Impact of Risk Management on Project Performance

Impact of Risk Management on Project Performance 1
IMPACT OF RISK MANAGEMENT ON PROJECT PERFORMANCE MEDIATED BY
LEADERSHIP EFFECTIVENESS
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Impact of Risk Management on Project Performance 2
Table of Contents
Chapter 1.................................................................................................................. 7
1.0 Introduction.......................................................................................................... 7
1.2 Research Background........................................................................................... 9
1.3 Problem Statement............................................................................................ 15
1.4 Research Aim................................................................................................... 16
1.5 Research Objectives........................................................................................... 16
1.6 Research Questions............................................................................................ 17
1.7 Significance of the Research................................................................................17
1.8 Assignment Structure......................................................................................... 18
Chapter 2................................................................................................................ 19
2.0 Literature Review.............................................................................................. 19
2.1 Definition of Key Concept...................................................................................19
2.2 Key Performance Measurement Models..................................................................26
2.3 Review of Relevant Empirical Research..................................................................43
2.4 Literature Gap.................................................................................................. 48
2.5 Summary of past studies..................................................................................... 48
2.6 Conceptual framework........................................................................................ 53
2.7 Hypothesis...................................................................................................... 53
H4: Impact of risk management on project performance is mediated by leadership effectiveness
Chapter 3................................................................................................................ 53
3.0 Research Methodology.......................................................................................... 54
Research Paradigm.................................................................................................... 54
Research Design/Method............................................................................................ 55
Research Strategy...................................................................................................... 56
Data Collection Method.............................................................................................. 57
Target population, sample size and sampling method..........................................................57
Questionnaire development.......................................................................................... 58
Ethical and Accessibility............................................................................................. 58
Data Analysis Plan.................................................................................................... 59
Chapter 4................................................................................................................ 60
4.0 Data Analysis...................................................................................................... 60
4.1 Demographic Analysis........................................................................................ 60
Risk Management.................................................................................................. 67
Project Performance............................................................................................... 72
Leadership Effectiveness......................................................................................... 80

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4.2 Normality Test................................................................................................. 89
4.3 Reliability Test................................................................................................. 90
4.4 Hypothesis...................................................................................................... 91
Chapter 5 Conclusion and Recommendation.....................................................................92
Conclusion.............................................................................................................. 92
Recommendation...................................................................................................... 94
Future Research Opportunity........................................................................................ 95
Limitations.............................................................................................................. 95
References.............................................................................................................. 96

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List of Table
Table 1: Performance Measurement Models...........................................................................28
Table 2: Summary of models and theories...............................................................................40
Table 3: Summary of past studies............................................................................................51
Table 4: Target population and sample size.............................................................................57
Table 5: Respondents gender frequency..................................................................................59
Table 6: Respondents age-group frequency.............................................................................60
Table 7: Respondents income frequency.................................................................................62
Table 8: Respondent's education frequency.............................................................................63
Table 9: Respondents type of business operation frequency...................................................64
Table 10: Risk management approach impact on performance...............................................66
Table 11: Respondents opinion regarding importance of risk management in managing
projects.....................................................................................................................................66
Table 12: Formal/informal risk management process..............................................................67
Table 13: How Risk management contribute to project performance.....................................67
Table 14: Risk management influence project on managing behaviour..................................68
Table 15: Role played by experience/competence levels to risk management........................69
Table 16: Respondents view about how completed project meets project expectations.........69
Table 17: Response regarding how KPIs act as a performance monitoring tool.....................70
Table 18: Response regarding how organisational leadership review influence project
performance..............................................................................................................................70
Table 19: Response about how organisation identify potential risks and address them..........71
Table 20: Response regarding how all project are delivered within a financial budget..........71
Table 21: Respondents showing how all project are completed with very minimal complaints
..................................................................................................................................................72

