Construction Project Management

Project Stakeholders
Management
Lecture # 11
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 The Project Stakeholders
• There can be many definitions of project stakeholders.
• 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]

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The Project Stakeholder Management Processes

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Project Stakeholder Management
Overview

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 The Project Stakeholders; Some Facts
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 on the other.

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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 Project Primary & Secondary Stakeholders
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
 Project Stakeholders:
An Alternative Definition
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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 An Alternative Definition
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, in particular, poor and marginalized groups who have
traditionally been excluded from participating in development
efforts, and …

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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 Project Primary Stakeholders: Examples
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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 Project Secondary Stakeholders: Examples
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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 Primary Stakeholders: Senior Management
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.
Without the interest, encouragement and
active support of senior management,
projects cannot contribute their full
potential to the organization. Senior
managers must create a “culture“ in the
organization which clearly acknowledges
the importance of projects as essential
building blocks in the implementation of
the organization‘s strategy.
Senior managers must periodically
monitor the progress of projects in their
organization‘s project portfolio and, if
necessary, in the extreme case order the
termination of projects if they are adding
no value to the organization. 11
Primary Stakeholders: The Project Sponsor
The project sponsor advocates the project to
senior management. His or her contribution
includes:-
 Initiating the project by proposing or selecting a
project manager,
 Ensuring that the project is consistent with the
strategic direction, mission, objectives and
goals of the organization and that its benefits
exceed its costs,
 Providing overall direction to the project, and
Sometimes called
the “Project ensuring that the project team has the requisite
Champion”, the resources to succesfully complete the project.
project sponsor
performs a bridging
 A bad project can blot the sponsor‘s reputation.
function on projects Transfer or retirement of the Project Sponsor
while the project is on-going can spell trouble
for the project.
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 Primary Stakeholders: Steering Committee
 A project steering committee usually
comprises
 6–10 members (incl the Project Manager)
 Chaired by the Project Sponsor or another
senior official of the implementing
organization(s).
 Committee members would be project
stakeholders from diverse areas, some of
Steering Committees whom possess considerable relevant
are recommended on specialist knowledge and expertise.
projects which are
 Typical functions of a steering committee
characterized by a
relatively high degree of include
complexity, visibility, assuming responsiblity for the successful
and risk, and entail achievement of the project goal and
high cost and duration, outcomes,
i.e., as are usually ensuring alignment of the project with the
medium to large
projects. objectives and goals of the implementing
and consuming organization(s) or entities.
 Potential Pitfalls: Bureaucratic,
tendency to micro-manage, and focus 14 on
 Primary Stakeholders:
Resource & Functional Managers
The functional or resource managers primarily
serve as resource suppliers for the project.
Their typical functions include providing staff
and resources from their respective
departments to work full- or part-time on the
project,
Functional / Resource
Managers exert great Reviewing and approving the parts of the
influence over projects,
especially in a matrix project plan which are relevant for their
environment.
specific areas, and providing direction to the
Dealing with them
often requires good project team members representing their
negotiation and
interpersonal skills on
respective departments.
the Project Manager’s
part. They are expected to be cooperative and
eliminate obstacles for the project team.
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 Primary Stakeholders:
Project Leader / Manager

The project manager is the key person who

 provides direction to the project team
 leads the project team through the creation
and implementation of the project plan,
The Project  obtains formal approval for it
Leader /
Manager is  monitors and reports on the progress of the
(Usually) project in relation to the project plan and
Ultimately  initiates action to ensure that the project stays
Responsible for
the Project‘s
on track, and responds for requests for
Success or changes to the project plan
Failure!

