PROJECT STAKEHOLDER

MANAGEMENT

Lecture # 3
 Project stakeholders are primarily individuals, groups or
communities of individuals and/or organizational entities who,
broadly speaking, have – or who believe they have – a “stake“
(interest) in the project or projects which are being undertaken, or
which may be undertaken at a future point in time.

The PMI defines stakeholders as “A stakeholder is an individual,

group, or organization who may affect, be affected by, or perceive itself
to be affected by a decision, activity, or outcome of a project.
Stakeholders may be actively involved in the project or have interests
that may be positively or negatively affected by the performance or
completion of the project. “.
[Project Management Body of Knowledge, 5th Edition 2013, p.29] 3
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 Stakeholders must be “managed“ throughout a project so that
their ideas and concerns are taken into consideration, they can
contribute to the project, they understand the project decisions
taken and accept them more readily and they will be project
supporters instead of project adversaries
 Depending on the nature of the project, the stakeholders can, at
one extreme, be very small in number and easily identifiable, or
they can be numerous, highly dispersed, and difficult to identify.
 Terms commonly used in the project management literature to
denote and differentiate stakeholders on a project are “Primary
Stakeholders“ and “Secondary Stakeholders“, “Internal and
External Stakeholders“ and “Key Stakeholders“

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 According to Cleland/Ireland [Strategic Design and
Implementation, 2002]: „Project primary stake-
holders are those individuals or organizational
entities who or which have a contractual or legal
Project Stakeholders

obligation to the project team and have the

responsibility and authority to manage and commit
resources according to schedule, cost and techni-
Primary Stakeholders cal performance objectives.“

Using Cleland/Ireland‘s definition of primary stake-

holders as a reference, project secondary stakehol-
ders are those individuals, groups of individuals and
organizational entities [and, as we shall see, commu-
nities and even countries] who or which have no
formal contractual relationship to the project in
question, but who/which believe they have a stake in
it because it can affect them in one way or other.
Secondary Stakeholders
Development, Financing and Implementing
Institutions may have a different perception as to
who constitute project’s stakeholders.

Example: According to the African Development Bank’s

Handbook on Stakeholder Consultation and Participation in
ADB Operations, Stakeholders are people/communities
who may - directly or indirectly, positively or negatively –
affect or be affected by the outcomes of projects or
programmes
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Primary Stakeholders are the beneficiaries of a development
intervention or those directly affected (positively or
negatively) by it. They include local populations (individuals
and community-based organizations) in the project/program
area, poor and marginalized groups who have traditionally
been excluded from participating in development efforts.

Secondary Stakeholders are those who can influence a

development intervention or are indirectly affected by it. They
include the borrowing government, line ministry and project
staff, implementing agencies, local governments, civil society
organizations, private sector firms, the Bank and its
shareholders and other development agencies.

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 Corporate Shareholders Project Team

Senior Management Project Partners

Project Customers
Project Sponsor
& Users

Primary Stakeholders Project Steering Project Input Suppliers

Committee & Vendors (ext.)

Project Management Project Contractors /

Office Subcontractors

Primary Stakeholders can be

internal or external to the Programme Manager Project Consultants
Project-implementing
organization
Functional /
Project Financers (ext.)
Resource Managers
Managing all these stake-
holders is challenging but
Local, State and Federal
routine for the project Project Manager
Government Entities
manager and project team

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Secondary Stakeholders
Secondary Stakeholders are
external to the
project organization
Managing secondary
stakeholders can be especially
challenging for the project
manager and project team
Competitors Intervenor Groups
Consumer Interest
Environmentalists
Groups
Civic and Professional
Local Communities
Organizations
Political Organizations Private Individuals
Local, State and Federal
Tourists
Government Entities
Media The General Population
Countries, Regions,
Academia & Researchers
World Community
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Senior Management is
ultimately responsible for their
organization’s performance.
As projects are the “building
blocks” in an organizations
strategy towards achieving its
goals, objectives and mission,
Senior Managers must keep a
close eye on them.
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Sometimes called the
“Project Champion”,
the project sponsor
performs a bridging
function on projects
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Steering Committees are
recommended on projects
which are characterized
by a relatively high
degree of complexity,
visibility, and risk, and
entail high cost and
duration, i.e., as are
usually medium to large
projects.

