Monday, July 15, 2024
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HomeProject managementWhy Stakeholder Management is Crucial for Project Success?

Why Stakeholder Management is Crucial for Project Success?

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Stakeholder management is crucial for the success of the project. Before we dive into the topic, we must understand, what are stakeholders and why it is important to analyze and manage the stakeholders of the project.

Project Stakeholders

Project stockholders are the individual persons or institutions who are actively involved in the project, or whose interests may be positively or negatively affected due to project execution or successful project completion.

Types of Stakeholders

The stakeholders are classified into following categories:

(A) External and Internal Stakeholders

Internal Stakeholders: These stakeholders come from within the organization, such as project team members, managers, owners of the company, etc.

External Stakeholders: External stakeholders are people or organizations outside the project or the company, such as, consumers, suppliers, investors, etc. If there is a construction project, then the local land owners, whose land is being acquired for the project will be external stakeholders.

(B) Direct and Indirect Stakeholders

The direct stakeholders are the once who have the power to influence the project decisions, such as project team, managers, product owners, etc.

Indirect stakeholders are the individuals or the organizations, who are more concerned with the outcome of the project, rather than its implementation, such as, customers and suppliers.

(C) Primary and Secondary Stakeholders

Primary stakeholders are the groups or individuals, who are most effected with the outcome of the project, positively or negatively, such as, project team, managers, owners or the company, customers, suppliers, business partners, etc.

Secondary stakeholders don’t get direct effected from the project. They are more difficult to identify, as compared to the primary stakeholders. Examples of secondary stakeholders include governments, trade unions, advocacy groups, and others. Project managers usually don’t consider secondary stakeholders during the planning because they are not actively involved in the implementation of the project. But if they become active due to some reasons, there impact may be substantial.

Steps Involved in Stakeholders Analysis

As soon as your project charter is finalized and the scope of the project is defined, it can be used as starting point to manager your stakeholders. There are following steps involved in the stakeholder analysis:

Identify Stakeholders

The first step is to identify who are your stakeholders. To do this, make a full list of all types of the stakeholders, such as external and internal stakeholders. You can take help of the project charter and other project documents such as project plan, etc. to do so. It is important to note that some project stakeholders won’t come into picture at the initial stage of the project, but if you can understand them and build relationship with them at the beginning, they will not create problems later on.

How to Identify Your Stakeholders?

The process of identifying stakeholders begins right the moment your sponsor approves the project charter. The following documents and techniques help you identifying your stakeholders:

(a) Project Charter

The project charter is a document which identifies the project head, key sponsors, clients, and influencers. By looking into the project charter, you can have a lot of idea about the project stakeholders.

(b) Reviewing the Enterprise Environmental Factors

The enterprise environmental factors (EEFs) such as the company’s structure, industry standards, etc. can give an insight about the project stakeholders.

(c) Interviewing the Experts and Influencers

Interviewing the project management experts and influences can also help identifying your stakeholders.

(d) Brainstorming Sessions Between the Project Team Members

If you ask some questions with the project team members during the brainstorming sessions, it is a great technique to know about the key stakeholders. Some useful questions are given as below:

  • Who are the stakeholders of this project?
  • Who is directly or indirectly associated with the project?
  • Whose interests are being positively or negatively impacted by the success of the project.
  • Who is the sponsor of the project?
  • Who can accept or reject the project?
  • Who are the suppliers of the project?

By asking these questions with your project team and finding answer of these can help you identifying your stakeholders.

Prioritize Stakeholders

Prioritization of stakeholders is important because it helps you plan, where you will invest your resources. It is crucial for the project manager to understand, who are the decision makers or who can affect the decisions, to ensure that you are communication with right person. The most effective method of prioritizing your stakeholders is power/interest grid, which is described below:

Power- Interest Grid

The power/interest grid prioritize stakeholders based on two criteria:

  • How much power the stakeholder has?
  • How much interest the stakeholder has in the project?

