Overview

“Please stakeholders! Can we please all agree?” is the project manager’s mantra.

For successful projects, it’s not enough to deliver on the customer’s demand; projects must meet all stakeholder expectations!

Identifying stakeholders is a primary task as all the important decisions during the initiation, planning, and execution stages of the project are made by these stakeholders. The five primary project stakeholders are the project manager, the project team, the functional management, the sponsor, and the customer.  In a larger sense, anyone who participates in the project or is impacted by its results is a stakeholder. Each stakeholder has an essential contribution to make, and all stakeholder expectations must be met. The contribution made by different people to the project is the principal criteria for identifying stakeholders.

Project Stakeholders

Project stakeholders are individuals and organisations that are actively involved in the project, or whose interests may be affected as a result of project execution or project completion. They may also exert influence over the project’s objectives and outcomes. The project management team must identify the stakeholders, determine their requirements and expectations, and, to the extent possible, manage their influence concerning the requirements to ensure a successful project. The figure below illustrates the relationship between stakeholders and the project team.

Stakeholders have varying levels of responsibility and authority when participating in a project which can change throughout the project’s life cycle. Their responsibility and authority range from occasional contributions in surveys and focus groups to full project sponsorship, which includes providing financial and political support. Stakeholders who ignore this responsibility can have a damaging impact on the project objectives. Likewise, project managers who ignore stakeholders can expect a damaging impact on project outcomes. Hartley’s (2018) stakeholder management matrix is a good illustration of key stakeholder responsibilities.

Sometimes, stakeholder identification can be difficult. A good strategy is to start developing a stakeholder list. The stakeholder list is a great tool for the project manager and a key input for the project communications plan.

Stakeholders may have a positive or negative influence on a project. Positive stakeholders are those who would normally benefit from a successful outcome of the project, while negative stakeholders are those who see negative outcomes from the project’s success. For example, business leaders from a community that will benefit from an industrial expansion project may be positive stakeholders because they see economic benefit to the community from the project’s success. Conversely, environmental groups could be negative stakeholders if they view the project as harmful to the environment. In the case of positive stakeholders, their interests are best served by helping the project succeed, for example, helping the project obtain the required permits to proceed. The negative stakeholders’ interest would be better served by impeding the project’s progress by demanding more extensive environmental reviews. Negative stakeholders are often overlooked by the project team at the risk of failing to bring their projects to a successful end.

Key stakeholders in every project include:

• Project manager. The person is responsible for managing the project.
• Customer/user. The person or organisation that will use the project’s product. There may be multiple layers of customers. For example, the customers for a new pharmaceutical product can include the doctors who prescribe it, the patients who take it, and the insurers who pay for it. In some application areas, the customer and user are synonymous, while in others, the customer refers to the entity acquiring the project’s product and users are those who will directly utilise the project’s product.
• Performing organisation. The enterprise whose employees are most directly involved in doing the work of the project.
• Project team members. The group that is performing the work of the project.
• Project management team. The members of the project team are directly involved in project management activities.
• Sponsor. The person or group that provides the financial resources, in cash or in-kind, for the project.
• Influencers. People or groups that are not directly related to the acquisition or use of the project’s product, but an individual’s position in the customer organisation or performing organisation can influence, positively or negatively, the course of the project.
• PMO. If it exists in the performing organisation, the PMO can be a stakeholder if they have direct or indirect responsibility for the outcome of the project. Many large and even medium-sized organizations have created a department to oversee and support projects throughout the organization. This is an attempt to reduce the high numbers of failed projects (see the Project Management Overview chapter.) These offices are usually called the project management office or PMO.   The PMO may be the home of all the project managers in an organization, or it may simply be a resource for all project managers, who report to their line areas.

Typical objectives of a PMO are:

• Help ensure that projects are aligned with organizational objectives
• Provide templates and procedures for use by project managers
• Provide training and mentorship
• Provide facilitation
• Stay abreast of the latest trends in project management
• Serve as a repository for project reports and lessons learned

The existence and role of PMOs tends to be somewhat fluid. If a PMO is created, and greater success is not experienced in organizational projects, the PMO is at risk of being disbanded as a cost-saving measure. If an organization in which you are a project manager or a project team member has a PMO, try to make good use of the resources available. If you are employed as a resource person in a PMO, remember that your role is not to get in the way and create red tape, but to enable and enhance the success of project managers and projects within the organization.

