What is a Stakeholder in Project Management?
By Deepesh KotwaniNov 17, 2019
The word Stakeholder refers to a person with an interest or concern in something, especially a business.
According to the Project Management Institute (PMI), the term project stakeholder refers to, "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"
Therefore, Stakeholder in Project Management refers to a person that gets affected by the project directly or indirectly. The effect could be a positive effect or a negative one, still, they will be considered as a Stakeholder of the Project. Stakeholders can be individuals, teams or organizations that are affected by the project.
Stakeholders can be internal members of the organization and can be external parties too. The common type of Stakeholders of a project are as follows:
- Customer or Client
- Project Sponsor
- Project Management
- Project Team
- Functional Managers
- Government Authorities (Sometimes, or according to the project scope.)
- Local Communities
- Internal Members
- Resource Manager, etc.
The list of Stakeholders will vary according to your project, you should identify all the stakeholders in the planning stage and they should be mentioned in the project description.
Key Stakeholders are the people/organizations that are directly connected to the project or have a direct effect on the project. They can influence the project and they have the direct authority to dictate whether the project is a success or not. It’s necessary that key stakeholders are happy and satisfied by the project or they can have a deep impact over the project. You cannot have a project analysis with knowing all the stakeholders of the project.
Stakeholders are too important as they can help you in achieving the project goals or can break the project too. You may have reached all the project milestones and have completed the project within the budget, but if these people are not happy, the project is ultimately a failure.
McElroy and Mills indicated that the purpose of stakeholder management is to achieve project success through the continuing development of their interrelationships. Therefore, identifying how stakeholders influence project success is an important and fundamental issue of stakeholder management.
A project manager is responsible for Stakeholder Management. It is a very important process, yet it is considered a fringe activity.
“No Man is an Island.” - John Donne. The project manager will do the managing of the project, but the actual work is done by other people. The project manager would need someone or a team to support, someone for investment and resources. And a project manager can only get help only when these people feel involved. Moreover, the expertise of these people would be very essential for the successful completion of the project.
Strong Support is a key ingredient of project success. In PMI’s 2017 survey, 62% of successfully completed projects had sponsors who were actively supportive. 78% of respondents in a Genecea survey also said they’d like business stakeholders to be more responsive and engaged in the project. Another study found that 33% of projects fail because of a lack of involvement from senior management.
If the project manager can maintain a healthy relationship between all the stakeholders, then only the project can be a success or can even be completed. Yes, if the stakeholders are not happy or satisfied, the project is doomed.
Example: Tire Plant in India
A U.S. chemical company chartered a project for unpaved roads. The plant was to be built in India a few years after an accident that killed several Indians and involved a different U.S. chemical company. When the company announced the new project and began to break ground, the community backlash was so strong that the project was shut down. A highly involved stakeholder can significantly influence your project.
Poor stakeholder management can be a big cause for project failure. You can have the best resources, the team could be working at their best, you are managing the team with a great project management software, and the project is about to be completed, but, if a stakeholder is not happy, it could be a big threat to the successful completion of the project.
Poor Stakeholder-project manager alignment is a big cause of project failure. Only 55% of people involved in projects - team leaders and project managers - feel that the project’s business objectives are clear to them. More than 80% also feel that the requirements process doesn’t articulate the needs of the business. And when the project is wrapped up, only 23% of respondents say that project managers and stakeholders are in agreement when a project is done.
Therefore, Stakeholder management is a very crucial part of project management.
Importance of Stakeholder Management:
1. Increasing Project Success:
The project is considered a success only if the stakeholders are happy with the results. To keep them happy you need to understand their needs, which could be done by efficient stakeholder management.
Still, it is never possible to satisfy all the stakeholders of the project, thus try to make the most of them or the most important ones feel satisfied.
Make a task of all the stakeholders using a Task Management Software or a list, and try to onboard them in the project. Note their requirements and try to satisfy them. As more and more stakeholders are satisfied it increases the success rate of your project.
2. Providing Expertise:
As a project management software, you will encounter many types of projects. With some, you would be familiar with and some would be out of your league. This is where the Stakeholders can help you. Stakeholders serve as an ocean of knowledge or as an expert on that topic.
You are not an expert at all the topics and the stakeholders can help you as an expert and can guide/inform you about all the current topics, historical information and with important insights.
Moreover, your job is to deliver the project and handle it. The work on the project is done by your team which is also a stakeholder and they can help you with their expertise too.
3. Reducing and uncovering risk:
Good Stakeholder management requires issues to be solved before they even arise.
In the planning and project description stage, involve all the stakeholders and discuss the project with them. Involve as many stakeholders as possible to reduce the risks in the project.
Discuss the project with them and know if they have any issues in the planning stage itself. Solve the issues and make necessary changes in the project at the planning stage itself, and thus solve the problem even before they arise.
4. Granting Project Acceptance:
Stakeholder management needs you to be in regular touch with the stakeholders. Update them on all the milestones you have accomplished and about all the deliverables. The more the stakeholders are engaged, it creates a positive project conclusion.
When they are aware of the deliverables and the plan, the final acceptance would be just a formality for the closure of the project.
Helpers are few, but there are many that want you to fail or are willing to be a roadblock in your way. The only way to be safe from them is to make them feel special and important, by fulfilling their needs too. Thus try to manage the Stakeholders at your best or there are higher chances of your project failure, instead of all the hardwork you put in it.