Involving Stakeholders in Managing Business Risks

Abstract

Managing a project has never been easy. Large projects in particular more often fail. Even if the projects are successful, they deliver less value and will call for significant maintenance overheads. According to a study done by McKinsey/ Oxford, half of IT projects with budgets of over $15 million dollars have run 45% over the budget, are 7% behind schedule and deliver 56% less functionality than predicted. That means that, at least half the time, achieving at least $15 million in benefits, requires spending $59 million. This is clearly not just a project risk, but a big business risk that most CEOs of companies are worried about. A project not delivered on time will affect the sales schedules of the company and will impact the revenue growth. A project not delivered within the budget will affect the project cost and will impact the profitability. A project not meeting the desired functionality will affect the turnaround time ancr will impact productivity. All the three parameters - revenue growth, profitability and productivity will impact business and hence not achieving these will be treated as business risk.