Richard Lomothey
Risk Management
The project Manager’s Perspective
Riskhantering
Projektledarens perspektiv
Project Management
MSc. Thesis
Termin:
Handledare:
HT-2018
Henrik Bergman
Tomas Johansson
Lennart Ljung
Abstract
Risk management is often mentioned in project management literatures and
among project managers. From all literatures that discuss project risk
management, it is recognized as an important tool, in project management, which
helps project managers to achieve projects goals in terms of project’s time, cost,
and quality that satisfy stakeholders. Considering the fact that there are always
uncertainties and risks in all new projects, it is of interest to find out if the views
of practicing project managers on risk management are the same as that which the
literatures portray.
The purpose of this study is to find out project managers views on risk
management and it is based on interviews conducted with project managers from
the construction, IT, product development, city planning, marketing, and event
planning branches.
The study concluded that project managers view risk management as a very
important tool in project management and that by applying their leadership skills
in risk management and maintaining proper control of projects, project managers
are able to achieve projects’ goals.
Key words: Project management, Uncertainties, Risk assessment, Risk analysis,
and Risk management
ii
Sammanfattning
Riskhantering nämns ofta i projektledningslitteratur och bland projektledare. Från
alla slag av litteratur som diskuterar projektriskhantering är det erkänt som ett
viktigt verktyg, i projektledning, som hjälper projektledare att uppnå projektmål
när det gäller projektets tid, kostnad och kvalitet som uppfyller intressenterna.
Med tanke på att det alltid finns osäkerheter och risker i alla nya projekt, tyckte
jag att det skulle vara intressant att ta reda på om åsikterna hos projektledare om
riskhantering är desamma som det som litteraturen visar.
Syftet med denna studie är att ta reda på projektledares åsikter på riskhantering
och studien bygger på intervjuer med projektledare från Bygg, IT, produktutveckling, stadsplanering, marknadsföring och evenemangsplanering branscher.
Studien drar slutsatsen att projektledare ser riskhantering som ett mycket viktigt
redskap i projekthantering. Genom att tillämpa sina ledarförmågor i riskhantering
såväl som att upprätthålla rimlig kontroll av projekt kan man därigenom uppnå
projektets mål.
Nyckelord: Projektledning, Osäkerhet, Riskbedömning, Riskanalys, Riskhantering
iii
Acknowledgement
My journey through the entire study at Karlstad University has been a remarkable
one and I have learnt a lot on project management.
I would like to thank all those involved in making this thesis a success and to
those respondents who happily and willingly agreed to be interviewed, I do
sincerely express my heartfelt appreciation. Without them, my thesis would not
have been completed.
Special thanks to my lectures and supervisor who gave me the foundation and
directions needed in becoming a project manager.
Finally, I will like to thank my course mates Linda, Jenny for their continuous
invaluable encouragements and contributions given me during the times when I
felt like fighting an uphill battle with this research.
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Table of contents
1
2
3
4
Introduction ................................................................................................ 1
1.1
Purpose .............................................................. Error! Bookmark not defined.
1.2
Who will benefit from this research? .................................................................. 2
1.3
Research question ............................................................................................... 2
Literature Review ....................................................................................... 2
2.1
Risk assessment................................................................................................... 4
2.2
Risk identification techniques ............................................................................. 9
2.3
Performing Qualitative Risk Analysis .............................................................. 11
2.4
Performing Quantitative Risk Analysis............................................................. 12
2.5
Planning Risk Responses .................................................................................. 12
2.6
Risk Transfer ..................................................................................................... 13
2.7
Controlling Risks .............................................................................................. 13
2.8
Communication Skills ....................................................................................... 14
Methodology ............................................................................................. 16
3.1
Population ......................................................................................................... 17
3.2
Data Analysis .................................................................................................... 17
3.3
Reliability and Validity ..................................................................................... 18
3.4
Ethical Consideration ........................................................................................ 18
Result ........................................................................................................ 19
4.1 Using leadership skills in risk management to facilitate project success .............. 19
4.2 Evaluating projects to maintain control ................................................................ 20
5
Discussion ................................................................................................ 22
6
Limitation .................................................................................................. 26
7
References .................................................................................................. 27
8
Appendix................................................................................................... 30
v
1
Introduction
There are always uncertainties and risk associated with the implementation of
every project. These could be on the cost, time, quality etc. that a project manager
has to be prepared to deal with. Kerzner (2006). The question which then arises is,
what is risk management?
Kerzner (2006) defines Risk management as the process of identifying,
quantifying, and responding to the risks of the project without any material impact
on the project's objectives and Dinu (2015) defines risk management as the
process of identifying, analyzing and responding to risk factors during the life of a
project and in the best interests of its objectives. Dinsmore & Cabanis-Brewin
(2011) on the other hand, defines risk management as the formal process whereby
risk factors are systematically identified, assessed, and provided for.
This process, according to Dinsmore & Cabanis-Brewin (2011) is concerned with
conducting risk management planning, identification, analysis, responses, and
monitoring and control on a project. The authors go on to further say that risk
management must be seen as preparation for possible events in advance, rather
than simply reacting to them as they happen.
Boyer (2016) explains that risk management affects the essential factors to the
success of a project such as the schedule, the scope, budget, communications,
stakeholder engagement, agreed quality of the deliverables, etc.