In addition to these key stakeholders, there are many different names and categories of project stakeholders, including internal and external, owners and investors, sellers and contractors, team members and their families, government agencies and media outlets, individual citizens, temporary or permanent lobbying organizations, and society-at-large. The naming or grouping of stakeholders is primarily an aid to identifying which individuals and organisations view themselves as stakeholders. Stakeholder roles and responsibilities can overlap, such as when an engineering firm provides financing for a plant that it is designing.

Selecting Projects

The huge cost in money, effort, materials, energy, personal reputations, and the effect on stakeholders requires that, before projects commit to the future, they are adequately and effectively proposed, evaluated, considered, and selected.

Criteria 

Meredith & Mantel (2019) identify six criteria for effective models for project selection:

1. Realism
2. Capability
3. Flexibility
4. Ease of use
5. Cost
6. Ease of computerisation

A project is successful when it achieves its objectives and meets or exceeds the expectations of the stake­holders. But lets look closely who are the stakeholders? As described earlier stakeholders are individuals who either care about or have a vested interest in your project.

NOTE: Key stakeholders can make or break the success of a project. Even if all the deliverables are met and the objectives are satisfied, if your key stakeholders aren’t happy, nobody’s happy.

Let’s take a look at these stakeholders and their relationships to the project manager.

Top Management

Top management may include the president of the company, vice-presidents, directors, division managers, the corporate operating committee, and others. These people direct the strategy and development of the organization.

On the plus side, you are likely to have top management support, which means it will be easier to recruit the best staff to carry out the project, and acquire needed material and resources; also visibility can enhance a project manager’s professional standing in the company.

On the minus side, failure can be quite dramatic and visible to all, and if the project is large and expensive (most are), the cost of failure will be more substantial than for a smaller, less visible project.

Some suggestions in dealing with top management are:

• Develop in-depth plans and major milestones that must be approved by top management during the planning and design phases of the project.
• Ask top management associated with your project for their information reporting needs and frequency.
• Develop a status reporting methodology to be distributed on a scheduled basis.
• Keep them informed of project risks and potential impacts at all times.

The Project Team

The project team is made up of those people dedicated to the project or borrowed on a part-time basis. As project manager, you need to provide leadership, direction, and above all, the support to team members as they go about accomplishing their tasks. Working closely with the team to solve problems can help you learn from the team and build rapport. Showing your support for the project team and for each member will help you get their support and cooperation.

Here are some difficulties you may encounter in dealing with project team members:

• Because project team members are borrowed and they don’t report to you, their priorities may be elsewhere.
• They may be juggling many projects as well as their full-time job and have difficulty meeting deadlines.
• Personality conflicts may arise. These may be caused by differences in social style or values or they may be the result of some bad experience when people worked together in the past.
• You may find out about missed deadlines when it is too late to recover.

Managing project team members requires interpersonal skills. Here are some suggestions that can help:

• Involve team members in project planning.
• Arrange to meet privately and informally with each team member at several points in the project, perhaps for lunch or coffee.
• Be available to hear team members’ concerns at any time.
• Encourage team members to pitch in and help others when needed.
• Complete a project performance review for team members.

Your Manager

Typically the boss decides what the assignment is and who can work with the project manager on projects. Keeping your manager informed will help ensure that you get the necessary resources to complete your project.

If things go wrong on a project, it is nice to have an understanding and supportive boss to go to bat for you if necessary. By supporting your manager, you will find your manager will support you more often.

• Find out exactly how your performance will be measured.
• When unclear about directions, ask for clarification.
• Develop a reporting schedule that is acceptable to your boss.
• Communicate frequently.

Peers

Peers are people who are at the same level in the organization as you and may or may not be on the project team. These people will also have a vested interest in the product. However, they will have neither the leadership responsibilities nor the accountability for the success or failure of the project that you have.

Your relationship with peers can be impeded by:

• Inadequate control over peers
• Political maneuvering or sabotage
• Personality conflicts or technical conflicts
• Envy because your peer may have wanted to lead the project
• Conflicting instructions from your manager and your peer’s manager

Peer support is essential. Because most of us serve our self-interest first, use some investigating, selling, influencing, and politicking skills here. To ensure you have cooperation and support from your peers:

• Get the support of your project sponsor or top management to empower you as the project manager with as much authority as possible. It’s important that the sponsor makes it clear to the other team members that their cooperation on project activities is expected.
• Confront your peer if you notice a behavior that seems dysfunctional, such as bad-mouthing the project.
• Be explicit in asking for full support from your peers. Arrange for frequent review meetings.
• Establish goals and standards of performance for all team members.

