Influence Of Types Of Risks On Performance Of Distribution Projects

Abstract

The practice of project management has been with us for centuries, only in the past few decades has there been an expression in academic literature. Project management has reached a maturity level in which it is applied to many situations. It is the principal means by which operational and strategic changes are managed in contemporary organizations. Management of project risks is recognized as an essential tool in management of projects in an organization, whether profit or non-profit. In Kenya, little research exists on influence of various risk types on performance of projects in organizations within the energy and utility sector. The general objective of this study was to evaluate the influence of various types of risks on the performance of distribution projects in Nairobi County by KPLC. The study was guided by four research objectives which were: To determine the extent to which economic risk influences performance of distribution projects; to determine the influence of regulatory risk on performance of distribution projects; to establish the extent to which technological risk influences performance of distribution projects; to determine the influence of completion risk on performance of distribution projects. In order to answer these research questions, the study adopted a descriptive survey design. The target population for this study consisted of Kenya Power and Lighting Company Limited employees engaged in the planning, designing, arranging for finance and executing distribution projects within Nairobi County. A sample size of 108 respondents was selected using stratified random sampling technique to group respondents into eight strata. Data collection methods used included a set of structured questionnaires. Data was analyzed quantitatively and qualitatively and presented descriptively and illustrated by use of tables. Information was sorted, coded and input into the Statistical Package for Social Sciences (SPSS) for production of tables, descriptive statistics and inferential statistics. The response rate obtained from the study was 82 (75.93%) responses were received which was considered sufficient to draw conclusions. The study findings indicated that KPLC staff involved in distribution project activities, within Nairobi County, were keenly aware about how project performance was influenced by management of economic, completion, regulatory and technological risks.52 (63.41%) respondents agreed that the organization had systems in place for effectively managing project scope, budget and schedule,52 (63.41%) respondents agreed that the organization instituted systems to effectively manage resources allocated to projects. The Likert mean score for the responses was 3.62. The study further confirmed that there was a positive correlation between performance of distribution projects and management of economic (beta = 0.019, p=0.760), completion (beta = 0.313, p=0.000), regulatory (beta = 0.253, p = 0.131) and technological (beta = 0.253, p=0.038) risks. The study further found that 31 (37.8%) respondents agreed that the organization had instituted appropriate monitoring and control systems to ensure adequate co-ordination and control of projects while 38 (46.34%) agreed that the organization had quality control systems to ensure achievement of customer satisfaction. The study further found that an average of 42 (51.22%) and 44 (53.66%) respondents agreed with management of completion risk and technological risk respectively by the existing organizational systems. These findings led to the conclusion that quality control and monitoring and control of distribution projects within Nairobi County needed to be improved from current levels. Furthermore, the management of completion and technological risks needed to improve if performance of distribution projects within Nairobi County is to improve. The study recommends that KPLC improves management of these risks through training of KPLC supervisors, employment of qualified contractors, improving procurement systems and enhancing innovative skills through training from within and without. This will ultimately improve performance of distribution projects in Nairobi County.