility and control that CIOs have over their project portfolios - 40% of IT directors don't have complete visibility over the initiatives they are running, so cannot see when projects are threatening to run over budget.
PRA is is our distinct practice that incorporates project management methodologies, risk management disciplines, and technical best practices to provide an accurate and in-depth assessment of project risk levels, examining four dimensions.
- BusinessBusiness drivers and requirements that dictate the solutionís features and functions, and timeline.
- VendorsProduct and/or service providers and risks involved in engaging 3rd party vendors.
- FinanceCommercial, budget, ROI and any financial expectations of the project.
- ITIT Project or execution management methodology, processes and procedures, and IT technical delivery capabilities.
- Feasibility - Can it be done?Business requirements mapped to capabilities, given times, resources, etc
- Visibility - Are we doing it as planned?Transparent process, gates, milestones, status, score
- Accountability - Who is driving it?Roles and responsibilities
- Flexibility - How to improve?Priorities, constraints, acceptable change, change control, de-risking
How Does PRA Work?
PRA is a time-boxed engagement where the ExadelFS PRA team works closely with our clientís program management, business, IT and designated management to collect relevant information and data points based on our predefined processes and templates. Sample project artifacts collected are:
- Project costs by phases and business cases
- Project related plans and schedules
- Governance & monitoring processes
- Business Cases and Requirements
- Software design and specifications documents
- Application and platform architecture
- Infrastructure and deployment
- Identified project risks
- 3rd Party/Partner product and services
The data is analyzed, measured and compared to project historical data maintained internally by ExadelFS. We have collected historical data points by working in collaboration with other IT consulting, services and insurance companies.
These data points are analyzed to measure and to score four essential qualities of a successful project. The exercise will answer key questions and provide clarity of the underlying makeup of a project anatomy.
PRA produces a comprehensive set of dashboards and reports indicating project health level in terms of risks.
What can be done after PRA?
There are several effective and viable options to maximize PRA results to assure IT project success. Client can opt to receive knowledge transfer from ExadelFS PRA team and proceed with the efforts on their own or to continue to engage us for further assistance.
Some of the ways to best utilize PRA are to:
- Feed the PRA information into existing Project Management process and procedures
- Launch a monitoring and governance program to manage and mitigate project risks
- Obtain an IT Project Insurance premium to cover against project failures. This warranty can increase comfort level and confidence of project stakeholders to execute the project with proper disciplines and governance while providing management a tool to leverage more cost-effective resources. Insurance can be combined with other options listed above.
Experienced ExadelFS personnel can augment PMO at the same time re-assuring that project risk assessment methodology is continuously applied to your projects.
How do Clients Engage Us?
Engaging ExadelFS is easy. PRA can be deployed as either a standalone engagement or as part of a broader project governance program. PRA is a cost-effective way to take a checkpoint at any time during the project and/or to strengthen program management by placing additional safeguard and governance.
PRA can be incorporated seamlessly into an organization's existing processes and procedures. Our predefined processes and templates can get our people engaged and running quickly.