Stakeholders are persons and organizations such as customers, sponsors, performing organization and the public, who are actively involved in the project or those whose interests may be positively or negatively affected by the execution, completion, or cancellation of the project. Stakeholders may also exert influence over the project and its deliverables. The project management team must identify both internal and external stakeholders in order to determine the requirements and expectations of all parties involved. Furthermore, the project manager must manage the influence of the various stakeholders in relation to the project requirements to ensure a successful outcome. Figure 2-6 illustrates the relationship between the project, the project team, and other common stakeholders.
Figure 2-6. The Relationship Between Stakeholders and the Project
Stakeholders have varying ievels of responsibility and authority when participating on a project, and these can change over the course of the project's life cycle. Their responsibility and authority may range from occasional contributions in surveys and focus groups to full project sponsorship, which inciudes providing financial and political support. Stakeholders can have an adverse impact on the project objectives. Likewise, project managers who ignore stakeholders can expect a negative impact on projcct outcomes.
Stakeholder identification can be difficult at times. For instance, it could be argued that an assembly-line worker whose future employment depends on the outcome of a new product-design project is a stakeholder. Identifying stakeholders and understanding their relative degree of influence on a project is critical. Failure to do so can extend the timeline and raise costs substantially. An example is late recognition that the legal department is a significant stakeholder; this could cause delays and increase expenses because of the additional documentation requirements necessary to carry out projcct tasks.
A projcct can have both positive and negative stakeholders. Positive stakeholders arc those who would normally benefit from a successful outcome from the projcct, while negative stakeholders are those who perceive 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 sec economic benefit to the community. Conversely, environmental groups could be negative stakeholders if they view the projcct as harmful to the environment. In the case of positive stakeholders, their interests are best served by helping the project succeed. The interests of negative stakeholders arc served by impeding the project's progress. Overlooking negative stakeholders can result in an increased iikclihood of failure. An important part of a project manager's responsibility is to manage stakeholder expectations. This can be difficult because stakeholders often have very different or conflicting objectives. Part of the project manager's responsibility is to balance these interests and ensure that the project team interacts with stakeholders in a professional and cooperative manner.
The customers/users are the persons or organizations that will use the project's product or service or result. Customers/users may be internal or external. There may also be multiple layers of customers. For example, the customers for a new pharmaceutical product can include the doctors who prescribe it, the patients who use it, and the insurers who pay for it. In some application areas, customers and users are synonymous, while in others, customers refer to the entity acquiring the project's product and users refer to those who will directly utilize the project's product.
These customer/users are key sources of information for the project team because it is typically for customers or end users that the project has been created. The customers/users therefore play a significant role in determining the scope of the project, influencing how the project is carried out, and testing the product or service ultimately delivered by the project team. As a result of this close partnership, the customers/users carry significant responsibility for providing accurate and timely data to the project team as well as identifying risks and responding to other issues that arise. Customers and users deal primarily with the project team, but they may also have direct involvement with vendors, business partners, or other operational stakeholders involved with the work necessary to complete the project deliverable.
The sponsor is the person or group that provides the financial resources, in cash or in kind, for the project. When a project is first conceived, the person or group acting as the sponsor champions the cause of the project. This includes serving as spokesperson to higher levels of management to garner support throughout the organization and promote the benefits that the project will bring. The sponsor leads the project through the engagement or selection process until formally authorized, and therefore plays a significant role in the development of the initial scope and charter. Another key attribute of the sponsor is to provide financial resources, in cash or in kind, for the project.
Sponsors have a major stake in the project's success, and therefore, at times, may take an active role on the project team. For issues that are beyond the control of the project manager, the sponsor serves as an escalation path. The sponsor may also be involved in other important issues such as authorizing changes in scope, phase-end reviews, and go/no-go decisions when risks are particularly high.
The sponsor deals directly, and most often, with the project manager. For some projects, the sponsor may also interact with the project team and other key stakeholders, particularly when resolving issues that have been escalated. Some projects have multiple sponsors who fulfill this role.
2.3.3 Portfolio Managers/Portfolio Review Board
Portfolio managers are responsible for the high-level governance of a collection of projects or programs, which may or may not be interdependent. Portfolio managers could receive direction from the organization's business strategy or from the guidance of a director within the organization. Portfolio review boards are a committee usually made up of the organization's executives who act as a project selection panel. They review each project for its return on investment, the value of the project, risks associated with taking on the project, and other attributes of the project. Portfolio review boards are not essential in every organization but, when used, provide additional support for project selection and prioritization. Portfolio review boards can also assist with responding to Request for Proposals (RFPs), tenders, or other opportunities that are developed externally.
