Effective Project Stakeholders Management

Presented by Dr. Tony Prensa, PMPFor NWA PMI ChapterFebruary 2014

Is that real?

Project Stakeholder Management

AgendaProject Success ParametersCurrent Facts!Literature reviewProject Stakeholder Management Processes

Identify StakeholdersPlan Stakeholder ManagementManage Stakeholder EngagementControl Stakeholder Engagement

Concluding thoughtsQ&AReferences Adjourn

Project Success Parameters

Current Facts!

According to an IBM study, only 40% of projects meet schedule, budget and quality goals.  Further, they found that the biggest barriers to success are people factors.Geneca, a software development company, noted from its studies that ‘fuzzy business objectives, out-of-sync stakeholders and excessive rework mean that 75% of project participants lack confidence that their projects will succeed.’ A truly stunning 78% of respondents reported that the “Business is usually or always out of sync with project requirements”McKinsey recently found that ‘while an increasing number of non-IT executives give IT a score of 61% for basic services like email and laptop support, only 26% rank IT high in the most vital area of proactively engaging with business leaders on new ideas or systems enhancements.’One Canadian study actually stated: “Bad communications between parties are the cause of IT project failures in 57% of cases they studied.”KPMG New Zealand found ‘…and incredible 70% of organizations have suffered at least one project failure in the prior 12 months and 50% of respondents indicated that their project failed to consistently achieve what they set out to achieve.’

Retrieved from: http://faethcoaching.com/it-project-failure-rates-facts-and-reasons/, 2/10/14

Literature Review

Literature ReviewR. Edward Freeman (1984)

Father of Stakeholder TheoryStakeholder theory is about identifying the groups who are stakeholders in a corporation and need to be managed

"Principle of Who or What Really Counts”Suggests to put stakeholders' needs at the beginning of any actionThe quality of relationships with stakeholders are the key determinant of corporate reputation Stakeholder management is the core of public affairs management Symmetric and asymmetric communication theory is relevant to stakeholder management

Literature Review (cont.)Study shows a strong correlation between project communication and project stakeholders’ commitment.Lack of stakeholder commitment is listed as a key cause for project failure.

It is caused because of inefficient project communication and inadequate project information.

Clarity of project information fosters commitment among stakeholders.Effective project communication makes workers feel that they are cared

Boosts their commitment to undertake tasks.Effective project communication creates a feeling of responsibility and

attachment between a stakeholder and the project tasks.The study suggests that project managers should ensure efficient project communication

Project team members cannot be committed to projects unless they have clear project goals.

(Nangoli, Namagembe, Ntayi, & Ngoma, 2012)

Literature Review (cont.)A project stakeholder management process – Six Steps

Plan

Identify

Analyze

Communicate

Act

Follow up(Karlsen, 2002)

1. Define the purpose 2. Identify3. Analyze4. Communicate 5. Strategize 6. Evaluate

Literature Review (cont.)Project Stakeholder Analysis/Strategies

(Karlsen, 2002)

Mixed blessing

Non-supportive

Supportive

Marginal

Pote

ntial

for c

olla

bora

tion

with

the

proj

ect

Collaborate

Defend

Involve

Monitor

Pote

ntial

for c

olla

bora

tion

with

the

proj

ectPotential to affect the

project

Potential to affect theproject

H

L

H

H

L

L

LH

Project Stakeholder Categories

Project Stakeholder Strategies

Management of project stakeholders is one of the most important tasks for a project manager because project’s success depends upon many individualsTrust is viewed as essential for stable relationships and vital for the maintenance of cooperationTrust enables cooperative behavior,

Promotes adaptive organizational forms, reduces damaging conflicts and transaction costs, and promotes more effective responses to crisis

Trust is something that must be earned over time by listening, talking and making sure that you “walk the talk”.The study results show that the parties should be aware of how trust is built in relations

Which factors are important in building trust.

Emphasis should be put on improving communication skills

Behaving reliably, showing commitment, being sincere, benevolent and competent, having and acting with integrity, working towards reaching project milestones and establishing common goals.

Clarify the roles and responsibilities in the beginning of the project.

(Karlsen, Græe, & Mona, 2008)

Literature Review (cont.)

(Karlsen, Græe, & Mona, 2008)

Literature Review (cont.)The model for trust building in a project-stakeholder relationship

Trust

Project

Stakeholder

Good communicati

on

Commitment

Sincerity

Benevolence

Reliablebehavior

Goal congruence

Integrity

Competence

Reaching project

milestones

Fact

ors Factors

Stakeholder theoryTo identify, classify and categorize stakeholder and understand behaviorManage stakeholder more strategically

Understanding project stakeholders needs and requirements

Is key for project success.Lack of understanding of internal/external project stakeholders and their interests

Might impact project success.Carefully consider external stakeholders and their influence on projectsThe external stakeholder environment involves all external stakeholders of the project and relationships between them.Interpretation model: Scan and collect data; analyze and interpret data; make decisions and take action (Aaltonen, 2011)Openness, dialogue and active engagement of stakeholders, in the front-end phases of the project

Reduce conflict in the project execution phase.

