Analysis of the effect of risk management practices on the performance of new product development programs

Oehmen, Josef; Olechowski, Alison; Kenley, C. Robert; Ben‐Daya, Mohamed

doi:10.1016/j.technovation.2013.12.005

Cited by 97 publications

(99 citation statements)

References 41 publications

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“…The risks we consider in this study all have negative or undesirable consequences for the focal project, in line with standard project management practice (Maguire and Hardy 2013;Oehmen et al 2014). The outcomes that result from the decision to carry out the project are always influenced by occurring risks (Raz et al 2002), such that increasing risk impacts and risk occurrence probabilities mitigate the value of the decision to conduct the project (Dey 2012).…”

Section: Hypothesis Developmentmentioning

confidence: 91%

“…It is widely acknowledged in project management literature that risks may have positive or negative effects on a project's objectives (Bryde and Volm 2009;Maguire and Hardy 2013;PMI 2008) and therefore may not only be a threat to project success, but also create opportunities (Teller et al 2014). However, project risk management processes still focus on potential negative effects (Bryde and Volm 2009;Raz et al 2002), and risks in a project management context usually refer to uncertain events with negative or undesirable consequences (Maguire and Hardy 2013;Oehmen et al 2014). Thus, it can be concluded that project risk management aims to identify uncertain events and their (predominantly negative) impact on the project for the purpose of reducing the said impact (Pich et al 2002).…”

Section: Risk Assessment and Anticipated Project Successmentioning

confidence: 99%

“…Teller et al (2014) and Salomo et al (2007) find that the application of formal project risk management leads to higher project portfolio success. Likewise, Oehmen et al (2014) find that risk management practices, including the quantification of expected impacts of risks on main project objectives, or the systematic monitoring and reviewing of risks, positively influence decision-making quality, the stable execution of the project plan, and a proactive project organization. Furthermore, their findings indicate that applying risk management practices indirectly influence both project success and product success (in the context of new product development) mediated through the aforementioned constructs of decision-making quality, stable project plan execution, and a proactive project organization.…”

Section: Risk Assessment and Anticipated Project Successmentioning

confidence: 99%

“…While assessing both the impacts of risks and the probability of them occurring contributes to project success (Oehmen et al 2014;Raz et al 2002;Salomo et al 2007;Teller et al 2014), it has not been investigated how risk assessment is considered in anticipations of project success. We propose that many projects may fail to achieve project objectives as a result of risks being insufficiently considered by project managers, thus leading them to make overly positive projections for project success.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

“…Risks are inherent in every project (Huff and Prybutok 2008) and defined as uncertain events that exert positive or negative effects on a project's objectives (Bryde and Volm 2009;PMI 2008), making risks a likely reason for deviations from the project management plan. Various studies have found that project risk management measures, including assessing the impacts of risks and the probability of them occurring, are key contributors to project success (Oehmen et al 2014;Raz et al 2002;Salomo et al 2007;Teller et al 2014). What has not been investigated, however, is how risk assessment influences project managers' anticipated project success.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Project managers’ overconfidence: how is risk reflected in anticipated project success?

Fabricius

Büttgen

2015

Bus Res

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Projects tend to exceed planned timelines and budgets. One reason may be that potential project risks are insufficiently reflected in anticipations of project success. Furthermore, project managers’ overconfidence may lead them to assess risk in a biased manner. The present study examines how risk assessment relates to overall anticipated project success and how overconfidence on the part of project managers influences such assessments. We assume that project managers’ risk awareness serves as a mediator between overconfidence and risk assessment. To observe the planning behavior of 204 project managers, we used a standardized, case-based survey. The results show that overconfidence reduces risk awareness among project managers, leading them to assess risks more optimistically and come to more positive conclusions about anticipated project success. When judging project success, project managers only consider the probability of a risk occurring; they do not factor in the impact of said risks on project success should the risks arise. Risks thus seem to be insufficiently reflected in anticipations of project success which might be a reason for high failure rates of projects.

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Section: Hypothesis Developmentmentioning

confidence: 91%

Section: Risk Assessment and Anticipated Project Successmentioning

confidence: 99%

Section: Risk Assessment and Anticipated Project Successmentioning

confidence: 99%

Section: Hypothesis Developmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Project managers’ overconfidence: how is risk reflected in anticipated project success?

Fabricius

Büttgen

2015

Bus Res

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The inseparable two: Impact of prior success and failure on new product development project discontinuation

Lévesque

Subramanian

Vrande

2022

J of Ops Management

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New product development (NPD) is a risky and expensive endeavor. Therefore, discontinuing less promising NPD projects, based on their development trajectories, is very important, yet firms face challenges when deciding whether and when to discontinue NPD projects. This article examines how characteristics of a firm's prior success and failure experiences, such as the number of launched and discontinued past projects, their attributes (i.e., the codification and quality of the knowledge underlying these past projects), and their level of relatedness (i.e., similarity) to current projects, influence the risks of continuing and discontinuing NPD projects, thus impacting their future discontinuation decisions. We adopt a mixed method approach, where we formally model and empirically test the influence of prior experiences on future decision-making. A formal model enables us to offer reasoning that considers the risks of continuing a project versus discontinuing that project as the basis for theoretical arguments for a set of proposed testable relationships. We then empirically test these relationships on 2938 new drug development projects of biopharma firms worldwide. We find that firms with a greater amount of success and failure experiences tend to discontinue less promising NPD projects sooner than firms with less success and failure experiences. Also, we find that while the attributes (particularly knowledge codification) of successful experiences predominantly helped firms decide on timely discontinuation, failure experiences influenced firms' decision on timely discontinuation only when the projects were closely related to their failure experiences.

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The role of risk mitigation actions in engineering projects: An empirical investigation

Shafqat

Oehmen

Welo

et al. 2022

Systems Engineering

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Engineering-heavy new product development (NPD) projects face unplanned design iterations, which can cause failure in terms of missed targets for cost, schedule, quality, and customer satisfaction. These unplanned design iterations can be understood as the occurrence of a specific category of engineering project risks. As a result, companies employ structured actions to mitigate these risks in projects. However, even with such strategies in place, projects can still struggle to achieve their targets. This study aims to explore how companies employ risk mitigation actions to manage risks in engineering-based NPD projects. To investigate this topic, a survey of employees in the aerospace and defense industries was conducted. We analyzed the responses using statistical methods. The results indicate that risk mitigation actions are used according to thematic clusters, in line with our findings from the literature. Furthermore, the selected mitigation measures show collective explanatory power for handling engineering project risks, suggesting that while some projects that employ mitigation actions may still fail, their use of such measures does still reduce the overall impact of risks. Interestingly, the results of the statistical analysis show no significant difference in the employment of risk mitigation actions in engineering-based NPD projects, whether they employ waterfall or agile NPD methods, or a mixture of both. These results suggest that companies should consider all classes of risk mitigation actions to manage engineering project risks. On this basis, the wider contextualization of individual mitigating actions should be taken into account when planning risk mitigation for engineering-based NPD projects.

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Analysis of the effect of risk management practices on the performance of new product development programs

Cited by 97 publications

References 41 publications

Project managers’ overconfidence: how is risk reflected in anticipated project success?

Project managers’ overconfidence: how is risk reflected in anticipated project success?

The inseparable two: Impact of prior success and failure on new product development project discontinuation

The role of risk mitigation actions in engineering projects: An empirical investigation

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