MASTER OF BUSINESS ADMINISTRATION 
IN 
INFORMATION TECHNOLOGY 
M L D T Karunanayaka. 
Department of Computer Science & Engineering 
University of Moratuwa 
December 2009 
ASSESSING THE AWARENESS OF  
SOFTWARE PROJECT RISK MANAGEMENT IN 
SRI LANKAN SOFTWARE INDUSTRY 
 
  
 
ASSESSING THE AWARENESS OF  
SOFTWARE PROJECT RISK MANAGEMENT IN  
SRI LANKAN SOFTWARE INDUSTRY 
 
 
 
 
 
By 
 
M L D T Karunanayaka 
 
 
 
 
The Dissertation was submitted, to the Department of Computer 
Science & Engineering of the University of Moratuwa in partial 
fulfilment of the requirements for the Degree of Master of Business 
Administration. 
 
 
Department of Computer Science & Engineering 
University of Moratuwa 
December 2009  
i 
 
DECLARATION 
 
“I certify that this thesis does not incorporate, without acknowledgement, any material 
previously submitted for a degree or diploma in any university. To the best of my 
knowledge and belief, it does not contain any material previously published, written or 
orally communicated by any other person or me, except where due reference is made 
in the text. I also hereby give consent for my dissertation, if accepted, to be made 
available for photocopying and for interlibrary loans, and for the title and summary to 
be made available to outside organizations” 
 
 
…………………………………   …………………………. 
 M L D T Karunanayaka.         Date   
         MBA/IT/08/9064 
 
 
To the best of my knowledge, the above particulars are correct. 
 
…………………………………  …………………………. 
 Prof. N D Gunawardena.          Date   
 Deputy Vice-Chancellor, 
 University of Moratuwa. 
 
 
 
 
 
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ABSTRACT 
Software projects are the lifeline of software development organizations. Due to the 
ever increasing complexities in systems, it is paramount that extensive planning and 
risk assessment is performed to ensure successful project completion. As an emerging 
industry in Sri Lanka, sound software project risk management is of crucial 
importance. This study is focused on measuring the awareness of software project risk 
management in Sri Lankan software industry.  
The study focuses primarily on investigating three key objectives: Firstly, identify the 
overall level of awareness of the software project risk management in Sri Lankan 
software industry. Secondly, extract the factors affecting to software project risk 
management and thirdly discussion on the risk response methods to the most 
significant risks found from survey results. Finally, the research discusses 
recommendations on improving the performance on better software project risk 
management based on the interviews conducted and the literature review. 
The research uses both qualitative and quantitative approaches to fulfill research 
objectives.  Data was primarily gathered through the questionnaire and interviews. 
The questionnaire was distributed among selected professionals in Sri Lankan 
software industry.  
The results of the study indicate that the overall level of risk awareness in Sri Lankan 
software industry is above the average, evaluating to an estimated overall mean value 
of 3.7 out of 5.  Study revealed that the awareness of software project risk 
management is dependent on the „organizational characteristics‟ such as size, 
complexity and cost of the project, organizational culture and higher management 
initiative. However there is no evidence to state that awareness is dependent on 
„technological aspects’ and ‘individual characteristics’. 
Since the „organizational characteristics‟ have a relationship with the risk awareness, 
it is advisable to strictly adhere to the processes and policies within an organization to 
ensure the positive outcome. 
  
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ACKNOWLEDGEMENT 
Firstly, I would like to extend sincere thanks to my supervisor, Prof. Niranjan 
Gunawardena, Deputy Vice-Chancellor University of Moratuwa, for accepting my 
proposal and always being receptive, supportive and flexible. His constant confidence 
in me was definitely a driving factor to make this endeavor a success. 
I would like to thank specially, our head of department, Mrs. Vishaka Nanayakara. 
Your patience was invaluable when running out of time.  
I owe my deepest gratitude to Mrs. Dilini Kulawansa, Head of Department of 
Information Technology, for unconditionally taking time to give advice and show that 
analysis, in itself, is an art. 
I would also like to acknowledge the support and guidance provided by the academic 
and non academic staff of the Department of Computer Science and Engineering. 
I am indebted to my colleagues, who supported me in number of ways while 
completing their own research. 
I would also like to give special thanks to my parents and my brother for their 
inspiration and encouragement. Without their support this research would not have 
been possible.  
And last but not least, I wish to thank Aruna, for had it not been for the constant 
support and encouragement from him, this would not have materialized. 
 
