How does agile reduce the risk of failure in software development projects?

They say no risk, no fun... While this saying may not be true in the area of software development projects, we must accept the fact that risk cannot be avoided. Therefore, it's better to know the enemy and use the best weapon. It just so happens that the most effective way to manage risk is the agile methodology.

In this article, you will learn why agile methodology, is the best possible project's protection against failure. Like nothing in the world, it is a cure-all that gives 100% certainty, but the properly applied agile principle keeps the project risk at an understandable and "safe" level.

Let's start with a short introduction about what agile is and how the methodology qualities favor risk management.

What is agile about and how it keeps the risk away

Agile methodology, per definition, is about a skill to act quickly. To make it possible the work must be performed in short cycles. Agile teams deliver a working element of the product, for example, some specific functionality, at the end of each short-term iteration.

This way, the team can examine the effectiveness and value of work delivered and then plan the next moves. Do we continue to work on the same track, or a change of direction is already needed? Transparent reasoning and aims lead to fast and wise responses to changes, which is the biggest asset of agile teams.

One of the agile principles is 'Individuals and Interactions over Processes and Tools'. It means that agile puts people in the first place. The methodology supports collaboration, knowledge, and experience sharing as the basis of a mature project team creating the product. Agile projects to succeed, need cross-functional teams with many skills on a board, which can deliver real value even with the project’s complexity.

Great collaboration within a team is, in fact, one of the tools to maintain the risk. The smoother and more effective teamwork is, filled with talking and workshops, the more possible is that the risk will be recognized. Furthermore, continuously delivered working software (or its parts) at the end of an iteration, allows for fast feedback loops. This significantly reduces the risk related to the quality of a software product.

The topic of risk management while running a software development project is vast. Risk factors are various and each of them can be analyzed separately. Agile, however, has responses to most risks. Let’s examine more carefully the risks and the weapons Agile offers.

Common software project risks

Low quality

Delivering a high-level quality product is a key factor project teams have to care about on regular basis. A well-built product is the sum of its elements – carefully built, and secured. What then impacts the bad quality code? The reasons may vary but the most common are unclear requirements, too tight deadlines, and of course technical risks causing technical debt.

What is exactly technical debt? A code that cuts down the agility level of a software project. It happens as a result of using timesaver methods when creating code to achieve the result faster.

In the long-term, a technical debt always comes to the surface and causes troubles, for instance, related to security. Correctly applied agile methodology, however, secures the code quality.

Lack of value

Problems with quality are often associated with the lack of product's value. Does the software development project deliver the product that meets market and audience needs? Building the product users don't need because it doesn't resolve their problems is a waste of money and a direct great way to the product's failure. Does the low business value mean that the product is lack something? Possible, but not necessarily. Very often, software products are overloaded with features. And the statistics are pitiless – consumers don't use over 50% of apps' features. They simply choose the most valuable ones. Still, the client pays for each feature produced, and creating a product with many features means more money spent. If these functionalities are not used afterward because they have little value for the user, the business value is lost and money has been wasted.

Too high cost

It is not an easy task to estimate precisely how much a software product will cost, especially at the project's beginning. Agile bets on a product's continuous improvement so that the effect reaches customer satisfaction and meets the market's needs. Therefore, the cost may overcome the initial estimations.

Here, the risk exposure is relatively high, and managing the risk is a challenging process. This is why planning the work step-by-step is a crucial part that allows for possibly accurate estimations.

Missed deadlines

Another risk software development projects have to manage is the delayed time of delivery. There are various reasons for time risk to occur, but more disturbing, are the effects that delayed delivery can cause. Depending on a project, the late launch may mean the lost of money, and chances for company to grow, or paying some kind of penalties.

Most common risks are related to quality, value, money and time. 

What is the agile approach to risk?

Compared to traditional projects, the agile approach protects software projects with a few effective techniques. The risk management techniques that agile uses affect all the previously mentioned project risks. By applying one type of agile risk management method, we can regulate several potential risks at the time.

Prioritization

To deliver the software product that offers users and business value, the agile teams need to know what is the core of the product. The basis of the product means the most important elements, and features, that a minimum viable product needs to have to be launched.

