the risks associated with the management of engineering projects

The perspective held by many people involved in engineering projects is that it’s an imprecise and challenging problem (Fan, Li, and Zhang, 2015). The view held is that of a project type that is not only impossible to execute but should also be feared. As such, project management initiatives involving engineering tend to necessitate increased care because of the sensitivity associated with being accurate. However, based on views by Qian and Lin (2016), nothing could be further from the truth. Although the risk is certainty ubiquitous, often difficult to identify and may not be completely avoided, López and Salmeron (2012) believe that, to a great extent, the risk may be mitigated, reduced or prevented by way of timely intervention, analysis, and action.

Consequently, because of the competing perspectives, one can argue that risks associated with the management projects are perceived to have divergent degrees of difficulty. Abdul-Rahman, Mohd-Rahim, and Chen (2012) reinforce this view by pointing out that risks facing project management can be classified into manageable and unmanageable. Theoretical perspectives of Legault (2013) appears to suggest that the internal sources of risk encompass the poor scope associated with a project definition and the failure to adequately engage all the stakeholders of a project. These shortcomings can affect the volume of data or information available to a project resulting in overall poor performance in the project. Conversely, scholars have also associated the risks facing projects to externally occurring factors. For instance, Shahtaheri et al. (2017) contend that the changes in policy, resulting in an unexpected policy, can be perceived as a source of external risk. The change in policy can suddenly make certain project deliverables illegal or constrain the ability to identify inputs for the engineering project. Therefore, as such, it is on this basis that the aim of this literature review is to critically review the risks associated with the management of engineering projects. The structure used to achieve this aim is as follows: an overview of engineering projects; risks associated with management of engineering projects; summary.

2.0 Overview of engineering projects

Engineering project management, as informed by Zhang and Fan (2014), refer to project management types that focus solely on engineering projects. Anantatmula and Fan (2013) are keen to point out that though the focus is on engineering projects, it also utilises the standardised methodologies and processes as those applied in other forms of project management. As such, any differences likely manifested in the methodology of project management in engineering projects are dependent on the industry, firm, and project being implemented. Nonetheless, the nature of engineering projects makes it particularly appealing to professionals in the engineering department seeking to the venture into the field of project management (Zhang, 2016). As such, this may involve the process of managing projects in the field of engineering. For instance, seeking to design, construct, and put up an office can be described as an engineering project.

Yet, in contrasting the engineering projects from normal projects, Larson and Gray (2011) contend that engineering projects often have a project manager that can be described as an engineering project manager. This often contrasts the project engineer who works within the project team and within the role of an engineer (D’Ignazio, Hallowell, and Molenaar, 2011). For instance, whilst a design engineer may be perceived as part of the project involved in the design of a building, one may not mistake them for the lead project manager. Rather, within this capacity, they play the role of team members and an expert on a particular subject matter. Nonetheless, Hoyt and Liebenberg (2011) contend that the lead project engineer may, from time to time assign them to a given project as lead manager. In view of this development, their role often changes and is limited to that of oversight and approval of the projects technical engineering components. As such, this often takes place when the project manager is characterised to have an engineering background or skills.

3.0 Risks associated with management of engineering projects

3.1 Meanings of risk management

Different scholars have formulated different understandings and perspectives on what risk management means. On the one hand, risk management, as informed by D’Ignazio, Hallowell and Molenaar (2011) is a process by which individual and organisational risk is not only understood but also managed in a proactive manner. This is often handled in this manner in order to overcome potential threats facing a project whilst also maximising the opportunities available to the project. Other scholars such as Larson and Gray (2011), describe risk management as the process of identification, analysis and response to the risk factors likely to be experienced in a project and in the best interest of realising the stated objectives. In view of the above competing perspectives, one can argue that both conceptualisations are more similar than divergent. The similarity is demonstrated in the consensus that risk management strategies are effective in reducing the likelihood of a particular event occurring or reducing the potential magnitude of that event occurring. Overall, however, as such, one can argue that projects are proactive in nature as opposed to be reactive. In view of these perspectives on risk management strategies, one can argue that a number of risks are likely to be faced by projects. This is because the occurrence of these risks is vital in stimulating the need for risk management strategies to be implemented.

