Dialogue on Risk

Effects of Project Risk Management on Project Success.

Karel de Bakker | 2011 | University of Groningen

“For almost 4 years, all outcomes of this PhD research project have been presented in English. For a good reason, because English is the leading language in the world of science. However, Dutch remains my first language, and it is much easier for me to express myself using Dutch, especially when it comes to saying thanks to the people that have accompanied me on my journey.

The question as to whether project risk management contributes to project success is, in the context of project management practitioners, essentially a question about the value of an instrument. In the case of a project; an instrument that is employed by project managers during the planning and execution stages of a project. The instrument of risk management is employed in projects in order to secure project success, regardless of all manner of unexpected events and situations that may occur during project execution. Some of the questions that relate to various perspectives on how risk management contributes to project success include:

  • What are the elements of the project risk management process?
  • What happens when the process is executed or elements of the process are executed
  • How does the process or perhaps the individual process elements influencethe project result?

These questions adhere well within the broader context in which an attempt is made to determine the value of project management in general for business (Thomas & Mullaly, 2008). Project risk management activities form a subset of project management. Most organisations participating in the study by Thomas and Mullaly (2008) claim intangible value as a result of the use of project management. More than half of the organisations claim tangible value resulting from project management, although none attempts to quantify this value. Considering the high exposure of the Thomas and Mullaly study and the significant budget of over 1.5 million US dollar assigned to conduct the study, thereis apparently a serious need in the practitioners‟ world to find answers to these and similar questions on the value for business of project management practices in general and project risk management in particular.

There is a second similarity between the search for an answer to the value of risk management and the search for an answer to the value of project management in general. “Although the holy grail of demonstrable project management value is often discussed and even proclaimed in consulting and practitioner literature, the actual value resulting from investments in project management has been hard to define – let alone measure” (Thomas & Mullaly, 2008:1). The perceptions of project risk management are very similar to the perceptions of project management in general. Although there is a generally accepted belief that risk management contributes to the success of a project, there is little evidence in literature that supports this statement in relation to Information Systems and Information Technology (IS/IT) projects, as this thesis will demonstrate. In addition, a project frequently has a duration of several months during which numerous events occur and numerous interactions between project stakeholders take place. This makes it very difficult to isolate the effect of one particular set of actions, in this case project risk management actions, upon project success. In order to draw valid conclusions about the relationship between project risk management and project success, it is therefore important to pay attention to potentially disturbing effects that are caused by the events and interactions that occur during a project.

It appears that at least two lines of thought that emerged over recent years, have contributed to the recent high ranking of the value question on the research agenda (Thomas & Mullaly, 2008). The first being the discussion to answer the question: “Whatis project success?”, a question that relates directly to the value question. This discussion commenced at the end of the 1980s with the paper by de Wit (1988) and was later pursued by others including, Turner and Cochrane (1993), Baccarini (1999) and Shenhar et al. (2001). More recently Agarwal and Rathod (2006) and Thomas and Fernandez (2008) contributed to the discussion by investigating project success in the context of IS/IT projects. In this discussion1, project success has developed from anobjective, measurable characteristic, represented by the “iron triangle” of time, cost andquality (Atkinson, 1999) into a concept that includes opinions and perceptions of individual project stakeholders on project success as well as additional dimensions such as the contribution of the project result to business objectives and the potential the project result has to support future potential of the business (Shenhar et al., 2001).

1 This debate in the context of project risk management is similar to the debate in quality management literature between quality defined as satisfying the requirements versus quality defined as fitness for use (see for instance Garvin, 1987).

Furthermore, this “iron triangle” of time, budget and quality plays an additional role inrelation to risk management and project success. The iron triangle is still often used to determine if a project can be considered a success (Royal Academy of Engineering, 2004; The Standish Group International, 1999). According to these reports, too many projects that involve IS/IT projects deliver too late, they cost too much money, and their results are disappointing. It is therefore tempting to conclude that these projects can be deemed unsuccessful, and that is what these reports conclude. The advice is (Royal Academy of Engineering, 2004) to add additional risk management, in order to improve the project success rate. Conversely, this thesis follows the line of thought that project success is a relative concept that may include more than on time, within budget limits delivery of a pre-defined result. Therefore this thesis relates the effects of risk management on project success in relation to an extended project success definition. Late delivery, for example, in certain circumstances can lead to the conclusion that the project has failed, however in other situations timely delivery plays only a subordinate role, and other aspects are much more important. In the latter examples, late projects can therefore be deemed successful.”

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