How Software Project Risk Affects Project Performance: An Investigation of the Dimensions of Risk and an Exploratory Model*

To reduce the high failure rate of software projects, managers need better tools to assess and manage software project risk. In order to create such tools, however, information systems researchers must first develop a better understanding of the dimensions of software project risk and how they can affect project performance. Progress in this area has been hindered by: (1) a lack of validated instruments for measuring software project risk that tap into the dimensions of risk that are seen as important by software project managers, and (2) a lack of theory to explain the linkages between various dimensions of software project risk and project performance. In this study, six dimensions of software project risk were identified and reliable and valid measures were developed for each. Guided by sociotechnical systems theory, an exploratory model was developed and tested. The results show that social subsystem risk influences technical subsystem risk, which, in turn, influences the level of project management risk, and ultimately, project performance. The implications of these findings for research and practice are discussed.     

Incentives in a Stage‐Gate Process

Many large organizations use a stage‐gate process to manage new product development projects. In a typical stage‐gate process project managers learn about potential ideas from research and exert effort in development while senior executives make intervening go/no‐go decisions. This decentralized decision making results in an agency problem because the idea quality in early stages is unknown to the executive and the project manager must exert unobservable development effort in later stages. In light of these challenges, how should the firm structure incentives to ensure that project managers reveal relevant information and invest the appropriate effort to create value? In this study, we develop a model of adverse selection in research and moral hazard in development with a go/no‐go decision at the intervening gate. Our results show that the principal's uncertainty regarding early‐stage idea quality—a term we refer to as idea risk—alters the effect of late‐stage development risk. The presence of idea risk can alter the incentives offered to the agent and may lead the principal to reject projects that otherwise seem favorable in terms of positive net present value. A simulation of early‐stage ideas, found through search on a complex landscape, shows that the firm can mitigate the negative effects of idea risk by encouraging breadth of search and high tolerance for failure.     

Information Systems Project Continuation in Escalation Situations: A Real Options Model

Software project escalation has been shown to be a widespread phenomenon. With few exceptions, prior research has portrayed escalation as an irrational decision‐making process whereby additional resources are plowed into a failing project. In this article, we examine the possibility that in some cases managers escalate their commitment not because they are acting irrationally, but rather as a rational response to real options that may be embedded in a project. A project embeds real options when managers have the opportunity but not the obligation to adjust the future direction of the project in response to external or internal events. Examples include deferring the project, switching the project to serve a different purpose, changing the scale of the project, implementing it in incremental stages, abandoning the project, or using the project as a platform for future growth opportunities. Although real options can represent a substantial portion of a project's value, they rarely enter into a project's formal justification process in the traditional quantitative discounted cash‐flow‐based project valuation techniques. Using experimental data collected from managers in 123 firms, we demonstrate that managers recognize and value the presence of real options. We also assess the relative importance that managers ascribe to each type of real option, showing that growth options are more highly valued than operational options. Finally, we demonstrate that the influence of the options on project continuation decisions is largely mediated by the perceived value that they add. Implications for both theory and practice are discussed.     

System Development Project Effectiveness: Problem-Solving Competence as a Moderator Variable*

In spite of end-user programming, for the foreseeable future users and information systems (IS) specialists will build systems together. A better understanding of this partnership (which has a troubled history) will help IS managers and users improve their management skills. This study investigates the relative contributions to project effectiveness of problem-solving competence, the quality of the working relationship, and the quality of the development process. Seventy-five medium-sized projects in 16 organizations were investigated using individual, one hour, structured interviews with the IS project leader and with the primary user. Results suggest that more complex models should be used to study system development. Moreover, problem-solving competence demonstrated a complex effect on project effectiveness.     