Studies have shown that there are uncertainties associated with every project
hence risk management is important in achieving the goal of a project. Kerzner
(2006), Nicholas & Steyn (2011), and Yim et al (2015). This is supported by
Burke (2003) when he explains that risk management has always been an intrinsic
part of project management. Chapman & Ward (2003) further explains that the
need to manage uncertainties is inherent in most projects that require formal
project management hence the need for risk management is important.
Monteiro de Carvalho & Rabechini Junior (2013) on the other hand, argue that
risk management shows a wide gap between theory and practice in organizations.
This argument seems to explain that risk management is not widely implemented
or practiced in some organizations. Also, Dey (2002) explains that risk is by
1
nature subjective and that managing risk subjectively poses the danger of nonachievement of project goals. Comparing the arguments of Kerzner (2006),
Nicholas & Steyn (2011), and Yin et al (2015) to that of Monteiro de Carvalho &
Rabechini Junior (2013) and Dey (2002) does seem to raise some sort of
contradiction and this may cast some doubts on some aspiring project managers
as to whether risk management is necessary in project management or not. In an
effort to clarify this doubt, this research will focus on obtaining the perspectives
or views of practicing project managers on risk management. This study will
bring out the views of practicing project management professionals on risk
management. It is hoped that this research will provide an answer to the question:
What do project managers say about risk management?
1.1
Purpose
The research aims to ascertain the project managers views on risk management
1.2 Who will benefit from this research?
It is hoped that the result of this research will serve to encourage both experienced
and inexperienced project managers to see the need for risk management in any
project that they are asked to manage.
1.3
Research question
What do project managers say about risk management?
2
Literature Review
This study aims to find out how project managers view risk management in
project management. Raz et al (2002) defines project risks as undesired events
that may cause delays, excessive spending, unsatisfactory project results, safety or
environmental hazards, and even total failure. They go on to further explain that
the source of projects risk may come from the task itself, which can be
characterized by uncertainty, complexity, and urgency, or from the lack of
resources or other constraints such as skills, or policy. According to Dinu (2015),
anything that threatens or limits the goals, objectives or deliverables of a project is
a project risk. Since we now know the meaning of project risks, we have to look at
what project risk management is. Yim R et al (2014)
2
defines project risk
management as a process for systematically identifying, evaluating, and
mitigating risks to improve the likelihood of project success whereas(and)
Kerzner (2006) on the other hand, defines project risk management as the process
of identifying, quantifying, and responding to the risks of the project without any
material impact on the project's objectives. A look into Burke (2003) expands
these above definitions of project risk management a bit further to include
management of project risk throughout the entire project’s lifecycle. It defines
project risk management as the systematic process of identifying, analyzing and
responding to project risk throughout the entire project lifecycle. In addition to
this definition, it specifically states that these actions should include maximizing
the results of positive events and minimizing the consequences of adverse events.
Burke (2003) view of including project risk management throughout the entire
project’s life-cycle is also shared by Chapman & Ward (2003) where they
emphasize that to be fully effective, risk management needs to address the whole
PLC (i.e. project life-cycle) rather than selected stages, guiding and informing
each and every stage of the PLC. According to Hedemann et al (2005), the project
lifecycle begins with the approval of the project assignment and continues on
through specification, development, testing and implementation up until delivery
of the project outcome. All these definitions of risks by the various authors have
one thing in common. They always link risk with objectives.
Looking at the various definitions of risk above, one can conclude that a risk is
any uncertain event that, if it occurs, could prevent the project realizing the
expectations of stakeholder. With regards to risks in projects, Hoobs (2015)
clearly states that most tasks will contain some elements of risks and that one
needs to set up a threshold at which one is going to begin to plan. He emphasizes
that as a project manager, the risks that you should be concerned with are those
that will have an impact on one of the three project parameters (time, cost, or
quality). Hoobs (2015) and Dinu (2015) argue that project risks need to be
evaluated with respect to two criteria. Probability (how likely they are going to
happen) and impact (how serious will it be if they do). This argument is also
supported by Nicholas & Steyn (2011) when they claim that the notion of project
risk management involves two concepts:
1. The likelihood that some problematical event will occur.
2. The impact of the event if it does occur.
3
This sets risk as a joint function of the above two parameters: Meaning that,
Risk = ƒ (likelihood, impact). Equ. This can also be expressed as:
Risk = Probability of event X Magnitude of loss/gain
This impact/likelihood is illustrated in fig. 1
Fig. 1. Risk and Impact
Source: pm4id.org
Impact, according to Bodicha (2015), affects project elements such a schedule,
budget, resources, deliverables, cost, quality, scope and performance.
The risk and impact diagram in fig 1 actually leads to another important step in
risk management, that is to say, risk assessment.
2.1 Risk assessment
The level of risk based on the impact/likelihood as illustrated in fig. 1 leads us to
Risk Assessment Matrix as illustrated in Table 1. The Risk Assessment Matrix
enables one to determine the three levels of risks. Namely Low Risk, Medium
Risk, and High Risk. This can be used to determine the level of risk associated
with each activity before applying any risk management strategies
4
Table 1: Risk Assessment Matrix
Source: EU interact sharing expertise
Bodicha (2015) on the other hand introduces a five-point scale guide for almost all
project work. This five-point scale is shown in table 2. Risk probability and Impact table.
