Project Governance, Project Performance, and the Mediating Role

of Project Quality and Project Management Risk: An Agency Theory

Perspective
Saif Ul Haq, Hefei University of Technology; COMSATS Institute of Information Technology
Changyong Liang, Hefei University of Technology
Dongxiao Gu, Hefei University of Technology
Jia Tina Du, University of South Australia
Shuping Zhao, Hefei University of Technology

Abstract: Although project governance has garnered the project-related activities to improve project performance. Pro-
attention of academicians, the area remains underdeveloped. ject governance focuses on program management, portfolio
This study measures the influence of project governance on management and project sponsors (Too & Weaver, 2014).
project performance directly as well as through the mediation Given the definition above, it can be argued that better govern-
of project management risk and project quality and with mod- ance of different factors and systems of the projects can result
eration of project leadership. The survey yielded 354 responses in improved project performance.
from 132 Pakistani software firms, while SEM was applied
using AMOS-21 for data analysis. This study finds that project Related Work and Literature Gap
governance has a significant positive influence on project per- Prior literature on the relationship between project governance
formance directly and through mediation, whereas the modera- and project performance has contradictory findings. Various
tion is insignificant. The findings will help not only Pakistan’s studies have examined the factors enhancing the project per-
software firms but also those in developing countries to formance (Abednego & Ogunlana, 2006; Lu, Guo, Qian, He, &
improve their projects’ performance through effective project Xu, 2015; Musawir, Serra, Zwikael, & Ali, 2017; Sankaran,
governance. Remington, & Turner, 2007). However, another study con-
ducted by Haq, Liang, Dongxiao, and Yinchao (2016) examined
Keywords: Project Performance, Project Governance, Project the direct effects of project governance, project quality, and
Quality, Project Management Risk Agency Theory, Project project risk on project performance in the IT industry of Paki-
Management stan. The findings revealed that project quality, project risk and
project leadership have significant positive effects on project
EMJ Focus Areas: Program & Project Management performance but the project governance doesn’t contribute
significantly to enhance project performance. However, the

O
previous literature such as Wiener, Mähring, Remus, and Saun-
rganizations have changed the use of projects from a ders (2016) suggested that the different mechanisms of project
tactical tool (simply to manufacture a product or a governance improves the project quality and are helpful to
service) to a strategic vehicle to transform the business manage the project risk (Keil, Rai, & Liu, 2013), which as a
of organizations (Biesenthal & Wilden, 2014). As important result, supplements the project performance. These findings
vehicles of organizational strategy (Artto, Kujala, Dietrich, & denote a gap to examine the mediation effects of project quality
Martinsuo, 2008; Laslo & Goldberg, 2008), these projects have and project risk management. Another key study is conducted
significant potential to help organizations accomplish their by Khan (2012), wherein moderating the role of project per-
desired goals (Shenhar & Dvir, 2007). As the project becomes formance is explored to determine the causal relationship
a core business of organizations, it provides the foundation for between project attributes and project governance. Statistically,
strategic management of such organizations so that the pro- in addition to its moderating role, the moderating variable acts
jects’ performance in terms of time and quality can be ensured. as an independent variable of the dependent variable (Aiken,
Previous studies uncovered a variety of critical success factors West, & Reno, 1991). Thus, project performance is an indepen-
to improve project performance (Belassi & Tukel, 1996; Pinto & dent variable, whereas project governance is the dependent
Prescott, 1988). These critical success factors include earned variable in the study of (Khan, 2012), implying that project
value management (Abba, 2000) and knowledge management performance has a causal effect on project governance. The
(PMI, 2013). Project-based organizations are using these direction of the relationship in this study appears to be opposite
approaches to improve their performance. because project performance is an outcome of project work and
In contrast, project governance, which has emerged as the accomplishment of goals, rather than an antecedent that
another key factor and garnered the attention of academicians can be achieved through the effective governance of all the
in the recent past, has largely been overlooked. Project govern- components and relationships among a project’s various stake-
ance refers to “the use of systems, structures of authority and holders. The effects of project governance on risk allocation and
processes to allocate resources and coordinate or control activ- project performance were also measured by Abednego and
ity in a project” (Pinto, 2014, p. 383). It argues for better usage Ogunlana (2006). Similarly, Sankaran et al. (2007) investigated
and coordination of systems and resources and improves the relationship between project governance and project

Refereed Research Manuscript. Accepted by Associate Editor Scala.

274 Engineering Management Journal Vol. 30 No. 4 2018

performance in Australian maritime projects. The research also been evidenced by Akbar (2015), who is of the view that
focused on an Australian public sector that has five corporate the industry is encountering different challenges, e.g., minimal
divisions; each division was divided into more than 20 business support from the government and human resources and man-
units. The research studied the project governance adopted in agerial issues (Akbar, 2015). Thus, there is no formal and
one division to improve the planning and implementation of its standard project governance structure; instead, every software
shutdown maintenance projects. However, in accordance of house devises its own structure to accomplish its projects.
abovementioned studies, we can argue that there is a lack of This highlights the existence of a contextual gap. The
understanding in the existing literature related to project gov- previous empirical findings were derived in the Western
ernance and project performance. world, making it difficult to apply and generalize them in the
The purpose of this paper is to examine the mediating role of context of Pakistan and other Asian countries due to various
project quality and project management risk in the relationship environmental differences. For instance, the technological and
between project governance and project performance. Prior economic environment of Pakistan is very different from those
research has proven project quality and project risk as the sig- of Western countries. The GDP per-capita of Pakistan was US
nificant predictors of project performance (Haq et al., 2016; Keil $1434.7 million during FY2014-15, whereas the same indicator
et al., 2013; Wallace, Keil, & Rai, 2004) but on the other hand few for America and Australia was US$56,115.7 million and US
researchers have argued that better project quality and risk man- $56,290.6 million, respectively. These indicators imply the lack
agement is the outcome of effective project governance and pro- of funds required to acquire modern information and commu-
ject governance mechanisms (Guo, Chang-Richards, Wilkinson, nication technologies (ICTs). Furthermore, IT project-based
& Li, 2014; Huang, Chang, Li, & Lin, 2004). As, Maruping, industries from most of the Asian countries must rely upon
Venkatesh, and Agarwal (2009) identified the project formal and the Western world for the transfer of modern technology and
informal controls as the key governance mechanism which can be cost-effective and quality solutions (N., F. J. a. G., 2005). The
used by the project managers to guide the software teams and aforesaid non-availability of funds and modern technologies
improve the quality of on-going projects. Software development poses serious challenges for IT firms to join with Western IT
projects are considered as complex endeavors that require specify- firms to acquire knowledge of modern ICTs as well as to
ing the outcomes (Kirsch & Cummings, 1996) by controlling the purchase modern tools and technologies.
quality. Similarly, project risk appears to have a significant con- Furthermore, cultural differences exist between Western
tribution toward project performance. Effective management of and Asian countries such as Pakistan; this has a key significance
risk can improve project performance by addressing the various for the phenomenon under study. The Pakistani culture is
issues obstructing its performance (Haq et al., 2016; Wallace et al., characterized by higher uncertainty avoidance and power dis-
2004). Meanwhile, effective risk management is an outcome of a tance; however, these dimensions tend to be the opposite in
sound project governance structure (Guo et al., 2014). As the Western countries, according to the Hofstede’s cultural com-
projects are of temporary nature (Bakker, Boroş, Kenis, & Oerle- parison between countries (Hofstede, 1984).
mans, 2013; Malach-Pines, Dvir, & Sadeh, 2009), project-based Franke, Hofstede & Bond (1991) argues that the countries
organizations require a unique governance structure, distinct that have high uncertainty avoidance and power distance cor-
from the traditional structures to manage the risks (Guo et al., respond to a pyramid model, which is more consistent with
2014; Zwikael & Smyrk, 2015). Therefore, it is pivotal to examine machine bureaucracy (Mintzberg, 1989). According to the pyr-
the mediating effects of project quality and project management amid model, an organization consists of the pyramid of
risk between the relationship of project governance and project employees with top management on the top followed by middle
performance. Therefore, this study is an extension to the above- management and lower-ranked employees at the bottom, while
mentioned findings of (Haq et al., 2016) with an objective to machine bureaucracy stresses the role of “techno-structure,
examine the mediating role of project quality and project manage- coordinated mechanisms and standardization of work pro-
ment risk in the relationship between project governance and cesses” (Shafritz, Ott and Jang, 2015, p.322). This kind of
project performance. Despite such significance, according to the culture supports strict bureaucracy and control and thus corre-
best of our knowledge, there is no study exploring the mediation sponds to less flexibility and support, less empowerment, a
effects of project quality and project management risk on the standardized work flow, strict compliance with rules, and
relationship between governance and the performance of a pro- higher formalization (Muijen and Koopman, 1994). Thus, this
ject, indicating a significant literature gap. kind of culture appears to be non-supportive of innovation and
Furthermore, the information technology (IT) sector has a creativity, which are two of the key requirements/features in the
significant role in the economic development of any country software industry. Conversely, a low power distance normally
(Singh, 2016). Developing countries concentrate more on this corresponds to a village-market (Franke, Hofstede & Bond,
fast-paced industry because it not only enhances a country’s 1991) and adhocracy (Muijen and Koopman, 1994). In contrast
exports but also benefits other industries in terms of their to the pyramid model, a village market is an implicit organiza-
digitalization (Singh, 2016). Pakistan has recognized the cascad- tion model (Hofstede, 2003), and adhocracy consists of an
ing impact of IT on economic growth. The Pakistani govern- organic, flexible, fluid and selectively decentralized structure
ment supports the software industry in terms of not taxing whose tasks are completed through mutual adjustments (Min-
software exports and allowing a 100% profit return to foreign tzberg, 1989, Shafritz, Ott and Jang, 2015, p.322).
investors. There are also software house associations such as the This kind of culture promotes innovation and support
Pakistan Software Firms Association for IT and ITES (P@SHA) orientation (Muijen and Koopman, 1994) due to the character-
and Pakistan Software Export Board (PSEB). However, Pakistan istics of a decentralized and organic structure in which people
has, as of yet, formed no regulations to inform and guide the collaborate and cooperate with each other through sharing
governance structure of the software houses. This finding has ideas and knowledge and mutual understanding (Mintzberg,

