Risk in project management: Scrum vs Prince 2

Introduction (200 words)

Risk in project management is defined as the possibility to be exposed to adverse consequences on future events during the planning or development of a project (Hughes etal 2009, p.163). The risk analysis is an important part in developing the project, because after analysing all the risks involved in the project development can be determined whether this is executable or not (Yeates 1991, p.43).

To facilitate the understanding of risk in project management this paper will further explain how Prince2 and Scrum methodologies manage risk.

 Prince2 Considers that risk in project management must maintain a balance of attention between the threats and opportunities with appropriate management measures to keep to a minimum or eliminate the potential risk (Williams, p.11). Under this framework we analyse two different types of risk internal and external with innovative and proactive responses to maximize opportunities (Chapman 2011, p.354). The revision of the risks is part of the project"s life cycle and has an stabilized process and structure to ensure intervention at all levels showing the changes (Williams, p.11).

Huges (2009, p.280) defined that risk in project management in software development with Scrum as one methodology where the risk is analysed every day in meetings established with Scrum, where the risk is identified, reported and resolved at the team level.

The Concept of Risk in Project Management (300 words)

"The art and science of identifying, analysing and responding to threats" of objectives proposed at each meeting during the project life cycle (Schwaber etal 2010, p.425).

Royer (2002, p.4) conceptualizes that all projects begin with the statement of objectives. In each objective is to "serve and meet the needs" of all persons involved in the project. Making it clear that the risk must be kept to a minimum because the risk is all that prevents success in a project (ibid p.4).

Kendrick (2002, p.28) proposes that through the study and understanding of Risk in project management can 'improve the chances of projects' to achieve the objectives at each stage of planning, although there are no guarantees, it is preferable to have a good knowledge of risk classes to which the project faces to strengthen the chances of success. The central theme of Risk in project management is to develop a reliable scheme for the development of projects, which can show whether a project is viable, or demonstrate that the project is not feasible to avoid or modify (Kendrick 2002, p.28). Risk analysis provides an opportunity to improve project quality (ibid p.40).

For the development and comprehension of the importance of risk in project management in this paper is base on this definition. Is an iterative process during the life of the project having as purpose to minimize the probability of occurrence or consequences of risks and maximize opportunities within the project (Dawson 2009, p.83). Following a risk management plan, which describes the identification of risk, estimation of probability of occurrence and impact of risk, quantify the alleged cost of risk in the event of plans of action to manage risk, high priority (ibid p.83). The benefits to be obtained with good management are, for example reductions in project cost, ease in developing project objectives, customer satisfaction (Dawson 2009, p.83).

The Concept of Risk in Prince 2 (300 words)

Prince 2 defines risk as the possibility of exposure to adverse consequences of future events inside a given time (Hughes etal 2009, p.163). Prince 2 has divided risk into two types of risk initially for its analysis: Risk inside of the Business and Risk inside of the Project. Once identified there are no distinctions in their treatment and all are included in the risk register (Hughes etal 2009, p.165).

 Business risks, are all those risks that a company can be involved e.g. Changes in the consumer market, policy changes, legislative, including public opinion of the city, etc. Taking responsibility in the Project Committee to manage these problems (Hughes etal 2002, p.141).

 Project risks are considered a "set of threats that affect the execution of the project" and obtaining final goals within a time frame and estimated costs (Hughes etal 2002, p.138). Threats can be classified as follows: Reliance on third parties in this case suppliers, organizational factors within the company as: unqualified personnel for the execution of the role or potential safety problems (Hughes etal 2002, p.141).

 Identified risks cannot be stored separately; you must introduce in the risk register to be analyzed comprehensively (Hughes etal 2002, p.152). "This work is done by the Project Committee, the Project Manager or Team Manager-Responsible of the team" (Hughes etal 2002, p.83). Prince 2 handles the risk in project management using the following steps.

Risk management must maintain a balance between threats and opportunities with appropriate management measures to keep to a minimum or eliminate the potential threats and maximize opportunities (Hughes etal 2002, p.260). The revision of the risks is part of the project life cycle and has a stabilization process and structures to ensure intervention at all levels and show the changes (Hughes etal 2002, p.261).