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Functional / Resource
Managers exert great
influence over projects,
especially in a matrix
environment.

Dealing with them often

requires good negotiation
and interpersonal skills on
the Project Manager’s
part.
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The Project Leader /
Manager is (Usually)
Ultimately Responsible
for the Project‘s
Success or Failure!

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Project teams can be
cross-functional, self
managed and virtual.
Through team effort and
collaboration, synergy is
evolved which is the
driving force behind the
project.
Project Contractors
often must contend
with many challenges
and unforeseen
problems during project
implementation!

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The Project Supplier is
the prime source of
inputs which are used on
large projects.

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Project Consultants
are indispensable for
many projects.

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Project Consultants
are indispensable
for many projects.

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Also called the “Project
Owner”, the customer is the
ultimate recipient of the
project output or result.

Customer satisfaction is a
measure of the project’s
success.
 Project Stakeholder Management

1 Understand the Project Context

2 Identify All Project Stakeholders

update
3 Analyze and Map the Project Stakeholders

revise
4 Design Stakeholders Engagement Strategy
Project
revise
Stakeholder
5 Implement Stakeholders Engagement Strategy
Information
System

Project Completion

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High
On projects, the attention
given to managing the
stakeholders will vary,
Project Importance

depending on the type of

stakeholder.

It is reasonable to assume that

as a project’s importance
increases, more care needs to
be exercised by the project
implementers in “managing” the
project stakeholders otherwise
the project goal and the project
Low investment may be jeopardized.

Low Focus on Effectively Managing the Project Stakeholders High

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High

Complex, capital-intensive
New Product Development and high-visibility projects
No. of Project Stakeholders

projects such as dams, roads, power

stations and pipelines.

Projects being imple-

Some social development
mented in and by
projects undertaken by
individual departments of
NGO’s
organizations.

Low

Level of Heterogenity of the Project Stakeholders and Complexity of

Low High
Managing Them

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 Brainstorming Survey

Ask the Consultant Ask Experienced Team Members

Organization‘s Existing
Ask other Project Managers
Documentation

Locals Case Studies

Other Organziation‘s Stakeholder

Website
Directory

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Stakeholder Analysis is a useful and frequently used tool
by project managers for identifying, understanding and
planning for engaging the stakeholders on a project for
success of the same.

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Power Factor is the measurable degree to which
stakeholders can have a positive or negative impact on a
project

On any given project, some stakeholders may be quite

powerful and able to intervene in it “positively“ by
providing resources and support to the project manager
and team or they may intervene in it “negatively“, causing a
delay or cost increase in the project, or a change in its
scope, or at worst causing its abandonment

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There are many dimensions of “power factor”. For example:
 Formal authority and position in a hierarchy
 Control over decision-making processes
 Control over coalition-building processes
 Control over information
 Control over incentives, rewards and punishments
 Control over financial and material resources
 Control over the environment (e.g. physical, social, technological)
 Networks (individual, group, organizations)
 Knowledge, skills and experience
 Personality Traits
 Inter-personal skills (communication, motivation, inspiration)
 Ability to influence perceptions of individuals, groups, general
public

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 High

More time,
effort and
Power of Stakeholder

cost must be
spent here
Moderate
Low

Importance of Developing and Implementing Effective Project

Low Stakeholder Engagement Strategies High
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 Identify Project Stakeholders

PHASE 1:
Collect Information on Project Stakeholders
STAKEHOLDER ANALYSIS

Identify and Analyze the Interests PHASE 2:

and Concerns the Stakeholders
have on the Project STAKEHOLDER ANALYSIS

Evaluate the Influence the Stakeholders PHASE 3:

may have on the Project
STAKEHOLDER ANALYSIS

Design and Implement Project Stakeholder

Engagement Strategies
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 Identify Project Stakeholders

