Risk Management in Project Networks: An Information Processing View

Abstract

Increasingly, projects are executed by networks of organizations. The networked form of organization has many important implications for project risk management. Information processing theories introduce mechanisms for processing information inside organizations as well as among organizations to reduce the uncertainty and equivocality inherently present in international projects. This study aims to examine the risk management practices involved at a project network level through an empirical analysis of one complex large project network executed in a challenging institutional environment. With regard to network level risk management, the paper identifies eight formal information processing mechanisms for implementing risk management: (1) established rules and criteria for the selection of subcontractors at a global level, (2) specification of responsibilities in the contract, (3) formal risk sheet, (4) progress follow-up tool, (5) database for project information, (6) customer reporting system, (7) updated project plan after the project is delayed, and (8) country study team. Personal relationships between parties, personal commitment, experienced individuals, and face-to-face meetings are identified as informal information processing mechanisms used as measures of project risk management to reduce equivocality. We also elaborate the fitness of the mechanisms used for the contextual situations of the project network settings.