Program managers are responsible for managing multiple projects when projects gain some measure of benefit by being managed collectively. The program manager ensures that all related projects are integrated, on schedule, on budget, and ultimately serve the common goal for which the program was created. The program manager interacts with each project manager to provide support and guidance on the individual projects.
A project management office (PMO) organizes and manages control over projects within an organization, providing a uniform approach regardless of the discipline, technology, or purpose. The PMO can be a stakeholder if it has direct or indirect responsibility for the outcome of the project. The PMO can provide but is not limited to:
• Administrative support services such as policies, methodology and templates,
• Mentoring to project managers,
• Project support, guidance and training on how to manage projects and the use of tools,
• Resource alignment of project staff, or
• Centralized communication among project managers, project sponsors, managers, and other stakeholders.
The project manager is the person assigned by the performing organization to achieve the project objectives. This is a challenging, high-profile role with significant responsibility and constantly shifting priorities. It requires flexibility, good judgment, and strong negotiating skills. The project manager must be able to understand project detail, but manage from the big-picture perspective. As the person responsible for the success of the project, the project manager is in charge of all aspects of the project including, but not limited to:
• Developing the project plan and all related component plans,
• Keeping the project on track in terms of budget and schedule,
• Identifying, monitoring, and responding to risk, or
• Providing accurate and timely reporting of project metrics.
The project manager is the lead person responsible for interfacing with all stakeholders, particularly the project sponsor, project team, and other key stakeholders. As shown in Figure 26, the project manager occupies the center of the interactions between stakeholders and the project itself.
A project team is comprised of the project manager, project management team, and other team members who carry out the work but who are not necessarily involved with management of the project. On some projects, the sponsor may also be part of the project team.
A properly functioning project team can mean the difference between a highly successful project and one that fails. While a team should be staffed with people who have the skills and talents necessary to carry out their respective roles, an effective team is one that demonstrates the ability to work well together and accept team members' strengths and weaknesses. This requires a willingness to communicate clearly, accurately, and fully and to commit to quality work and meeting deadlines. Individual team members must also be aware of how their work affects the work of other team members.
Functional managers are individuals who play a management role within an administrative or functional area of the business, such as human resources, finance, accounting, or procurement. They are assigned their own permanent staff to carry out the ongoing work, and they have a clear directive to manage all tasks within their functional area of responsibility.
A project manager may need to work with a functional manager to make use of the services the functional group typically provides. For instance, a project manager may deal with a human resources manager to hire a new employee or a contractor with the right skill set for carrying out necessary project tasks. Likewise, a functional manager in finance may be a resource regarding funding of the project and other budgetary details.
Functional managers deal most often with the project manager or other members of the project management team. Functional managers typically have little interaction with other stakeholders with regard to project work.
Operational managers are individuals who have a management role in a core operational area of the business, such as research and development, design, manufacturing, provisioning, testing, or repair. Unlike functional management, these groups deal directly with producing and maintaining the saleable products or services of the enterprise. Management from these groups plays an important role, because resources with the appropriate technical expertise may need to be borrowed for purposes of the project. For example, a project to install a nationwide telecommunications network might make use of staff from the ordering department, technical specialists from the design group, installers from field operations, and testers from service implementation. Depending upon the project, these operational resources may provide full-time dedicated employees to the project, provide part-time assistance, or perform project activities on a routine basis along with non-project work.
After a project is completed, operations management sometimes provides long-term support. In these situations, a formal handoff occurs to pass technical project documentation and other permanent records into the hands of the appropriate operational management entity.
2.3.10 Vendors/Business Partners
Vendors, also called suppliers or contractors, are external companies that enter into a contractual agreement to provide components or services necessary for the project. Business partners are also external companies, but they have a special relationship with the enterprise, sometimes attained through a certification process. Business partners provide specialized expertise or fill a specified role such as installation, customization, training, or support. When the project work is contracted almost entirely to a series of vendors and business partners the resulting group is referred to as a network organization.
As independent contractors, vendors/business partners often deal with the project management team and customers/users. They may also interface with project team members from operations who are involved with tasks related to the contracted product or service. It is the responsibility of vendors/business partners to carry out all contracted duties with the same standards of quality and professionalism as the enterprise itself.
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What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.