Table 2: Risk probability and Impact
Scale
Probability
Impact
•
•
•
Very low
Low
Medium
•
•
•
Unlikely to occur
May occur
Is as likely as not to
occur
•
•
Negligible impact
Minor impact on
time, cost & quality
•
High
•
Is likely to occur
•
•
Very high
•
Is almost certain to
occur
•
Substantial impact
on time, cost & quality
Threatens the success of the project
Source: Bodicha (2015)
Based on this risk likelihood and impact we can conclude that a project will,
under normal circumstance, be considered risky whenever the combination of
these two parameters (i.e. likelihood and impact) is large. According to Raz et al
(2002) no one can avoid project risks; however, we can certainly prepare by
adding risk management activities to project plans and put in place mechanisms,
backups, and extra resources that will protect the organization when something
goes wrong. Dinu (2015) shares this view by stating that with a suitable risk
management, the probability of an event occurring and its impact on a project can
be reduced. Carvalho & Rabechini Junior (2015) on the other postulate that some
surveys have found that risk management has low impact on project performance
and at the same time other scholars have suggested that even moderate levels of
risk management planning is enough to reduce the negative effects of risk on
project success.
5
Young (2007) states that there are two fundamental types of risks that are always
present. These are Project risks and Process risks.
• Project risks are those risks that are associated with the technical aspects of the
work to achieve the required outcomes; and
• Process risks are those risks that are associated with the project process,
procedures, tools and technique employed, controls, communication, stakeholders
and team performance. Young (2007)
Young (2007) goes on to further emphasize that as a project manager you have the
obligation, working, with your team, to:
• identify and evaluate potential risks;
• derive a response strategy and action plans to contain the risks;
• implement the actions and monitor the results;
• promptly resolve any issues arising from risks that happen.
Dey (2002) summarizes the process of risk assessment as follows as shown in
table 3:
Table 3. Risk Assessment
Risk Assessment
• Identify risks
• Assess risk
• Determine consequence
scenarios
• Determine control measure
Looking at the definitions of project risk management given by Yim R et al
(2014)
and Kerzner (2006) above, one can easily agree with the definition of
project risk management as stated by the
Project Management Body of
Knowledge that it is the systematic processes of identifying, analyzing, and
responding to project risk throughout the project life-cycle. The inclusion of
project lifecycle by PMBOK (Project Management Body of Knowledge) in the
definition of project risk management, as illustrated in Burke (2003), indicates
that project risk does exist in the project’s concept phase, development phase,
implementation phase, and termination phase. The project risk is, however, lower
at the concept phase and gradually increases with time through the remaining
6
phases and reaches its maximum at the termination phase. This is illustrated in
Fig.2 (Risk vs Amount at stake)
Fig.2 Risk Management Model (Risk vs Amount at stake)
Source: Burke (2003)
Dey (2002) however, chooses to approach the task of risk management by
breaking it down into these three stages: Risk identification, Risk analysis, and
Risk responses.
In his survey to identify the occurrence tools which were mostly implemented and
related to the success of any project management and specifically with effective
project risk management, Ghaeli (2017) identifies the following tools: Analysis,
Background, Control, Identification, Planning and Tracking. These tools listed
are in fact similar to the following six processes.
•
Plan Risk Management
•
Identify Risks
•
Perform Qualitative Risk Analysis
•
Perform Quantitative Risk Analysis
•
Plan Risk Responses, and
•
Control Risks. Zandhuis et al (2013).
These tools or processes are also identified by Kerzner (2006). The PMI’s
PMBOK Guide; however, groups these above listed tools into two groups: The
planning process group and the Monitoring and Controlling Process Group as
illustrated in fig. 3. below.
7
Fig. 3 Plan Risk Management
Source: PMBOK Guide
The risk management plan essentially identifies the risks that can be defined at
any stage of the project life cycle (PLC). It has to be
periodically updated
throughout the PLC of the project. According to Dinsmore & Cabanis-Brewin
(2011), risk management planning is about deciding how to conduct management
activities for a project. Such planning should be continuously reviewed during the
project and updated whenever occurrence if the risk process is modified.
In other to define how the
risk management plan will be structured and
performed for the project, Mulcahy et al. (2013) suggests that the following
people be involved:
•
•
•
•
•
•
Project Manager
Sponsor
Team
Customer
Other Stakeholder, and
Experts.
The Project Manager can identify the potential risks for a project in any of the
following methods: Brainstorming with the team, considering issues/problems
that have arisen in past projects, or the 2” common risks” checklists that exist for
the particular project.
Williams (2008) details the process involved in creating a risk management plan
as follows:
1. Identify potential risks
2. Rate them by likelihood and severity.
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3. Choose which risks to plan for.
4. Make plans for dealing with those risks.
Due to the fact that there are numerous risks associated with projects, Hoobs
(2015) advices that as a project manager, the risks that you should be most
concerned with are those risks that will have impact on one of the three project
parameters (time, cost or quality).
The main output of a risk management plan according to Peixoto et al (2014) is
the risk register. A risk register, as defined in Turner (2014) is a list of all the risks
on the project, with their impact and risk reduction strategy. These risks,
according to the authors, are sorted according to their priority so that the
significant few are at the top, where they can be focused on, and the significant
many are at the bottom, where they can be remembered but do not occupy too
much attention.
