Determinants of Project Portfolio Risk Management Effectiveness for Digital Transformation in the U.S. Electric Utility Industry

Digital transformation is a strategic priority for firms in the electric utility industry and accounts for billions of investment dollars (USD) across all industries. Leaders of these organizations strive for effective risk management governance systems and adequately prepared workforces to execute their strategic initiatives. Identifying and understanding the key factors that increase the effectiveness of project portfolio risk management in these organizations helps enable their digital transformation goals. The goal of this research is to identify and understand the key determinants of project portfolio risk management effectiveness (PPRME) relevant to power producers in the United States electric utility industry. A survey of over two hundred workers provided the data informing the investigation. Partial Least Squares - Structural Equation Modelling (PLS-SEM) was used to test a model describing the impact of risk management culture, leadership support, stakeholder engagement, and management processes on project portfolio risk management effectiveness. The results inform the key roles of organizational risk management culture and the quality of senior management support for improving the effectiveness of an organization’s project portfolio management. Effectiveness in project portfolio risk management is driven by informed, and empowered project teams and engaged, risk-aware leadership.