PROJECT STAKEHOLDER ANALYSIS

3.1Introduction:
Project managers are not completely free to set project objectives: they have different groups
of stakeholders to consider.

Definition:

 Project stakeholders are those individuals or groups that, potentially, have an interest
in a given project.
 Stakeholders are those who can influence a given project and who in turn can be
influenced by the project activities.
 Stakeholders are persons or organizations that are actively involved in a given project
or whose interests may be negatively or positively affected by the performance or
completion of the project.

3.2 Stakeholder Analysis:

This analysis is carried out focusing on the following:

 Identifying the different stakeholders: Different projects have different sets of

stakeholders. It should be noted also that different situations create different sets of
stakeholders.
 What interests do they have in a given project?
 What power do they possess?
 How should the project management respond to the stakeholder demands?

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 The reason is that the project has to use resources to meet stakeholder demands and
resources are scarce in relation to the demands and insufficient to meet stakeholder
demands.

3.3 Classification of stakeholders:

A) Stakeholders can be within a project, connected to the project or external to the project.

The broad types of stakeholders in a project are:

 Internal stakeholders(e.g. project employees, management)

 Connected stakeholders(e.g project shareholders,customers,suppliers,financiers)
 External stakeholders(e.g. the community,government,pressure groups)

B) Primary & Secondary Stakeholders:

Primary stakeholders: These are stakeholders who have a contractual relationship with the
project. This includes internal and connected stakeholders.

Secondary stakeholders: These have no contractual relationship with the project. This
includes the external stakeholders.

3.4 Examples of project stakeholders:

1. Customers/users: These are persons or organizations that will use the project’s
product, service or output. Customers/users can be internal and/ or external to the
organization.
2. Sponsors: A sponsor is a person or group that provides the financial resources, in cash
or in kind, for the project. When a project is first conceived, the sponsor champions the
project. The sponsor plays a key role in the development of the initial scope and
charter. The sponsor may be involved in important issues like authorizing changes in
scope, go/no-go decisions when risks are particularly high.
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 3. Management Team: This comprises the following:
i) Program Managers: These are responsible for managing projects in a coordinated way
to obtain benefits and control not available from managing them individually. Program
managers interact with each project manager to provide support and guidance on
individual projects.
ii) Project Managers: These are assigned by the performing organization to achieve project
objectives. This is a challenging, high-profile role with significant responsibility and shifting
priorities. It requires flexibility, good judgement, strong negotiation skills, leadership and
knowledge of project management practices. The project manager is the lead person
responsible for communicating with all stakeholders particularly the sponsor, project team and
other stakeholders. The project manager should be able to understand project detail, but
manage from the overall perspective. The project manager is responsible all aspects of a
project, including but not limited to :
 Developing the project management plan and all related component plans.
 Keeping the project on track in terms of time and budget.
 Identifying,monitoring,and responding to risk
 Providing accurate and timely reporting of project metrics
iii) Functional Managers: These are individuals who play a management role within an
administrative or functional area of the project e.g. human resources, finance, accounting,
procurement.
iv) Operations Management: These are individuals who have a management role in the core
area of the project e.g. research & development, design, manufacturing, testing or
maintenance. Unlike functional managers, these managers deal directly with the production
and maintaining the saleable products and services of the enterprise.

4. Project team: This is comprised of the project manager, project management team and
other team members who carry out the work but are not particularly involved in the
management of the project. The team is made up of members from different groups with the
knowledge and skills required to carry out project work.

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5. Sellers/business partners: Sellers also called vendors, suppliers or contractors are external
companies that enter into contractual agreements to provide components or services
necessary for the project.
Business partners are also external to the organization but have a special relationship with
the organization sometimes obtained through a certification process. They provide specialized
expertise or fill a specialized role e.g. installation, training or support.