2.2 Risk identification techniques
Risk identification is about preparing a project risk list. It is the process of
examining the program areas and each critical technical process to identify and
document the associated risk. Kerzner (2006). Risk identification is viewed by
others as the most important step in risk management because it is not possible to
manage a risk that has not been identified. Dinsmore & Cabanis-Brewin (2011).
This believe is supported by Burke (2003) as he sees risk identification as being
probably the hardest and most important part of risk management process
because, according to him, if the risk cannot be identified, it will be excluded
from further analysis which will in turn lead to the risk not being responded to.
He goes on to emphasize that the process of risk identification should not be a
one-time event. Rather, it should be a continuous process and the frequency
should depend on the level of risk on the project and schedule of meetings.
The identification of project risk, according to Nicholas & Steyn (2008) begins
early in the conception phase and focuses on discovering the high-risk factors that
would cause difficulties in executing the project or destined to failure. Peixoto et
al (2014) does summarize the risk identification techniques in Table 4. Where the
process involved are explained showing the inputs, tools and techniques, and
outputs used in identifying risks.
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Table 4. Risk Identification Techniques
Source: Peixoto et al (2014)
Looking at stakeholders views on the importance of the various processes
involved in risk management Carvalho & Rabechini Junior (2014) does state that
a survey conducted on risk management concluded that over 75% of stakeholders
in the survey do agree that risk identification is the most important factor in risk
management, followed by risk report, risk records, risk allocation, risk control,
and risk analysis. This indicates that risk identification is very significant to
project success followed by risk report. This fact speaks for itself looking at the
responses from the interviews. All respondent mentioned risk identification when
asked to list the process involved in risk analysis.
Kerzner (2006), emphasizes that the common practice in risk identification is to
classify project risks according to its source. This typically being objective or
subjective.
Objective source: recorded experience from past projects and the current project
as it proceeds
• Lessons learned
• Program documentation evaluation
• Current performance data.
Subjective source: experience based upon knowledgeable experts
Interviews and other data from subject matter experts
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2.3 Performing Qualitative Risk Analysis
Qualitative risk analysis helps us to identify the sources or factors of the main
risks of a project. Norris et al (1997).
During the qualitative risk analysis, you create a prioritized list of risks. You then
classify these risks as high, moderate, or low, or you assess the cost impact of the
risk if it happens. Dvir &Shenhar (2007) Due to the limitations on resources and
time, these risks cannot be given the same degree of attention; hence, these risks
are further prioritized so as to identify those risks that are worst threats and best
opportunities. Dinsmore & Cabanis-Brewin J. (2011).
Basically, qualitative risk analysis assesses the importance of the identified risks
and develops prioritized lists of risks for further analysis to determine how to
reduce their potential impact. Dvir & Shenhar (2007). The authors point out that
at times, experts from functional units are called upon to help in assessing the
risks and their potential impact.
The reason why Dvir & Shenhar (2007) discusses the importance of developing
prioritized lists is because with the large number of possible risk events, it is
impossible to address each and every situation hence it is necessary to prioritize
risks. Kerzner (2006)
Table 5. illustrates an example of a risks prioritization where a project manager
categorizes the risks according to the project’s time, cost, and performance
constraints.
Table 5. Prioritization of risks
Source: Kerzner (2006)
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Looking at table 5, it can be seen that the project manager would have to focus
his/her effort on reducing the scheduled-related risks. Having said that, one has to
bear in mind that even if schedule has the highest priority, the project manager has
to start work on cost and technical performance-related issues at the same time,
but the schedule-related issues may have the greatest resources applied.
According to Kerzner (2006), the prioritization of risks could be established by
either the project manager or the project sponsor, or even by the customer. It can
also be industry specific, or even country specific.
After identifying the risks and prioritizing the risks, it would helpful to come up
with a list of the known risk and, the chances of it happening, the impacts if it
happens, and the response. This could be listed in a ‘known risk’ as in table 6.
Table 6. Known Risks
What could
wrong
go Chances of it
happening
Impact if it does
happen
What should be
done about it
Source: Craig J.C. (2012)
2.4 Performing Quantitative Risk Analysis
You analyze the project’s likelihood of achieving its objectives or the
probabilities that the risks on the list will happen. The expected cost of each risk is
then calculated by multiplying the expected cost by its probability of occurrence.
Dvir & Shenhar (2007) This supports Nicholas & Steyn (2011) as given in equ.1
2.5 Planning Risk Responses
Risk response planning addresses the issue of how to deal with risk. It details the
ways to mitigate the negative effects of project risks and their cost. These costs
are then compared to the expected cost of each risk and then a decision is made
whether to include each response in the project plan. Dvir &Shenhar (2007)
12
The methods of dealing with an identified risk generally are, according to Nicholas & Steyn (2011) and Dey (2002).
• to transfer;
• to avoid;
• to reduce; and
• to accept/absorb.
2.6 Risk Transfer
Using contractual incentives, warranties, penalties, or insurance policies, risk can
be transferred partly between the customer, the contractor, or other third parties.
Subcontracting: contracting with a party that has the expertise or knowledge on
how to do the job.
Reduce Risk
Some of the ways to reduce technical risks (its likelihood, impact, or both)
according to Nicholas & Steyn (2011) are to:
•
Employ the best technical team.
•
Base decisions on models and simulations on key technical parameters.