 Risk analysis is based on communication between the levels of project and program information as needed for the identification, estimation, impact of risk assessment and consequential actions (Hughes etal 2002, p.260).

 Risk Treatment are activities that are involved in planning, monitoring and control, aimed at addressing the problems encountered in the development of the project (Hughes etal 2002, p.165).

The Concept of Risk in SCRUM (300 words)

In Scrum the risk is analysed at all times within the life of the project, from the "Scrum is performed daily, meetings where each iteration are planning, release planning meetings, and retrospective review meetings where the risks are presented and resolved" (Phillips 2004, p.177). Sliger (2008,p.178) recommends that for better understanding to the people involve in the project of how this methodology handle the risk they must see it as a structured approach where only the risk involve in the project development is analysed within the following steps.

In this step The identification of risks is a task that does all the team and the results are written on a blackboard or flipchart (Sliger etal 2008, p.184). In the risk analysis. The team use the technique of qualitative analysis. Which employs "judgment, intuition and experience of each person to determine the potential risks and losses in the different stages of development" (Sliger etal 2008, p.188). However it should be emphasized that the cycles are short and are subject to on-going review, resulting in effective development (ibid p.188). Risk Response Planning. The whole team contributes to the development of actions and options for the reduction or elimination of risk and maximizes opportunities (Sliger etal 2008, p.189). Risk Monitoring and Control, is very clear that the risk monitoring is continuous at the termination point of each iteration we discuss the strategies used in controlling risk (ibid p.189). One of the advantages of this methodology is that the risk is monitored daily by the use "of information radiators" (ibid p.189).

Comparison of the concepts and handling of risk in Prince2 and Scrum

To systematically compare both methodologies, they will further be split into different parts; similarities and differences of both, advantages and disadvantages of each respectively.

Similarities between Scrum and Prince2.

The current world we live in suffers many alterations, such as technology and business needs of the market, that are changing at a very fast pace, so if software projects do not go at the same speed, they run the risk of falling under major problems (Kidd 2011, p.53). Many authors assert that Methodologies Scrum and Prince2 cannot be used alone, so it is Very Important to Implement other Methodologies (Hughes etal 2009, p.176). For example, Scrum is considered as a framework, resulting in many cases the implementation of other methodologies such as Extreme Programming XP for a good monitoring of the Risk and Development of the project (Phillips 2004, p.394).

Scrum and Prince2 in risk management are Methodologies that have to be used according to the guidelines (Phillips 2004, p.255). They have to be adapted to the Needs of the company's project (Phillips 2004, p.176). While Scrum has an iterative the process and Prince2 an incremental process, both methods have the Principle of continuous Risk reports (Phillips 2004, p.177).

They Have quality Risk limits at all Levels of the project and these are: Agreed and strict tolerance (Williams, p.13). "This last part is very important because depending on the type Tolerance company provides a balance to Risk Occurring and cost of Limiting Risk, for example in Business cases" (Williams, p.13). These allow to analyse user Methodologies Needs to view the problems and Risk Involve, eleven you get the results, Communicate to the client (Williams, p.14).

The Differences that can be found in the implementation of these Methodologies are:

"When we refer those who are responsible for risk management Scrum defines who is the team responsible for solving any problem or risk arising during the development of each Sprint" (Phillips 2004, p.177), while with Prince 2 "is the Project Manager in charge of identify, record and check regularly the risk, then go to the Project Board a report explaining the risks appeared in the phase" (Hughes etal 2002, p.261). The Project Board report based on the recommendations of the Project Manager decides what actions to take to manage risk and performs a valance between the degree of risk and the benefits the project can be achieved, then the Project Board is responsible for notifying the Project Manager of potential external risks that the project may be subjected and to inform the corporate or Programme management of "risks that could affect the reach of the programme or corporate objectives" (ibid p.261).

Once understood who are the risk managers to understand the next topic is Risk ownership, preserved under the Scrum methodology as is observed during the "Sprint Review the of Risk is transferred from the development team to the costumer in a communication and transparency" (Pries etal 2011, p.51). "Prince 2 has a different approach has the Executive Where the total control over the project manager ownership meanwhile has partial control of all risks involved in the project" (Williams, p.11).