Engineering Management Journal Vol. 30 No. 4 2018 275

1989). Thus, Western cultures have extended more support for surrendered the right that the corporation should be
knowledge sharing, innovation and creativity, whereas the cul- operated in their sole interest.
tures of Asian countries, such as Pakistan, are more likely to be
non-supportive of such software industry requirements due to This definition implies that agency theory is based on the
their higher bureaucracy and higher rules orientation. Thus, it idea of the separation of ownership and control, which is an
is argued that the findings about the phenomenon under study issue of great importance in organizations (Berle & Means,
developed in the Western world are difficult to apply in Asian 1932; Jensen & Meckling, 1976). Because of the separation of
countries due to the aforesaid cultural differences and their ownership and control, the board cannot put its complete trust
implications for the software industry. Thus, there is a need in the organization’s management. Consequently, there may be
to explore this phenomenon in Asian countries, such as Paki- conflicts between owners and their agents, potentially resulting
stan, and derive the context and culture-specific findings that in agency costs to minimize these conflicts. According to neo-
could be applied by software firms to manage their project classical economics, agency theory is criticized because the
performance in this non-supportive context and culture. agent may act in his/her best interest instead of that of the
To address the theoretical and contextual gaps argued above principal or owner (Donaldson & Davis, 1991). The theory can
and to offer solutions to Asian project-based industries to main- also be criticized because the management may not be trusted.
tain and improve their performance through project governance, Thus, project owners must engage in strict monitoring (Aduda,
this study’s objective is to answer the following research question: Chogii, & Peterson, 2013) of the project manager’s perfor-
mance, which is the primary objective of agency theory.
1. Do project quality and project management risk have Turner and Müller (2003) used agency theory to describe
mediating effects on the relationship between project gov- the relationship of the project manager (agent) and principal
ernance and project performance? (project owner) for the first time in the project governance
literature.
The researchers concluded that the project owner needs to
monitor the performance of the agent. Thus, the project owner
can ensure that the objectives of a project manager are aligned
Theoretical Background with the owner’s objectives. Turner et al. (2010) are of the view
Project governance is based upon and associated with corporate that, in the context of project management (PM), agency theory
governance, but its main focus is on the governance of a single is used to highlight the relationship between the project owner
project (Joslin & Müller, 2016). Previous studies have eluci- and the project manager. Given the role of project governance
dated the role and application of management theories in the as explained by (Turner, 2009), it helps to set the project
field of corporate governance. For instance, Gilson (1996) objectives and then determine the means to attain these objec-
argues that, according to the economists’ perspective, there is tives and to monitor the performance; this appears well
a strong connection between governance and the performance informed by agency theory. Furthermore, this principle-agent
of the organization. From this notion, researchers were inspired relationship is supposed to mitigate the planning and control
to consult management theories to understand the concept of risk and uncertainties regarding project team by strict monitor-
governance. Certain studies (e.g., Biesenthal & Wilden, 2014; ing. Thus, it can be argued that the project performance can be
Mahaney & Lederer, 2003; Turner, Huemann, Anbari, & Bre- increased through continuous project monitoring by the owner
dillet, 2010) discuss the concept of project governance within because more intensive monitoring can address the discrepan-
the domain of corporate governance theories. According to cies in project work in time such that better results are resul-
Yusoff and Alhaji (2012), agency theory is one of the renowned tantly produced. Given the above discussion and considering
theories being studied in the context of corporate governance. the objectives of this study, agency theory is employed to
Agency theory, which was originated by Jensen and Meck- inform the current study because it focuses on monitoring,
ling (1976) work, is an economical representation of the rela- which is essential to enhancing project performance.
tionship between the shareholder and the manager of a
company by viewing them as rational and self-interested actors.
Eisenhardt (1989) reviewed the two extreme positions on Hypothesis Development
agency theory, i.e., the proponents who argued that agency Project Governance and Project Performance
theory is a revolutionary theory Jensen & Ruback, 1983 and The term project governance has been used differently by
the opponents who argued that agency theory is not clear, is various authors with different meanings and implications
narrow and has no testable implications (Perrow, 1986). The (Crawford & Cooke-Davies, 2005; Müller, 2009; Too & Weaver,
study concluded that the theory is unique, clear and empirically 2014). However, the term’s single objective is to improve pro-
testable and can be used to address the principal-agent issues in ject performance. In a broader perspective, governance can be
any firm. Agency theory continues to have many boundary understood as a set of principles of authority, accountability,
conditions, and there is a need for further theoretical develop- stewardship, leadership, direction and control (Sankaran et al.,
ment (Bendickson, Muldoon, Liguori, & Davis, 2016). 2007). To organize project transactions, project governance
Berle and Means (1932, p. 355) described agency theory as encompasses initiating, terminating and maintaining a relation-
ship with the various internal and external stakeholders
The property owner who invests in a modern corporation involved in the project (Heide, 1994). Effectively organizing
so far surrenders his wealth to those in control of the these relationships with internal stakeholders, such as project
corporation that he has exchanged the position of inde- teams and firm management, and actors in the external envir-
pendent owner for one in which he may become merely onment, such as suppliers, clients, and the government, appears
recipient of the wages of capital [Such as owners] have to make a significant contribution to project success.