•
Use mature, computer-aided system engineering tools.
•
Use parallel development on high-risks tasks.
•
Provide the technical teams with adequate incentives for success.
•
Hire outside specialists for critical review and assessment of work.
•
Perform extensive tests and evaluations.
•
Perform a risky task earlier in the project to allow time to reduce the impact of risk.
•
Minimize system complexity.
•
Use design margins.
2.7 Controlling Risks
Risk control is about mitigation. Kerzner (2006) explains that risk control is about
managing the risks in a manner that reduces the likelihood and /or consequences
of its occurrence on the program. It does not attempt to eliminate the source of the
risk but seeks to reduce the risk.
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Project risks are those risks that are threats to the projects itself and may impede
the achievement of the project’s objectives within budget and on time. Typical
risks
associated
with
project
risks
could
be
supplier
failure,
skill
shortage(manpower), New methods (new technology) etc. Nicholas & Steyn
(2011).
There are a lot of factors that contribute to project risks. Some of them are scope
definition, time, cost, incorrect management, ineffective shareholder management,
human resources, poor communication etc. Kerzner (2006) and Nicholas & Steyn
(2011).
Elkjaer et al (1999) summarizes risk management processes into a complete loop
which he refers to as The project Risk Management Loop of Control as seen in fig.
4. He lists the advantages of using the Project Risk Management Loop of Control
to be:
•
•
•
•
Baselining for a systematically work approach
Controlling critical risks.
Ensuring use of experience.
Exchanging information between project participants. Elkjaer et al (1999).
Fig. 4 Project Risk Management Loop of Control
Source: International Project Management Journal
2.8 Communication Skills
As a final topic on risk management, a look into the importance of communication
in risk management has to be highlighted. Project management, like all
management positions, requires the skills to develop and maintain interpersonal
14
relationships with all stakeholders. It also requires the ability to communicate. As
explained in Carroll (2012) a project manager needs the basic skills that any line
manager needs; however, the project manager requires a different approach in
using these skills. Whiles hard skills are job-specific skills and the knowledge one
needs to perform a particular task, communication (sometimes referred to as soft
skills) on the other hand can be said to be interpersonal skills. They include
attributes like listening skills, communication skills, empathy, conflict resolution,
decision-making, motivation, creative-thinking, flexibility, problem-solving,
political and cultural awareness, trust-building, negotiating, expectation
management. etc.
Newton (2016) explains that being able to deal with
stakeholders, set and manage their expectations, and keep them positively
engaged in a project is one of the most important factors in project management
and that soft skills are most critical to a project manager’s success.
According to Carvalho & Rabachini Junior (2015), soft skills involve the
management of interpersonal relationships and the notion of project ecology. The
authors argue that risk management requires more time and efforts invested in soft
skills and that complex projects require management interventions that go beyond
simple analytical approach. They go on to emphasize that the ISO 31000 standard
(ISO 2009) suggests communication and consultation with both internal and
external stakeholders during all the phases of the risk management process so as
to ensure that they and those responsible for risk management understand the
foundations that form the basis for certain decisions and specific actions. This,
authors believe, will enable them to adjust their perception of risk. These skills
mentioned above are supported by Anantatmula (2010) when he explains that
leadership has its efforts directed toward convincing people about the need to
change, aligning them to a new direction, and motivating people to work together
to achieve project objectives under difficult and demanding work environments.
15
3
Methodology
A qualitative research approach will be used to find out project managers’ views
on risk management.
As stated in Neuman (2003), qualitative research emphasizes trustworthiness as a
parallel idea to objective standards in quantitative research design thereby
ensuring that the research is dependable, credible and that the research accurately
reflects the evidence.
Telephone calls were made and mails with interview guide (see appendix) were
sent to project managers from different companies explaining the purpose of the
interviews and topic of the research. They were then asked if they will be willing
to participate in the study. Further communication was held with those agreed to
participate to agree on suitable dates and times for the interviews. The interview
questions/questionnaire were then sent to them prior to the interviews.
The interviews were conducted either face-to-face, through skype, and on the
phone with those project managers and senior project managers who agreed to
participate. The interviews were recorded with the consent of the interviewees.
The recorded interviews lasted between 30 to 50 minutes. The respondents were
assured that the recorded materials and the transcripts would be destroyed after
the completion of the research. They were also made to understand, through the
research guide and recruiting mails sent to them that their participation were
confidential and that their names and the workplaces won’t appear in the research.
Three of the interviews were conducted at their workplace on, four interviews
were conducted on skype and one interview was conducted on the phone. These
interviews were conducted without any disturbance or outside influence.
Out of the nine project managers that were contacted for the study eight
respondents participated in the study. This means that efforts were made to ensure
that the respondents in the study was around 90% of the total respondents.
Semi-structured open-ended questions were used for the interviews. These openended questions allow the respondents to freely interpret and respond to the
questions the way they view them.
In order to ensure that the participants who were initially contacted for the
interview were available and were still willing to participate in the interviews,
16
emails were sent to them on few occasions to remind them and at the same time
confirm the agreed dates for the interview. However, there was one participant
who initially agreed for the interview but did not respond to my mails and did not
participate.
3.1 Population
The population of this research was randomly selected to reflect a broad range of
different fields in which project management is implemented. It includes 9 project
managers and senior project managers in the following industries: Construction,
IT Sector, product development, and city planning, Event management/planning,
Marketing and City planning with experience in project management ranging
from 5 to 20 years in Sweden, the US, and the middle east.