Collect Information on Project

Stakeholders

Identify and Analyze the Interests

and Concerns the Stakeholders
have on the Project

Evaluate the Influence the Stake-holders

may have on the Project

Design and Implement Project

Stakeholder Engagement Strategies
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34

Identify Project Stakeholders
Collect Information on Project
Stakeholders
Identify and Analyze the Interests
and Concerns the Stakeholders
have on the Project
Evaluate the Influence the Stake-holders
may have on the Project
Design and Implement Project
Stakeholder Engagement Strategies
Issue-Based Framework of Stakeholder
Analysis (Examples):
• Financial
• Social
• Political Ideologies
• Conservation (e.g. ecological, cultural,
historical, acheological)
• Health (air, water and land pollution)
• Personal Development
• General Attitude towards Change
• Emotional & sentimental
• Individual & Collective Prejudices
• Group Mission
• Image of Project Owner / Implementor
• Security Concerns
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Identify Project Stakeholders
Collect Information on Project
Stakeholders
Identify and Analyze the Interests
and Concerns the Stakeholders
have on the Project
Evaluate the Influence the Stake-holders
may have on the Project
Design and Implement Project
Stakeholder Engagement Strategies
• SWOT-Analysis of project
stakeholders
• Anticipated INFLUENCE/ impact of
the stakeholders on the project
(high, medium, low)
• Attitude of stakeholders towards
project (supportive, neutral,
adversarial)
• Degree of involvement for a change
program
• Stakeholder Register
• Application of stakeholder
visualization mapping tools
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 Influencing Projects: Stakeholder Negative Options
(Institutional, Political and Legal Options)

Non-cooperation
Enlisting media support to generate negative publicity)
Exerting pressure on other stakeholders to oppose the
project
Boycotts
Lobbying politicians and legislators
Petitioning
Litigation

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 A key individual disrupts
the communication
between Team R and the
Line Manager by making Involvement
threats
Z
Team R

Functional
Group 1 Dir. 2
Group Group
K X
Y
Strength of relationship Line
Mgr
Strong
Weak
Size of Functional Dir. 1 Head of Org
Bubble = Degree of Group 2
Y
influence

Against the Change For the Change

Attitude

Attitudes, influence, and levels of involvement in the project

can be mapped
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 Project Stakeholder Engagement
Supportive Strategies
Project Stakeholders

Neutral Project achieves its goal

within time and budget
according to its
requirements and to
Adversarial
satisfaction of all key
stakeholders.
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 PROJECT INFORMATION
CONTEXT

CONSULTATION
Rigorous analysis and
documentation of the
stakeholder community’s
concerns, their expected
attitude and behavior towards INCENTIVES
project and review of their
options, SWOT-Analysis of
the project from the stake-
holder perspective
PARTNERSHIP

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 Retain interest and support of all
project stakeholders

Increase the level of supportiveness of

the project’s key active stakeholders

Use supportive stakeholders to influence

Supportive
adversarial & neutral stakeholders in
Stakeholders favor of the project

Convert (important) passive supportive

stakeholders to actively supportive ones

Convince stakeholders to provide input

for the project

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 Ensure that neutral stakeholders do not
become adversarial stakeholders

Neutral
Stakeholders
Encourage neutral stakeholders to
become supportive stakeholders

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 Reduce (and when possible eliminate)
resistance by (active) adversarial
project stakeholders
Prevent passive adversarial
stakeholders from turning into active
ones
Influence adversarial stakeholders by
Adversarial seeking alliances with supportive
Stakeholders stakeholders
Prevent adversarial stakeholders from
joining forces to oppose the project
Convince adversarial stakeholders that
they may stand to benefit from the
project
Offer incentives to adversarial
stakeholders to gain support for the
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 COST

TIME

HUMAN & TECHNICAL

RESOURCES
Limitations
INFORMATION

POLICIES

LACK OF CREATIVITY

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