How Software Project Risk Affects Project Performance: An Investigation of the Dimensions of Risk and an Exploratory Model

To reduce the high failure rate of software projects, managers need better tools to assess and manage software project risk. In order to create such tools, however, information systems researchers must first develop a better understanding of the dimensions of software project risk and how they can affect project performance. Progress in this area has been hindered by: (1) a lack of validated instruments for measuring software project risk that tap into the dimensions of risk that are seen as important by software project managers, and (2) a lack of theory to explain the linkages between various dimensions of software project risk and project performance. In this study, six dimensions of software project risk were identified and reliable and valid measures were developed for each. Guided by sociotechnical systems theory, an exploratory model was developed and tested. The results show that social subsystem risk influences technical subsystem risk, which, in turn, influences the level of project management risk, and ultimately, project performance. The implications of these findings for research and practice are discussed. Subject Areas: Sociotechnical Systems Theory, Software Project Risk, and Structural Equation Modeling. ∗The authors would like to thank the Project Management Institute’s Information Systems Special Interest Group (PMI-ISSIG) for supporting this research. We would also like to thank Georgia State University for their financial support through the PhD research grant program. The authors gratefully acknowledge Al Segars and Ed Rigdon for their insightful comments and assistance at various stages of this project. †Corresponding author.