Resource Managers

Because project managers are in the position of borrowing resources, other managers control their resources. So their relationships with people are especially important. If their relationship is good, they may be able to consistently acquire the best staff and the best equipment for their projects. If relationships aren’t good, they may find themselves not able to get good people or equipment needed on the project.

Internal Customers

Internal customers are individuals within the organization who are customers for projects that meet the needs of internal demands. The customer holds the power to accept or reject your work. Early in the relationship, the project manager will need to negotiate, clarify, and document project specifications and deliverables. After the project begins, the project manager must stay tuned in to the customer’s concerns and issues and keep the customer informed.

Common stumbling blocks when dealing with internal customers include:

• A lack of clarity about precisely what the customer wants
• A lack of documentation for what is wanted
• A lack of knowledge of the customer’s organization and operating characteristics
• Unrealistic deadlines, budgets, or specifications requested by the customer
• Hesitancy of the customer to sign off on the project or accept responsibility for decisions
• Changes in project scope

To meet the needs of the customer, client, or owner, be sure to do the following:

• Learn the client organization’s buzzwords, culture, and business.
• Clarify all project requirements and specifications in a written agreement.
• Specify a change procedure.
• Establish the project manager as the focal point of communications in the project organization.

External customer

External customers are the customers when projects could be marketed to outside customers. In the case of Ford Motor Company, for example, the external customers would be the buyers of the automobiles. Also if you are managing a project at your company for Ford Motor Company, they will be your external customer.

Government

Project managers working in certain heavily regulated environments (e.g., pharmaceutical, banking, or military industries) will have to deal with government regulators and departments. These can include all or some levels of government from municipal, provincial, federal, to international.

Contractors, subcontractors, and suppliers

There are times when organizations don’t have the expertise or resources available in-house, and work is farmed out to contractors or subcontractors. This can be a construction management foreman, network consultant, electrician, carpenter, architect, or anyone who is not an employee. Managing contractors or suppliers requires many of the skills needed to manage full-time project team members.

Any number of problems can arise with contractors or subcontractors:

• Quality of the work
• Cost overruns
• Schedule slippage

Many projects depend on goods provided by outside suppliers. This is true for example of construction projects where lumber, nails, bricks, and mortar come from outside suppliers. If the supplied goods are delivered late or are in short supply or of poor quality or if the price is greater than originally quoted, the project may suffer.

Depending on the project, managing contractor and supplier relationships can consume more than half of the project manager’s time. It is not purely intuitive; it involves a sophisticated skill set that includes managing conflicts, negotiating, and other interpersonal skills.

Let’s revise who are your stakeholders in the following video and how these can be managed.

(Click the image below to access the video)

Politics of Projects

Many times, project stakeholders have conflicting interests. It’s the project manager’s responsibility to understand these conflicts and try to resolve them. It’s also the project manager’s responsibility to manage stakeholder expectations. Be certain to identify and meet with all key stakeholders early in the project to understand all their needs and constraints.

Project managers are somewhat like politicians. Typically, they are not inherently powerful or capable of imposing their will directly on coworkers, subcontractors, and suppliers. Like politicians, if they are to get their way, they have to exercise influence effectively over others. On projects, project managers have direct control over very few things; therefore their ability to influence others – to be a good politician – may be very important

Here are a few steps a good project politician should follow. However, a good rule is that when in doubt, stakeholder conflicts should always be resolved in favour of the customer.

Assess the environment

Identify all the relevant stakeholders. Because any of these stakeholders could derail the project, you need to consider their particular interest in the project.

• Once all relevant stakeholders are identified, try to determine where the power lies.
• In the vast cast of characters, who counts most?
• Whose actions will have the greatest impact?

Identify goals

After determining who the stakeholders are, identify their goals.

• What is it that drives them?
• What is each after?
• Are there any hidden agendas or goals that are not openly articulated?
• What are the goals of the stakeholders who hold the power? These deserve special attention.

