Table of Contents
Chapter 1: Introduction
1.1 Background and Context
1.2 Aims and Objectives
1.3 Importance of the Research
1.4 Layout of the Research
Chapter 2: Literature Review
2.1 Background and Definitions
2.2 Single Project Risk Management
2.3 Multiple Project Risk Management
2.4 Risk Management and Project Success
Chapter 3: Methodology
3.2 Research Paradigm
3.3 Research Design
3.3.1 Research Participants
3.4 Data Collection Process
3.4.1 Primary Data:
3.4.2 Secondary Data
3.5 Questionnaire design
3.6 Ethical Considerations
3.7 Limitations of the Research
3.8 Validity and Reliability
Chapter 4: Results Analysis and Discussions
4.1 Descriptive statistics
4.2 Implementation of Risk Management
4.3 Success Related to Risk Management
Chapter 5: Discussion and Conclusion
5.1 Risk Management Implementation
5.2 Risk Management and Project Success
5.3 Implications of the Research
This is research has the intention to examine risk management in multi project environment with the aim of finding out how organisations does their risk implementations and if the implementation of risk processes within participant organisations has any impact on the rate of project success within a multi-project environment. As found in most literatures, project risk management has concentrated more on single standalone projects as opposed to managing project risk as portfolio where lesson learned from one project could be of benefit to another project within the same project environment (portfolio).
As risk management in projects has evolved over the recent decades as an integral part of project management in recent time, it has gained tremendous attention within the industrial sector because of an increased awareness about the relationship between efforts to reduce risk and project success.
Within the academic community, there is the existence of gap in literatures regarding risk management in multiple project environments, and for the fact that the research that has been performed within the academic community has largely focused on the idea of risk management occurring in single project environments; the research will be aimed at how risk management is implemented within the organizations that will be examined, in order to draw up conclusion if risk is better managed at single project level or at multi- project level (portfolio level).
I acknowledge the inputs and feedbacks of my supervisor Alex Dalzell. I also acknowledge fellow members of Project and Risk management groups in LinkedIn and APM [Association for Project Managers] Berkshire Branch for all their inputs, suggestions, feedbacks and guidance when it mattered most. I also want to acknowledge Rolf Olsson who in his Research of 2008 on Risk management in a multi-project environment: An approach to manage portfolio risks published on the International Journal of Quality & Reliability Management that led as a catalyst to this research at hand.
This work is dedicated to the Almighty God for seeing me through the stress of work, family and study, and for my lovely wife for being there at all times. I also dedicate this to my two wonderful children, Amara and Chinua Ezeoke for always showing yours skills in writing, painting and graphic design on the pages of my textbooks even when your services are not needed. In all, I dedicate this work to my both late parents [late Mr Jonathan Ezeoke and late Joana Ezeoke] for your insight and valuable advice during their lifetime on the need to be educated not just on paper but to liberate the mind. Additionally, I will not forget to mention my Hero and Mentor, General Dim Emeka Ojukwu [Ezeigbo GburuGburu, the people’s General] for because of your inspiration and influence I started this course. I constantly drew from your wealth of wisdom. Though you are no longer with us, you will ever remain the hero of the Biafran-Child.
Chapter 1: Introduction
1.1 Background and Context
Risk management in projects have become an ever evolving area over the recent decades as an integral part of project management; and has always been present in the industrial environment (Olsson, 2007).The focus on risk management within the industrial sector has gained great attention in recent decades because of an increased awareness about the relationship between efforts to reduce risk and project success (Miles and Wilson, 1998; Wider and Davis, 1998). For project managers, the increased focus on risk management has meant that they have had to devote greater attention to the particular risks that are associated with the projects that they manage, regardless of whether they operate within the construction industry, information technology, or manufacturing (Olsson, 2007). In other words, “the responsibility of the effectiveness of risk management lies within project management” (Olsson, 2007). Clearly, every human endeavour involves risk (Wider and Davis, (1998) cited in Baccarini et al., 2004), and risk can be seen as barrier to success (Miles and Wilson, 1998, cited by Olsson, 2008), and has been viewed by Hertz and Thomas (1994) cited in Olsson, (2008) as being related to the concepts of chance such as the probability of loss or ruin.
