Risk Management Practices and Energy Projects’ Performance

Abstract

The main objective of this thesis was to assess how risk management is practiced in energy projects and how it affects projects’ performance. This research is conducted mainly to assess the extend of usage of risk management in energy projects in order to check what should be done to improve energy projects performance as reflection of effective risk management. The research targeted energy project managers and other staff related to energy project management in the energy utility. This research used quantitative method of data collection, it is based on a scheduled questionnaire survey to collect the primary data using purposive sampling of nearly or fully completed projects. Data from respondents by rating on a Likert scale, were processed and analysed through SPSS. The extent of agree/disagree of respondents about research variables was assessed by using the Mean Score (MS). Risk management practice is documented, based on questionnaire survey in percentage through tables. Significant factors of the risk were identified by ranking the risk factors based on the response of respondents regarding their probability of occurrence. The objective of studying the impact was achieved through hypothesis testing using regression analysis between risk management practices (risk identification, risk assessment and risk treatment) as the independent variables with cost and time schedule as dependent variables. This study showed a positive linear relationship between risk management practices and energy project performance. Specifically, effective identification of risk analysis as well as risk treatment at planning and implementation of a considerable level of stage involve large statistical effect about the performance of project (proxies by a planned cost and time). Findings also revealed that risk management practices require a bit of improvement in energy projects. The thesis has both academic and policy implications. It provides a deep understanding of risk management in energy projects which has not been has not been given important attention in the academic literature as most studies have a bias on banks and construction industries. The thesis contributes to practice as well. Findings from this study can help the project managers to enhance existing risk mitigation strategy which will be beneficial to the various stakeholders in energy sector to streamline the project development process and reduce the risks attached to energy projects