Many components must be estimated, tracked, and controlled while managing any software project. These components include resources (people, equipment, tools, etc.), schedule, cost, requirements, quality, and acceptance testing. The key to balancing all of these components is one of managing risks.

A serious problem, and one that is being encountered more frequently in the global economy, is an increase in the number of software projects which encounter significant risks, due to the intense rate of both technological and economic competition. Using tools to assess and measure risk can help improve the outcome for all software projects. A “risk envelope” is a virtual container within which a team attempts to execute the project by managing risks so that the project may be successful. The “risk envelope” is simply a way to describe the uncertainty in a measurement or estimate, regardless of whether it is schedule, resources, requirements, or some other aspect of the project. This paper provides guidelines for the assessment, identification, and management of risk involved in software development projects using the concept of the risk envelope.