Within the academic literature, the process of identifying and then working to reduce or eliminate risks associated with various types of projects has been stated to be an essential element of success (Baccarini, Salm and Love, 2004). The problem, however, is that much of the academic research surrounding risk management and its impact on successful project management has focused on risk management in relation to single projects (Olsson, 2008). The idea has been that project management is something that is based on mitigating and reducing risks on a single project rather than attempting to reduce risks across multiple projects (Artto, Kahkonen and Pitkanen, 2000). Though however, this school of thought considers risk as loss and associates it with negative connotation, on the other hand Jaafari (2001) sees risk as exposure to loss or gain, and Baccarini et al., (2004) opines that risk management is an essential process for the successful delivery of projects.
If according to Baccarini et al. (2004) that risk management is an essential process of (single) project delivery, the question that will come to mind is, does risk management as it applies to (single) projects also apply to multi-projects (portfolio) as well? By this, according to Olsson (2008), risk management in project perspectives have mostly focused on managing risks in single projects, and that not much has been done in the area of portfolio risk management. The reason why there is a concern about project risk management only as it relates to reducing and eliminating risks associated with a single project is viewed as a problem because most organizations do not carry out projects in a vacuum. Instead, project management requires bringing together resources within an organization, such as financial resources, human resources, and time, so that they can be used to complete multiple projects for the sake of organizational success (Sanchez, Robert, Bourgault and Pellerin, 2009). Attempting to carry out risk management for each project within an organization in which multiple projects are on-going at any given time may mean not fully utilizing the skills or resources within an organization, as well as ignoring risks that may exist across projects that could result in project failure (Artto, Kahkonen and Pitkanen, 2000).
Managing projects in multi-project environment refers to the management of project portfolios and not just the management of single projects separately (Artto el al., 2000). On the other hand, risk management in projects has been viewed as a process to manage events which has effect only on project’s objectives, such as time, scope, or quality objectives (Copper et al., Olsson, 2007; Perminova et al., 2008 cited by Sanchez et al., 2009). These project objectives constitute the project deliverables, which determines the success or failure of a project. To, deliver these project deliverables, Sanchez et al. (2009) suggest that it is necessary to build stronger risk culture if efficacy of risk management process in project-based organisations must be increased.
1.2 Aims and Objectives
The primary aim of this research is to investigate whether multiple project (portfolio) risk management results in greater project success for organizations as compared to single project risk management. The goal of using this aim to guide the investigation is to be able to provide a direct comparison of project outcomes between those organizations that use single project risk management and organizations that have adopted multiple project risk management. In order to provide additional focus for this investigation and to ensure that the underlying aim of this research is achieved, two specific objectives have been created:
- To examine how the selected organizations implement risk management, and evaluate if risk when identified in one project creates opportunity in another project within the same portfolio.
- To examine if when an organization does adheres to their risk management procedure, if that translate to project successes, if yes, could that be applied to project portfolio, if not, what could be suggested.
These objectives provide an important focus for this research with regards to the methodology that is used to obtain data in order to address the aims of this investigation. The ability to determine whether multiple project risk management results in greater project success for organizations as compared to single project risk management requires an examination of how organizations implement risk management process. At the same time, it is useful to understand whether project and risk managers within organizations who identify risk in one project are able to understand how the identification of risk in one project may actually create opportunities for risk reduction and elimination in other projects. In other words, to find out whether there is a cross communication and information sharing as it concerns risk within the organization.
Furthermore, it is necessary to determine if organizations are actually adhering to their risk management procedures, and if those procedures result in project success. It might be that the organizations that are investigated as part of this research is not adhering to the stipulated risk management procedures, or that the risk management procedures do not aid in achieving project success. In order to demonstrate results that are valid in terms of showing whether multiple project risk management is related to greater project success, it must first be determined that the organizations that are studied are having success with the risk management procedures they use, regardless of whether those procedures are intended for use on a single project or across multiple projects.
1.3 Importance of the Research
The importance of this research can be explained from both academic and practical standpoint. From an academic standpoint, there is the existence of gap within the literatures regarding risk management in multiple project environments. Most of the research that has been performed by the academic community has largely focused on the idea of risk management occurring in single project environments (Olsson, 2008). The idea has been that risk management is performed on each project within an organization regardless of whether projects are related to each other or how the overall resources of an organization may be shared across projects. However, continuing to focus on risk management as a process that occurs in relation to each project in an organization and not across multiple projects seems to ignore the environment in which companies operate in which multiple projects not only take place at once, but an environment in which the success of any single project is at least partially related to the success of other projects (Artto, Kahkonen and Pitkanen, 2000). This research will help to move the attention of the academic community toward the idea of risk management as a process that can occur for an entire portfolio of projects in an organization. In addition, the results of this study can be used as a starting point for other investigations about how risk management is carried out in multiple project environments, as well as the relationship between risk management efforts related to multiple projects and overall project success.