276 Engineering Management Journal Vol. 30 No. 4 2018

Governance is more concerned with the process of controlling; successfully to the client. Such project quality can be achieved
however, it does not impose authority over internal and exter- with the effective governance of the project and various relevant
nal stakeholders to ensure compliance but develops a strong factors. Walker and Kwong Wing (1999) provided two different
relationship and makes favorable decisions for the project approaches to project governance: a system approach that
(Moldoveanu & Martin, 2001). Governance is also concerned enables the project manager to constantly evaluate the needs
with controlling PM processes ranging from the planning to the of the customer and the end results needed to be achieved in
completion of a project (Turner & Keegan, 2001). The concept terms of resources, budget and time and a transaction cost
of project governance also involves developing a consensus approach in which the organizations adapt their governance
among members of the project team, which is required to structures to achieve the lowest possible transaction costs. The
complete the project in a highly uncertain environment (Hewitt authors believe that combining these approaches improves pro-
De Alcántara, 1998). According to Turner and Keegan (2001), ject quality, cost and risk management, enabling the project
project governance is necessary to facilitate operational control team to complete the project in time, thus indicating higher
processes as well as to manage the project team’s relationship project performance. In higher education projects, effective
with the client. The relationship between these two constructs governance is used as a leverage tool to improve project quality
was also studied by (Haq et al., 2016). Though, they found (Hénard & Mitterle, 2010). While defining the responsibilities
insignificant contributions of project governance towards pro- of a project steering committee in Melbourne, the Department
ject performance in the IT industry of Pakistan, but the litera- of Treasury and Finance in Victoria (2012) reports that one of
ture (e.g., Abednego & Ogunlana, 2006; Lu et al., 2015) found the major responsibilities of the project steering committee is to
the significant contributions of project governance towards monitor and manage the project quality in term of time and
project performance. cost to ensure higher project performance. The above literature
Zwikael and Smyrk (2015) provided two different on project quality and project performance reveals that there is
approaches to project governance, including i) accountability a relationship between these two concepts. Better project qual-
for benefits’ realization based on control and ii) accountability ity is one of the major predictors of project performance (Haq
for benefits’ realization based on trust, while arguing for com- et al., 2016).
bining them to increase project performance. Parsons (2006) In addition, the review of the literature reveals that an
emphasizes the measurement of the interim project perfor- effective project governance model can have the significant
mance. While extracting various common reasons for poor potential to enable project managers to identify better and
project performance, Michiel C Bekker and Herman Steyn meet quality standards. On the other hand, project quality––
(2008) argued that countries’ lack of information management including both design and product quality––has sufficient
and poor project monitoring and control are the main reasons. potential to enhance project performance because better quality
Turner (2009) also focuses on project monitoring in his defini- standards arguably set different indicators of project perfor-
tion for project governance, in which he argues that project mance. Such higher standards lead a project team to strive
governance provides a framework to set and attain the project hard and work in such an effective and efficient manner that
objectives while monitoring the project performance. There- the achievement of predetermined performance indicators can
fore, a structure is required to put a monitoring mechanism be obtained. The above arguments offer an understanding that
in place. Abednego and Ogunlana (2006) viewed project gov- effective project governance sets higher quality standards, while
ernance as a useful tool to monitor the ongoing project’s higher quality standards set higher performance indicators.
performance and to take measures necessary in case problems Therefore, if the projects are governed well, higher quality
arise. This is expected to result in improved project perfor- standards are set, which, in turn, improve project performance.
mance through addressing issues and challenges on site. Thus, Thus, the following hypothesis is formulated.
it may be argued that a project’s effective governance is a
significant determinant of project performance because project Hypotheses 2: Effective project quality plays a significant mediat-
governance helps project managers not only govern, monitor ing role in the relationship between project governance and
and control a project’s various stages and functions but also project performance.
deliver the project benefits to internal and external stakeholders
and beyond. As the studies are conducted in the Western or
Australian contexts and cultures, which are significantly differ-
ent from those of Asian countries, such as Pakistan, the effect of Project Management Risk, Project Governance, and Project
project governance on project performance in the Pakistani Performance
software industry is argued to be different. To measure this An effective project governance model appears highly essential
effect, the following hypothesis is developed. to identify the risk areas better, e.g., the team risk, user risk, and
complexity risk, that are involved in a project and their man-
Hypothesis 1: Effective project governance has significant positive agement. Turner and Müller (2005) emphasized the importance
effects on project performance. of collaboration and coordination among project participants,
through which they can align individual tasks to better address
and manage the risk areas and produce a better outcome for all
stakeholders. Incorporating relational risks into a project gov-
Project Quality, Project Governance, and Project Performance ernance structure enables project managers not only to under-
Project quality contends that the quality requirements of a stand the risks of conflict caused by several human factors,
project, i.e., design and product quality, are satisfied (Abednego bounded rationality, and other moral hazards but also to better
& Ogunlana, 2006). In fact, it is an assurance that all the needs, predict and manage these problems. Similarly, the effective
whether these are in term of quality or time, are delivered communication of risk areas among project members is also

Engineering Management Journal Vol. 30 No. 4 2018 277

of paramount significance (Atkin & Skitmore, 2008). Huang been confirmed by the authors through analysis of various
et al. (2004) believe that the efficient management of risks databases and the literature on project management. Similarly,
should be placed at the center of the project governance Anantatmula (2010) argues that the leadership role of project
model, implying the significant effects of project governance managers for their project teams and subsequent contribution
on project management risk management. to the success of the projects (specifically, the relationship
While measuring how software project risk affects project between project leadership and project performance) have not
performance, (Wallace et al., 2004) identified different types of been properly explored.
risks: organizational environment, user, requirements, project Furthermore, the aforementioned power distance dimen-
complexity, planning & control and team. Furthermore, the sion of national culture has significant implications for leader-
authors grouped these risks into three groups: organizational ship (Kirkman, Chen, Farh, Chen, & Lowe, 2009) and
environment and user risks as social subsystem risk; require- empowerment (Robert, Probst, Martocchio, Drasgow, & Law-
ments and project complexity risks as technical subsystem risk; ler, 2000). For instance, people in higher power distance socie-
and planning & control and team risks as project management ties, such as Pakistan, are argued to be unwilling to challenge or
risk. The authors argued that the project management risk has question the undue power of their superiors or a powerful
key importance in managerial decision-making processes, and group of the society (Humborstad, Humborstad, Whitfield, &
it can be used to mediate the potential effects of technical Perry, 2008). As the Pakistani software industry, similar to any
subsystem risk on project performance. As the objective of other industry, is primarily composed of local people, they
this study is to measure the potential effects of project govern- argue in favor of following their supervisors’ decisions instead
ance on project performance and project governance is a fra- of questioning their perspectives Fikret Pasa, 2000 or thinking
mework where project sponsors and project teams align the outside of the box to provide innovative solutions to their
project objectives with that of the organizational strategy (PMI, clients. In such a context, project leadership is expected to be
2013). Hence, it can be argued that project management risk, very different from the Western context, which is characterized
i.e., the combination of planning & control and group risks, can by a low power distance.
be used to mediate the relationship between project governance Thus, it is argued that the role of project leadership in
and project performance. project performance should be explored empirically to offer
Thus, it can be argued that better project governance may culture-specific insights about how leadership style can contri-
result in better risk management, subsequently enhancing pro- bute to the successful accomplishment of a project. This argu-
ject performance, thus indicating a mediating role of project ment led us to develop the following hypothesis:
management risk management between the relationship of
project governance and project performance. Hypothesis 4: Effective project leadership has significant positive
effects on project performance.
Hypotheses 3: Project management risk has a significant mediat-
ing role in the relationship between project governance and
project performance.
Project Leadership, Project Governance, and Project
Performance
Understanding of the importance of ‘the people’ involved in a
Project Leadership and Project Performance project to a project’s success has developed rapidly in recent
The leaders’ competencies and performance have long been decades. For project management institutes, PMI (2013), lea-
considered a critical determinant of project performance (Haq dership involves focusing the efforts of a group of people
et al., 2016; Nixon, Harrington, & Parker, 2012). Various stu- toward a common goal and enabling them to work as a team.
dies have been performed to investigate the effect of different A project manager’s leadership style is a significant contributor
types of leadership on project performance. For instance, Yang, to the project success (Patanakul & Shenhar, 2012) because,
Wu, Wang, and Chin (2012) reported the impact of project without effective leadership, it is difficult to implement a project
managers’ leadership and interaction with teams on project governance model effectively and to produce higher project
performance in Taiwan. The study further reports that certain performance. Project governance involves a set of relationships
project managers developed culture-specific leadership styles among various project leaders, including the project manager,
that are most compatible with the local socio-cultural milieu. project sponsor, owner (client) and other stakeholders, to
Similarly, Nixon et al. (2012) suggested that one of the key achieve the project objectives. These leaders are key individuals
reasons for project success/failure is the proper management who implement the project governance model. However, if the
and leadership style for the project team; therefore, project leaders lack the required leadership skills and fail to lead the
managers should develop a leadership style that best fits in project team effectively or impart them with the necessary
the organizational and national cultural context. Kempster knowledge and on-the-job training, project performance is
and Parry (2011) required different leadership styles across ultimately compromised. In contrast, if project leaders are
place and time; therefore, the universality of a leadership style enriched with the required skills and capable of developing a
cannot be claimed. context-specific leadership style, there is a higher likelihood
Explaining the research gap in this area of research, Turner that this can multiply the effects of the project governance
and Müller (2005) reported that the leadership style of func- model on project performance because of the skillful imple-
tional managers has largely been studied in the domain of mentation of the project governance model by capable leader-
general management, whereas the impact of a project manager ship (Haq et al., 2016; Lacerda, Ensslin, & Ensslin, 2011; Kissi,
and his/her leadership style on project success has been largely Dainty, & Tuuli, 2013; Nixon et al., 2012). Thus, it can be
been ignored in the previous literature. This finding has also argued that project leadership has the potential to strengthen

