Relationship Risk Analysis in Project Governance

Abstract

Project governance theory is increasingly wide attention of theoretical and practical circles. The research emphasize the governance relationships between project stakeholders is critical to the success of the project, the risk control as the core of project governance. However, existing research does not form the general theory and methods of risk analysis that can be applied to different projects with different characteristics, and also did not put forward a unified strategy choice theory and method on how to reduce risk. Seeking a new theory and method to analysis and disposal project stakeholders’ risk is of great significance. This article uses Social Network Analysis method constructs whole project stakeholders’ risk analysis process, which contains: the construction of project governance model, the measurement of risk and the selection of strategy. Introduction In the process of China's rapid economic growth, all kinds of projects, especially large projects across the organization constantly emerging, various types of problems, such as project investment out of control, quality accident, project delay, happen occasionally[1]. The traditional single project management which with project manager as the core as well as theory and methods of programme management and portfolio management which with a single organization as the boundary have gradually shown its shortcomings[2]. Standishgroup survey results show that the important cause leading to the project failure is the failure of governance between project stakeholders[3]. The project governance theory, which core tasks include how to determine the project goals, select the project implementation strategy, establish information disclosure and monitoring mechanisms ,is increasingly wide attention of theoretical and practical circles. Project governance research began in the late 1990 s, mainly based on three research perspectives: the perspective of corporate governance, governance structure and process character perspective. First two perspectives are transplanting the Corporate Governance Theory, Principal-Agent Theory, Stakeholder Theory, and Beyond Property-Right Argument into project management, trying to achieve the balance of responsibility, right and benefit between project stakeholders, form an effective risk and benefit sharing mechanism, prompt stakeholders’ action coordinately for the success of project[4]; Project governance theory based on process role perspective believes that project governance is the process of establishing and maintaining the between project stakeholders, this process will create a good environment for the project management, so as to reduce project risk, improve project success rate[2]. Although three different research perspectives, but essentially stressed that stable and reliable between project stakeholders is critical to the success of the project governance. However, existing research does not form the general theory and methods of risk analysis that can be applied to different projects with different characteristics, and also did not put forward a unified strategy choice theory and method on how to reduce risk. Current studies of International Conference on Management Science and Management Innovation (MSMI 2014) © 2014. The authors Published by Atlantis Press 95 project risk management, mainly focus on the analysis and research on associated risk factors with a single stakeholder role behavior, or only consider risk between two stakeholders,[5][6]called relationship in this study. These studies neglected the between many stakeholders, and therefore does not reflect and solve the core issue of project governance. So, seeking a new theory and method to analysis and disposal project stakeholders’ risk is of great significance. Literature review Research status and trends of project governance relationship. The carrier of project task is temporary organization consisting of multiple stakeholders, between these stakeholders, different project governance are formed around the agreement on the project objectives, project implementation strategy, and the disclosure and monitoring of information in the process of project implementation. The study of governance can be divided into two categories, binary and relationship. The research of binary relationship. This type of research believes that binary is the basic unit of project governance relationship, and project governance is the simple superposition of binary relationship, is divided into the following three aspects: principal-agent [4][7-9], trading relationship[10] and collaborative working relationship[2]. The research of network relationship. This kind of research believes that the standpoint of seeing project governance as a simple combination of “binary” relationships split the systematicness of project governance. The most representative research results seen project governance as a social network, such as Aaltonen [11],Pryke and Pearson[12], Masquefa [13] , Ferriani [14]. These studies also limited in simple network, but provides a good approach for this study. Research status and trends of project governance risk. Governance risk research originated in the corporate governance research field; the term corporate governance risk has been mentioned in Yin-Hua Yeh’s research which analyzed the relation between corporate governance and financial crisis, Taiwan’s listed companies as samples[15]. Although there is currently no scholars clearly put forward the definition of project governance risk, the related studies have been carried out. Such as research on large construction project risk[6], the risk of BOT project[5], the stability of the supply chain between upstream and downstream relationship[16-19], etc. Through the analysis of related research on project governance and project governance risk, we found that: First, the study of project stakeholders’ focused mostly on relationship, but less on relationship. Second, pay more attention to project attributes risk factor analysis, rarely involved the study of stakeholder risk. The construction of project governance model Network node selection. Project governance node is project stakeholder, two key problems need to be solved on identification of project stakeholders: one is to find the project have what stakeholders; the second is the expression of the between the stakeholders. Both aspects contact closely, this research does not intend to discuss respectively from two aspects, but treat the identification of project stakeholder as an whole process, and express it with snowball’s thoughts. Step1: Select a representative stakeholder to get the data.