From a practical standpoint, the findings of this study can have important implications and provide important and useful information for project and risk managers, as well as corporate leaders. If the results of this study show that risk management across multiple projects is related to greater project success as compared to risk management in a single project environment, then it would provide empirical evidence for those project managers and companies that are still focused on single project risk management that it may be in their best interest to reconsider and perhaps change focus of their risk management efforts. Actual evidence would exist to demonstrate that risk management across multiple projects is indeed related to greater project success.
In addition, this research can provide project managers with information about how other project managers and companies have implemented risk management across their entire portfolios, and whether these efforts have been successful. The importance of this information is that project managers and companies that are still using single project risk management can begin to implement portfolio risk management by using the techniques that have been successful for others, while avoiding those actions and strategies that have not be highly successful. In the end, this research will contain a large amount of information and insights that can be used in real-world situations to assist project managers and companies in adopting multiple project risk management.
1.4 Layout of the Research
Following this introduction to the research, chapter 2 contains an in-depth literature review about risk management, single project risk management, and multiple project risk management. The literature review is provided to offer in-depth understanding of the existing literatures, as well as to determine the specific factors and characteristics that have been found in previous studies that are related to project success in relation to risk management efforts. Then, the methodology used for this investigation is provided in chapter 3. The complete explanation is provided about how the data collection for this research is carried out, as well as the way in which the methodology that has been chosen addresses issues of reliability and validity in order to ensure the results from the data analysis are of the highest quality possible. In chapter 4 of the research, the analysis of the data are provided, as well as a discussion about the results of the study and what they mean from both an academic and practical standpoint. Finally, chapter 5 provides a conclusion of the research and a discussion of the strengths and limitations of the study, as well as recommendations for future research on this topic.
Chapter 2: Literature Review
2.1 Background and Definitions
Before examining the literature and ideas about single project and multiple project risk management, it is important to provide an overview of some of the terms related to the subject to be discussed. The first term that needs to be defined is “risk management” as it relates to projects. Risk management is the process of planning, organizing, monitoring, and controlling a project, as well as identifying and mitigating risks so that the goals and objectives of the a project are achieved (Lee, Park & Shin, 2009: Richman, 2011; Archer & Ghasemzadeh, 1999; Caron Fumagalli & Rigamonti, 2007). It is the job of not only project managers, but also other stakeholders within an organization to carry out the process of identifying and controlling or mitigating risks that could delay a project, cause cost overruns, or simply result in the goals and objectives of a project not being met.
Risk management is a vital part of any project because it allows for contingency plans to be developed as to how specific risks that cannot be completely controlled can be handled should they arise (Kwak & Ingall, 2007; Hanpeng & Yongbo, 2011). Most of the problems that are encountered on a project that result in a lack of project success are related to the inability to properly identify and address risks. The risks are often not identified are related to a variety of areas such as scheduling, costs, ability to bring together all necessary suppliers and partners in an effective manner, and even a lack of coordination on the part of the project manager (Balikuddembe, Osunmakinde & Bagula, 2009). Risk management makes it possible to identify the risks associated with a project and create strategies to prevent them from derailing a project (Madic, Trujic & Mihajlovic, 2011).
However, it is important to understand that there are different types of risk management with regards to the number of projects that are managed. Single project risk management is the process of identifying and managing the risks associated with a single project. Within single project risk management, the sole focus is on the single project and the risks associated with that project. All of the activities associated with identifying, monitoring, and controlling risks occur only on the project in question (Hutchin, 2001). As noted by Baccarini et al., (2004) that risk management is an essential process for a successful project delivery, however, it is with less evidence that the success associated to risk management in single project could as well be associated with multi-projects (project portfolio). Evaristo and Fenema (1999) argue that the vast majority of practical and theoretical developments on project management have been related to single projects. Olsson (2008) writes that the existing risk management processes do not support projects in managing risk within a project portfolio, and states clearly that there is a need for a shift in focus for risk management in a portfolio environment, and considers risk management in a single project insufficient due to the focus on a single project.