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Table 22: Response regarding how leadership teams seriously look into the complaints as part
of future project improvement.................................................................................................72
Table 23: Competency and relevance experiences are key factors in project members..........73
Table 24: Leadership team look into complaints to improve projects.....................................74
Table 25: Leaders talk about trends that influence how employees work...............................74
Table 26: Leaders describe a convincing image of what employees would look like in future
..................................................................................................................................................75
Table 27: Leaders speak with honest principles regarding higher meaning and purpose of
employees.................................................................................................................................75
Table 28: Leaders seek challenging opportunities to test their abilities..................................76
Table 29: Leaders challenge employees to be innovative........................................................76
Table 30: Leaders ask employee to learn when things go wrong............................................77
Table 31: Leaders experiment and take risk in case of failure.................................................77
Table 32: Leaders seek innovate ways to improve performance.............................................78
Table 33: Leaders develop cooperation with employee...........................................................78
Table 34: Leaders involve employees in decision making......................................................79
Table 35: Leaders allow employees freedom on how to work................................................79
Table 36: Leader ensure employee growth..............................................................................80
Table 37: Normality test...........................................................................................................80
List of Figures
Figure 1: Respondents gender distribution..............................................................................60
Figure 2: Respondent's age-group distribution........................................................................61

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Figure 3: Respondents income distribution..............................................................................62
Figure 4: Respondents education distribution..........................................................................64
Figure 5: Distribution of respondent's business operations......................................................65

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Chapter 1
1.0 Introduction
Risk management is acknowledged as a vital exercise toward realising better performance
amongst projects. Success in any project is determined by its performance in realising the
project cost, time, safety, quality as well as environmental sustainability goals. In this sense,
risk management is essential in a project to avert incurring additional costs and time. The
concept of risk management emerged as a continued procedure that is trailed by any project
to unmask the risks related with its practices as well as execution (Carvalho & Rabechini
Junior, 2015). In this sense, risk management is concerned with the investigation of the risks
involved in the project so as to allow the project management to deal with upcoming risks
and challenges that are likely to hamper the project. On the same note, risk management
results in the effective utilisation of resources which impacts on the success of the project
(Rabechini Junior & Monteiro de Carvalho, 2013). Schedule and cost performance are the
major aspects for measuring the success of a project. Recent studies have shown that a project
is said to be successful when it is accomplished within time and planned budget (Cooper,
2015). However, many projects particularly in the developing countries are faced by the
problem of resource scarcity. Projects plays a big role to the economy of most countries
across the world. For instance the construction project sector significantly contributes to the
Gross Domestic Product (GDP) in addition to creating employment opportunities, hence it is
considered a key for the economic development of a country (Baldry, 2018). Therefore,
projects plays a socio-economic development which has various effects.
It is important to understand exactly what it means by risk prior to managing it. Risk as well
as uncertainties are inherent in all projects regardless of the size. Project are plagued by risk
because of their processes, nature, setting and organisation. In this regard, projects keeps on

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being faced with unfavourable and unforeseen factors. Generally, projects calls for a lot of
resources as well as experts from various fields which are related to each other. Accordingly,
such complexity are further compounded by unique features that are distinctive outcomes of
production. Therefore, when it comes to managing risks it is essential to coordinate and
communication among the ad-hoc project teams.
The Association for Project Management asserted that risk is unavoidable in any project thus
the reason as to why risk management is a quickly developing management instrument in
many projects (Amoah & Pretorius, 2019). This has been made possible through the
realisation of the significance of risk management as an integral component of project
management. Risk management is one of the most essential process as well as ability to cope
up with risks associated with projects and uncertainties (Golini, Kalchschmidt, and Landoni,
2015, p.653). To be able to rescue the poor image of the project performance, the best
approach is to implement a risk management process. Through the implementation of risk
management, the most common problem in many projects like unsafe working setting, delay
in project deliver, unsatisfactory product quality and over budgeting among others. As a
result, it is argued that risk management is a vital instrument particularly when it comes to
decision-making process in relation to risks (Thomas, and Marath, 2013, p.236). Nonetheless,
it is not easy to attain efficient risk management in many projects. Effective risk management
is a key challenge to most project managers. While it is not possible for project managers to
foresee the future, they are in a position to anticipate risks which are inherent in the project
and manage these risks prior to them happening (Qazi, Quigley, Dickson, and Kirytopoulos,
2016, p.1185). In regard to project performance planning is of great significance to ensuring
project success. Planning is a continuous process through delivery of a project. Various
empirical studies related to project management success aspects have asserted that planning is