Define the problem

• The facts that constitute the problem should be isolated and closely examined.
• The question “What is the real situation?” should be raised over and over.

Culture of Stakeholders

When project stakeholders do not share a common culture, project management must adapt its organizations and work processes to cope with cultural differences. The following are three major aspects of cultural difference that can affect a project:

1. Communications
2. Negotiations
3. Decision making

Communication is perhaps the most visible manifestation of culture. Project managers encounter cultural differences in communication in language, context, and candour.

Language is clearly the greatest barrier to communication. When project stakeholders do not share the same language, communication slows down and is often filtered to share only information that is deemed critical.

The barrier to communication can influence project execution where quick and accurate exchange of ideas and information is critical.

The interpretation of information reflects the extent that context and candour influence cultural expressions of ideas and understanding of information. In some cultures, an affirmative answer to a question does not always mean yes. The cultural influence can create confusion on a project where project stakeholders represent more than one culture.

Example: Culture Affects Communication in Mumbai

A project management consultant from Australia was asked to evaluate the effectiveness of an Australian project management team executing a project in Mumbai, India. The project team reported that the project was on schedule and within budget. After a project review meeting where each of the engineering leads reported that the design of the project was on schedule, the consultant began informal discussions with individual engineers and began to discover that several critical aspects of the project were behind schedule. Without a mitigating strategy, the project would miss a critical window in the weather between monsoon seasons. The information on the project flowed through a cultural expectation to provide positive information. The project was eventually canceled by the Australian organisation when the market and political risks increased.

Not all cultural differences are related to international projects. Corporate cultures and even regional differences can create cultural confusion on a project.

Managing Stakeholders

Often there is more than one major stakeholder in the project. An increase in the number of stakeholders adds stress to the project and influences the project’s complexity level. The business or emotional investment of the stakeholder in the project and the ability of the stakeholder to influence the project outcomes or execution approach will also influence the stakeholder complexity of the project. In addition to the number of stakeholders and their level of investment, the degree to which the project stakeholders agree or disagree  influences the project’s complexity.

A small commercial construction project will typically have several stakeholders. All the building permitting agencies, environmental agencies, and labour and safety agencies have an interest in the project and can influence the execution plan of the project. The neighbours will have an interest in the architectural appeal, the noise, and the purpose of the building.

Example: Tobacco Plant in Malaysia

A China tobacco company chartered a project team to design and build a plant to produce the raw materials for the production of sweet cigars. The plant was to be built in Malaysia a few years after an accident that killed several local Malaysian and involved a different China company in a different market sector.  However, when the company announced the new project and began to break ground, the community backlash was so strong that the project was shut down. A highly involved stakeholder can significantly influence your project.

Example: Wind Turbine on a College Campus

A small college in South Carolina, USA won a competitive grant to erect and operate a wind turbine on campus. The engineering department submitted the grant as a demonstration project for engineering students to expose students to wind technology. The campus facilities department found only one location for the wind turbine that would not disrupt the flow of traffic on campus. The engineering department found that location unacceptable for students who had to maintain the wind turbine. The county construction permitting department had no policies for permitting a wind turbine and would not provide a building permit. The college had to go to the county council and get an exception to county rules. The marketing department wanted the wind turbine placed in a highly visible location to promote the innovative approach of the college.

Each of the college’s stakeholders had a legitimate interest in the location of the wind turbine. The number of stakeholders on the project, multiplied by their passion for the subject and the lack of agreement on the location, increased the complexity of the project. Significant time and resources of a project will be dedicated to identifying, understanding, and managing client expectations.

Example: Stakeholders and a Highway Bypass Project

The Department of Highways chartered a project to upgrade a number of new road connections that crossed the city of Adelaide, Australia. The closing of key roads severely impacted traffic congestion, including access to one of the largest childcare centres. The contract included provisions for minimizing the impact on the traffic and communities near the construction areas. This provision allowed businesses or interested parties to review the project schedule and make suggestions that would lessen the impact of the construction. The project leadership invested significant time and resources in developing alignment among the various political stakeholders on the project approach and schedule.

Relationship Building Tips

Take the time to identify all stakeholders before starting a new project. Include those who are impacted by the project, as well as groups with the ability to impact the project. Then, begin the process of building strong relationships with each one using the following method.