Supporting the allocation of software development work in distributed teams with multi-criteria decision analysis

In the fast moving software industry, projects have been increasingly developed by distributed teams, which are located in geographically remote offices and collaborate using information communication technologies. In such environments, project distribution presents specific challenges, as work in distributed teams increases project technical complexity, communication lines multiply and stakeholders’ interests may be divergent. Despite the importance and complexity of this type of problem, it seems that there is a lack of reports, in the literature, of systems that could support these decisions. This paper presents a real-world case study, where we developed a multi-criteria model for supporting the distributed team work allocation decision for a major global software company. It was developed with a group of software development project managers, using decision conferencing and multi-attribute value analysis. The model deals not only with software engineering attributes, but also “soft” and strategic issues, like team satisfaction and training opportunities. We also discuss some issues and challenges faced during this modelling process.     

The Mutable Nature of Risk and Acceptability: A Hybrid Risk Governance Framework

This article focuses on the fluid nature of risk problems and the challenges it presents to establishing acceptability in risk governance. It introduces an actor‐network theory (ANT) perspective as a way to deal with the mutable nature of risk controversies and the configuration of stakeholders. To translate this into a practicable framework, the article proposes a hybrid risk governance framework that combines ANT with integrative risk governance, deliberative democracy, and responsive regulation. This addresses a number of the limitations in existing risk governance models, including: (1) the lack of more substantive public participation throughout the lifecycle of a project; (2) hijacking of deliberative forums by particular groups; and (3) the treatment of risk problems and their associated stakeholders as immutable entities. The framework constitutes a five‐stage process of co‐selection, co‐design, co‐planning, and co‐regulation to facilitate the co‐production of collective interests and knowledge, build capacities, and strengthen accountability in the process. The aims of this article are twofold: conceptually, it introduces a framework of risk governance that accounts for the mutable nature of risk problems and configuration of stakeholders. In practice, this article offers risk managers and practitioners of risk governance a set of procedures with which to operationalize this conceptual approach to risk and stakeholder engagement.     

Using Risk Communication to Disclose the Outcome of a Participatory Decision-Making Process: Effects on the Perceived Acceptability of Risk-Policy Decisions

It has been suggested that public participation during decision making about risks can lead to more widely accepted risk policies. This article discusses an experiment to determine if this is true when people are made aware of the fact that a participatory decision-making process has taken place only through information disclosed during a subsequent risk communication effort. The results from this experiment showed that, after receiving information during risk communication that cast risk policies about space exploration as the product of a participatory decision process, participants in the study felt more supportive of the resulting decisions than did participants in a control group. This result coincided with the participants in the study group perceiving the risks associated with the decision to be lower and the benefits higher. Responses from these participants also showed that they were more satisfied with the decision-making process than they were with the outcome of the decision itself Therefore, it may be premature to view the objective of participatory decision-making approaches-and the risk communication efforts that discuss them-as a means of making risk policies more widely acceptable to the public at large. Rather, it may be better to view the benefits of these approaches in terms of their ability to help lead to higher quality decisions that are the product of more widely accepted decision processes.     

考虑风险总关联的项目风险应对策略选择方法

本文针对考虑风险总关联的项目风险应对策略选择问题,首先结合MACBETH方法以及DEMATEL方法分析项目风险总关联;然后,在考虑项目管理者风险态度的基础上,以最大化项目管理者期望效用为目标构建考虑风险总关联的项目风险应对策略选择优化模型;最后,通过实际案例分析验证所提方法和模型的可行性与有效性,并比较分析了不同关联作用对风险应对决策的影响。结果表明：1）存在使项目管理者期望效用达到最大的最优项目风险应对预算;2）项目管理者的风险态度和对风险关联的关注程度对风险应对策略的选择和项目管理者的期望效用均有影响,在实际项目风险应对决策中均应予以考虑;3）在项目风险应对策略选择过程中,项目管理者不仅要考虑风险之间的直接关联还要重视风险之间的间接关联,而风险之间的积极关联则可以忽略。     

ON THE USE OF VERBAL PROTOCOLS IN CONJOINT ANALYSIS STUDIES

A recent study by Olshavsky and Acito helped gain insight into (a) the decision process used by respondents when asked to do a conjoint task, (b) the predictive validity of conjoint models compared to models derived from verbal protocols, and (c) the reasons for prediction errors. In this article, the author argues that the Olshavsky and Acito results do not lead one to believe that the compensatory conjoint models can be potentially more misleading than models that try to represent more accurately the underlying evaluation process with noncompensatory and compensatory rules. Hence, it does not seem necessary to try to identify noncompensatory rules in a conjoint study.     