3.2 Risks facing engineering project management

Project management faces several risks that originate from a wide variety of sources. According to Hoyt and Liebenberg (2011), time and cost are some of the factors likely to create risk in a project. In the event the time allocated for a project is exceeded, there is a likelihood that it will incur a high cost of completion. For instance, a project exceeding its timeline has to compensate workers for extra days, pay more for capital goods on hire or have to get new permits for the project due to violated timelines. Moreover, the quality aspects of a project can also influence the quality attributes associated with a given project (Nocco and Stulz, 2006). The issue of quality relates to how well a project is able to match the expectations of the project sponsor. As such, for projects failing to match the expectations of the sponsor, they risk have a poor quality. This can be in the form of failing to complete project on time, exceeding budget or the poor workmanships associated with a project. As such, in the event the customer is not satisfied, one can conclude that the project quality is compromised. Furthermore, the health and safety principles associated with a particular project can also affect the risk occurrence in the project (Kermanshachi et al, 2016). The health and safety standards set can affect how well the workers in the project are able to remain healthy and perform their activities to a high level. In situations of poor worker health, the quality and output generated by the workers is likely to be comparatively low. In addition, the legal framework, the project team and the assumptions used to inform the project are other factors likely to influence the risk predisposition associated with a given project (Loch, DeMeyer and Pich, 2011). By making unsubstantiated assumptions in a project, one risks not capturing the realistic aspects of the project and consequently negatively affecting the overall quality of the project.

Other scholars have opted to categorise the occurrence of risk in projects into either internal and external source of risk. Theoretical perspectives of Legault (2013) appears to suggest that the internal sources of risk encompass the poor scope associated with a project definition and the failure to adequately engage all the stakeholders of a project. These shortcomings can affect the volume of data or information available to a project resulting in an overall poor performance in the project. By failing to engage all stakeholders, the project can face challenges in seeking full support or critical resources such as funds or permits that are necessary for completing the projects. Other sources of internal risk as captured by López and Salmeron (2012), encompass the confusion that is created amongst team members roles. Confusion amongst team member roles suggests that some tasks may remain undone whilst others may be done poorly since there is a lack of expertise that can be readily directed towards accomplishing the specified tasks. Consequently, Hilorme t al. (2019) add that having unrealistic timetables and having too many projects competing for similar resources can also be internal sources of risk facing a project. An unrealistic timetable suggests that projects are rushed and a lack of adequate number of people to complete project deliverables also complicates how projects can be completed. Having an unrealistic timetable can put unnecessary pressure on employees to complete a project resulting in poor project execution. In addition, having too many projects to be handled per unit time also constrains the quality of the project because limited time is directed towards the completion of a given project as all the project tasks take up attention for completion. Therefore, it can also create a challenge for the project team in terms of determining which project to prioritise and which one or determining which project deliverable should be undertaken before others are conducted.

Conversely, scholars have also associated the risks facing projects to externally occurring factors. For instance, Shahtaheri et al. (2017) contend that the changes in policy resulting in an unexpected policy can be perceived as a source of external risk. The change in policy can suddenly make certain project deliverables illegal or constrain the ability to identify inputs for the engineering project. Moreover, Abdul-Rahman, Mohd-Rahim and Chen (2012) argue that changes in technology can also pose a significant external risk to projects. Changes in technology may make the current technology applied be costlier since it results in less efficiency or make it harder for a project to conclude since it has to acquire the technology before concluding its objectives. Other scholars believe that funding to be provided by the government by way of grants can be faced with risk because the grants are susceptible to inflation and currency movements in the external business environment (Fan, Li and Zhang, 2015). The issue of funding provides a significant impediment to the overall quality of project because it can create delays in project completion. Qian and Lin (2016) add that the issues of union action and potential legal dispute are some of the reasons why projects are likely to experience risk associated with the external business environment. The issue of union is likely to create delays in a project as a raft of issues are being negotiated prior to the project being completed in time.