(Aaltonen, 2011)

Literature Review (cont.)

Literature Review (cont.)

(Jepsen & Eskerod, 2009)

“Effective project managers require keen analytical and intuitive skills to identifystakeholders and work with them to understand their expectations and influence uponproject success. This facilitates managing a process that maximizes stakeholder positiveinput and minimizes any potential detrimental impact” (Jepsen & Eskerod, 2009, p.2).

Stakeholder Area of interest

Contributions Expectations Power Strategy Responsible

Stakeholder ActiveOpposition

PassiveOpposition

Neutral PassiveSupport

ActiveSupport

Suppliers XOTopManagement X

Peers XGrumbler

Stakeholder Register

Stakeholder commitment matrix

X = current position, O = necessary/wanted position

O

O

XO

Project Stakeholder Management

Project stakeholders The definition

Individuals, groups, or organizations who may affect, be affected by, or perceive themselves to be affected by a decision, activity, or outcome of a project.

(PMI, 2013)

Project Stakeholders

Project

Financialinstitutions

Client/customers

End Users

Competitors

Suppliers/Contractors

ControllingOrganizations

Consultants/Advisers

Third Parties

LaborUnions

InsuranceCompanies

LineOrganizations

PublicAuthorities

Press/Media

Performing Organization

Project ManagerProject Team

Subject Matter Experts

Sponsor

Primary

SecundaryInternal

External

Project stakeholdersIt is critical for project success to identify the stakeholders

Early in the project or phase and to analyze their levels of interest, their individual expectations, as well as their importance and influence.

This initial assessment should be reviewed and updated regularly.

Classify stakeholders according to their interest, influence and involvement in the project.

Project manager should focus on the relationships necessary to ensure the success of the project

Project Stakeholder Management the definition

Processes required to identify the people, groups, or organizations that could impact or be impacted by the project,

To analyze stakeholder expectations and their impact on the project,and develop appropriate management strategies

to effectively engaging stakeholders in project decisions and execution.

Stakeholder management also focuses on continuous communication with stakeholders:

to understand their needs and expectations, addressing issues as they occur, managing conflicting interests and fostering appropriate stakeholder engagement in project decisions and activities.

Stakeholder satisfaction should be managed as a key project objective.

(PMI, 2013)

I am the PM

Project stakeholder management is designed to encourage the use of proactive project management for limiting stakeholder activities that might affect the project negatively, and to assist the project team’s ability in taking advantage of opportunities to encourage stakeholder support of project goals.

(Karlsen, Græe, & Mona, 2008)

Project Stakeholder Management

Project Stakeholder Management is also …

Vital to develop an understanding that can generate appreciation and trust and lead to constructive

working relationships.Efficient management of the relationship between the project and its stakeholders

is an important key to project success.The project and its stakeholders can be viewed as a network

in which the actors interact with each other and exchange information, resources, and results.

Stakeholders ultimately determine whether a project is a success, based on the project results.

Project Stakeholder Managementthe processes

Identify Stakeholders

•To identify the people, groups, or organizations that could impact or be impacted by a decision, activity, or outcome of the project.

•To analyze and document relevant information regarding their interests, involvement, interdependencies, influence, and potential impact on project success.

Plan Stakeholder Management •To develop management strategies to effectively engage stakeholders

throughout the project life cycle, based on the analysis of their needs, interests, and potential impact on project success.

Manage Stakeholder Engagement

•To communicate and working with stakeholders to meet their needs/expectations, address issues as they occur, and foster appropriate stakeholder engagement in project activities throughout the project life cycle.

Control Stakeholder Engagement •To monitor overall project stakeholder relationships, and adjusting

strategies and plans for engaging stakeholders

(PMI, 2013)

Proc

esse

s

Identify stakeholders

The key benefit of this process is that it allows the project manager to identify the appropriate focus for each stakeholder or group of stakeholders.

Inputs

• Project charter

• Procurement documents

• Enterprise environment factors

• Organizational process assets

Tools & Techniques

• Stakeholder analysis

• Expert judgment

• Meetings

Outputs

• Stakeholder Register

(PMI, 2013)

Identify Stakeholders Key QuestionsWho is threatening the target of this project?Who is most dependent on this project?Has there been a similar project in the market? If so, to what extent did it succeed? Who was in charge and how did local stakeholders respond?Who possesses claims – including legal jurisdiction and customary use – over the project/resources at stake?Is any government departments to be involved in this project?Are there national and/or international bodies involved in this project because of specific laws or treaties?Who are the people or groups most knowledgeable about, and capable of dealing with the project at stake?Are the stakeholders and their interests stable across the globe or is there any identifiable pattern exists?Are there major events/trends/activities currently affecting the stakeholders?Is this project replaceable by other project(s)?

