Lean Risk Management in Engineering Projects

This Ph.D. thesis investigates how to improve project risk management through the application of lean thinking principles. The management of risks is a key activity in project risk management, yet it is plagued by various challenges in both practice and research. There is a disconnect between theory and practice and the study of practice is lacking.

Project risk management faces challenges with effectiveness and efficiency. Studies on project risk management and project success produce conflicting results and there are misalignments regarding stakeholder value propositions. The literature is abundant with prescriptive guidelines on how to ‘do’ risk management, but with a limited empirical basis justifying those prescriptions.

Risk management processes need to be designed and tailored to various aspects such as the organizational environment, stakeholder needs and project context, yet the knowledge regarding how to do this in practice is lacking. To address these challenges, the principles of Lean Thinking are applied to project risk management.

Particularly the Lean Thinking principles of value, value stream and waste are explored in depth. During the research, principles of Lean Risk Management are conceptualized through literature and empirical studies. First, the exploration of the principle of value reveals that in both research and practice it is unclear how project risk management creates value as well as how it fails to do so.

In fact, few studies explicitly address the value creation of project risk management. It is often assumed to be linked to improved project success, but studies often leave out compounding factors and present simplified generalized and conflicting findings that do not necessarily connect to practice.

The results reveal that the value project risk management creates is contextual and highly influenced by stakeholder value perceptions. The study presents an empirically grounded holistic model of value creation within project risk management. Second, the exploration of waste in project risk management reveals the different ways in which the management of risk can be non-value adding or even value destroying.

Sometimes, conducting risk management incorrectly can be worse than doing no risk management. The study on waste presents an overview and framework of the different types of waste discovered in literature and empirical study. Particularly defective information and lack of system discipline are dominant categories.

Third, the value stream and its modeling of project risk management is explored. The results reveal that the value stream in project risk management can be considered to consist of both explicit and implicit risk management, different sources of uncertainty as well as decision points. Furthermore, a risk value stream mapping framework is conceptualized and evaluated.

The framework suggests to map the formal risk management process as well as other processes which implicitly serve to manage risk. Based on the mapping, non-value adding and value destroying activities (waste) can be removed and potentials for value creation can be identified. Fourth, what serves to manage risk in practice is investigated through the lens of Actuality research.

A review is conducted on the empirical research on project risk management in two top journals and find that the study of the lived experience of practitioners is very limited, which might explain the gap between theory and practice in project risk management. A sense-making framework is conceptualized and applied in an empirical study.

The study reveals that much of the management of risk happens outside the formal explicit risk management process and that there is extreme heterogeneity between organizations. The resulting framework can facilitate an understanding of the current state of the management of risk in an organization. The results has implications for project risk research, questions the normative guidance and reveals a gap particularly in Actuality based studies and with regard to the value creation of project risk management.

By being more aware of the intricacies of practice and the interaction between the implicit and explicit management of risk, designers of such systems can better understand how to enable value creation through project risk management.