Scrum classifies risks: general and specific, general risks are those that are so common in every project, and risks are those that occur in the environment and project environment (Miranda 2004, p.48). Prince2 classifies risk as external and internal, external risk is considered as everything related with the company and internal risk as everything related with the project (Williams, p.11).

The facility of Management of Risk response to the changing of the Scrum Methodology Requirements Increases because the changes file are permitted (Phillips 2004, p.177). It may occur at the Beginning of Each sprint or iteration because the changes file and the level of Risk cannot be predicted (ibid p.177). Meanwhile with Prince2 is the opposite (Williams, p.13).

Advantages of Scrum:

The approach of Scrum managing its project through Sprints enables it to have a better grip of identification of any abnormalities/problems that may turn into risks in a short time during the execution of the project because of the sprints of small duration (Phillips 2004, p. 176). Therefore yielding the project success (Phillips 2004, p.177).

The ability to manage risks in Scrum team is constantly enhanced Scrum resulting in handling all kinds of risks because the responsibility and authority is given to the development team (Phillips 2004, p.177). This feature of this methodology creates a better working environment, promotes innovation and motivation in developing the project (Hughes etal 2009, p.278).

Continuity of Risk Management in Scrum is guaranteed because it is a task performed ending the Sprint, a process that is cyclical and will as a side event in the development of the iteration, each sprint should perform five steps involving the management of risks (Phillips 2004, p.254).

Advantages of Prince2:

Prince2 defines the risks that can occur in software projects (Hughes etal 2002, p.258). These may originate in any element that is part of the project development methodology so this makes it very clear of the roles and responsibilities involving all aspects of the organization involved in the internal or external risks such as: business, users, suppliers, human resources, requirements and the final product quality, is well defined in the risk management component of project (Hughes etal 2009, p.261).

Prince2 uses a common language as a communication tool thus avoiding the risk of misunderstandings during the development of the project (Williams, p.24).

Disadvantages

The proposal delivered by Scrum templates and documents in the management lacks the information regarding external risks to the project making the project venerable to these risks influencing it to slow down hence delay in project deliverance (Kidd 2011, p.314).

When working with scrum software development products the main problem facing teams is that very often are concentrated in the manufacture of small parts that they forget about the product itself (Phillips 2004, p.194).

In the case of Prince2 the evaluation of risk is judged between the scales of 1-10 by the Project manager (Hughes etal 2009, p.170). This can turn out into a big problem because while concentrating on one risk, he tends to ignore others that maybe much more critical (ibid p.170).

One of the potential risks that are considered within the Prince2 process is that during the project and product development is the lack of communication (Williams, p.23). Since different groups work separately, circumstances may occur when one team has finished before the other (ibid p.23).

Discussion and Conclusions

These two methodologies are well known in Europe and UK for the quality that Scrum gives to software development and Prince2 for the facility that provides in the Management Development within a project, despite Scrum and Prince2 have different ways to handle risk, these methodologies perform a good job in risk management. However, many authors argue that given certain projects, for example, large-scale projects or projects implemented in different countries where the methodologies are not known, the companies shall use other methodologies to control risk and to achieve success.

These methodologies fit perfectly to the needs of the changing world, taking the unpredictability of risks in projects as an asset and any amendments or changes as opportunities for continuous improvement. Scrum methodologies is one of the most widely used in today because of the degree of flexibility provided during the life of the project, allowing a timely risk management as it is not a separate process of the methodology, but it is an activity that is performed during each stage of the project having as characteristics: each team member has the right initiative in addressing risks and active participation of the owner of the product in the product development.

Bibliography

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Williams G PRINCE2® Maturity Model (P2MM) OGC  Procurement | Programmes & Projects Version 2.1 Available At http://www.p3m3-officialsite.com/nmsruntime/saveasdialog.asp?lID=462&sID=166

Autor:

Mr Hernan Santiago Portero Portero

Module Leader:

Dr Elke Duncker

School of Engineering and Information Sciences