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 Primary Stakeholders: The Project Team
The project team is right in the front-
line of the project‘s planning and
implementation.
Project teams can be cross-functional,
self-managed and virtual type.
The individual project team members
Project teams can be participate in the project planning
cross-functional, self process and provide technical
managed and virtual.
Through team effort and expertise, ideas, input and motivational
collaboration, synergy is
evolved which is the support that can help the entire team
driving force behind the succesful completion of the project
project.
(quality deliverables within the
allocated budget and according to
schedule)
 Primary Stakeholders: The Contractor
 The Project Contractor is a key stakeholder who
undertakes the bulk of physical work on
Constrution projects.
 Some of the Contractor‘s major responsibilities
include:-
 ensuring that the construction schedule as laid
Project down in the project plan is kept,
Contractors often  work undertaken is consistent with the project
have to contend
with many requirements and specifications,
challenges and  approved changes to the project scope are
unforeseen
problems in the
incorprated into the construction plan,
course of project  quality standards are not compromised,
implementation!
 construction progress is regularly monitored
and communicated to the project team, and
 close coordination with the Project Suppliers
and Project Subcontractors is maintained.
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 Primary Stakeholders: The Supplier
Like the Project Contractor, the
Project Supplier is a key stakeholder
in construction and other categories
of projects.
Often, Suppliers have a network of
Subsuppliers
The Supplier is responsible for
The Project Supplier ensuring that
is the prime source
of inputs which are  all the material inputs of the agreed
used on large
projects. specification and quality are delivered
to the project site(s) in the required
quantity at the time they are needed
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 Primary Stakeholders: The Consultant
The Project Consultant can be an individual
performing a few specialized tasks on a
project
It can also be a organization which is
concurrently working on several diverse
projects and is involved in the project
Project throughout its life-cycle
Consultants
are .
indispensable
for many
projects.

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 Primary Stakeholders: The Consultant
Consultants offer all kinds of services e.g.,
 undertaking pre-feasibility and feasibility studies,
 contract management,
 project planning,
 architectural and engineering design,
 cost estimation,
Project  scheduling,
Consultants  quality assurance,
are  risk assessment,
indispensable
 data management,
for many
projects.  monitoring,
 auditing,
 report evaluation,
 training (skill development, team building,
communication etc.),
 liaising with other project stakeholders and
troubleshooting 21
 Primary Stakeholders: The Project Customer

The customer‘s responsibility is to

clearly indicate to the project
manager and team the needs and
requirements that must be met by
the project, and closely interact
with the project manager and team
during the project‘s planning and Also called the “Project
Owner”, the customer is
implementation the ultimate recipient of
the project output or
result.

Customer satisfaction is a
measure of the project’s
success.
Managing Project Stakeholders Professionally
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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 Understand the Project Context
The first task in „managing“ project stakeholders is
to identify, study and understand the context in
which the project is taking place – in other words,
look at the project‘s „broader picture“.

Projects come in all shapes and sizes and their

change impact varies enormously. And, as all
projects are unique, even if two projects are
somewhat similar, they may require different
approaches to manage stakeholders.

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 Understand the Project Context
(Importance of Project)
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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 Understand the Project Context
(Complexity Involved in Managing Project Stakeholders)

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

Low High
of Managing Them

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 Identification of All Project Stakeholders

Brainstorming Survey

Ask the Consultant Ask Experienced Team Members

Organization‘s Existing
Ask other Project Managers
Documentation

Locals Case Studies

Other Organziation‘s
Website
Stakeholder Dirctory

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 The Project Stakeholder Management
Process: Stakeholder Analysis

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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 Project Stakeholders: The Power Factor
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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 What is “Power Factor”?
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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 Power in Project Stakeholder Networks
Med Med Managing stakeholder
- +
relationships and networks can be
High Low complex and considerably
+ +
challenging for the project
manager and team.
High
Low
+ Some stakeholders may appear
relatively less powerful and,
Low Low Low
hence, unimportant or irrelevant
- +
for the project. However, they may
Low
- be quite powerful because of their
Med
Low
-
excellent links to powerful
Low
Med stakeholders and ability to
Low influence them about the project.
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 Power and Imp of Project Stakeholder Engagement
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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 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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 Stakeholder Mapping
 A powerful stakeholder alignment tool that allows the
team to quickly and visually assess their stakeholders’
impact on the success of a project