3.3 Predisposal factors to risk occurrence

The occurrence of risk in projects is not random. Perspectives by Legault (2013) reinforce the view that project risk attributes exist that predispose certain projects to experience certain risks. For instance, issues of strategic fit can be a rationale as to why certain projects face risks whilst others are able to avoid similar risks (Anantatmula and Fan, 2013). The issue of strategic fit is significant because it creates risk through the operation of outside of the agreed strategy. As such, this can jeopardise the ability of the project to deliver on its project objectives. López and Salmeron (2012) adds that issues of expertise of the project team can also expose a particular project to the likelihood of risk occurring. Expertise often creates risk by way of not having the appropriate personnel or expertise to execute and complete a given project. Moreover, the issues of image and size of the project can also determine the risks likely to be experienced by a project (Zhang, 2016). The issue of image can result in the damage of the reputation of the company thereby putting the viability of present projects at risk. The size of the project can create risk in situations that a project with many deliverables is likely to be risky to execute in comparison to a project with a lesser number of deliverables because of the simplicity involved.

Complexity and planning timescale are examples of other issues likely to face projects and expose them to the potential of risk (Hilorme et al., 2019). Projects perceived to be more complex not only require complex timescale in planning but also can create challenges in effectively completing the projects. For instance, poor planning in projects can have a negative impact in projects because of the potential of violated timelines (). The complexity and planning challenges can create risks of incomplete deliverables, poor financial planning and poor-quality management practices. Other scholars such as Zhang and Fan (2014), believe that issues of cultural fit and the quality of time of information are other predisposal factors likely to increase the likelihood of risk being experienced in a project. Projects characterised by poor cultural fit tend to have a poorer quality of project because the methods of completion fail to match the value of the project. This is because the employees fail to adequately fit into what is required of them or how to conduct operations within the company. Consequently, this creates a challenge for the employees of the organisation in terms of adapting to the culture that can enable them perform their functions effectively.

Poor quality data is another complexity related issue likely to expose a project to the occurrence of risk and subsequent failure. The quality of information available to a project can also determine how successful or risky a particular project is likely to be in the short and long run (Abdul-Rahman, Mohd-Rahim and Chen, 2012). Scholars believe that having poor quality data costs organisations significant amounts of money. Estimates by IBM suggests that on an annual basis, poor quality data costs US businesses up to $3.1 trillion (ENR InfoCenter, 2020). A number of factors have been attributed to this trend. Firstly, the use of manual processes and off-book calculations can easily result in errors being made. Consequently, these errors can result in overestimations or under-estimations that negatively affect the quality of projects. Secondly, incidents of poor data quality can be manifested when projects fail to document or follow any processes taken. This often is manifested in deliverables that cannot be accounted for, spent funds that fail to provide supportive documents for expenditure. As such, this often contributes to higher costs of project completion and subsequent inability to realise a high-quality project based on the approach towards expenditure. Yet, Monk and Wagner (2012) believes that having an enterprise resource management system that manages data in a project, the risks facing the project can be mitigated. This is because it not only minimises errors but also documents every process and guarantees accountability in terms of project cost and quality.

Customer demand variability is another complexity risk that can negatively affect a project by resulting in higher costs of completion and project delays. The demands made by the customer can also influence how effective a project can be in meeting or failing to deliver on the expectations of the customer (Shahtaheri et al., 2017). Although projects commence with the best intentions, Pynnönen, Hallikas and Ritala (2012) argue that customers can have a negative influence on projects. For instance, customer expectations and demand can vary across the lifetime of a project. As such, this can create additional pressure on the project to deliver on the expectations of the customer. Subsequently, the project could experience a violation of its budgeting and time constrains resulting in extra costs and project delays. Bowie (2003) believes that customers can negatively impact on projects when a customer satisfaction measurement is not added during the planning phase for the project. This is because whilst customer satisfaction is dependent on understanding, defining and evaluating the customer requirements, not having an awareness of what they are and how they vary across the lifecycle of the project can reduce the effectiveness of how they are managed. In view of this, Heilala et al. (2010) argue that in managing the risk faced from varying customer expectations, effective project managers make the decision to engage customers directly and ask them questions as the project progresses. This often provides an effective method to determine the level of customer satisfaction. Subsequently, it also provides the project manager with an opportunity to make changes to the overall project such that it delivers on customer expectations.