It's Only Temporary: Time Frame and the Dynamics of Creative Project Teams

The success of many knowledge‐intensive industries depends on creative projects that lie at the heart of their logic of production. The temporality of such projects, however, is an issue that is insufficiently understood. To address this, we study the perceived time frame of teams that work on creative projects and its effects on project dynamics. An experiment with 267 managers assigned to creative project teams with varying time frames demonstrates that, compared to creative project teams with a relatively longer time frame, project teams with a shorter time frame focus more on the immediate present, are less immersed in their task and utilize a more heuristic mode of information processing. Furthermore, we find that time frame moderates the negative effect of team conflict on team cohesion. These results are consistent with our theory that the temporary nature of creative projects shapes different time frames among project participants, and that it is this time frame that is an important predictor of task and team processes.     

风险环境下企业信息系统项目控制对绩效的影响机制研究:基于项目经理和用户代表的双重视角

虽然当前项目管理水平不断提高,但是企业信息系统项目实施的成功率仍然不容乐观。项目干系人缺乏准确的相互认知和角色定位,以及风险与控制的关系无法有效处理是导致项目绩效偏低的重要原因。为了从不同视角探索风险和控制对企业信息系统项目绩效的共同作用,通过对65位项目经理和63位用户代表所经历的128个项目的调查,利用结构方程模型进行实证分析,并采用层次回归分析技术进行检验。实证结果表明,正式控制和非正式控制对信息系统项目绩效都具有积极的影响,但是项目经理认为正式控制具有更加重要的作用,而用户代表认为非正式控制的作用更为显著。此外,项目经理和用户代表均认为组织风险和技术风险会减弱正式和非正式控制对绩效的有效作用。因此在控制方式的选择和组合上不仅要基于项目自身的特点,而且要基于干系人的角色。同时,信息系统项目绩效并非单纯由成功或失败因素所决定,而是取决于两类因素的均衡程度。研究结论为信息系统项目的风险控制提供了全新的理论依据和决策支持。     

关系契约治理与外包合作绩效——对日离岸软件外包项目的实证研究

对日离岸软件外包项目具有典型的关系契约特性,现有文献对软件外包中的关系契约治理及对合作绩效的影响还缺乏系统的理论分析和实证研究。信任、交流和相互适应调整作为重要的关系规范,在对日软件外包关系契约治理中具有重要意义。本研究根据访谈和110个项目的数据实证检验了关系规范对离岸软件外包项目绩效的影响。通过结构方程模型方法发现,交流的有效性对于项目质量和供应商成本控制绩效有积极影响,相互适应调整对于成本控制绩效也有积极影响。这个发现有助于构建有效的关系契约治理机制,促进软件外包产业发展。     

Community‐Driven Hypothesis Testing: A Solution for the Tragedy of the Anticommons