Stakeholder analysis

To systematically gathering and analyzing quantitative and qualitative information to determine stakeholders’ interests.

To identify interests, expectations, and influence of the stakeholders and relates them to the purpose of the project.

To identify stakeholder relationships that can be leveraged to build coalitions and potential partnerships to enhance the project’s likelihood of success.

“Stakeholder analysis increases the project manager’s ability to anticipate opportunities and problems for the project at a time when the project team still has time and opportunity for maneuvering” (Jepsen & Eskerod, 2009, p.1).

StakeholderAnalysis

Identify

Analyze Assess

All potential project stakeholders and relevant information (roles, departments, interests, knowledge, expectations, and influence levels.

The potential impact or support each stakeholder could generate, and classify them so as to define an approach strategy.

How key stakeholders are likely to react or respond in various situations, in order to plan how to influence them to enhance their support and mitigate potential negative impacts.

K nowY ourS takeholders

Stakeholders Analysis Key QuestionsWho is directly responsible for decisions on issues important to the project?Who holds positions of responsibility in interested organizations?Who is influential in the project area (both thematic and geographic areas)?Who will be affected by the project?Who will promote/support the project, provided that they are involved?Who will obstruct/hinder the project if they are not involved?Who has been involved in the area (thematic or geographic) in the past?Who has not been involved up to now but should have been?

How to classify stakeholders?Power/Interest grid

Grouping stakeholders based on level of authority (“power”) and concern (“interest”) regarding the project outcomes.

Power/Influence gridGrouping the stakeholders based on level of authority (“power”) and involvement (“influence) in the project.

Influence/Impact gridGrouping stakeholders based on involvement (“influence) and their ability to effect changes to the project’s planning or execution (“impact)

Salience ModelDescribing classes of stakeholders based on their power, urgency, and legitimacy

Power/Interest Grid

Example Power/Interest Grid

Keep Satisfied

Monitor

ManageClosely

KeepInformed

High

Power

Low

Low Interest High

• A

• B

• H• F

• G

• D

• C

• E

High

Low

More techniques …Expert Judgment

To ensure comprehensive identification and listing of stakeholders:

Senior managementOther units with the performing organizationIdentified key stakeholdersExperienced project managers Subject matter expertsIndustry group and consultantsProfessional and technical associations

MeetingsProfile analysis meetings are project meetings designed to develop and understanding of major project stakeholders, and they can be used to exchange and analyze information about roles, interests, knowledge, and the overall position of each stakeholder facing the project

Plan stakeholder managementThe process of developing appropriate management strategies to effectively engage stakeholders …To provide clear, actionable plan to interact with project stakeholders to support the project’s interests.

Inputs

• Project management plan

• Stakeholder register

• Enterprise environmental factors

• Organizational process assets

Tools & Techniques

• Expert judgment

• Meetings• Analytical

techniques

Outputs

• Stakeholder management plan

• Project documents updates

(PMI, 2013)

Why the project management plan?Contains life cycle selected for the project and the processes that will be applied to each phaseContains description of how work will be executed to accomplish the project objectivesContains description of how human resources requirements will be met and how roles and responsibilities, reporting relationships, and staffing management will be addressed and structured for the projectContains the change management plan that documents how changes will be monitored and controlled Contains need and techniques for communication among stakeholders

Analytical techniquesStakeholder engagement throughout the project life cycle is critical for success.Engagement level of stakeholders can be sorted as follows:

Unaware – unaware of project and potential impactsResistant – aware of project and potential impacts and resistant to changeNeutral – aware of project yet neither supportive nor resistantSupportive – aware of project and potential impacts and supportive to changeLeading – aware of project and potential impacts and actively engaged in ensuring the project is a success

Stakeholder engagement assessment matrix

Stakeholder Unaware Resistant Neutral Supportive Leading

Stakeholder 1 C D

Stakeholder 2 C D

Stakeholder 3 D, C

C – current engagementD – desired engagement

The stakeholder management plan

It is a component of the project management plan and identifies the management strategies required to effectively engage stakeholders. It should contain at least:

Desired and current engagement levels of key stakeholdersScope and impact of change to stakeholdersIdentified interrelationships and potential overlap between stakeholdersStakeholder communication requirements for the current project phaseInformation to be distributed to stakeholders, including language, format, content, and level of detailReason for the distribution of that information and the expected impact to stakeholder engagementTime frame and frequency for the distribution of required information to stakeholdersMethod for updating and refining the stakeholder management plan as the project progresses and develops

Manage stakeholder engagementThe process of communicating and working with stakeholders to meet their needs/expectations, address issues as they occur, and foster appropriate stakeholder engagement in project activities.