Based on the above questions, you can classify your stakeholders into the following categories:

High Power- High Interest

These type of stakeholders have high power to influence your project and they also have keen interest in the outcome of the project. An example of such kind of stakeholders are investors.

High Power- Low Interest

These stakeholders can influence the implementation and outcome of the project in a great way but they have little interest in the implementation and outcome of the project. The example of these stakeholders are the government agencies who can influence your project based on the government regulations but have little interest in your project.

Low Power- High Interest

These stakeholders are very interested in the project but don’t have much power to influence the implementation or outcome of the project. The example of such stakeholder is some NGO or local people who support your cause but they have little power to influence the project.

Low Power- Low Interest

These stakeholders are of lowest priority. They do not show interest in the project, neither they have much power to influence the project.

The strategy for managing the stakeholders under these categories is mentioned in the Power- Interest Grid shown below:

Understand Your Stakeholders

By following the previous steps, you could have known your stakeholders and the way how to manage them. Now it’s time to understand your stakeholders. Understanding their expectations from the project is crucial for the success of the project. The best way to understand the stakeholders is to meet them face to face and discuss the following things:

What the project success looks like for them?

What are their expectations from the project?

How the positive or negative project outcome will impact them?

You also need to be aware about the possible conflict of interest among the stakeholders. The important thing is that if you talk to your stakeholders at the beginning of the project, it will help building a good relationship with your stakeholders at the early stage and will help you completing your project successfully.

How to Manage the Stakeholders?  

Making a balance between the stakeholders and keeping them happy is crucial for the project success. Here are few tips to manage your stakeholders:

Document Each Stakeholder’s Role and Expectations

Documenting your stakeholders, their roles and expectations is very helpful. You should maintain the stakeholder register so that you can track your stakeholders and their priorities. In this way you will not miss any stakeholder and will manage them effectively.

Communicate with Your Stakeholders

Communication is the key to successful stakeholder management. As a project manager, it is your prime job to keep your stakeholders informed, included, and inspired throughout the lifecycle of your project. You should also know the priority stakeholders during the different phases of the project so that you can concentrate your energy dealing with right stakeholder. Providing the stakeholders visibility about the project is important but overloading them with unnecessary information should be avoided.

Involve the Stakeholders in the Project & Keep them Informed About What Matters to Them

Involve the stakeholders at every stage of the project. If they are not actively involved, then keep them informed about the project progress are various other things relevant to them. The expectations of every stakeholder are different and hence the information given to them should be as per their expectations. You should take the help of power-interest grid to know how to deal with different stakeholders and how much information should be given to them. Interviewing them, sending questionnaires and compiling answers, adding the stakeholders to the project dashboard and providing them access to the dashboard are some of the methods by which you can keep your stakeholders involved in the project.

Establish the Change Mechanism

Change requests are inevitable in the project. Changes may introduce at any phase of the project. Therefore, a proper mechanism to handle the change requests is very important. If the change request mechanism will be established at the beginning, the changes will be included in the project scope and proper approval for the changes will be obtained. This will avoid disputes later on and will be instrumental in successful completion of the project. If changes are not handled properly, it will result in scope creep and ultimately affect the project performance and the project success.

Conclusion

Stakeholders has a key role in the success or failure of the project. Proper identification, categorization and management of the stakeholders is therefore crucial for the successful implementation and completion of the project. Making all stakeholders happy is one of the objectives of the project. The project team therefore must try hard to focus on the stakeholder management.

Also read: Project Risk Management: Identification, Analysis, Response and Control

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Rajesh Pant
Rajesh Panthttps://managemententhusiast.com
My name is Rajesh Pant. I am M. Tech. (Civil Engineering) and M. B. A. (Infrastructure Management). I have gained knowledge of contract management, procurement & project management while I handled various infrastructure projects as Executive Engineer/ Procurement & Contract Management Expert in Govt. Sector. I also have exposure of handling projects financed by multi-lateral organizations like the World Bank Projects. During my MBA studies I developed interest in management concepts.
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