A study of the impact of project classification on project risk
indicators
Rachel Yim, Jason Castaneda, Toni Doolen, Irem Tumer, Richard Malk,
in International Journal of Project Management, Volume 33, Issue
4, May 2015, Pages 863-876
Background
Many Information Technology projects are failed to be delivered, and the failed
Information Technology projects cost much. Therefore, it’s a huge waste for the investors
and companies. Many factors will lead projects to failure, for example, the financial
losses, negative press, loss of customer trust, and loss of competitive advantage. As a
result, it is necessary to discover some methods to improve the project’s management so
that the project could be more probably to succeed.
Risk management is one of the methods. It can indirectly decrease the project risk if the
manager understands risk events well. However, a predictive ability to indicate potential
risks before the start of a project is high demanded. The relationship between the project
classification and risk indicators is the main point. The information about it could be
gathered from the interviews, and it is created and coded. Those are informed by project
management literature which relates to project classification, project success factors, and
project risk management:
Based on how the projects satisfy the investors, projects can be divided into three
classifications: compliance, operational, and strategic. At first, compliance projects are
essential when regulatory requirements need to be fulfilled and the projects are
“must-do”. And then, operational projects are necessary when the current operations
need to be improved. There is rarely the level of urgency between operational projects
and compliance projects. Strategic projects, the third classification, are usually
available for an organization which has a long-term purpose. For example, some
company may focus on the increment of its revenue or the advantage in marketing.
The success of project can be defined in several ways according to the project
management literature. Nevertheless, an opinion which is overall agreed comes out in
Nagadevara, 2012 “one important role of project managers is to attend to those factors
that are primary to achieving project success”. As a result, the critical success factors
are the external environment; the internal organizational structure; the proficiency of
organizational management; the level of team member coordination; and project
elements.
Maytorena et al., 2007 explained the project risk management “project risk
management is a process for systematically identifying, evaluating, and mitigating
risks to improve the likelihood of project success”.
Results
The study emphasizes on the relationship between project classifications. There are
eleven design projects from large engineering design organizations selected for the study.
A code schema of risk indicators is created for these design projects. To begin with, the
qualitative data analysis is necessary, since it is well-suited for connecting the meaning s
people place on events and processes to the world around them.
Then the projects should be selected. All projects for this study were selected from a
single division. Researchers have the documents about summaries of these projects so
that they can divide the projects into three groups according to their primary project
objective, such as operational, compliance and strategic. The design projects which
completed in the same division of the organization will be asked to reach a special
objective.
Here comes the method of data collection. There were two interview protocols which
gathered first-hand accounts from staffs about risk events encountered during the lifespan
of the eleven design projects. The questions of the first interview were based on serious
cases approach. The answers were supposed to be the most memorable impression on the
process. The second set of interview questions was for some embedded thoughts of rist
events. So it emphasized on searching the managers and members who they ever met.
There were 70 in total of interviews and took 28 months to finish.
Next is the participant selection for the interview. There was a list which contains the
potential interview candidates with many kinds of job titles from the project
documentation. There were 46 educated employees who took part in the interview
process. Eight of them were interviewed for multiple questions attributing to the multiple
projects they had a role on.
The last and the most important part of the methodology is code schema development and
code assignment. The categories of critical success factors were used for the risk
indicators, including risks related to the external environment, risks related to the
organization, risks related to upper management performance, risks related to the
functional manager and team, and risks related to the project. The formation of the
interview transcripts contained around half of a sentence, therefore, the facilitate
precision in the assignment of risk indicator codes will be transcribed in text. The sum of
the times each risk indicator code appeared in each transcript would come out after every
transcript was coded. The transcripts were analyzed line-by-line. The researcher would
list the homologous risk indicator code if a risk indicator was recognized. The outlying
information would not be coded. There were at least two researchers who were
responsible for coding of each transcript so that the method for coding would be more
reliable. Once all transcript had assignment with final codes, there would be a process
that could ensure the equality of each transcript in the dataset.
Finally, here come the results. In the analysis of coded transcripts, the most ten frequently
code of risk indicators by project classification would be taken out to compare. Six risk
indicators out of 36 total risk indicator codes appeared in the top ten of all three project
classifications. They are (1) demands for changes in standard procedures, (2) inadequate
data, (3) upper management’s skills in communication, (4) project team need for a better
understanding of project scope, (5) customer-related changes and communication, and (6)
communication between different functional departments.
It was indicated that for at least two of these common codes, there were differences in the
possibility of these types of risk events, based on project classification. The project
urgency codes just made up a small percentage of the total overall risk indicator codes for
strategic projects. Operational projects are often led by the requirements from customers;
therefore, the deadlines for these projects can also be restricting. Compliance projects are
made necessary by changes in regulations. They set the deadlines for compliance, and
organizations are forced to create the needful design changes within specific timelines.
Strategic projects are so internally driven that the organization must be more flexible in
setting schedules. There was another difference noted in risks related to certification,
which were prevalent in compliance and strategic projects.
Conclusions
As a conclusion of this summary, it is obvious and irrefutable that communication is
important for all projects. However the project managers should emphasize on the
adjustment for risk management plans depending on the project classification. And the
summary also indicates that a threat would be posed to projects when incomplete,
inaccurate, or obsolete information caused the risks; therefore, the standard procedures to
which can avoid the negative consequences resulting from project teams are really
needed. Project managers should make sure that all employees in the projects have their
approaches to the necessary information and that information is up-to-date and complete.
In a nutshell, project managers who works on operational or compliance projects should
assign resources to build ironic relationships and communication paths with suppliers so
that the open communication will be enhanced and the risks resulting from
misunderstandings related to project requirements will be reduced.
Hu Tianyi
412986