IS Project Risk Management: Risk Factors in IS Project Management

Author: Eashani Rodrigo

The success of a project depends on how it is being managed. Organizations across different industries use formal project management methodologies and best practices for the successful management of their various projects. One of the most critical project management functions is the ‘Project Risk Management’. Every project comes with inevitable risk factors that impact the success of the project. In any project management environment, either it is construction, information technology, telecommunications and financial services etc., proper project risk management should be followed in order to reduce and eliminate possible unexpected project risks and to help resolving problems if they occurred.

According to Schwalbe (2009), risks are “uncertain events that may occur to the detriment or enhance of the project”, therefore the project risk management is aimed at “minimizing negative risk events and maximizing positive events”. In recent years, with the increasing complexity of the projects and changing business environments, the uncertainty of the project outcomes is in continual increase. This has resulted in making the risk management an important function in project management. Many researchers have found that process of risk management is a critical function for the success of the projects and it is essential to the development of profitability, especially in large-scale projects. To achieve success in IT projects, the IT (Information Technology) industry is increasingly adopting risk management processes in their IS (Information Systems) project management practices.

In IS project management, risk management involves all processes concerned with risk identification, risk analysis, and response to project risks. From these processes, most critical process is considered as the ‘risk identification’ or identifying the risk factors; which is the first step in managing successful IS development risks. Even though there are considerable attempts of academics to identify, classify, and compare IS project risk factors, there are not enough evidence to support the idea that industry practices use these frameworks in practical project management. Industry experts argue that these IS project risk factors identified by academics are not always applicable in the practical scenarios and there are other aspects to be considered when identifying IS project risks.

By studying the project risk related academic literature, industry practices and industry case studies, it was evident that academic risk identification frameworks have been updated periodically due to the increasing complexity of the projects. Initially the risk factors’ was on the project resources such as people, process and technology and the internal factors of organizations that can affect the project. However, as the complexity and the inter-dependencies of factors have increased, the researchers have attempted to identify framework and structures that present all possible risk factors in IS projects. These factors have focused not only internal factors but also external factors such as Commercial and legal relationships, Economic circumstances and Political circumstances. Therefore, due to complexity of the project the academic frameworks continued on updating on the risk identification categories to support the practical adoption of these frame works in to the different industry contexts.

Moreover, it was seen that projects risk factors can change depending on the cultural and organizational factors. Each country may have additional unique set of risk factors that needs to be considered in cultural and organizational aspects. They have also identified that in practical IS project risk management, most organizations focus mainly on the technical issues of the project and tend to neglect people aspects when identifying risk factors, which leads to IS project failure. Therefore, in practical context the organizations should focus on all aspects of risk identification categorizations without solely focusing on technical aspects.

In practical scenario of project management, there are common risk factors or frameworks that can be adopted by practitioners; however, still there are unique risk factors to different countries based on their socio-economic context. Therefore, all these aspects should be considered when identifying risk factors in different IT project in practical context. Moreover, the common risks factors may have different impact on various countries and various projects, therefore the risk identification should be carried out individually for each project considering all the possible aspects depending on the context. 

As the final note, current industry practices adopt common risk identification frameworks for their IS project risk management practices and there are common risk factors that are similar to the industry identified risk factors. However, the success of adoption of these frameworks are questionable as there are unique risk factors that can majorly impact the IS project. Therefore, in practical IS project risk identification practices, the project managers should consider the common risk factors as well the unique risk factors that can impact the specific project. However, there can be implications when identifying unique risk factors in practical IS project management in different context. The complexity of the project and lack of knowledge in every aspect of the project or the context may limit the successful identification of accurate risk factors. Another implication is the time limitation. The risk identification is the time consuming process, the project stakeholder involvement in project risk identification and the requirement to consider many aspects of the project may not be practical with the project time-frames.

Read the full industry research essay here. 

References

Schwalbe, K. (2009) Introduction to Project Management, 2nd edn. Boston, Mass.: Course Technology.