Evaluating software project portfolio risks

As in any other business, software development organizations try to maximize their profits and minimize their risks. The risks represent uncertain events and conditions that may prevent enterprises from attaining their goals, turning risk management into a major concern, not only for project managers but also for executive officers involved with strategic objectives. In this sense, economical concepts can greatly support Software Engineers in the effort to better quantify the uncertainties of either a single project or even a project portfolio. In this paper, we present a technique for evaluating risk levels in software projects through analogies with economic concepts. This technique allows a manager to estimate the probability distribution of earnings and losses incurred by an organization in relation to its software project portfolio. This approach has been calibrated by data collected in an empirical study, which has been planned and accomplished to provide information about the relative importance of risk factors in software projects. A usage example of such an approach is presented. Finally, we introduce a case tool specially built to support the application of the proposed techniques. (C) 2006 Elsevier Inc. All rights reserved.