3.5 Stakeholder Interests:

A)Internal stakeholders Interests to defend Response risk
 Managers  Jobs/careers  Industrial action
 Employees  Money  Negative power to
 Promotion impede
 Benefits implementation
 Satisfaction  Resignation
B)Connected Stakeholders: Interests to defend Response risk

 Shareholders  Increased  Sell shares

profitability  Boot out
 Increased market management
share and growth
 Reduced risk
 Bankers  Security of loans  Denial of credit
 Adherence to loan  Higher interest
agreements charges

 Suppliers  Profitable sales  Refusal of credit

 Payment for goods  Court action
supplied  Wind down
 Long term relationships

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 relationship
 Customers  Goods as promised  Buy elsewhere
 Future benefits  Sue

C) External stakeholders Interests to defend Response risk

 Government  Jobs  Tax increases
 Training  Regulation
 Tax  Legal action
 Interest/pressure  Rights  Publicity
groups  Pollution  Direct action
 Sabotage
 Pressure on
government
 Professional bodies  Members’ ethics  Imposition of ethical
standards.
 Community

3.6 Managing Stakeholders:

Why is it important to manage stakeholders?
Stakeholders may also exert influence over the project, its deliverables and the project team
members. The project management must identify both internal and external stakeholders in
order to determine project requirements and expectations of all parties involved.

Furthermore, the project manager must manage the influence of various stakeholders in
relation to project requirements to ensure a successful outcome.

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Stakeholders have varying levels of responsibility and authority when participating on a
project and these change over the course of the project life cycle. Stakeholders can have an
adverse impact on project objectives.

Stakeholders’ identification is a continuous and can be difficult. Understanding stakeholders

and their relative degree of influence on the project is critical because failure to do so can
extend the timeline and raise costs substantially.

Another part of a project manager’s responsibility is to manage stakeholder expectations. This

can be difficult because stakeholders have very different or conflicting objectives.eg project
employees may want a higher bonus whereas shareholders are interested in increased
profits. Therefore, more bonuses to project employees mean less profit. Part of the project
manager’s responsibility is to balance these interests and ensure that the project team
interacts with the stakeholders in a professional and cooperative manner.

3.7 How can a project manager manage

stakeholders?
Mendelow advanced a model which can be used to manage stakeholders, and this is called
stakeholder mapping. This model is based on 2 dimensions i.e.:

 Power
 Level of interest

Mendelow suggests that stakeholders may be positioned on a matrix whose axes are power
held and the likelihood of showing an interest in the project activities. When mapping, identify
the stakeholders in terms of the level of interest and the amount of power they possess.
These factors will help define the type of relationship the project should seek with its
stakeholders.

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 Low Level of Interest High

High

C D
Power

A B

Low

3.7.1 Responses:
Mendelow suggests responses to each group ie; Minimal effort (Quadrant A), Keep informed
(Quadrant B), Keep satisfied (C), Key players (D).

Explanation:

1. Minimal Effort: As a project manager, you do not need to bother too much with this
group of stakeholders. They can even be overlooked for they possess low power and
interest.
2. Keep Informed: These have to be kept informed for they have high interest. Though
they have low power, but by keeping them informed will prevent them from lobbying
support from groups with more power e.g. NGOs can get support from politicians. The
same applies to community representatives.
3. Keep satisfied: This means that this group should not be antagonized. If they are
antagonized, they move to Quadrant D i.e. if antagonized, they will want to be very
interested.
4. Key players: These are found in segment D and may even participate in decision-
making. An example would be a major customer.

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Summary

Stakeholder analysis in project management is the process of assessing a decision's impact

on relevant parties. This information is used to assess how the interests of those stakeholders

should be addressed in a project plan, policy, program, or other action. Stakeholder analysis

is a key part of stakeholder management. A stakeholder analysis of an issue consists of

weighing and balancing all of the competing demands on a firm by each of those who have a

claim on it, in order to arrive at the firm's obligation in a particular case. A stakeholder analysis

does not preclude the interests of the stakeholders overriding the interests of the other

stakeholders affected, but it ensures that all affected will be considered.

Stakeholder analysis is frequently used during the preparation phase of a project to assess

the attitudes of the stakeholders regarding the potential changes. Stakeholder analysis can be

done once or on a regular basis to track changes in stakeholder attitudes over time.

Benefits of Stakeholder Analysis

Stakeholder analysis helps with the identification of the following

 Stakeholders' interests

 Mechanisms to influence other stakeholders

 Potential risks

 Key people to be informed about the project during the execution phase

 Negative stakeholders as well as their adverse effects on the project

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