Shared ownership of property and resources is a longstanding challenge throughout history that has been amplifying with the increasing development of industrial and postindustrial societies. Where governments, project planners, and commercial developers seek to develop new infrastructure, industrial projects, and various other land‐and resource‐intensive tasks, veto power shared by various local stakeholders can complicate or halt progress. Risk communication has been used as an attempt to address stakeholder concerns in these contexts, but has demonstrated shortcomings. These coordination failures between project planners and stakeholders can be described as a specific kind of social dilemma that we describe as the “tragedy of the anticommons.” To overcome such dilemmas, we demonstrate how a two‐step process can directly address public mistrust of project planners and public perceptions of limited decision‐making authority. This approach is examined via two separate empirical field experiments in Portugal and Tunisia, where public resistance and anticommons problems threatened to derail emerging industrial projects. In both applications, an intervention is undertaken to address initial public resistance to such projects, where specific public stakeholders and project sponsors collectively engaged in a hypothesis‐testing process to identify and assess human and environmental health risks associated with proposed industrial facilities. These field experiments indicate that a rigorous attempt to address public mistrust and perceptions of power imbalances and change the pay‐off structure of the given dilemma may help overcome such anticommons problems in specific cases, and may potentially generate enthusiasm and support for such projects by local publics moving forward.     

Risk Assessment and Risk Governance of Liquefied Natural Gas Development in Gladstone,Australia

This article is a retrospective analysis of liquefied natural gas development (LNG) in Gladstone, Australia by using the structure of the risk governance framework developed by the International Risk Governance Council (IRGC). Since 2010 the port of Gladstone has undergone extensive expansion to facilitate the increasing coal export as well as the new development of three recently completed LNG facilities. Significant environmental and socio‐economic impacts and concerns have occurred as a result of these developments. The overall aim of the article, therefore, is to identify the risk governance deficits that arose and to formulate processes capable of improving similar decision‐making problems in the future. The structure of the IRGC framework is followed because it represents a broad analytical approach for considering risk assessment and risk governance in Gladstone in ways that include, but also go beyond, the risk approach of the ISO 31000:2009 standard that was employed at the time. The IRGC risk framework is argued to be a consistent and comprehensive risk governance framework that integrates scientific, economic, social, and cultural aspects and advocates the notion of inclusive risk governance through stakeholder communication and involvement. Key aspects related to risk preassessment, risk appraisal, risk tolerability and acceptability, risk management, and stakeholder communication and involvement are considered. The results indicate that the risk governance deficits include aspects related to (i) the risk matrix methodology, (ii) reflecting uncertainties, (iii) cumulative risks, (iv) the regulatory process, and (v) stakeholder communication and involvement.     

Project‐Level Reuse Factors: Drivers for Variation within Software Development Environments*

Systematic reuse can dramatically improve software development productivity and quality even though a software reuse methodology may require substantial investments. Some projects may fail to achieve the targeted amounts of reuse within organizations that are overall successful in employing reuse. To explain such variation, this research explores the effects of project‐level factors in the success of software reuse. A model that relates project factors to project reuse success is developed using an information‐rich case study approach. The results are based on the insights obtained in a nominal group technique session, triangulated with structured interviews and comparative case studies. Success factors identified by the study relate to client influence, project culture, project attributes, and developer reuse experience. An organization that can successfully identify the factors affecting potential software reuse will be able to better target investments for the improvement of its reuse methodology and thus positively affect its software development productivity and quality.     

Managing Multiple Facets of Risk in New Product Alliances*

The trend of forming alliances to develop new products continues; however, many of these new product alliances fail. As such we explore how key risk types intrinsic in new product alliances, performance, relational, and knowledge appropriation risks, influence alliance success. Further, we theorize that different alliance governance mechanisms can reduce the negative impact of risks on alliance success. To disentangle possible heterogeneous factors across firms that may affect the interplay of risk assessments and the use of governance mechanisms, we employ latent class regression analysis on survey data collected from 128 new product alliance firms and find support for a two‐regime solution. Longer alliance relationships and lower technological turbulence are factors for some firms (regime one), while the opposite are factors for other firms (regime two). These two regimes show different patterns in the interplay of risk assessments and governance for alliance success. Our theory and results support viewing risk as a multiple‐factor concept and by understanding the different impacts of the risk types in new product alliances and how governance mechanisms mitigate such effects, we aid managers' decision making regarding the balance of contractual versus normative governance in new product alliances. Understanding the heterogeneous factors inherent in these complex relationships enables managers to understand the conditions in which various governance mechanisms promote new product alliance success.     