Inputs

• Stakeholder management plan

• Communications management plan

• Change log• Organizational

process assets

Tools & Techniques

• Communication methods

• Interpersonal skills

• Management skills

Outputs

• Issue log• Change requests• Project

management plan updates

• Project documents updates

• Organizational process assets updates

(PMI, 2013)

Manage stakeholder engagement entails:

Engaging stakeholders at appropriate project stages to obtain or confirm their continued commitment to the success of the projectManaging stakeholder expectations through negotiation and communication, ensuring project goals are achievedAddressing potential concerns that have not yet become issues and anticipating future problems that may be raised by stakeholdersClarifying and resolving issues that have been identified

Why the communication management plan?

It provides guidance and information on managing stakeholder expectations:

Stakeholder communications requirementsInformation to be communicated, including language, format, content, and level of detailReason for distribution of informationPerson or groups who will receive informationEscalation process

Management stakeholder engagementtools and techniques

Communication methodsThe methods of communication identified for each stakeholder in the communications management plan. The project manager decides how, when, and which of these methods are to be used in the project.

Interpersonal skillsBuilding trustResolving conflictActive listeningOvercoming resistance to change

Management skillsFacilitate consensus toward project objectivesInfluence people to support the projectNegotiate agreements to satisfy the project needsModify organizational behavior to accept the project outcomes

Organizational process assets updates

Stakeholder notificationsAbout resolved issues, approved changes, and general project status

Project reportsProject status, lessons learned, issue logs, closure reports, and outputs from other knowledge areas.

Project presentationsProvided to project stakeholders

Project recordsCorrespondence, memos, meeting minutes, and other documents describing the project

Feedback from stakeholdersConcerning project operations can be distributed and used to modify or improve future performance of the project

Lessons learned documentationIncludes root cause analysis, corrective actions, other types of lessons learned about stakeholder management.

Control stakeholder engagementThe process of monitoring overall project stakeholder relationships and adjusting strategies and plans for engaging stakeholders. The key benefit of this process is that it will maintain or increase the efficiency and effectiveness of stakeholder engagement activities as the project evolves and its environment changes.

Inputs

• Project management plan

• Issue log• Work performance

data• Project documents

Tools & Techniques

• Information management systems

• Expert Judgment• Meetings

Outputs

• Work performance information

• Change requests• Project management

plan updates• Project documents

updates• Organizational

process assets updates

(PMI, 2013)

Concluding thoughtsProject managers have to ensure that they communicate the project information that is required at the different stages (Nangoli, Namagembe, Ntayi, & Ngoma, 2012).Project managers should build good relations with the stakeholders who are identified as being most crucial for the end result (Karlsen, Græe, & Mona, 2008).Trust is important for building a well-functioning relationship (Karlsen, Græe, & Mona, 2008). Project success is tied to e ectively communicating and managing ffrelationships with the various stakeholders of the project. This makes stakeholder management an important issue in project management (Assudani & Kloppenborg, 2010). Project manager should make deliberate attempts to exert influence on project stakeholders so that they deliver their contributions to the project (Jepsen & Eskerod, 2009.Keep in mind that stakeholders are critical for your success!

Questions and Answers

References

Aaltonen , K. (2011). Project Stakeholder Analysis as an environmental interpretation process. International Journal of Project Management , 29 (2011) 165-183.

Assudani, R., & Kloppenborg, T. J. (2010). Managing stakeholders for project management success: an emergent model of stakeholders. Journal Of General Management, 35(3), 67-80.

Karlsen, J. T., Græe, K., & Mona, J. M. (2008). Building trust in project-stakeholder relationships. Baltic Journal of Management, 3(1), 7-

22. doi:http://dx.doi.org/10.1108/17465260810844239

Karlsen, J. T. (2002). Project Stakeholder Management. Engineering Management Journal, 14(4).

Jepsen, A. L., Eskerod, P. (2009). Stakeholder analysis in projects: Challenges in using current guidelines in the real world. International Journal of Project Management , 27 (2009) 335-343.

Project Management Institute. (2013). A guide to the project management body of knowledge (pmbok® guide) – fifth edition [ebook]. Retrieved from CTU Online Library http://wow.coursesmart.com/C001850000035/firstsection#

X2ludGVybmFsX0J2ZGVwRmxhc2hSZWFkZXI/eG1saWQ9OTc4MTkzNTU4OTY3OS9j

Nangoli, S., Namagembe, S., Ntayi, J. M., & Ngoma, M. (2012). Towards building project-stakeholder commitment. World Journal of Entrepreneurship, Management and Sustainable Development, 8(4), 233-245. doi:http://dx.doi.org/10.1108/20425961211276615

Effective Project Stakeholders Management

Presented by Dr. Tony Prensa, PMPFor NWA PMI ChapterFebruary 2014