This document summarizes the key findings from a study on project risks and uncertainties. The study analyzed 42 case studies of different project types through interviews. The main findings were: 1) Stakeholder capabilities and dynamics were the most common source of uncertainties. 2) Organizational uncertainties like mergers and acquisitions and political issues also led to uncertainties. 3) Technological uncertainties from technical issues and tight specifications as well as contextual issues like legal and market changes were other sources of uncertainties.

1. Mgt 610 Strategic Perspectives on Project Management
© Thomas Lechler 2013For academic use only. 1
MGT610
Lecture 2
The Impact of Project Risks and
Uncertainties

2. Mgt 610 Strategic Perspectives on Project Management
© Thomas Lechler 2013For academic use only. 2
Module Topics and Objectives
The role of project plans and changes
– Importance of quality of project planning.
– Recognize that plan changes and goal changes are
different.
– Analyze the impact of plan and goal changes on
project value.
– Analyze the impact of contextual factors on plan and
goal changes.

3. Mgt 610 Strategic Perspectives on Project Management
© Thomas Lechler 2013
Value PM: Core Conflict in Maximization Paradigm
Maximize
Project
Value
PrerequisiteRequirementObjective
The management core problem:
– Management of change: Opportunity discovery and
exploitation.
Exploit
Opportunities
Not Exploit
Opportunities
Initial
Requirements
Met
Stakeholder
Expectations
Met
PM’s
Value
Mindset
3

4. Mgt 610 Strategic Perspectives on Project Management
© Thomas Lechler 2013
Plans are Nothing, Changing Plans is
Everything
The Impact of Changes on Project
Success
For academic use only. 4

5. Mgt 610 Strategic Perspectives on Project Management
© Thomas Lechler 2013For academic use only. 5
Conceptual Framework of Project Planning and Changing
Efficiency Customer
Satisfct.
Goal
Changes
Plan
Changes
Quality of
Planning
Context
+
+
+
+
+
+
-
-
-
-
-
-
+
Hypothesized Relations between the Planning Variables and Success

6. Mgt 610 Strategic Perspectives on Project Management
© Thomas Lechler 2013For academic use only. 6
Conceptual Framework – Variable Definitions
– Plan changes: frequency
– Goal changes: importance and frequency
– Planning quality: work breakdown, resource
allocation, scheduling, budget
– Success: efficiency, customer satisfaction
– Context
• Technical Risks: demanding
• Importance: usefulness, importance for
organization
• Experience: similar project
• Manpower: personnel losses or transfer
• Parallel Projects: undertaken at the same time
• Breakthrough: technological

7. Mgt 610 Strategic Perspectives on Project Management
© Thomas Lechler 2013For academic use only. 7
Conceptual Framework – Variable Measurements
Scale Measures
Efficiency
(Alpha:0.86)
1. The project had come in on schedule
2. The project had come in on budget
Customer
satisfaction
(Alpha:0.81)
1. The clients were satisfied with the process by which this project
was completed
2. The clients are satisfied with the results of the project
Plan changes The project plans (schedule, personnel, budget) were often changed
Goal changes
(Alpha:0.83)
1. Project goals were often changed
2. At least one major project goal was changed considerably
Planning quality
(Alpha:0.85)
1. The entire project task (scope) was structured in work packages.
2. Every work package was allocated with a specific time allowance.
3. We knew which activities contained slack time or slack resources.
4. All work packages had a predecessor and a successor work
package (except the first and the last).
5. There was a detailed budget plan for the project.
6. The precise demand for key personnel (who, when) was specified
in the project plan

8. Mgt 610 Strategic Perspectives on Project Management
© Thomas Lechler 2013
Conceptual Framework – Variable Measurements
For academic use only. 8
Scale Measures
Technical risks
(Alpha:0.79)
1. The task was technically demanding.
2. The completion of the business goals included high risks.
Importance
(Alpha:0.78)
1. It was important that the results of the project could be used as
soon as possible
2. The implementation of the project was important for the
organization’s policy
3. The implementation of the project was important for the success of
the organization
Experience The projecting company had experience with the solution of similar
problems
Manpower The project team did not experience any significant personnel losses
or transfer during the project’s development
Parallel projects The completion of the project depended on other projects,
undertaken at the same time.
Break through The project was not subject to any recent technological
breakthrough, which could have rendered it obsolete.