Two of the
respondents have 20yrs of experience in project management, 4
of them have
15yrs of project management, and 3 of them have 5yrs experience as senior
project management.
3.2 Data Analysis
Participants were interviewed and the information gathered from interviews were
carefully transcribed by using Google doc program and by listening to the
recorded voices couple of times to ensure that the responses from the interviews
were carefully understood and then converting the audio data to text. The reason
for using these two methods was to compare the texts generated from both
methods and to compare them to verify that transcribed
texts are not different
from what the respondents’ views given during the interviews.
The transcribed data obtained from the interview was then transferred to word
document for analysis where thematic analysis was employed to break down the
transcribed data by coding. Bryman (2012).
During the coding, words that relate to the study or research were written on the
right-hand column of the word document. This resulted in several pages of coded
materials. The coded materials were studied several times to make sure that
materials that were repeated several times were noted. Notes were then made to
mark words and quotes that were relevant to the aim of the research. The codes
were then combined to form themes. Braun & Clarke (2006).
17
3.3 Reliability and Validity
According to Neuman (2003), reliability means dependability or consistency.
The author goes on to say that qualitative researchers use variety of techniques
(e.g. interviews, participation, photographs, document studies, etc.) to record their
observations consistently.
Nobel & Smith (2015) also talks about consistency in reliability whereas
Golafshani (2003) discusses how crucial it is in the examination of
trustworthiness to ensure reliability in qualitative research.
To ensure the reliability of this study, few numbers of the population were asked
if they understood the research topic and each question was explained to make
sure they clearly understood each question. This formed a sort of test or pilot
questionnaire to make sure that the questions are easy to understand, appropriate
to the research topic, and unambiguous. After the pilot questionnaire, the
questions were then adjusted in the interview guide where necessary. A re-test
method was also used to determine the reliability of the results. This was done by
sometimes slightly asking the same questions in different way at a later time. This
was to ensure that they will give the same answers if the research is repeated.
Fellows & Liu (2008).
Some of the participants were invited to comment on the interview transcript and
also to verify if the final themes do adequately reflect the study. This was done to
ensure the validity of the study.
All the participants were interviewed under the same condition, in their respective
offices at their workplaces, and in quiet environment without disruptions. Both the
transcription and the analysis were done by the same person to ensure a consistent
approach. In order to make this research process transparent, all steps have been
reported
through
the
choice
of
problem
formulation,
methodology,
implementation, data processing and analysis.
3.4 Ethical Consideration
The participants in this study were assured that their participation were
anonymous /confidential and that neither their names nor the companies that they
work for will appear anywhere in this study. They were also told that they could
18
opt out during anytime of the interview and that they were free to decide not to
answer any questions that they didn’t feel comfortable with. As explained in
Jelsma J. & Clow S. (2005), It is essential to obtain informed consent before any
participant is enrolled in a research project. It was very important let the
participants know their identities would be protected and
that any information
about them would be kept confidential as explained in Bryman (2012). The
respondents were also informed that all material transcribed will be available to
those who are competent only.
4 Result
What do project managers say about risk management?
4.1 Using leadership skills in risk management to facilitate project
success
This theme is about how the respondents describe the roles that their leadership
skills play in coordinating the various tools (i.e. resources) available to them to
eliminate the risks associated with the projects that they manage in order for them
to deliver the output that the stakeholders expect of them.
All the respondents emphasized the importance of risk management in project
management and also the need to apply good leadership skills in risk
management.
Most of the respondents explained that one of the key roles in successfully
implementing risk management is having good leadership skills. This is because
as a good leader, you need to know in advance (in other words, you need to
identify) the problems that are ahead of you to enable you to develop a plan to
solve those problems. As one respondent put it:
“With good leadership skills I am able to know what the problems are so that I
will have enough time to find solutions otherwise it will be difficult to deliver the
project’s objective on time. “
Another respondent put it this way:
19
“I am able identify the risks early, analyze them, and coordinate the resources
available to find solutions to those problems.”
Some of the respondents also stressed the importance of communication, a
leadership skill, in risk management and the need for a project manager to
communicate with stakeholders to let them know the problems that exist and how
he or she intend to solve them. The benefit of such action is that with good
communication skills the project manager is able to effectively communicate with
both the team members and stakeholders. This enables the project manager able to
gain mutual trust, respect, and commitment. A respondent had this to say:
“I notice that it is a good idea to get stakeholders involved because it gives them
the opportunity to make better decisions and also their involvement is a key to
delivering what the stakeholders want.
With better coordination of the resources available to perform a task and
effectively communicating with all parties involved, the project manager is able to
lessen the stress associated with getting the work done. This is evident as a
respondent puts it:
” Implementing risk management helps me to eliminate those stress associated
with not knowing what obstacles I could encounter during the course of the
project.”
The views expressed by the respondents indicate that, a good project manager can
accomplish a lot by effective leading, planning, monitoring and communicating.
4.2 Evaluating projects to maintain control
Maintaining control of project is something that the respondents see as a very
important part of project management in that it enables project managers to
develop the necessary measures needed to mitigate risks by continuously
re-evaluating projects and developing plans to counter these risks in other to reach
the projects goal.