278 Engineering Management Journal Vol. 30 No. 4 2018

Exhibit 1. Research Model

H4
Project Leadership

H5
H1

H2

Project Quality

Project Governance Project Performance

Project Management
Risk

H3

H1

the effects of project governance on project performance in the with the help of numerical data analyzed using certain mathe-
industry. To test this relationship, the following hypothesis has matical/statistical models. This approach helps to differentiate
been developed. the quantitative from the qualitative research and suggests that,
in quantitative studies, numerical data are collected and analy-
Hypothesis 5: Project leadership increases the impact of project sis is performed by using different numerical mathematical
governance on project performance. tools.
Different scholars claim that the quantitative research
Based on the above literature review and hypotheses, the approach is used when research strives to collect data from a
following conceptual model (Exhibit 1) has been developed: larger population, with the intention to have a wide range of
objectives and make predictions, as well as to generalize the
Methodology findings of the study over other similar contexts (Easterby-
Methodologists argue for two main research approaches: qua- Smith et al., 2012; Harwell, 2011; Hopkins, 2008). The current
litative and quantitative (Easterby-Smith, Thorpe, & Jackson, research appears compatible with the quantitative research
2012; Saunders, 2011). Qualitative research is informed by an approach because its research questions are causal in nature,
inductive method in which qualitative data are collected with- the theoretical framework and hypotheses are developed before
out a preconceived theoretical framework. The theory is data collection, and these are tested via the analysis of quanti-
derived and finally confirmed by existing theories; therefore, tative data through statistical tools.
the theory is purely grounded in the empirical evidence (Saun-
ders, 2011). Conversely, quantitative research is deductive in
nature, as it proceeds from the development of a theoretical Measures
framework and hypotheses, followed by quantitative data col- We adapted measures for most of the variables from previous
lection and analysis and testing of the hypotheses (Easterby- studies except for project governance, which was developed by
Smith et al., 2012; Hopkins, 2008). Furthermore, the research the authors. We used five constructs in this study: project
questions of the current study are of a causal nature, which performance, project governance, project management risk,
means that one variable affects another variable, which sup- project quality and project leadership. All constructs were
ports a quantitative deductive research approach to explore the measured on a 5-point Likert-type scale. Project governance,
phenomenon under investigation. Quantitative research is project leadership and project quality were measured by
characterized by measurement for the collection of numeric Strongly Disagree (1); Disagree (2); Neutral (3); Agree (4);
data and the application of probability theory using mathema- or Strongly Agree (5). Project performance and project man-
tical modeling and statistical tests for hypothesis testing. As agement risk were measured by Never (1); Rarely (2); Some-
suggested by Aliaga (2002) and cited in Muijs (2010), the times (3); Often (4); or Always (5). The questionnaire is
purpose of the quantitative approach is to explain the problem presented in Appendix I.

Engineering Management Journal Vol. 30 No. 4 2018 279

Project Governance modified. The pilot respondents were not repeated in the main
The project governance scale was developed considering the study. Then, the modified questionnaire was used to collect the
guidelines published online by the Association of Project Man- data by sending an online survey form to each key position
agement (APM, 2011). However, we further modified the holder such as department heads, manager/team leaders, ana-
scale’s items considering the objectives of the current study to lysts, designer/programmers, and testers. Each questionnaire
make it fit the context of the current study’s empirical world. was administered depending on the software firm’s number of
This scale helped to measure the overall project governance. employees.
The same scale was also used by (Haq et al., 2016) to measure Data were collected with the assistance of a web-based
the determinants of project performance in the IT industry. survey using (https://docs.google.com/forms/) from software
The scale’s alpha coefficient is 0.88. firms in Pakistan. The respondents were contacted via an
email containing the questionnaire link and a cover letter. We
Project Management Risk described the objective, methodology, and potential usefulness
To measure the project management risk, the 10-item scale of of the study, in addition to the anonymity of data and respon-
Wallace et al. (2004) was adapted. This scale includes seven dents’ identities. Initially, 500 questionnaires were sent. We
items to measure the planning and control risk and three items received 372 questionnaires, yielding an initial response rate
to measure team risk. The alpha coefficient of the scale for the of 74.4%. During the data analysis, we found 354 questionnaires
current study is 0.88. that were completed and were useful for the study; thus, the
useful response rate was 70.8%. Consequently, 354 responses
Project Leadership were used in the final analysis.
To measure the project leadership in software projects, a 6-item
scale developed by (Rotich, Wanyama, Douglas, & Mamuli,
Data Analysis
2014) was adapted. We have further modified the items to
To analyze the data and derive the results, SPSS 17 and AMOS
increase the readability of the scale and to make it easy to
21 were used. Confirmatory factor analysis (CFA) has been
understand. This scale helped to measure the overall role of
used widely to check the validity of measurement scales (Kar-
project leadership in project governance and project perfor-
riker & Williams, 2009). CFA is very useful for this study, as the
mance. The scale’s alpha coefficient is 0.85.
current study adapted scales from previous studies. Structural
equation modeling (SEM) through AMOS was applied to test
Project Performance
the hypotheses. SEM is an important technique being used
To measure project performance in the software development
across different disciplines and in the social sciences (Hooper,
industry, the 7-item scale developed by (Nidumolu, 1996; Rai &
Coughlan, & Mullen, 2008); it helps to investigate and report
Al-Hindi, 2000) was used. Project performance has been mea-
the results regarding complex interdependences among vari-
sured on two constructs, i.e., product performance and process
ables where each unobserved variable is measured by several
performance. Five items were designed to measure product
observed variables (Hair Jr, Sarstedt, Hopkins, & G. Kuppel-
performance, and two items were designed to measure process
wieser, 2014).
performance. The scale’s alpha coefficient is 0.83.

