Different types of risks in Software Project Development

Software development

is a multi stage approach of design, documentation,

programming

, prototyping, testing etc which follows a

Software Development Life Cycle (SDLC)

process. Different tasks are performed based on SDLC framework during software development. Developing and Maintaining software project involves risk in each step. Most enterprises rely on software and ignoring the risks associated with any phase needs to be identified and managed/solved otherwise it creates unforeseen challenges for business. Before analyzing different risks involved in software development, Let’s first understand what is actually risk and why risk management is important for a business.

Risk and importance of risk management :

Risk is uncertain events associated with future events which have a probability of occurrence but it may or may not occur and if occurs it brings loss to the project. Risk identification and management are very important task during software project development because success and failure of any software project depends on it.

Various Kinds of Risks in Software Development :

1. Schedule Risk : Schedule related risks refers to time related risks or project delivery related planning risks. The wrong schedule affects the project development and delivery. These risks are mainly indicates to running behind time as a result project development doesn’t progress timely and it directly impacts to delivery of project. Finally if schedule risks are not managed properly it gives rise to project failure and at last it affect to organization/company economy very badly. Some reasons for Schedule risks –
   • Time is not estimated perfectly
   • Improper resource allocation
   • Tracking of resources like system, skill, staff etc
   • Frequent project scope expansion
   • Failure in function identification and its’ completion
2. Budget Risk : Budget related risks refers to the monetary risks mainly it occurs due to budget overruns. Always the financial aspect for the project should be managed as per decided but if financial aspect of project mismanaged then there budget concerns will arise by giving rise to budget risks. So proper finance distribution and management are required for the success of project otherwise it may lead to project failure. Some reasons for Budget risks –
   • Wrong/Improper budget estimation
   • Unexpected Project Scope expansion
   • Mismanagement in budget handling
   • Cost overruns
   • Improper tracking of Budget
3. Operational Risks : Operational risk refers to the procedural risks means these are the risks which happen in day-to-day operational activities during project development due to improper process implementation or some external operational risks. Some reasons for Operational risks –
   • Insufficient resources
   • Conflict between tasks and employees
   • Improper management of tasks
   • No proper planning about project
   • Less number of skilled people
   • Lack of communication and cooperation
   • Lack of clarity in roles and responsibilities
   • Insufficient training
4. Technical Risks : Technical risks refers to the functional risk or performance risk which means this technical risk mainly associated with functionality of product or performance part of the software product. Some reasons for Technical risks –
   • Frequent changes in requirement
   • Less use of future technologies
   • Less number of skilled employee
   • High complexity in implementation
   • Improper integration of modules
5. Programmatic Risks : Programmatic risks refers to the external risk or other unavoidable risks. These are the external risks which are unavoidable in nature. These risks come from outside and it is out of control of programs. Some reasons for Programmatic risks –
   • Rapid development of market
   • Running out of fund / Limited fund for project development
   • Changes in Government rules/policy
   • Loss of contracts due to any reason

More risks associated with software development:

1. Communication Risks: Misunderstandings, mistakes and a general sense of confusion can result from inadequate or absent communication.
2. Security Risks: Vulnerabilities that might compromise the privacy, reliability or accessibility of the set are known as security risks and they have become common in a time.
3. Quality Risks: The risk associated with quality is the potential for a product to be delivered that does not meet end user satisfaction or required criteria.
4. Risks associated with Law and Compliance: Rules and laws are often overlooked when it comes to project development. Ignoring them may result in penalties, legal issues or just a lot of difficulties.
5. Cost Risks: Unexpected costs, changes in the project scope or excess funds may completely halt your financial plan.
6. Market Risks: The effectiveness of your programme in the market may be compromised by evolving technology trends, new competitors or shifting the customer wants.