• Analyse stakeholders: Conduct a stakeholder analysis, or an assessment of a project’s key participants, and how the project will affect their problems and needs. Identify their individual characteristics and interests. Find out what motivates them, as well as what provokes them. Define roles and level of participation, and determine if there are conflicts of interest among groups of stakeholders.
• Assess influence: Measure the degree to which stakeholders can influence the project. The more influential a stakeholder is, the more a project manager will need their support. Think about the question, “What’s in it for them?” when considering stakeholders. Knowing what each stakeholder needs or wants from the project will enable the project manager to gauge his or her level of support. And remember to balance support against influence. Is it more important to have strong support from a stakeholder with little influence, or lukewarm support from one with a high level of influence?
• Understand their expectations: Nail down stakeholders’ specific expectations. Ask for clarification when needed to be sure they are completely understood.
• Define “success”: Every stakeholder may have a different idea of what project success looks like. Discovering this at the end of the project is a formula for failure. Gather definitions up front and include them in the objectives to help ensure that all stakeholders will be supportive of the final outcomes.
• Keep stakeholders involved: Don’t just report to stakeholders. Ask for their input. Get to know them better by scheduling time for coffee, lunch, or quick meetings. Measure each stakeholder’s capacity to participate and honour time constraints.
• Keep stakeholders informed: Send regular status updates. Daily may be too much; monthly is not enough. One update per week is usually about right. Hold project meetings as required, but don’t let too much time pass between meetings. Be sure to answer stakeholders’ questions and emails promptly. Regular communication is always appreciated – and may even soften the blow when you have bad news to share.

These are the basics of building strong stakeholder relationships. But as in any relationship, there are subtleties that every successful project manager understands – such as learning the differences between and relating well to different types stakeholders.

How to Relate to Different Types of Stakeholders

By conducting a stakeholder analysis, project managers can gather enough information on which to build strong relationships – regardless of the differences between them. For example, the needs and wants of a director of marketing will be different from those of a chief information officer. Therefore, the project manager’s engagement with each will need to be different as well.

Stakeholders with financial concerns will need to know the potential return of the project’s outcomes. Others will support projects if there is sound evidence of their value to improving operations, boosting market share, increasing production, or meeting other company objectives.

Keep each stakeholder’s expectations and needs in mind throughout each conversation, report or email, no matter how casual or formal the communication may be. Remember that the company’s interests are more important than any individual’s – yours or a stakeholder’s. When forced to choose between them, put the company’s needs first.

No matter what their needs or wants, all stakeholders will respect the project manager who:

• Is always honest, even when telling them something they don’t want to hear
• Takes ownership of the project
• Is predictable and reliable
• Stands by his or her decisions
• Takes accountability for mistakes

Supportive Stakeholders are Essential to Project Success

Achieving a project’s objectives takes a focused, well-organized project manager who can engage with a committed team and gain the support of all stakeholders. Building strong, trusting relationships with interested parties from the start can make the difference between project success and failure.

Tools to Help Stakeholder Management

There are many project decelerators, among them lack of stakeholder support. Whether the stakeholders support your project or not, if they are important to your project, you must secure their support. How do you do that?

First, you must identify who your stakeholders are. Just because they are important in the organization does not necessarily mean they are important to your project. Just because they think they are important does not mean they are. Just because they don’t think they need to be involved does not mean they do not have to be. The typical suspects: your manager, your manager’s manager, your client, your client’s manager, any SME (subject matter expert) whose involvement you need, and the board reviewing and approving your project. Note that in some situations there are people who think they are stakeholders. From your perspective they may not be, but be careful how you handle them. They could be influential with those who have the power to impact your project. Do not dismiss them out of hand.

Second, you need to determine what power they have and what their intentions toward your project are. Do they have the power to have an impact on your project? Do they support or oppose you? What strategies do you follow with them?

Third, what’s the relationship among stakeholders? Can you improve your project’s chances by working with those who support you to improve the views of those who oppose you? The table below summarizes the options based on an assessment of your stakeholders’ potential for cooperation and potential for threat.

Now that you have this information, you can complete a stakeholder analysis template in the table below that will help you define your strategies to improve their support:

Finally, a key piece of your stakeholder management efforts is constant communication to your stakeholders. Using the information developed above, you should develop a communications plan that secures your stakeholders’ support. The template in the Figure below can be used.