Risk identification and project approval: an importance-performance analysis of taxonomy-based risks in Information Technology projects

• Main Author: Da Silva, Tiago Ferreira
• Format: Others
• Published: OpenSIUC 2010
• Subjects: Importance-Performance Analysis; IT Projects; Project Approval; Project Management; Risk Identification; Risk Management
• Online Access: https://opensiuc.lib.siu.edu/theses/355; https://opensiuc.lib.siu.edu/cgi/viewcontent.cgi?article=1362&context=theses

The dissemination of project management practices is consolidating project as a great mean of achieving an organization's strategic plan (PMI, 2008, p. 10). But there are no resources and funds available to all, and competition among alternative projects is increasing. Funding institutions, government agencies, and credit rating organizations started considering project risk in project evaluation, instead of only using financial metrics such as ROI (Return on Investment) or NPV (Net Present Value). In order to obtain resources needed to implement projects, and thus contribute to an organization's objectives, it is necessary to identify the risks that have greater influence on project approval. This study applied the Importance-Performance Analysis (Martilla & James, 1977) to identify the main risk identification deficiencies for Information Technology (IT) project managers who apply for resources or funding approval. The identification was made possible by measuring IT project managers' perceptions of (1) the level of importance, or positive influence, which different risk categories have in project approval; (2) the level of performance they believe to have in the identification of these risks, meaning prior detection and registering; and (3) the gap between the measured levels of importance and performance. A survey listing 28 risk categories belonging to a validated risk taxonomy and 5-point Likert scales with different levels of importance and performance were presented to IT project managers from the central Illinois area. A total of 38 professionals answered the survey instrument, and verification of exclusion criteria resulted in an adjusted sample of 32 subjects. Descriptive statistics were used to compare mean values for each category, determining the gap between importance and performance levels for every category. The risk categories that presented the top three scores for importance were Scope uncertainty, Legal/regulatory, and Financial. The risk categories that represented the three greatest deficiencies or gaps (importance versus performance) for IT project approval were Contractual, Complexity, and Scope uncertainty.