Some of the respondents expressed that maintaining control of a project means
that they are able to identify the problems, assessed the impact that the problems,
20
come up with strategies to respond to those problems and regularly monitor to see
if the project is going according to plan.
Here are what some of them had to say:
“To have control you need to be able to know the problems, check to know how
these problems could affect the project and then go ahead to find a solution to the
problems. “
One of the respondents explained that as a means of properly maintaining a full
control over the project he has to first identify what the problems are, assess the
problems to see if any of the problems will have significant impact on the project,
he then proceeds to find means to respond to the problems and thereafter continue
to monitor the project during the course of the project to make sure that they
delivering what the stakeholders expect to be delivered.
Continuously evaluating the project gives the project manager information as to
whether the project is going in the right direction as planned. This is seen as a way
of maintaining control of the project. Some of the respondents did express that
they do undertake evaluation as a means of controlling projects. Here are some of
the things they had to say:
“Evaluation provides me and my team the opportunity to check if the project is
successful, what we have learnt from the project, and if mistakes have been made,
what can we learn from our mistakes.”
“I do evaluate a project because it makes me gain and maintain control of project
so that I can deliver exactly what I was asked to deliver. “
When asked why there is a need to maintain control of projects that they manage,
a respondent had this to say:
“You want to know at the early stage if there are errors to be corrected rather
than waiting until you come midway through the project to realize that everything
is wrong.”
The respondents also expressed that there are several tools available to enable
them to gain control of the project that they manager; however, some of them did
say that they do look at those tools that let them know what uncertainties or risks
are associated with the projects that they are going to undertake. Based on that,
21
they are able to find solutions to enable them to deliver successful projects. Some
of them also emphasized the need to have control over the project if one wants to
deliver a successful project.
A respondent put it this way:
“I see the need to perform a formal evaluation or assessment because it enables
me to make sure that I am going to deliver what the stakeholders expect to be
delivered.”
Without having control over a project, there is a likelihood that the project
manager won’t be able to finish the project on time, and possibly over run the
budget allocated for the project.
A respondent had this to say:
“Finding the balance between the project’s budget and the resources and the
time to deliver the project puts you in control of your project.”
During the interview it came to light that all the respondents do conduct
evaluation to help them to see if the projects that they are managing are going in
the right direction and they see it as a form of controlling the project as well.
Some of them explained that controlling a project is a way of measuring project
performance.
5 Discussion
How do project managers view risk management?
This study focused on ascertaining the views of project managers on risk
management. The objective has been to talk to project managers through openended questionnaire. The result shows two themes as shown below:
How do project managers view leadership role in risk management?
This study discovered that project managers do view the leadership role in risk
management as important and that they do use their leadership skills to coordinate
activities and resources.
22
Leadership is the ability to influence the behavior of others to accomplish what is
desired, also a leadership function directs and motivates people Nicholas & Steyn
(2011). This ability to influence the behavior of others to accomplish what is
desired obviously requires, among other things, good communication skills.
Some respondent explained that with good leadership skills they are able to know
what the problems are, find solutions to these problems, and deliver the project’s
objective on time. This is in line with Kerzner (2006).
From the views expressed by some of the respondents, they use better leadership
skills to identify the risks early, analyze them, and coordinate the resources
available to find solutions.
These views expressed by some of the respondents are explained in Dinsmore &
Cabanis-Brewin, (2011) in which it states that risk management is concerned with
conducting risk management planning, identification, analysis, responses, and
monitoring and control on a project. However, to be able to effectively conduct all
the above-mentioned processes requires good leadership skills. This, in fact, can
explain why the respondents view leadership role in risk management as
important
Other respondents emphasized how, through risk management, they are able to
know in advance what can possibly go wrong, plan how to avoid it happening,
and then apply their leaderships skills to lead team mates to achieve the project’s
goal.
It was discovered, through the views of the respondents, that with leadership skills
the respondents are able to communicate with stakeholders to convince them
where changes are needed, motivate team members and align them to new
directions. This is emphasized in Newton (2016) and Anantatmula (2010) where
they explain that the project manager has to a be able to communicate with
stakeholders and convince them on why he or she thinks these changes are
necessary to achieve the projects objectives.
Looking at the respondents’ views on leadership it is very clear that they view
leadership role in risk management as important tool which enables them to
coordinate the resources available to achieve the project’s goal.
23
How do project managers maintain control of the project?
This study discovered that project managers do undertake project evaluations as a
means of controlling the project. In other to gain control of the project, it was
revealed that the tools needed are : identifying the problems (i.e. risks), knowing
the impact these problems could have on the project (i.e. analyzing the risks), and
finding a solution to the problem (i.e. risk response). This is in line with the risk
management tools mentioned in Dey (2002) and Ghaeli (2017). These tools
mentioned here are similar to the risk management plan mentioned in Williams
(2008). These tools when used ensures effective risk management.
These evaluations, according to Nicholas & Steyn (20011), do also ensure that if
any mistakes are made those mistakes are not repeated in the next project etc. The
authors also explained that evaluation throughout the life-cycle addresses the
questions “What is happening?“ and “How is the project proceeding?“ and
evaluation after the project is completed for the purpose of appraising the project
and assessing the end product or end-result addresses the questions “What has
happened?” and “What were the results?” These are all means of controlling the
project.