The environmental factors that expose a project to certain risk elements can also be used to determine the risk profile associated with undertaken a given project (Fan, Li and Zhang, 2015). Whilst natural hazards are perceived as part of human life, over the recent times, their occurrence and impact on projects has been growing resulting in delays and possible failures of projects. Based on the influence from the external environment, Kutsch and Hall (2010) contends that a number of risk factors can be experienced. For instance, projects can encounter external hazards that include storms, floods, earthquakes, sabotage, vandalism, civil unrests, labour strikes and terrorism. The occurrence of any of these risks is likely to pose a threat to the accomplishment the project within a given date and time (Bau et al., 2008). A case in point is when there has been a storm or floods that is likely to make roads impassable thereby complicating the delivery of inputs to the project site. Therefore, in the occurrence of these unforeseen natural disasters, the risks facing a project are likely to be experienced in a more significant way. Reed, A and Knight (2010) argue that in view of the fact that some natural hazards such as storms. Hurricanes and earthquakes may not be avoided, measures to help improve the occurrence of those risks may not be effective. In response to the risks faced due to natural disasters, Sarigiannidis and Chatzoglou (2011) argue prior planning and good timing of projects is an important step in overcoming risks posed by natural disasters. For instance, planning for projects before a known rainy season period can be an effective way of preventing storms.

Finally, the context specific factors can also be used to determine and identify the likelihood of risk occurrence in a project (Zhang and Fan, 2014). Project context, as informed by Fan, Li and Zhang (2015) refer to the internal and external environment likely to affect how a project operates and impacts on the environment around the project. As such, having a poor understanding of the project manager and the context specific factors around a project can create risk for project failure. For instance, D’Ignazio, Hallowell and Molenaar (2011) contend that a given project could require the use of an IT system to monitor the construction of a building project. Subsequently, in the event the project fails to utilise the IT system, it is likely to risk failure because it may be difficult to take stock of every deliverable that is important towards project completion. In response to the context specific factors, Abdul-Rahman, Mohd-Rahim and Chen (2012) believes that establishing the fundamentals around a given project can be useful in determining the context specific factors. For instance, establishing how unique a given project is from others is an important element in determining how to determine what is needed for its completion. Hoyt and Liebenberg (2011) further corroborates this view by pointing out that determining the project success criteria for a project can help determine how to successfully complete the project. Therefore, this helps position the project towards avoiding risks facing the project.

4.0 Summary

This literature review set out to collect articles, books and reports focusing on risk management practices amongst engineering projects. As such, this section collected useful data on the risks associated with management of engineering projects. In view of the above literature review findings, one can conclude that the risks associated with engineering projects by and large mirror those of normal non-engineering related projects to a certain extent. The differences in the two types of projects is manifested in the degree of difficulty. Whereas engineering related projects tend to have a higher degree of difficulty, non-engineering projects have a lower degree of difficulty. Nonetheless, the findings have also established that in view of the similarities manifested in the types of risks faced, it was possible for current risk management activities being applied in findings to risks faced by organisations.

The findings indicated that engineering project risks could be attributed to a wide number of factors. Of these, the main risks likely to be faced by projects included violation of the timeline constraints specified by the project sponsor, higher cost of project completion beyond the budget specified by the sponsor and inability to match the expectations of the project sponsor based on quality specifications. Moreover, the findings established that the risks facing engineering projects could be categorised into internal and external sources of risk. The internal sources of risk included the poor scope associated with a project definition, the failure to adequately engage all the stakeholders of a project, the confusion that is created amongst team members roles, having unrealistic timetables and having too many projects competing for similar resources can also be internal sources of risk. The external sources of risk included changes in government policy resulting in an unexpected policy, changes in technology can also pose a significant external risk to projects, funding to be provided by the government by way of grants and the issues of union action and potential legal dispute.

Yet, the literature review findings had a gap associated in the non-focus on Saudi Arabia related engineering projects. Whilst Saudi Arabia has invested significantly into engineering projects, there exists limited theoretical and empirical data focused on the Saudi Arabian engineering sector. Subsequently, in view of this research gap, this necessitates this research to conduct in a primary research that seeks to invest the risks associated with engineering projects in Saudi Arabia.