Agile development is about creating the most important elements first. This is why, the prioritization of the requirements is the crucial analysis, the agile project teams have to conduct. Agile methodologies - Scrum or Kanban have several methods at their disposal, in the form of artifacts and events, that ensure the proper level of prioritization and, as a result, risk reduction.

Backlog
A list of tasks in the form of user stories. This list sets out the requirements for the product and its functionality. The backlog contains many elements, but not all of them will be implemented. However, they are all related to the product's and users' needs.

The team – made up of experts and clients, has to carry out the backlog's prioritization. This is to show, what is the product's essence, and to rank the importance of its elements. It helps with implementing the essential functions at first. This, in turn, enables to manage the risk reduction of project development with no value for the user or business. Backlog prioritization allows the agile teams to build the essence of the product within the budget and on time.

As working in agile is an iterative process, the backlog priorities can change in time. The backlog's re-prioritization takes place continuously, as the agile development team discovered, more details or new information about the project. This makes changes to requirements, which are a normal and frequent occurrence in software projects, safer. Risks related to backlog changes are discussed and checked immediately, which supports risk management.

Transparency

Agile risk management is based on transparency. This one must include all the areas of the agile software development process. Even one not clear but important aspect can impact project risk. Not having the full picture of the project status, and its priorities and problems may sabotage risk management. Lack of transparency can cause building the product with poor quality, not enough user value, or after the deadlines.

Therefore, open communication, as well as using agile increments and events, favors transparency. All details matter here. For instance, the transparent requirements containing DoD (definition of done) are crucial to delivering real value. In contrast, not having clear completion criteria can cause developers to build a product on assumptions and personal understanding of the requirements. Transparency, in that case, is money and time saved.

Other transparency guards are Scrum meetings. Sprint planning, daily meetings, sprint reviews, or retrospectives, all of them, support the transparency. How do the meetings do the job? They give space (open for everyone) for activities that are the basis for transparency:

The better we are informed about the process and its results, the easier we can manage the project risk. Transparency in software development allows us to act quickly. The more we know, the more accurate and fast our actions can be.

Decreasing the batch size

Reducing batch size has an impact on several factors. First of all, it helps when working on a complex project. For the team, it is easier to break up the work into parts and focus on one element. This way, the errors, and inaccuracies can be spotted at the early stages.

When delivering smaller batches, feedback is given more frequently. This helps to maintain the quality and manage the potential changes. It's much easier to change a part of the functionality than to build it from scratches again.

High product quality, and change management, both help in cost reduction. Being up to date with the quality and result of the process parts decreases the possibility of redoing the whole. For a client, it is a great tool for managing a budget.

Reducing the work in progress

Limiting WIP (work in progress) is about decreasing the number of tasks in progress at one time. It means, for instance, that developer builds one functionality at a time. Reducing WIP is a good practice for mature agile teams, as when the team is overloaded with many open tasks, it's difficult to deliver a high-quality product. And this can badly influence other risk factors such as missed deadlines and exceeded costs.

Coping with a large amount of work in progress can lead to difficult situations negatively impacting the whole project:

Why reducing WIP is a great tool for managing risk and team to succeed?

WIP tools

Visualization 

Nothing makes you more aware of a problem than seeing it. Scrum and Kanban boards presenting the separate category of work in progress allows seeing at a glance if there is too much openwork. Simple and easy.

Setting Limits

WIP limits seem to be the easiest method to reduce the open tasks. Together with the visualization board, it can be very helpful to easily see the upcoming limits. When reaching the limits, team members have to finish one task, so there will be a space for another work to open. 

WIP is a typical multitasking issue a modern word faces. Many studies prove, that multitasking significantly reduces productivity and extends the delivery time of individual tasks. As a result, the risk related to quality and time arouse. Limiting WIP is one of the methods that agile project management has up its sleeve to reduce such risks.

Risk management is a must-have

Software development is subject to risk. The more complex the project is, the greater the risks that cannot be left to oneself. Agile methodology is currently considered the best when it comes to project protection against failure. The great tools at agile's disposal take care of several risks, treating the project holistically. After all, a successful project is not only delivered on time and at cost, it is also about the high-quality value it brings. Providing all these elements make it possible for the client to sell the product, and make a profit.

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