In this research, a study of the effects of coordination mechanisms and risk drivers such as project uncertainty on the performance of software development projects was conducted. Two types of coordination mechanisms were considered: vertical and horizontal. The former refers to the extent to which coordination between users and IS staff is undertaken by authorized entities such as project managers or steering committees. The latter refers to the extent to which coordination is undertaken through mutual adjustments and communications between users and IS staff. A new research model was developed by synthesizing research using the structural contingency perspective from Organization Theory and the risk-based perspective in Software Engineering. The model suggests that residual performance risk, i.e., the difficulty in estimating performance-related outcomes during the later stages of the project, can clarify the relationship between project uncertainty, coordination mechanisms and performance. Eight hypotheses were derived from the model for empirical testing. Data were collected from 64 software development projects in the banking and other industries. The results provide considerable support for a revised research model. As expected, project uncertainty increases residual performance risk. Both in turn have a direct negative effect on performance. Vertical coordination significantly reduces both project uncertainty and residual performance risk. However, horizontal coordination does not have any significant effect on residual performance risk. Instead, it has a direct positive effect on project performance. Moreover, higher levels of both vertical and horizontal coordination lead to higher levels of overall performance. Their differential impacts on residual performance risk are interesting areas of future research.

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