Project Quality Results

Project quality was measured with the help of the 6-item scale Demographic Profile
used earlier by (Mahaney & Lederer, 2003). These items mea- Demographic information on the respondents was also col-
sured the overall quality of a software project. The alpha coeffi- lected during the data collection phase, including gender,
cient for the current scale is 0.80. age, qualification, job designation, work experience and pro-
ject-related work experience of the respondents. Exhibit 2
Data Collection summarizes the demographic profile of the respondents.
The target context for this study is Pakistan’s software industry. Data were collected from a total of 354 employees of soft-
A list of software firms was obtained from the registered mem- ware houses in Pakistan, of which 91% of respondents were
bers of the Pakistan Software Firms Association for IT and male, and 9% were female. The majority of respondents were
ITES (P@SHA) and the PSEB. P@SHA is a platform for pro- male because the target population is a male-dominant
moting, protecting and developing software firms in Pakistan. society where low literacy rates and cultural and social
PSEB is a governmental body that promotes Pakistan’s IT norms impede women’s active participation in the economic
industry in local and international markets (PSEB, 2014). development of the country (Mirza, 2014). Furthermore, a
Before 2014, approximately 200 software firms from all over large ratio of working women work as teachers and doctors.
Pakistan were registered members of P@SHA. To determine the Demographic analysis shows that the majority of the respon-
sample size, we used a well-known and widely used sample size dents were young males with the qualification of masters and
table for a finite population introduced by Krejcie and Morgan bachelor degrees. Because of the lower age, the respondents’
(1970). Thus, 132 of 200 software firms were selected by using overall work experience and work experience in software
this sampling formula for data collection. development projects were also low. The job ranks of the
After selecting the software firms, a pilot study was con- majority of respondents were project manager, project direc-
ducted by sending the questionnaire to 40 respondents to test tors or team leaders. These designations are usually used
for any ambiguous expressions, awkward wording, or distor- interchangeable, and one of these officials lead projects.
tions of the original meanings. Based on the feedback of the Detailed information about the demographics of this study
respondents and the data in the pilot study, certain items were is provided in Exhibit 2.

280 Engineering Management Journal Vol. 30 No. 4 2018

Exhibit 2. Sample Demographics descriptive analysis shows that project performance, project
quality, project governance, project management risk and pro-
Measure Item Frequency Percentage ject leadership are found to be slightly above moderate level
with their means ranging from 3.20 to 3.53 in the IT industry of
Gender Male 323 91.2 Pakistan. Regarding correlation analysis, it is found that the
Female 31 8.8 project performance in the IT industry has a positive, signifi-
cant correlation with all variables under study. Project quality is
Age < 25 197 55.6
significantly correlated with project governance, while project
26–35 114 32.2 governance is significantly and positively correlated with pro-
36–45 27 7.6 ject management risk and project leadership variables.
Although the values of the correlation coefficient (r), ranging
46–55 14 4.0
from 0.050 to 0.252, are low for the current variables, according
Above 55 2 .6 to (Hatcher, 2003; Sharon Lawner Weinberg, 2008), we can
Qualification Bachelors 87 24.6 argue that a correlation exists between the variables because
Masters 228 64.4
the value of r is within the acceptable range of + 1 and −1.
PhD 7 2.0
Validity and Reliability Testing
With professional 11 3.1
certification
CFA through AMOS software was used to check the validity of
the scales (Exhibit 4). CFA has been widely used to test the
Without professional 21 5.9 validity of measurement scales (Karriker & Williams, 2009;
certification Paré & Tremblay, 2004; Slaughter, Zickar, Highhouse, &
Position/ Project sponsor/owner 11 3.1 Mohr, 2004). The model proved to have a good fit after remov-
designation ing the items with a factor loading of less than 0.40 and that
Project director 66 18.6 were non-normal and correlating the residuals of those items
that have a high covariance with other items, as recommended
Project manager 149 42.1 by (Paré & Tremblay, 2004). We used Cronbach’s alpha scores
Team leader 74 20.9 through SPSS to test the reliability of the measurement scale.
Developer 32 9.0 The value of Cronbach’s alpha is between 0.80 and 0.88, which
is acceptable according to (Nunnally & Bernstein, 1967).
others 22 6.2
The first fitness indicator in CFA is the chi-square (CMIN)
Total work < 2 years 47 13.3 divided by the degree of freedom (DF), which is recommended to be
experience from 3 to 1 by (Carmines & McIver, 1981, p. 80). For this study, the
3–5 years 234 66.1 value of CMIN/DF is 2.215, showing a good model fit. However,
Albright and Park (2009) recommend other fitness indicators for
6–10 years 52 14.7
CFA: the comparative fit index (CFI), the goodness-of-fit index
Above 10 years 21 5.9 (GFI), the adjusted goodness of fit index (AGFI) and the root
Project-related < 1 year 125 35.3 mean square error of approximation (RMSEA). The values of GFI
experience and AGFI for this study are 0.848 and 0.808, respectively, which are
1–2 years 167 47.2
greater than the threshold of ≤ 0.80 recommended by (Davis,
Schoorman, & Donaldson, 1997). CFI, as explained by Brown
3–5 years 43 12.1 (2006, p. 84) is “the fit of a user-specified solution about a more
Above 5 years 19 5.4 restricted, nested baseline model” in which “the covariance among
all input indicators are fixed to zero”, or it can be said that no
relationship exists between variables. The value of CFI for this
Descriptive and Correlation Analysis study is 0.902, which is higher than the threshold of 0.90. Steiger
Exhibit 3 shows the descriptive information of each variable in (1980) introduced another indicator of CFA, which is RMSEA.
the framework, where the mean and standard deviation of each Brown (2006, pp. 83–86) concluded that RMSEA “incorporates a
variable have been reported. Moreover, in the same Exhibit, penalty function for poor model parsimony” and therefore is very
correlation statistics among the variables are also stated. The sensitive to the estimated number of parameters but insensitive to

Exhibit 3. Descriptive and Correlation Analysis (Pearson’s Correlations)

Sr. no. Measure M SD Project performance Project quality Project governance Project management risk Project leadership

1 Project performance 3.41 .74 1

2 Project quality 3.36 .86 .247** 1
3 Project governance 3.53 .79 .170** .252** 1
4 Project management risk 3.50 .79 .208** .019 .144** 1
5 Project leadership 3.20 .94 .229** .030 .251** .050 1

**Correlation is significant at the 0.01 level (two tailed).

Engineering Management Journal Vol. 30 No. 4 2018 281

Exhibit 4. Confirmatory Factor Analysis the threshold for the current dataset. To meet the condition of
discriminant validity, the correlations between items in any two
Factor loading Cronbach’s constructs should be lower than the square root of the AVE
Variable Item (λ) alpha shared by items within a construct (Bekker & Steyn, 2008). The
results of the current dataset meet this requirement as well.
Project governance (PG) PG1 .556 0.88 Hence, it can be safely inferred that the current dataset meets
PG2 .651 the requirements of validity.
PG3 .826
Measurement Model (Hypothesis Testing)
PG4 .801 Project Governance, Project Leadership, and Project
PG5 .711 Performance. In the first step, direct paths (i.e., Hypotheses 1
PG6 .772 and 4) are measured to investigate the impact of the
independent variables on the dependent variable. In this
PG7 .726 paper, standardized estimates have been used while
PG8 .584 performing SEM in AMOS. Therefore, this step measures the
Project performance (PP) PP1 .489 0.83 impact of project governance and project leadership on project
performance. Both hypotheses are found to be significant at
PP2 .464
0.01 and 0.10 level of significance, respectively, proving that
PP3 .626 project governance is marginally significant while the project
PP4 .684 leadership has a significant positive impact on project
performance. Furthermore, SEM fitness indices are found to
PP5 .750
be within the acceptable range. For example, CMIN/DF is
PP6 .649 2.130, GFI is 0.912, AGFI is 0.877, CFI is 0.942, RMSEA is
PP7 .607 0.05, and PCLOSE is 0.083. Thus, it is concluded that the
Project quality (PQ) PQ1 .511 0.80
proposed Hypotheses 1 and 2 are significantly accepted. In
addition, multi-group moderation through AMOS is used to
PQ2 .569 test Hypothesis 5. For this purpose, factor scores for each
PQ3 .741 variable are imputed using latent variables in AMOS. After
PQ4 .787 imputing factor scores, the moderating variable is split about
the median using “Rank Cases” and divided into two groups
PQ5 .737 such as PL Low and PL High. Then, the model is run in AMOS
Project management risk PR1 .964 0.88 using these groups, and their Z-Scores are computed to derive
(PR) PR2 .617 the results with the help of the “Stats Tool Package” (Gaskin,
2016). The results (Exhibit 6) showed that Hypothesis 5 was not
PR3 .634
supported because the p-value is in the higher-than-acceptable
PR4 .831 range. Therefore, the moderation of project leadership between
PR5 .855 project governance and project performance is not proven for
the sampled data. Although the fitness indices were found to be
PR6 .706
within the acceptable range (CMIN/DF = 2.075, GFI = 0.840,
PR7 .578 AGFI = 0.810, CFI = 0.900 and RMSEA = 0.03), the p-value is
PR8 .621 much higher than the acceptable range. The results are given
PR9 .641
below in Exhibits 5 & 6.
Project leadership (PL) PL1 .489 0.85 Project Quality, Project Management Risk, and Project
PL2 .464 Performance. In the second step, mediation Hypotheses 2
PL3 .626 and 3 are tested. Mediation testing through MacKinnon
(2008) has become very popular in the last few years. Hence,
PL4 .684
the MacKinnon mediation strategy has been considered in this
PL5 .750 study to test the mediation. Furthermore, confidence limits are
PL6 .657
Exhibit 5. Hypothesis Decision Table (Standardized Estimates)

