Stakeholder management

Almost any person or organization with an interest in a project can be termed a stakeholder.

The type and interest of a stakeholder are of great importance to a project manager since they enable him or her to use these to the greatest benefit of the project. The process of listing, classifying and assessing the influence of these stakeholders is termed stakeholder analysis. Stakeholders can be divided into two main groups:

1 direct (or primary) stakeholders, and

2 indirect (or secondary) stakeholders.

1 Direct stakeholders

This group is made up, as the name implies, of all those directly associated or involved in the planning, administration or execution of the project. These include the client, project sponsor, project manager, members of the project team, technical and financial services providers, internal or external consultants, material and equipment suppliers, site personnel, contractors and subcontractors as well as end users. In other words, people or organizations directly involved in all or some of the various phases of the project.

2 Indirect stakeholders

This group covers all those indirectly associated with the project such as internal managers of the organization and support staff not directly involved in the project including the HR department, accounts department, secretariat, senior management levels not directly responsible for the project, and last but not least the families of the project manager and team members.

A sub-section of indirect stakeholders are those representing the regulatory authorities such as national and local government, public utilities, licensing and inspecting organizations, technical institutions, professional bodies, and personal interest groups such as stockholders, labour unions and pressure groups. Each of these groups can contain

1 positive stakeholders who support the aims and objectives of the project

2 negative stakeholders who do not support the project and do not wish it to proceed.

Direct stakeholders mainly consist of positive stakeholders as they are the ones concerned with the design and implementation of the project with the object of completing it within the specified parameters of time, cost and quality/performance. They therefore include the sponsor, project manager and the project design, construction/installation teams. This group could also have negative stakeholders such as employees of the end user, who would prefer to retain the existing facility because the new installation might result in relocation or even redundancy.

The indirect group contains probably the greatest number of potential negative stakeholders. These could include environmental pressure groups, trade (labour) unions, local residents' associations, and even politicians (usually in opposition) who object to the project on principle or on environmental grounds.

Local residents' associations can be either positive or negative. For example when it has been decided to build a by-pass road around a town, the residents in the town may well be in favour to reduce traffic congestion in the town centre, while residents in the outer villages whose environment will be degraded by additional noise and pollution will undoubtedly protest and will try to stop the road being constructed. It is these pressure groups who cause the greatest problems to the project manager.

In some situations, statutory/regulatory authorities or even government agencies who have the power to issue or withhold permits, access, wayleaves or other consents can be considered as negative stakeholders.

Figure 7.1 shows some of the types of people or organizations in the different groups and subgroups.

Although most negative stakeholders are clearly disruptive and tend to hamper progress, often in ingenious ways, they must nevertheless be given due consideration and afforded the opportunity to state their case. Whether it is possible to change their attitude by debate or argument depends on the strength of their convictions and the persuasiveness of the project supporters.

Diplomacy and tact are essential when negotiating with potentially disruptive organizations and it is highly advisable to enlist experts to participate in the discussion process. Most large organizations employ labour and public relation experts as well as lawyers well versed in methods for dealing with difficult stakeholders. Their services can be of enormous help to the project manager.

It can be seen therefore that for the project manager to be able to take advantage of the positive contributions of stakeholders and counter the negative ones most effectively, a detailed analysis must be carried out setting out the interests of each positive and negative stakeholder, the impact of these interests on the project, the probability of occurrence, particularly in the case of action by negative stakeholders and the actions, or reactions, to be taken.

Figure 7.2 shows how this information can best be presented for analysis

The Stakeholder column should contain the name of the organization and the main person or contact involved.

Positive stakeholders

Negative stakeholders

Direct

Indirect

Indirect

Internal

External

Internal

External

Internal

External

Sponsor

Client

Management

Stockholders

Disgruntled

Disgruntled end

employees

user

Project

Contractors

Accounts Dept

Banks

Pressure groups

manager

Suppliers

HR dept

Insurers

Unions

Consultants

Tech. depts

Utilities

Press (media)

Project

Families

Local

Competitors

team

authorities

Politicians

Project

Government

Residents'

office

agencies

associations

Figure 7.1 Stakeholder groups

Stakeholder

Interest

Influence impact

Probability

Action to maximize support

Reaction to minimize disruption

Figure 7.2 Stakeholder analysis

Figure 7.2 Stakeholder analysis

The Interest column states whether it is + or - and whether it is financial, technical, environmental, organizational, commercial, political, etc.

The Influence/impact column sets out the possible effect of stakeholder interference, which may be helpful or disruptive. This influence could affect the cost, time or performance criteria of the project. Clearly stakeholders with financial muscle must be of particular interest.

The Probability column can only be completed following a cursory risk analysis based on experience and other techniques such as brainstorming, Delphi and historical surveys.

The Action column relates to positive stakeholders and lists the best ways to generate support such as maintaining good personal relations, invitations to certain meetings, updated information, etc.

The Reaction column sets out the tactics to assuage unfounded fears, kill malicious rumours and minimize physical disruption.

The key to all these procedures is a good communication and intelligence-gathering system.

Project Management Made Easy

Project Management Made Easy

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.

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