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Wednesday, May 4, 2011

Chapter 8: Project Stakeholders

In the previous chapters, we have been using the term Project Stakeholders repeatedly and we havent had any clear cut definition or description as to who these people are. Well, you need to look no further, we are going to do it right away in this chapter.

So, lets get started!!!

Who are the Project Stakeholders?

Project stakeholders are individuals and organizations whose interests are affected (positively or negatively) by the project execution and completion. In other words, a project stakeholder has something to gain from the project or lose to the project. Accordingly, the stakeholders fall into two categories—positive stakeholders, who will normally benefit from the success of the project, and negative stakeholders, who see some form of disadvantage coming from the project. The implications obviously are that the positive stakeholders would like to see the project succeed and the negative stakeholder’s would be happy if the project was delayed or even better cancelled.

For ex: let us say, your state government wants to build a Government Hospital in your city. It is a good thing right? You, the citizens of your city and the chief minister are all positive stakeholders of this project. Lets say there is a private Hospital in the city that is having a thriving business currently. They would be negative stakeholders because, if the government hospital comes up, their business will be affected and hence they would be happy if the government scraps its project.

Negative stakeholders are often overlooked by the project manager and the project team, which increases the project risk. Ignoring positive or negative project stakeholders will have a damaging impact on the project. Therefore, it’s important that you, as the project manager, start identifying the project stakeholders early on in the project. The different project stakeholders can have different and conflicting expectations, which you need to analyze and manage.

Identifying Project Stakeholders

Identifying all the project stakeholders might be a difficult task, but the following are the obvious stakeholders in any project:

1. Project manager - Include yourself first. The project manager in charge of the project, in the list of the stakeholders to start with.
2. Project management office (PMO) - If your organization has a PMO, and it is directly or indirectly responsible for the outcome of a project, then the PMO is a stakeholder in that project.
3. Project team - This team consists of the project manager, the project management team, and the individuals who perform the work of the project to produce the project outcome. This team may consist of individuals from different groups and departments with different subject matter expertise and skills.
4. Program manager - If your project is part of a program, then the program manager is certainly a stakeholder of your project.
5. Portfolio managers - A portfolio manager is an individual who performs high-level management (governance) of a set of projects or programs and interfaces between the projects/programs and the business strategy of the organization for which the projects and programs are being run.
6. Portfolio review board - A portfolio review board is a committee that selects and rejects the projects by reviewing them for factors such as the project value, return on investment, and risks involved in performing the project.
7. Functional managers - These are the individuals who play the management roles within administrative or functional areas of the organization. For example, the VP of marketing is a functional manager and so is the director of engineering. The level of authority depends on their position in the hierarchy and also the organizational structure. For example, if you are using resources that are under a functional manager, that functional manager is a stakeholder of your project.
8. Operational management - These are the individuals who are performing management roles in the operational areas of the organization. For example, the director of IT, who is responsible for maintaining the computer network that your team is using, is a stakeholder in your project. Depending on your project, you might be handing over the product of the project to an operations group that will be responsible for providing the long-term support for it.
9. Sellers – Sellers are entities external to the performing organization, such as contractors and suppliers, who enter into a contractual agreement with the performing organization to provide certain components for the project. These components are the products, services, or results that you procure.
10. Business Partners - Business partners are the external organizations that fill a specific role for the project, such as installing the product of the project, providing training and support for the product, or providing specialized expertise for the project. Business partners are different from vendors in that they have a special ongoing relationship with the organization, which sometimes is attained by satisfying some requirements, such as certifications.
11. Customer/user - In general, customers are the entity that will acquire the project’s outcome, such as product, and users are the entity that will use the product. In some cases the customers and users may be the same entity, and in other cases there may be a whole chain (with different layers) of customers and users.
12. Project sponsor - This is the individual or group that provides financial resources for the project. A sponsor has a major stake in the project and may perform an active role in the project team from time to time.

Following are some of the functions of a sponsor:

1. The sponsor champions the project when it’s conceived. This includes gathering support for the project by performing actions such as acting as project spokesperson to the higher-level management and spelling out the benefits of the project.
2. The sponsor leads the project through the selection process until the project is finally authorized, at which point the leadership role goes to the project manager.
3. The sponsor plays an important role in developing the initial project scope and charter.
4. The sponsor serves as an authority and a catalyst for issues beyond the control of project managers, such as authorizing some critical changes and other yes/no decisions.

Identifying Other Stakeholders

We have just identified the easy bunch of stakeholders that every project would have. In addition to these key stakeholders, who are easy to identify, there can be a number of other stakeholders, who might be more difficult to identify, inside and outside your organization. Depending upon the project, these might include investors, sellers, contractors, family members of the project team members, government agencies, media outlets, lobbying organizations, individual citizens, and a whole myriad of other individuals who might have an interest in this project and its outcome.

While dealing with the stakeholders, the keyword is influence. Watch out for influencers who are not direct customers or users of the product or service that will come from the project, but who can influence the course of the project due to their position in the customer organization or the performing organization. The influence can be positive or negative.

So, not only are the stakeholders affected positively and negatively by the project, but the project can also be impacted positively or negatively by them. It is critical for the success of the project that you identify positive and negative stakeholders early on in the project, understand and analyze their varying and conflicting expectations, and manage those expectations throughout the project.

Trivia:

Do not confuse the project management team with the project team. The project management team consists of individuals involved in the project management tasks. It is a subset of the project team, which includes the members of the project management team and also other members, such as those who perform the actual work of the project.

In the next chapter, we shall take a look at one of the most important and influential stakeholder in any project. The person who can make or break the project.

Previous: Project Management Knowledge Areas

Next: The Most Influential Stakeholder

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