In contrast however, multiple project risk management is seen as the process of managing the risks associated with a portfolio of projects (Turner & Mueller, 2003). In this type of risk management, the identification, monitoring, and control of risks is not focused on a single project, but the full range of projects on-going within an organization. The focus of multiple project risk management is to mitigate risks across the entire organization (Hutchin, 2001). Lycett et al. (2004) and Pellegrini (1997) cited by Sanchez et al. (2009) describe multiple project risk management (portfolio risk management) as focusing more on strategic issues for a portfolio of projects and the ability to achieve strategic objectives. Turner and Mueller (2003) consider portfolio as a permanent or temporary organisation in which their components are managed together to coordinate interdependencies. Sanchez et al. (2009) in their extensive research on risk in project, program, and portfolio management conclude and agreed with Olsson (2008) that project risk management is a well-developed domain in comparison to the program risk management and portfolio risk management field for which specifically written methodologies are difficult to find.
While there are a variety of methodologies tools, concepts, and even and project management software that can be used to carry out risk management functions of both single project and multiple project risk management, the academic literature has largely focused on single project risk management (Filippov, Mooi, Aalders & Van der Weg, 2010; Herroelen, 2004). This is troublesome because most companies carry out their business activities based on individual projects; and it is the success or failure of those projects that can lead to the success of failure of an entire organization (Hopkinson, 2011). It has been argued that because companies carry out more than one project at a time, the risks associated with those projects need to be examined and mitigated across the organization and not in isolation (Lycett, Rassau & Danson, 2004).
Because most companies carry out more than one project at a time, the lack of research regarding multiple project (portfolio) risk management and whether it can lead to greater success for companies as compared to single project risk management is a major gap within the academic literature. The lack of research on multiple project risk management demonstrates an area in which additional research is needed, and shows the importance of the current investigation (Evaristo & Fenema, 1999). Companies can benefit from not only having more information about multiple project risk management, but also have empirical evidence about the successes that may be possible from this type of risk management as compared to single project risk management.
2.2 Single Project Risk Management
The question arises as to why the academic literature has largely focused on single project risk management if most companies have multiple projects occurring at any given time (Hopkinson, 2011; Olsson, 2008). One of the reasons for this may be related to the theoretical concept of the risk management process. Within the risk management framework, the process of risk management begins with the actual identification of risk, followed by determining potential causes of the risks and the ways in which those risks may be constrained. Then, the risks are quantified so that alternatives can be developed for how to address the risks should they arise based on their importance to the overall project (Hopkinson, 2011). Based on the alternatives that are developed and the level of importance of the risks, the best alternatives are chosen, a plan is put into place to manage the risks and implement the alternatives, and the a review occurs to evaluate project success and determine if new risks have been identified (Gupta, 2011).
Within this generic framework of risk management, there is no step that involves examining the risks associated with other projects within an organization, or attempting to learn from the risk management process occurring with the larger organization. Instead, a company that follows this generic framework would likely perceive that risk management is something that occurs in isolation in relation to each project. However, another reason that much of the focus within organizations is on single project risk management may be the perception that the risk management process is too great and can easily result in a project manager taking on too much work and focusing on issues and concerns that are not related to the project that he or she is leading (Steyn, 2002).
Furthermore, single project risk management is easier because it requires less coordination between project managers (Steyn, 2002; Hopkinson, 2011; Olsson, 2008). In single project risk management, a project manager only needs to focus on his or her project. There is likely little need to coordinate activities with other project managers, perhaps with the exception of scheduling employees or in relation to the allocation of resources. Unfortunately, it seems to be forgotten in single project risk management that issues of scheduling and resource allocation are risks that must be examined and controlled (Raz, Barnes & Dvir, 2003). Project managers who perceive that their projects are the most important within an organization, and as such will receive the immediate access to the resources that are needed above other projects that are occurring in the same organization, may be setting themselves for failures. They may be overlooking a central issue that could result in project failure regardless of the other outcomes that are achieved.
Another reason that single project risk management may be viewed as the acceptable means of risk management even within organizations that have many projects occurring at once is because some have attempted to distinguish risk management from program management (Chapman, Ward & Ward, 2003). In an attempt to address risk management in which the risks associated with several projects are managed together, the concept of program management in which a person or group of people oversee a number of projects at once has been applied to this process. The problem that would seem to arise from trying to label risk management as something unique when it occurs across multiple projects is that project managers might view themselves as not being part of that process.
For example, in some of the literature, it appears that only certainly risks are viewed as being important at the organizational level (Hopkinson, 2011). Risks such as bidding on projects and being able to complete multiple projects at once with the internal resources that are available have been treated as though they deserve special attention in organizations when multiple projects occur at once (Kakhonen & Artto, 1997). The problem that could occur with this type of thinking about risk management is that once any risks associated with bidding or accepting projects have been mitigated, project managers might return to a focus of risk management solely within their own projects and not across the entire organization (Hopkinson, 2011; Olsson, 2008).