One of the key risk management controls for an Agile Risk Management Framework is to limit the amount and time between investment and return.
A development organisation needs to deliver investments where the Lead Time and Weighted Lead Time are within agreed thresholds. Limiting the lead time also limits the financial value of inventory in the development organisation that is not delivering value to customers. An organisation may limit both the lead time (or weighted lead time) and/or the financial value of inventory (See CFD below).
This leads to a new way of looking at the RAG status:
- RED – The investment is over the lead time (weighted lead time) limit.
- RED (Trending) – The investment is expected to breach the lead time (weighted lead time) limit.
- AMBER (Trending) – The investment might* breach the lead time (weighted lead time) limit.
- GREEN (Trending) – The investment is not expected to breach the lead time (weighted lead time) limit.
Organisations in transition often struggle to make lead time targets. It is possible that the organisation might allow longer lead times provided software is delivered into a pseudo production environment, and that there is a commitment from executives across the entire value stream to achieve the target lead time within an agreed time period.
* As indicated by a tool such as Troy Magennis’s Monte Carlo Simulation.