 A tool to develop strategies that increase stakeholder

support

 A different way of looking at stakeholders

 A means of focusing stakeholder discussions

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Stakeholder maps take the form of ‘bubble’ charts

The X-axis represents a rating of the stakeholder’s

support for the change program
The Y-axis represents a rating of the stakeholder’s
involvement with the change program
The bubble size corresponds to the relative influence
the stakeholder has in the organization
Lines are used to link stakeholders together to
reflect their relationships
The thickness of the line represents the strength of
the relationship (thick=strong)

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An example stakeholder map showing support for a
planned organisational change

A key individual disrupts the

communication between
Team R and the Line Involvement
Manager by making 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
influence Y

Against the Change For the Change

Attitude
Attitudes, influence, and levels of involvement in the project
can be mapped
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 Watch out for Types of Stakeholders……..
Carryout Stakeholder SWOT-Analysis
(Stakeholder Strengths)
Well informed about the project and its consequences
High level of commitment, determination and tenacity
Can organize quickly
Capable of devising effective strategies to further their
interests and objectives
Highly vocal
Considerable financial, material and other resources
Skillful in using information and communication
technology
Ability to influence those who count
Ability to form alliances with other stakeholders
Awareness of diverse options to influence the course of
the project
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 Stakeholder SWOT-Analysis
(Stakeholder Weaknesses)
Disinterested in the project or ignorant of its conse-
quences
Have too little time to contemplate project in detail
Lack of financial, informational and other resources at
their disposal to influence the project
Inability to organize themselves collectively
Inability to form alliances with other stakeholders
Inability to form effective strategies to deal with the
project
Unaware of their rights in connection with the project
Uninformed about their options (institutional, legal
and other) to influence the project
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 Stakeholder SWOT-Analysis
(Stakeholder Opportunities)
Not opposed to the change which the project is
expec-ted to bring
Willingness to listen and cooperate
Can be convinced that they stand to benefit from the
project during and subsequent to its implementation
Can be targetted by the project manager and team
with the appropriate engagement strategies
Can provide material, infomational and moral support
to the project
Can be encouraged to lobby in support of the project
among other stakeholders who may have reservations
about it
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 Stakeholder SWOT-Analysis
(Stakeholder Threats)
May have misperceptions about the project which
may prompt them to act against it
May refuse to cooperate
May organize themselves politically to oppose project
May launch a campaign of spreading disinformation
about the project to influence the wider stakeholder
community against it
May attempt to influence powerful stakeholders to
intervene in the project
May mount a legal challenge the project or resort to
scare tactics and intimidation in an attempt to “kill”
the project or at least cause cost and schedule
overruns and alter its scope
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 Goal of Project Stakeholder Engagement

Project Stakeholder
Supportive Engagement Strategies
Project Stakeholders

Neutral
Project achieves its goal
within time and budget
according to its
Adversarial requirements and to
satisfaction of all key
stakeholders.
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 FEW POSITIVE OPTIONS
Project Stakeholder Engagement Strategies

PROJECT CONTEXT INFORMATION

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

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 Engaging Project Stakeholders
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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 Engaging Project Stakeholders

Ensure that neutral stakeholders do not

become adversarial stakeholders

Neutral
Stakeholders
Encourage neutral stakeholders to
become supportive stakeholders

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 Engaging Project Stakeholders
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
project 45
Engaging Project Stakeholders: Major Limitations

COST

TIME

HUMAN & TECHNICAL

RESOURCES
Limitations
INFORMATION

POLICIES

LACK OF CREATIVITY

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 Good News

There will be Quiz in the next class

We will also talk about various organizations

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 End Note

Everyone asks for a strong project manager - when they

get him they don't want him

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THANK YOU!

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