Risk,Process Maturity,and Project Performance: An Empirical Analysis of US Federal Government Technology Projects

In recent years, there has been increasing pressure on the US federal government to reduce spending and improve the management of its technology projects. Mitigating the adverse impact of risks on the performance of these projects presents a significant challenge for its stakeholders. Our research examines this challenge in two steps. First, we identify and define a set of salient risks in federal technology projects—specifically, complexity risk and contracting risk in the planning process, and execution risk in the execution process. Next, we investigate whether higher levels of process maturity, assessed by the Capability Maturity Model Integration (CMMI) framework, mitigate the negative effect of project risks on project performance. The analysis of time‐series data collected from 82 federal technology projects across 519 quarterly time periods indicates that each of the three types of risks has a significant negative effect on project performance. This finding highlights the practical significance of managing these risks in the federal technology project context. Further, we find that increasing levels of process maturity attenuate the negative effect of project risks on the performance of federal technology projects. However, the attenuation effects are consequential only at high levels of project risks; at low levels of project risk, increasing levels of process maturity can adversely affect project performance. To demonstrate the financial implications of increasing process maturity levels in federal technology projects, we examine the magnitude of project cost savings (and overruns) across different levels of CMMI and project risks. In summary, our study contributes to the sparse literature on public sector operations by addressing the understudied context of federal technology projects, and provides a nuanced examination of the implications of process maturity in managing the risk to performance relationship in such projects.     

Managing Outsourced Software Projects: An Analysis of Project Performance and Customer Satisfaction

We examine the drivers of project performance and customer satisfaction in outsourced software projects using a proprietary panel dataset. The data cover 822 customer observations related to 182 unique projects executed by an India‐based software services vendor. Adopting a multidisciplinary perspective, we investigate how project planning, team stability, and communication effectiveness impact project performance and customer satisfaction. We delineate the direct and interactive influences of the antecedent variables. We also examine how these influences are moderated by two important project contexts: (a) the nature of software work (maintenance and development vs. testing projects) and (b) project maturity (new vs. mature projects). Among other results, we demonstrate that, when project planning capabilities are high, the positive impact of team stability and communication effectiveness on project performance is even higher. In addition, our results suggest that the impact of communication on project performance is muted when team stability is high. Finally, we also demonstrate that the impact of the antecedent variables on project performance varies with the nature of software work. Our findings offer specific and actionable insights to managers that can help them manage outsourced projects better, and open up new research perspectives in the context of outsourced project management.     

Using Prior Risk‐Related Knowledge to Support Risk Management Decisions: Lessons Learnt from a Tunneling Project

The authors of this article have developed six probabilistic causal models for critical risks in tunnel works. The details of the models' development and evaluation were reported in two earlier publications of this journal. Accordingly, as a remaining step, this article is focused on the investigation into the use of these models in a real case study project. The use of the models is challenging given the need to provide information on risks that usually are both project and context dependent. The latter is of particular concern in underground construction projects. Tunnel risks are the consequences of interactions between site‐ and project‐ specific factors. Large variations and uncertainties in ground conditions as well as project singularities give rise to particular risk factors with very specific impacts. These circumstances mean that existing risk information, gathered from previous projects, is extremely difficult to use in other projects. This article considers these issues and addresses the extent to which prior risk‐related knowledge, in the form of causal models, as the models developed for the investigation, can be used to provide useful risk information for the case study project. The identification and characterization of the causes and conditions that lead to failures and their interactions as well as their associated probabilistic information is assumed to be risk‐related knowledge in this article. It is shown that, irrespective of existing constraints on using information and knowledge from past experiences, construction risk‐related knowledge can be transferred and used from project to project in the form of comprehensive models based on probabilistic‐causal relationships. The article also shows that the developed models provide guidance as to the use of specific remedial measures by means of the identification of critical risk factors, and therefore they support risk management decisions. Similarly, a number of limitations of the models are discussed.