Kerzner (2006) do emphasize that risk monitoring, which is part of project
control, systematically tracks and evaluates the effectiveness of risk handling
action against established metrics and that monitoring results may also provide a
basis for developing additional risk handling strategies , or updating existing risk
handling strategies, and reanalyzing known risks. This is in support with the
Project Risk Management Loop Control given in Elkjaer et al (1999).
In summarizing the processes involved in risk management control, Elkjaer et al
(1999) uses the Project Risk Management Loop of Control, as shown in fig. 4 to
explain the stages involved in project control. The authors list these stages as:
The Identification stage, followed by the Assessment stage, the Response stage,
and finally, the Monitoring stage. These stages mentioned by Elkjaer et al (1999)
are in agreement with the tools mentioned in Dey (2002), Ghaeli (2017), and
Williams (2008).
Comparing what these authors, mentioned above, say about project control to
some of the respondents’ statements on project evaluation and control, it can be
seen/agreed that for effective risk management, project evaluation/control is very
24
important and an integral part of project risk management as shown in fig. 3 and
fig. 4.
These findings do suggest that project managers do view risk management as an
important tool in project management and that with good leadership skills coupled
with project evaluation and control, project managers are able to achieve project’s
goal.
The findings of this study, as stated above, is supported by Kerzner (2006),
Nicholas & Steyn (2011), and Yim et al (2015). This suggests that there is a
correlation between the theoretical reasons for the need for the implementation of
project management in organizations and what can be achieved by implementing
project management. However, Monteiro de Carvalho and Rabechini Junior
(2014) do argue that risk management shows a wide gap between theory and
practice in organizations.
From most literature and the views of the respondents in this study, I do see that
project management is an important tool which , when properly implemented, that
is to say, when the PM takes into account, the triple constraints(i.e. Budget, Cost,
and Scope) the project manager , with the approval of the customer, can decide to
make trade-offs among the triple constraints. This could be a trade-off between
the cost of the project and the period of implementation. That is to say, increasing
human resource to shorten the duration of the project but at the expense of the
cost of the project.
It also enables a project to be completed cost effectively by better planning,
getting the exact number of team members to work on the project, eliminating the
risks involved, and continuously controlling and evaluating the project at various
stages until the project is completed. This leads to the completion of the project
within the shortest possible time.
I do hope that this research will serve to encourage people who are new to project
management to see the importance of risk management and also to help them
identify some of the areas in project management that they need to pay keen
attention to.
It is my hope that a future research will focus on strategies implemented to lessen
25
the likelihood of external risks impact on projects.
6 Limitation
Initially it was anticipated that at least ten or more respondents would be
interviewed. However, due to time constraint only 9 project managers were
contacted for the study. Out of these nine project managers that were contacted
eight project managers agreed to be interviewed. It was not an easy task arranging
suitable times for the interviews as all the respondents had busy work schedules.
26
7
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8 Appendix
APPENDIX
Hello,
My name is Richard Lomothey. I am studying for my Master’s degree in Project
Management at the Karlstad University and I am writing a thesis titled:
Risk
Management: The Project Managers Perspective; hence, I will like to arrange an
interview with you to get your views on Risk Management in projects.
The purpose of this interview is to find out the views of project managers on risk
management and how they experience it?
Participation in this interview is voluntary and the questionnaire is confidential, meaning
that respondents names and the companies that they work for will NOT appear
whatsoever in the thesis.
Regards, Richard
Interview guide
Participation in this survey/interview is voluntary and the questionnaire is confidential,
meaning that respondents names and the companies that they work for will NOT appear
whatsoever in the thesis.
You are permitted to skip any question that you don’t want to answer.
Is ok for the interview to be recorded?
I will like to thank you for giving me the opportunity to interview you on this topic.
Job tittle of Respondent: ………………...
Number of years in Project Management experience: …………………………...
In which branch do you work? (example: Construction, product development, IT,
Event planning, town planning, manufacturing, Personnel development, etc.)
How often do you work with projects? ……………
Do you enjoy working as a project manager?.................
What do you see as rewarding in project management? …………..
30
Questionnaire
1. Can you explain a little bit on how you view risk management in project
management?
2. Do you normally apply/consider risk management when managing projects? (If
yes, why do you consider risk management when managing projects? and if no,
why not?)
3.
What has been your experience when you apply risk management in project
management?
4. Did it go well? If it went well, why do you think it went well? If it did not go
well, why didn’t it go well?
5. When you apply risk management in managing project, what aspects of risk
management do you look at or what aspects do you consider and why?( In other
words the areas where you think there is likelihood that risk could occur and
could have a significant impact on the project?) why do you focus on those areas?
6. What steps do you follow when implementing risk management?
7. Do you follow the same steps for any project that you manage? If yes, why do
you follow the same steps and if no, why not?
8. In your view, which areas do you think project managers should look out for
when implementing risk management and why should they look out for these
areas? (i.e. areas where there are likelihood of risk occurring)
9.
Do you view risk management as important tool to implement in projects? If yes,
can you explain why do you think it is important? If not, why is it not important?
10. Do you notice that you are able to deliver a successful project when you apply
risk management? How were your feelings afterwards?
Thank you for giving me the time and opportunity to meet with you for this interview.
If there is any answer that I misunderstand during the interview, will it be ok, if I sent a
mail to get more clarification?
31