 
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TABLE OF CONTENTS 
 
DECLARATION ........................................................................................................... I 
ABSTRACT ................................................................................................................. II 
ACKNOWLEDGEMENT ........................................................................................ III 
LIST OF FIGURES ................................................................................................... VI 
LIST OF TABLES ................................................................................................... VII 
LIST OF ABBREVIATIONS ................................................................................ VIII 
CHAPTER 1: INTRODUCTION ............................................................................... 1 
1.1       BACKGROUND .................................................................................................. 1 
1.2       MOTIVATION .................................................................................................... 2 
1.3       RESEARCH TOPIC .............................................................................................. 3 
1.4       RESEARCH METHODOLOGY .............................................................................. 4 
1.5       NATURE AND FORM OF RESULTS ...................................................................... 5 
CHAPTER 2: LITERATURE SURVEY ................................................................... 6 
2.1 SOFTWARE PROJECT RISK MANAGEMENT ........................................................ 6 
2.2 IMPORTANCE OF RISK MANAGEMENT .............................................................. 6 
2.3 RISK IDENTIFICATION MODELS ........................................................................ 7 
2.4 SOFTWARE RISK IN OTHER COUNTRIES .......................................................... 17 
2.5 FACTORS AFFECTING THE SOFTWARE PROJECT RISK MANAGEMENT............. 22 
2.6 RISK RESPONSE STRATEGIES .......................................................................... 23 
2.7 PROJECT LEVEL RISKS ................................................................................... 25 
2.8 SUMMARY ...................................................................................................... 29 
CHAPTER 3: METHODOLOGY ............................................................................ 30 
3.1 THEORETICAL BACKGROUND AND CONCEPTUAL FRAMEWORK OF THE STUDY
 30 
3.2 RESEARCH APPROACH.................................................................................... 37 
3.3 RESEARCH DESIGN ......................................................................................... 41 
3.4 SAMPLE DESIGN ............................................................................................. 43 
3.5 DATA COLLECTION ........................................................................................ 44 
3.6 DATA ANALYSIS ............................................................................................ 45 
CHAPTER 4: DATA ANALYSIS ............................................................................ 46 
4.1 RELIABILITY AND VALIDITY .......................................................................... 46 
4.2 DESCRIPTIVE ANALYSIS ................................................................................. 47 
4.3 STATISTICAL ANALYSIS ................................................................................. 58 
4.4       RESULT OF HYPOTHESES ANALYSIS ............................................................... 71 
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CHAPTER 5: DISCUSSION .................................................................................... 73 
5.1 COMPARISON OF THE CURRENT AVAILABLE STRATEGIES TO MOST 
SIGNIFICANT RISKS ................................................................................................... 73 
CHAPTER 6: CONCLUSION AND RECOMMENDATIONS ............................ 82 
6.1 CONCLUSION .................................................................................................. 82 
6.2 RECOMMENDATIONS TO IMPROVE THE PERFORMANCE .................................. 84 
6.3 LIMITATIONS OF THE STUDY .......................................................................... 86 
6.4 FURTHER RESEARCH ...................................................................................... 87 
REFERENCES ........................................................................................................... 89 
APPENDIX I: QUESTIONNAIRE .......................................................................... 93 
APPENDIX II ........................................................................................................... 101 
 
 
 
 
 
 
 
 
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LIST OF FIGURES 
 
FIGURE 2.1: RISK BREAKDOWN STRUCTURE (PROJECT MANAGEMENT INSTITUTE 2004) ......................... 9 
FIGURE 2.2: RISK IDENTIFICATION MODEL IN ORGANIZATION CONTEXT (IRM 2002).............................. 11 
FIGURE 2.3: RISK IDENTIFICATION WITH VARIETY OF PROJECT RISKS (WIDEMAN 1992) ......................... 15 
FIGURE 3.1: TAXONOMY BASED RISK IDENTIFICATION (CARR ET AL. 1993) ............................................ 36 
FIGURE 3.2: CONCEPTUAL MODEL FOR RISK IDENTIFICATION ................................................................ 38 
FIGURE 3.3: CONCEPTUAL FRAMEWORK BETWEEN AWARENESS AND FACTORS AFFECTING AWARENESS 39 
FIGURE 4.1: SAMPLE DEMOGRAPHICS – GENDER .................................................................................... 47 
FIGURE 4.2: SAMPLE DEMOGRAPHICS – EDUCATION .............................................................................. 48 
FIGURE 4.3: SAMPLE DEMOGRAPHICS – AGE GROUP ............................................................................... 49 
FIGURE 4.4 : SAMPLE DEMOGRAPHICS – JOB TITLE ................................................................................. 50 
FIGURE 4 .5: NUMBER OF RESPONSES AGAINST EVALUATION CRITERIA FOR PRODUCT ENGINEERING RISK
 ....................................................................................................................................................... 51 
FIGURE 4 .6: NUMBER OF RESPONSES AGAINST EVALUATION CRITERIA FOR DEVELOPMENT 
ENVIRONMENT RISK ....................................................................................................................... 51 
FIGURE 4 .7: NUMBER OF RESPONSES AGAINST EVALUATION CRITERIA FOR PROGRAM ENVIRONMENT 
RISK ................................................................................................................................................ 51 
FIGURE 4.8: RATINGS AGAINST THE PRODUCT ENGINEERING ................................................................. 53 
FIGURE 4.9: RATING AGAINST THE DEVELOPMENT ENVIRONMENT ......................................................... 55 
FIGURE 4.10: RATINGS AGAINST THE PROGRAM ENVIRONMENT ............................................................. 56 
FIGURE 4.11 : OVERALL PROJECT RISK FEEDBACK SUMMARY ................................................................. 57 
FIGURE 4.12: SCATTER DIAGRAM ON AWARENESS OF SOFTWARE PROJECT RISK MANAGEMENT VS 
EXPERIENCE ................................................................................................................................... 63 
FIGURE 4.13: SCATTER DIAGRAM ON AWARENESS OF SOFTWARE PROJECT RISK MANAGEMENT VS 
ORGANIZATIONAL CHARATERISTICS .............................................................................................. 67 
FIGURE 4.14 : SCATTER DIAGRAM ON AWARENESS OF SOFTWARE PROJECT RISK MANAGEMENT VS 
TECHNOLOGICAL ASPECTS ............................................................................................................. 69 
FIGURE 4.15 : SCATTER DIAGRAM ON AWARENESS OF SOFTWARE PROJECT RISK MANAGEMENT VS 
INDIVIDUAL CHARACTERISTICS ...................................................................................................... 70 
 
