Risk is highest during the initiation phase of a project due to the existence of limited information and various unknown factors. And it is during this stage that the decision makers have the highest potential to influence the outcome of any project. As a result, a decision maker’s behavior becomes very important in decision making at such early stage of the project development. This study focuses on the impact of behavioural decision making on ineffective risk management in a project. The Analytic Hierarchy Process (AHP - a multi-step decision analysis model that converts qualitative factors into quantitative measures) approach is used here to analyze the data and rank four risks in any Information Technology (IT) project setting. These risks are overoptimistic forecasts, gold plating, inefficient resource allocation, and overcautious forecasts. The set of behavioural criteria used for ranking these four risks are - bounded rationality (cognitive limitation), cognitive biases (cognitive heuristics) and lack of sensemaking (making sense of ambiguous and novel situations). This paper is trying to focus only on those risks (and not on typical risks) which could be developed because of the behavior of an individual leader when making decisions. The result of this research could help in guiding practitioners in making better decisions pertaining to handling these four risks whose foundation is laid at the very beginning of the project. There are very limited empirical studies which discuss behavioural decision making in projects and its effects, particularly considering how important project decisions are.

Authors:
Kumar Gaurav Thakur, Central European University, Austria

About the Presenter(s)
Mr Kumar Gaurav Thakur is a University Doctoral Student at Central European University in Austria

See this presentation on the full schedule – Saturday Schedule

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