the sample size compared to the number in the population. The H. Independent Dependent Path
value of RMSEA is 0.059, and its PCLOSE is 0.001, which shows a no. variable variable coefficients Decision
good model fit, as recommended by the AMOS user guide and
(Browne & Cudeck, 1993). 1 Project Project .096* Supported
In addition to CFA, data were analyzed for discriminant governance performance
and convergent validity through AMOS as guided by (Gaskin, 4 Project leadership Project .112*** Supported
2016). The results show that values of the composite reliability performance
(CR) of constructs ranged from 0.805 to 0.907, which are
within the acceptable range; the values of AVE are also above Note: ***P < 0.01, ** p < 0.05, and * p < 0.10.

282 Engineering Management Journal Vol. 30 No. 4 2018

Exhibit 6. Hypothesis Decision Table (Standardized Estimates)

Low High

H. no. Independent variable Moderator variable Dependent variable Estimate P-value Estimate P-value Z-score Decision

5 Project governance Project leadership Project performance 0.116 0.117 0.022 0.769 −0.904 Not supported

Exhibit 7. Hypothesis Decision Table (Standardized Estimates)

H. no. Independent variable Mediating variable Dependent variable Direct effect Indirect effect Decision

2 Project governance Project quality Project performance 0.117 0.027*** Supported

3 Project governance Project management risk Project performance 0.193 0.057*** Supported

Note: ***P < 0.01, ** p < 0.05, and * p < 0.10.

Exhibit 8. Hypothesis Testing

H4: .112***
Project Leadership

H5: -0.904
H1: .096*

H2: Direct=0.117, Indirect=0.027***

Project Quality

Project Governance Project Performance

Project Management
Risk

H2: Direct=0.193, Indirect=0.057***

H1: .096*

Note: Dotted line shows insignificant relationship, numbers above the line represent path coefficients (***P < 0.01, **p < 0.05, and *p < 0.10).

important for understanding the effects based on the between project governance and project performance. Rucker,
distribution of the product or the bootstrapping. The Preacher, Tormala, and Petty (2011) stated in their study that
bootstrapping technique is utilized to test the mediation numerous indirect effects through various mediators often
significance. Bootstrapping is becoming a very popular tool define one particular relationship, as hypothesized in this
for testing the significance of mediation. Krejcie and Morgan research. In the SEM technique, multiple mediators cannot be
(1970) argued that bootstrapping is preferred for mediation tested because indirect effects compute the combined effects of
analysis. Mediations of project quality and project other relationships. Therefore, each mediation is tested
management risk have been hypothesized in the relationship separately in different structural equation models. In the first

Engineering Management Journal Vol. 30 No. 4 2018 283

step, the mediation of project quality is tested, and in the was also marginally significant, when this path was mediated
second phase, the mediation of project management risk is with project quality, it proved to be fully mediated by project
tested. It is found that the relationship between project quality. There may be multiple reasons for our observation that
governance and project performance is fully mediated by software firms have an excellent mechanism to address project
project management risk and project quality. The results of quality. Software firms focus on projects by continuously
mediation analysis are given in Exhibit 7. reviewing them at each stage. Similarly, project management
The fitness indicators for the mediation of project quality risk fully mediated the relationship between project governance
are also within the acceptable range. CMIN/DF is 3.446, GFI is and project performance. Project governance provides an effec-
0.856, AGFI is 0.813, CFI is 0.869, and RMSEA is 0.08. The tive perspective to better understand and manage the project
fitness indicators for the mediation of project management risk risk (Guo et al., 2014). Previous literature (Jones & McLean,
are also within the acceptable range. CMIN/DF is 3.250, GFI is 1970; Keider, 1984; Thayer, Pyster, & Wood, 1980) argued the
0.845, AGFI is 0.803, CFI is 0.878, and RMSEA is 0.08. For a poor planning and control increase the riskiness of any project
good fit, the values of GFI, AGFI, and CFI should be closer to 1 and may often leads towards cost and schedule overruns. Some-
(Mahaney & Lederer, 2003). times, there are uncertainties regarding the project teams such as
turnover, lack of cooperation among team members, and low
motivation (Jiang, Klein, & Means, 2000; Schmidt, Lyytinen, &
Discussion, Implications, and Conclusions Mark Keil, 2001). These risks and uncertainties affect the per-
The SEM results for the impact of project governance on formance of software projects negatively. Therefore, our research
project performance (Hypothesis 1) indicate a marginal signifi- suggests that if there is an effective governance structure, soft-
cant relationship (p-value < 0.10, β = 0.096). ware firms may avoid such types of risks and can improve the
The impact of project governance on project performance project performance. Project team members have specialized
is found to be marginally significant for this study. This study skills and are led by experienced project managers to identify
also confirms the findings of previous studies such as that of and mitigate project management risks in advance. Therefore,
(Abednego & Ogunlana, 2006; Lu et al., 2015; Müller, 2009), the research question “Do project quality and project manage-
who argued that project governance is a suitable tool to moni- ment risk have mediating effects on the relationship between
tor the project’s ongoing performance and to take the necessary project governance and project performance?” is answered. The
measures in the event that problems arise, leading to higher results of hypothesis testing are given in Exhibit 8.
project performance by addressing issues/problems on site. Agency theory in a project management context emphasizes
These findings also support agency theory as described by the relationship between the project owner and the project manager
(Aduda et al., 2013), which assumed that management could (Turner and Müller 2010). As the monitoring and controlling are
not be trusted. Thus, project management requires strict mon- integral parts of agency theory, as well as of project governance as
itoring by the owners. Continuous monitoring results in better defined by Turner (2009, p. 311), the project owner needs to
project performance. The relationship with project leadership is monitor the performance of the project manager, which will indeed
found to be significant. Specifically, effective leadership enhance the performance of the project. The results of the current
improves any project’s performance. The findings support the study also favor this phenomenon that effective project governance,
results of earlier studies (Keller, 1992; Nixon et al., 2012). i.e., the monitoring of the project manager by the project owner,
Project leadership is one of the key factors of any project’s along with efficient project management risk and project quality
success or failure. Project managers develop a leadership style management increases the project performance.
that best fits their local and national cultural context. The SEM
results for Hypothesis 5 showed that project leadership has no
moderating effects on the relationship between project govern- Theoretical Contributions
ance and project performance. There could be multiple reasons The current study has several important contributions to the
for these results. For example, the project leaders were not existing body of knowledge on project governance and project
entirely free to allocate roles and duties among project teams. performance.
Moreover, if project leaders are not enriched with the required First, the software development industry in developing
skills and are not capable of developing a context-specific countries remains in its nurturing phase; therefore, only a
leadership style, the effects of project governance model on few studies can be found in the past literature that has focused
project performance could be negative. on the software houses of a country such as Pakistan. Rela-
The SEM results for Hypotheses 2 and 3 showed that tionships such as the effect of project governance on project
project quality and project management risk fully mediated performance, project quality, and project management risk
the relationship between project governance and project per- and the effects of project management risk and project quality
formance. Hence, our analysis has confirmed that project qual- on project performance have been studied as individual rela-
ity and project management risk fully mediates the relationship tions in the past (Abednego & Ogunlana, 2006; Haq et al.,
between project governance and project performance. Our 2016; Khan, 2012; Zwikael & Smyrk, 2015). However, the
analysis also confirmed the findings of previous studies (Haq mediation by project management risk and project quality
et al., 2016; Maruping et al., 2009) that sound governance have not previously been studied. Therefore, to the best of
mechanism can be used to improve the quality of a software our knowledge, this study examined the two hypotheses
project, which is a significant predictor of project performance. (Hypothesis 2) and (Hypothesis 3) for the first time. Further-
Project quality, including design and product quality, along more, the current research provided context and culture-spe-
with efficient management of project-related risk has the poten- cific findings that are derived purely from the context of the
tial to increase the performance of software projects. Although Pakistani software industry and thus addressed the aforesaid
the direct effect of project governance on project performance theoretical and contextual gap.

