Portfolio Risk Management and Its Contribution to Project Portfolio Success: An Investigation of Organization, Process, and Culture

Abstract

As organizations commonly operate in highly dynamic markets with new and changing competitive pressures and customer requirements, they frequently implement risk management practices in the expectation of addressing the challenges that arise from a rapidly changing environment (Raz, Shenhar, & Dvir, 2002). The aim of single project risk management is compliance with cost, time, and quality objectives (Pellegrinelli, 1997). Furthermore, management within a project portfolio incorporates the implementation of the right projects, the alignment of the projects to the strategy, and the balancing of the project portfolio (Elonen & Artto, 2003). In a project portfolio, dependencies between the projects trigger the emergence of new risks in addition to single project risks (Project Management Institute, 2008a); therefore, project risk management alone is insufficient in the context of project portfolios (Olsson, 2008). Insufficient risk management may increase unexpected events because more risks materialize (Kutsch & Hall, 2009). These events may cause cost overruns and delays (

Designing an Organizational Culture Model in the Projects Environment: a Constructivist Approach

“…This attitude leads to the application of processes, tools and techniques of project management (Ajmal & Koskinen, 2008;Kendra & Taplin, 2004;, Morrison & Brown, 2004;Teller, 2013), the following of policies related to these (Karlsen, 2011) and the documentation of project information (Stare, 2012). However, the extent to which people adopt project management practices depends on the efforts of the organization to engage them in projects (Fernandes, Ward, Araujo, Loureiro, & Braga, 2014).…”

“…This implies the existence of an awareness of the organization regarding the need to manage projects (Bryde, 2003;Teller, 2013). This support is manifested by the provision and allocation of resources to projects (Karlsen, 2011), their participation to solve problems and the definition of priorities set for the project portfolio (Stare, 2012).…”

Project Portfolio Management

“…Petit and Hobbs (2010) and Petit (2012) show that project portfolios are-due to high project interdependence-greatly affected by variations in project objectives, customer requirements and target customers during the course of individual projects. Similarly, managers are often unaware that risks of individual projects may aggregate at the portfolio level or that risks of individual projects may represent opportunities for other projects (Olsson, 2008;Teller, 2013). Many changes and unexpected events lead to unavoidable unpredictability, which is generally not well catered for in current portfolio management approaches.…”

Shedding New Light on Project Portfolio Risk Management

“…Teller presents an extensive empirical study demonstrating the impact of formalisation and quality of risk management on the success of the portfolio [13,14,22,23]. In addition, McFarlan indicates the usefulness of a complex approach to portfolio risk in the decision-making process [54].…”

“…The particular project portfolio risks were selected and named through the course of the literature review [5][6][7]9,13,14,[16][17][18]23,30,33,[40][41][42]56,[58][59][60][61][62][63][64][65][66][67][68]. Every identified risk was defined, described, and placed into one of the component, structural, or overall risk categories.…”