Introduction

Chapman and Ward (1997) define project risk as a "threat to [the] success" of the project. They investigate the roots of uncertainty through the systematic analysis of their Project Definition Process providing answers to the following six questions: 1) Who are the parties involved? 2) What do the parties want to achieve? 3) What is it the parties are interested in? 4) How is it to be done? 5) What resources are required? 6) When does it have to be done? Further, they state that the purpose of risk management is to improve project performance via a systematic identification, appraisal, and management of project-related risk.

Alternatively, Kangari and Boyer (1989) define risk management as a systematic approach to risk identification, goal description, risk sharing and allocation, risk evaluation, and risk minimization and response planning. In a recent paper, Huchzermeier and Loch (2001) define five different types of uncertainty (leading to risk) in research and development (R&D) projects, and study the value of options when these uncertainties are present. The uncertainties considered are variability in market payoff, budget, performance, market requirement, and project schedule.

Thus, under these broad definitions of risk and quite general descriptions of risk management, it is clear that risk avoidance/risk mitigation programs must be multidimensional. These programs often include good management practice and leadership and human resource issues, as well as scheduling, contingency planning, and buffer management (buffer sizing...