284 Engineering Management Journal Vol. 30 No. 4 2018

 Second, in the past studies, contradictory findings have 4. IT project managers and team leaders should have the
been revealed in the relationship of project governance and authority, ability, and resources to make appropriate
project performance (Abednego & Ogunlana, 2006; Haq et al., decisions.
2016; Khan, 2012). Hence, to better understand the mechanism
that regulates the relationship of project governance and project
performance, mediation needs to be studied between these Limitations and Future Direction
variables. Limited studies have studied the mediators in the This study investigated the influence of project governance on
relationship between project governance and project perfor- project performance by collecting data from the software
mance, such as (Zwikael & Smyrk, 2015). However, previous houses of Pakistan. However, due to time constraints, this
researchers did not attempt to test the mediation of project study also has certain limitations.
management risk and project quality. This study has sought to First, demographic analysis reveals that only 9% of parti-
test the mediations of project quality and project management cipants working in Pakistan’s IT industry are female. Pakistan’s
risk in the relationship between project governance and project IT industry needs to create more employment opportunities for
performance in the software houses of Pakistan. women, who, being half of the population of the country, are
Finally, this study’s findings will be helpful for extending the most decisive force in the national economy. Women’s
the literature to developing economies by providing pioneer active participation may enhance the impact of governance on
empirical evidence from Pakistan of an emerging software the IT industry’s performance in Pakistan. Future research can
industry. As previously noted, most of the previous studies investigate the impact of low female participation on project
have been conducted in Western countries such as the USA governance and project performance.
and Australia. Therefore, those studies’ findings are argued to Second, we collected data from the software houses of
not be applicable to developing countries. However, the cul- Pakistan only. This research can be extended to other popula-
tural-related findings of the current research offer insight into tions by adding new variables to the current model. Further-
the software houses operating in high power distance countries more, the current model can be studied at various
due to its implication for leadership and cultural similarities. organizational levels.
In addition, governance problems, such as ownership con- Third, we have used the agency theory perspective to study
centration (La Porta, Lopez-de-Silanes, & Shleifer, 1999) and the influence of project governance on project performance.
ineffective board structures (Dharwadkar, George, & Brandes, We suggest that future studies can investigate other theories,
2000), exist in Pakistan, as in many other developing countries. such as stewardship theory and stakeholder theory, and relate
Due to these similarities with the aforesaid Asian countries, the them to the current model.
findings of the current research can be generalized to these
developing Asian countries to manage the project performance
Conclusion
in the software industry through project governance and
This study investigates the effects of project governance on
leadership.
project performance by investigating the mediation effect of
project quality and project management risk in that relationship.
Managerial Implications The theoretical lens of agency theory has been used to under-
This study provides significant insights into Pakistan’s software stand the role of project governance in project performance. This
firms’ ability to track and enhance project performance and their study also investigates the moderating effect of project leadership
ability to formulate strategies to measure the performance of on the relationship between project governance and project
ongoing projects while addressing project governance, project qual- performance. A quantitative deductive approach has been used
ity, project management risk and project leadership. The concepts to derive the research model. A web-based survey yielded 354
of agency theory will help practitioners develop a governance responses from software firms in Pakistan. SEM through AMOS
structure based on strict monitoring, which can ultimately enhance has been used to test the hypotheses. Data analysis has been
project performance. Moreover, this study has the following prac- completed in three different steps. First, Hypotheses 1 and 4 have
tical implications for software firm project managers in Pakistan. been measured to verify the impact of project governance and
project leadership on project performance. The results showed
1. First, project governance should be accorded considerable that Hypotheses 1 and 4 are significant, meaning that project
attention to improve project performance. Software firms governance and project leadership positively impact project per-
should have well-structured governance frameworks sup- formance. Second, the moderation hypothesis (i.e., Hypothesis 5)
ported by suitable approaches, and resources and control has been analyzed, but the results were insignificant, meaning
mechanisms should be applied at every stage of the project that the moderation of project leadership is not proven for the
life cycle. Because the project manager is primarily respon- relationship between project governance and project perfor-
sible for the project, he or she must have strong knowledge mance. Third, the mediation hypotheses (i.e., Hypotheses 2 and
of governance frameworks. 3) have been analyzed. The results showed that the relationship
2. There should be considerable focus on project quality, and between project governance and project performance is fully
standard coding systems should be followed for better mediated by project quality and project management risk.
project quality. Moreover, ongoing projects should be con- These results helped answer the research question and achieve
tinuously reviewed. this study’s objective.
3. To manage the potential risk, IT project managers should
make an accurate estimation of the resources required for Acknowledgment
strong project planning and should carefully define project The authors are very grateful to the anonymous referees for
milestones. their valuable comments and suggestions.