9. Mgt 610 Strategic Perspectives on Project Management
© Thomas Lechler 2013For academic use only. 9
Empirical Findings - Sample Description
Kind of Project Absolute frequency Relative frequency
Machine tool manufacturing 25 5.6%
Plant construction 61 13.6
Building construction 30 6.7
Product development 116 25.9
Reorganization 52 11.6
Software 109 24.3
Others 55 12.3
Total 448 100.0%
Returned Questionnaires: 43%, N= 448 (257 successful, 191 unsuccessful)
Respondents: Project Leader 46%, Team 27%, Others 27%

10. Mgt 610 Strategic Perspectives on Project Management
© Thomas Lechler 2013For academic use only. 10
Empirical Findings – Correlations between Contextual and
Planning Variables
Quality of
Planning
Goal
Changes
Plan
Changes
Personnel Constraints n.s. .226** .226**
Parallel Projects n.s. .202** .174**
Occurrence of Breakthrough n.s. .247** .127**
Technical Risks n.s. .175** .165**
Importance .204** n.s. n.s.
Experience .170** n.s. n.s.
**p<=0.01, n.s. – not significant

11. Mgt 610 Strategic Perspectives on Project Management
© Thomas Lechler 2013For academic use only. 11
Empirical Findings – Path Model
Efficiency Customer
Satisfct.
Goal
Changes
Plan
Changes
Quality of
Planning
-.27 -.21
+.50
+.61
+.14+.27
-.16
-.23
n.s.
n.s.

12. Mgt 610 Strategic Perspectives on Project Management
© Thomas Lechler 2013For academic use only. 12
Empirical Findings – Path Model (total)
Efficiency
-.20
R2= 26%
Cust. Sati.
R2= 55%
+.61
Technical
Risk
Goal
Changes
Plan
Changes
Quality of
Planning
Personnel
Constr.
Parallel
Projects
Break
through
Import.
Experie.
+.16 +.15 +.14 +.18
+.11
-.16
-.21
-.23
+.50
+.14
+.16
+.20
-.27
+.27

13. Mgt 610 Strategic Perspectives on Project Management
© Thomas Lechler 2013For academic use only. 13
Empirical Findings – Effects of Success Factors
Planning Variables/ Impact on
Efficiency
Direct
Effect
Indirect
Effect
Total
Effect
Quality of Planning +.27 +.08 +.35
Goal Changes -.21 -.10 -.31
Plan Changes -.23 - -.23
Planning Variables/ Impact on
Customer Satisfaction
Direct
Effect
Indirect
Effect
Total
Effect
Quality of Planning +.14 +.25 +.39
Goal Changes -.15 -.19 -.34
Plan Changes - -.14 -.14

14. Mgt 610 Strategic Perspectives on Project Management
© Thomas Lechler 2013For academic use only. 14
Goal
Changes
Empirical Findings – Calculation of Effects (Ex.)
• Indirect Effects of Goal Changes
• (+.50 * -. 23) = -.10
• = Indirect Effect -.10 ( )
• + Direct Effect -.21 ( )
• = Total Effect -.31
Efficiency
+.50
-.23
-.21
Plan
Changes

15. Mgt 610 Strategic Perspectives on Project Management
© Thomas Lechler 2013For academic use only. 15
Summary of Empirical Findings
• The influences of planning and changes on project success
– The positive total effect of the variable quality of planning (+.35
and +.39) is completely overridden by the negative combined
effect of plan and goal changes (-.54 and -.48)
• The interactions between the planning variables
– The quality of planning reduces the level of goal changes (−0.27),
it does NOT affect plan changes
– Changing project goals leads to changes of project plans (0.50)
• The influences of context on the project planning activities
– Strategic importance and the level of experience of the project
team affecting only the quality of planning
– The others influence goal changes and plan changes

16. Mgt 610 Strategic Perspectives on Project Management
© Thomas Lechler 2013For academic use only. 16
Summary of Empirical Findings
• Plan changes and goal changes are different!
• Goal changes will lead to plan changes
• The influence of frequent changes on project value is
significantly negative
• The quality of project planning can reduce goal changes
• The causes for changing project plans are contextual-
related

17. Mgt 610 Strategic Perspectives on Project Management
© Thomas Lechler 2013
Definitions of Project Risk and Uncertainty
• Project Risk
– Project risks also known as the Known-Unknowns are
basically events, circumstances, situations or
conditions that have a potential negative impact on
meeting predefined project objectives.
• Project Uncertainty
– Unexpected and unforeseen project situations with
potential significant impact on the value of a project.
For academic use only. 17

18. Mgt 610 Strategic Perspectives on Project Management
© Thomas Lechler 2013
Exploratory case based interview study
• 42 case studies
• 90-minute interviews with semi-structured questionnaire
• Creation of case study protocol and database
Research Method
Project Category Frequencies
Information Systems Projects 20
Product and Service Development Projects 9
Construction Projects 4
Business & Organization Change Projects 3
Research & Development Projects 2
Project-like tasks 4
Total 42
For academic use only. 18

19. Mgt 610 Strategic Perspectives on Project Management
© Thomas Lechler 2013
• Stakeholder capabilities and dynamics are the most frequent source of
uncertainties!
• Mergers and acquisitions and politics lead to uncertainty.
Categories of Uncertainties
Uncertainty Categories Uncertainty Sources Frequencies
Stakeholder uncertainty Inexperience, change, contracts 18
Organizational uncertainty M&A, politics, unknown legacy system 9
Technological uncertainty Tech. issues, tight specs 8
Contextual turbulences Legal, market 6
Project characteristics Unknown complexity 3
Malpractice Self induced uncertainty 2
For academic use only. 19