 
 
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LIST OF TABLES 
TABLE 2.1: TOP 10 SOFTWARE RISK ITEMS (BOEHM 1991)..................................................................... 18 
TABLE 2.2: CRITICAL 20 RISK FACTORS IN THE IMPLEMENTATION OF INFORMATION TECHNOLOGY 
SERVICE MANAGEMENT PROJECTS .................................................................................................. 20 
TABLE 2.3: MANAGING PROJECT LEVEL RISKS (CONROW AND SHISHIDO 1997) .................................... 25 
TABLE 2.4: MANAGING PROJECT ATTRIBUTE LEVEL RISKS (CONROW AND SHISHIDO 1997) ................. 26 
TABLE 2.5: ENGINEERING AND MANAGEMENT LEVEL RISKS (CONROW AND SHISHIDO 1997) ............... 27 
TABLE 2.6: MANAGING WORK ENVIRONMENT RISKS (CONROW AND SHISHIDO 1997) .......................... 28 
TABLE 2.7: MANAGING OTHER RISKS (CONROW AND SHISHIDO 1997) .................................................. 28 
TABLE 3.1: OPERATIONALIZATION OF VARIABLES USED IN THE STUDY ................................................... 43 
TABLE 4.1: RELIABILITY STATISTICS FOR MAJOR RISK CLASSES .............................................................. 46 
TABLE 4.2: RELIABILITY STATISTICS FOR INDEPENDENT VARIABLES ...................................................... 47 
TABLE 4.3: DESCRIPTIVE STATISTICS OF RISKS IN PRODUCT ENGINEERING ............................................ 53 
TABLE 4.4: DESCRIPTIVE STATISTICS OF RISK IN DEVELOPMENT ENVIRONMENT .................................... 54 
TABLE 4.5: DESCRIPTIVE STATISTICS OF RISK IN PROGRAM ENVIRONMENT ............................................ 56 
TABLE 4.6: FREQUENCY ON OVERALL AWARENESS ON SOFTWARE PROJECT RISK MANAGEMENT IN SRI 
LANKAN SOFTWARE INDUSTRY ...................................................................................................... 57 
TABLE 4.7: DESCRIPTIVE STATISTICS OF RESEARCH CONSTRUCTS .......................................................... 57 
TABLE 4.8: CORRELATION BETWEEN EXPERIENCES AND AWARENESS OF SOFTWARE PROJECT RISK 
MANAGEMENT ................................................................................................................................ 63 
TABLE 4.9: ANOVA RESULTS ON LEVEL OF RISK AWARENESS AND AGE GROUPS ................................... 64 
TABLE 4.10: ANOVA RESULTS ON LEVEL OF RISK AWARENESS AND GENDER ........................................ 66 
TABLE 4.11: CORRELATION RESULTS BETWEEN AWARENESS AND ORGANIZATIONAL CHARACTERISTICS 68 
TABLE 4.12: CORRELATION RESULTS BETWEEN AWARENESS AND TECHNOLOGICAL ASPECTS................ 69 
TABLE 4.13: CORRELATION RESULTS BETWEEN AWARENESS AND INDIVIDUAL CHARACTERISTICS ........ 71 
TABLE 5.1: RISK RESPONSE STRATEGIES TO MOST SIGNIFICANT RISKS .................................................... 81 
  
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LIST OF ABBREVIATIONS 
IRM – Institute of Risk Management 
RBS –Risk Break Down Structure 
RIM – Risk Identification Model 
SEI – Software Engineering Institute 
SPSS – Statistical Package for Social Science  
SQA – Software Quality Assurance 
TBQ – Taxonomy Based Questionnaire