Engineering Management Journal Vol. 30 No. 4 2018 285

Disclosure statement Bendickson, J., Muldoon, J., Liguori, E., & Davis, P. E. (2016).
No potential conflict of interest was reported by the authors. Agency theory: The times, they are a-changin’. Management
Decision, 54(1), 174–193. doi:10.1108/md-02-2015-0058
Berle, A. A. J., & Means, G. C. (1932). The Modern Corporation
Funding and Private Property. New York, NY: MacMillan.
This work was supported by National Natural Science Founda- Biesenthal, C., & Wilden, R. (2014). Multi-level project govern-
tion of China (NSFC) [grant number 71331002], [grant number ance: Trends and opportunities. International Journal of
71771075], [grant number 71771077], [grant number Project Management, 32(8), 1291–1308. doi:10.1016/j.
71601061]. ijproman.2014.06.005
Brown, T. A. (2006). Confirmatory factor analysis for applied
research. New York, NY: The Guilford Press.
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Tadeu de Oliveira Lacerda, R., Ensslin, L., & Rolim Ensslin, S. About the Authors
(2011). A performance measurement framework in portfo- Saif Ul Haq is pursuing for his PhD degree at Hefei University of
lio management: a constructivist case. Management Deci- Technology. He is assistant professor of project management at
sion, 49(4), 648–668. Bahria University, Lahore Campus, Lahore Pakistan. He has pub-
Thayer, R. H., Pyster, A., & Wood, R. C. (1980). Special Feature lished two papers in international journals and also presented two
The Challenge of Software Engineering Project Manage- papers in international conferences. His research interests are pro-
ment. Computer, (8), 51–59. doi:10.1109/MC.1980.1653750 ject governance mechanisms, project control, project performance,
Too, E. G., & Weaver, P. (2014). The management of project and quantitative analysis.
management: A conceptual framework for project govern- Changyong Liang is a professor of MIS and the Director of the
ance. International Journal of Project Management, 32(8), Institute for IT Engineering Management at Hefei University of
1382–1394. doi:10.1016/j.ijproman.2013.07.006 Technology (HFUT). He is executive committee member of CNAIS
Turner, J. R. (2009). The handbook of project-based manage- and associate editor-in-chief for Chinese Journal of Operations
ment (Vol. 92): New York, NY: McGraw-Hill. Research and Management. His research focuses on information
Turner, J. R., & Keegan, A. (2001). Mechanisms of governance engineering management and emerging technologies. He is author/
in the project-based organization:: Roles of the broker and editor of seven books and over 140 publications and the principle
steward. European Management Journal, 19(3), 254–267. investigator for four National Science Foundation of China
doi:http://dx.doi.org/10.1016/S0263-2373(01)00022-6 projects.
Turner, J. R., & Müller, R. (2003). On the nature of the project as a Dongxiao Gu is an associate professor of information manage-
temporary organization. International Journal of Project Man- ment at HFUT, and a visiting research scholar in Indiana University
agement, 21(1), 1–8. doi:10.1016/S0263-7863(02)00020-0 Bloomington. His research interests focus on IT project manage-
Turner, J. R., & Müller, R. (2005). The project manager’s leader- ment. He is author of over 50 publications in journals such as
ship style as a success factor on projects: A literature review. Information & Management, AI in Medicine, IJPR, etc. He serves
Project management journal, 36(2), 49–61. as an Editorial Board Member for International Journal of Internet
Turner, R. J., Huemann, M., Anbari, F. T., & Bredillet, C. N. and Enterprise Management. He is the principle investigator for two
(2010). Perspectives on projects. New York, NY: Routledge. National Science Foundation of China projects.
Van Muijen, J. J, & Koopman, P. L. (1994). The influence of Jia Tina Du is a Senior Lecturer at the School of Information
national culture on organizational culture: a comparative Technology and Mathematical Sciences, University of South Aus-
study between 10 countries. European Journal Of Work and tralia in Australia. Tina is also an Australian Research Council
Organizational Psychology, 4(4), 367–380. DECRA Fellow (2017-19) and visiting fellow at the University of
Walker, A., & Kwong Wing, C. (1999). The relationship between Oxford, UK (2016-17). She has published 75 papers in refereed
construction project management theory and transaction journals and conference proceedings and raised $800,000 for
cost economics. Engineering Construction and Architectural research. Her research interests include information retrieval,
Management, 6(2), 166–176. doi:10.1108/eb021109 human information behavior, and theories and methodologies in
Wallace, L., Keil, M., & Rai, A. (2004). How software Project information management.
management risk affects project performance: An investigation Shuping Zhao received the PhD in business administration
of the dimensions of risk and an exploratory model. Decision from Hefei university of Technology, Hefei, China, in 2015. Cur-
Sciences, 35(2), 289–321. doi:10.1111/j.00117315.2004.02059.x rently, he is a Lecturer of Management Information Systems at
Wiener, M., Mähring, M., Remus, U., & Saunders, C. S. (2016). Hefei University of Technology, Hefei, China. He teaches decision
Control Configuration and Control Enactment in Information sciences and information systems. His main research interests
Systems Projects: Review and Expanded Theoretical Frame- include decision-making theory and data mining.
work. MIS Quarterly, 40(3), 741–774. doi:10.25300/MISQ Contact: Dongxiao Gu, School of Management, Hefei Uni-
Yang, L.-R., Wu, K.-S., Wang, F.-K., & Chin, P.-C. (2012). versity of Technology, Hefei, Anhui 230009, P. R. China;
Relationships among project manager’s leadership style, [email protected]

Engineering Management Journal Vol. 30 No. 4 2018 289

Appendix I: Questionnaire
Part I: Demographics

□ < 25 □ 26–35

Gender □ Male □ Female Age group (in years) □ 36–45 □ 46–55

□ Above 55

Qualification □ Bachelor’s □ Master’s □ Project sponsor/owner

□ PhD □ Project director

□ with professional certification Position/designation □ Project manager □ Team leader

□ Developer

□ without professional certification □ Others

Work experience □ < 2 year □ 3–5 years Project-related experience □ < 1 year □ 1–2 years

□ 6–10 years □ Above 10 years □ 3–5 years □ Above 5 years

Part II

Sr. no. Statement Strongly Disagree Neutral Agree Strongly

disagree agree

Project Governance (PG)

1 The board has overall responsibility for the project governance.


1 
2  3 
4 5

2 The organization differentiates between projects and non-project-based activities.


1 
2  3 
4 5

3 Roles and responsibilities for the projects are defined clearly.


1 
2  3 
4 5

4 Disciplined governance arrangements, supported by appropriate methods,

resources and controls are applied throughout the project life cycle.

1 
2  3 
4 5

5 Every project has a project sponsor who is the single point of accountability in and
to the organization for the successful outcome and benefits from the project.

1 
2  3 
4 5

6 Each project has a project manager who is accountable to the project sponsor for
the successful achievement of the project objectives or deliverables.

1 
2  3 
4 5

7 The board or its delegated agents decide when independent scrutiny of projects is
required and implement such assurance accordingly.

1 
2  3 
4 5

8 There are clearly defined criteria for reporting project status and for the escalation
of risks and issues to the levels required by the organization.

1 
2  3 
4 5

Sr. no. Statement Never Rarely Sometimes Often Always

Project Performance (PP)

How often …

1 The application developed is reliable


1 
2  3  
4 5

2 The application is easy to maintain


1 
2  3  
4 5

290 Engineering Management Journal Vol. 30 No. 4 2018

 (continued)

3 The users perceive that the system meets intended functionalrequirements


1 
2 3 
4 5

4 The system meets user expectations with respect to response time


1 
2 3 
4 5

5 The overall quality of the developed application is high.


1 
2 3 
4 5

6 The project was completed within budget


1 
2 3 
4 5

7 The project was completed within schedule


1 
2 3 
4 5

Sr. no. Statement Never Rarely Sometimes Often Always

Project Management Risk (PR)

How often the mentioned below events negatively affected the project…
1 Lack of an effective project management.

1 
2 3 
4 5

2 Project progress not monitored closely enough


1 
2 3 
4 5

3 Inadequate estimation of required resources


1 
2 3 
4 5

4 Poor project planning


1 
2 3 
4 5

5 Project milestones not clearly defined


1 
2 3 
4 5

6 Inexperienced project manager


1 
2 3 
4 5

7 Ineffective communication

1 
2 3 
4 5

8 Inexperienced team members


1 
2 3 
4 5

9 Team members lack specialized skills required by the project


1 
2 3 
4 5

Project Quality (PQ)

To what extent, do you agree or disagree with the following statements?

Sr. no. Statement Strongly Disagree Neutral Agree Strongly

disagree agree

1 Our system implementation 100% free from faults


1 
2 3 
4 5

2 We always adhere to the Coding standards in implementing our systems.


1 
2 3 
4 5

3 Our quality team is continuously reviewing the ongoing project


1 
2 3 
4 5

4 Our quality team is 100% independent to review any ongoing project.


1 
2 3 
4 5

5 The project we deliver almost meet user expectations.


1 
2 3 
4 5

Project Leadership (PL)

To what extent, do you agree or disagree with the following statements?

Sr. no. Statement Strongly Disagree Neutral Agree Strongly

disagree agree

1 Project leadership is 100% free for allocating roles and responsibilities among
project team 
1 
2 3  
4 5

2 All project personnel are conversant with organizational mission, vision and values

1 
2 3  
4 5

Engineering Management Journal Vol. 30 No. 4 2018 291

 (continued)

3 The organization goals and objectives are clearly defined

1 
2 3 
4 
5

4 There are right people at the right time to address the right issues and make the
right decisions.
1 
2 3 
4 
5

5 Project Leadership is 100% free for the Recruitment of project team

1 
2 3 
4 
5

6 Project leadership is 100% free for allocating roles and responsibilities among
project team 1 
2 3 
4 
5

292 Engineering Management Journal Vol. 30 No. 4 2018