Details Disucssion On Stakeholders

Published Date: 02 Nov 2017

As discussed earlier, stakeholders are the individuals, groups or organizations that are directly or indirectly, positively or negatively affected by the outcome of the project. For more clarification let us take the example of a proposed large real estate project in a region.

In the project of a real estate project, the individuals that possess the land are the direct affectees of the project. If they are compensated well, then their economic condition will improve hence they’ll be positively and directly affected. On the other hand if they are not compensated well and somewhat forced to leave the area then again they will be directly affected but in a negative manner.

With the implementation of a large real estate project, local industry like cement, steel will flourish and are directly affected, but the vendors of the said industries and further their vendors will get the business and at the end of the day many people will get benefit out of it. This is the way people get indirect positive effect of the project. On the other hand, if the project team decides to import all the material from abroad, it’ll have a negative impact on the industry and their vendors will be negatively affected but in an indirect manner.

There are two types of stakeholders which are defined as under

Internal Stakeholders: These are the stakeholders that are present in the organization or are present in the formation of the organization that are implementing the project. For example the project sponsor, project manager etc.

External Stakeholders: These are the stakeholders that are present outside the organization or are not present in the formation of the organization that are implementing the project. For example business partners, general public etc.

Identification of the stakeholders is not a one time activity and is a continuous process throughout the life cycle of the project. As the situation of the project is always changing, the new stakeholders come in and should be handled properly. There are always some individuals/ groups that get the benefit out of the project and some are adversely affected. Handling and managing the negatively affected stakeholders is a major challenge and should be treated very seriously.

At the end of the day, the project is all about the stakeholders. The fate of the project is in the hands of the stakeholders. What should be the line of action, what should be expected out of the project, the targets and deliverables of the project, all are set by the stakeholders. This is the reason why the stakeholders can exert pressure and influence the fate of the project. This is the reason why it is very important for the project manager and his team to properly identify both the internal and external stakeholders and get clarity about their expectations and determine the dos and don’ts in the life cycle of the project. This is very critical because this can adversely affect the project and can lead to incomplete project, targets not met or even the project being terminated or unsuccessful.

The project stakeholders may have varying responsibilities and authority and they tend to even change during the life cycle of the project. For example a person who is given the responsibility to spread the survey questionnaire to different people and get that filled has a little authority and responsibility as compared to the project manager but it is important to understand that both are stakeholders of the project and have a different impact on the project.

MAJOR STAKEHOLERS

Some of the major stakeholders in the project life cycle are as follows

Customers: The customers are the individuals, groups or organizations that will use the result or deliverable of the project. It is extremely important to understand the requirements and the expectations of the customers. For example project of launching a new mobile phone cannot be successful if it doesn’t meet the requirement and expectation of the customers.

Sponsors: The sponsor is the individuals, groups, organizations or governments that sponsor the project. The project can be sponsored through financial resources either in cash or in kind.

Portfolio Managers: Portfolio managers are responsible for high level governance of the project or programs which may be interdependent or independent of each other.

Program Managers: They are responsible to collect data of the projects and manage different projects simultaneously. They interact with project managers to better control of the project.

Project Management Office: The project management office is the central body and plays a role of coordination between the project, program, portfolio managers and the higher or top level management of the organization. They have many varying responsibilities that will be discussed later.

Project Manager: These are the resource persons appointed by the organization and given the responsibility to complete the project and also its goals. They are directly responsible for achieving the goals of the project. They are involved in the project from the stage of its conceptualization and have many responsibilities which are sometimes complex. The details will be discussed later.

Project Team: Project team is the group of people that are working on the project. This is headed by the project manager, the project management team and other staff members. All the execution and implementation of the project is done by the project team.

Functional Managers: These are the people who play a permanent managerial or administrative role in the support function of the organization which includes Human resource, Finance, Procurement etc. Functional managers are also stakeholders as they have assigned their staff for the project and are affected by the outcome of the project.

Operations Management: These are the people who play a permanent managerial or administrative role in the core business of the organization in includes manufacturing/production, research and development etc. Operational managers are also stakeholders as their operations are affected by the outcome of the project.

Business Partners: External companies including the distributors/sellers, suppliers also known as vendors are also stakeholders as their business position is dependent on the progress and outcome of the project.

Political Leadership/Government: The political leadership is also a stakeholder as inviting investment and creating jobs for the people of the region is the responsibility of the government. Also adherence to the public interest and all the laws is the responsibility of the government and government generates revenues through these projects.

General Public: General public living in the area is also stakeholders as the project causes economic growth in the region and prosperity is observed in the area where projects are undertaken.

DETAILS DISUCSSION ON STAKEHOLDERS

Now we will discuss each stakeholder in detail

CUSTOMERS

Customers are one of the most important stakeholders in the project. In fact in most of the projects, they are the main drivers of the project and they are the stakeholders that influence the project the most. This is so because at the end of every project, its outcome is a deliverable. If the deliverable is not according to the requirement or expectation of the end user or the customer, then the deliverable or the product is all set to get failed. Hence, we can say that the project has failed and its deliverables have not got the attention of the customers.

There can be three scenarios in the development of any project in relation to getting feed back from the end user/customer. The first is that the product has not met the expectation, second is that the product has met the expectations and third is that the product has exceeded the expectations of the customer. In business terms when the product exceeds the expectation of the customer, it is known as exciters.

It is also important to mention here that there is a difference between the customer and the end user. In most of the cases they are the same as some one buys a mobile phone and then uses it. But in case where the person buys the product and is used by some one else, then the customer and the end user are different. For example a person buys a car and has appointed a driver to drive that car, in that case the owner of the car is the customer and the driver of the car is the end user.

It is also very important to identify the category of people and target the people for whom the product is being made. By identifying this, one can finalize the features as well as the cost of the product. For example in designing and launching a mobile phone, it is very important to target the group of people and include features in the product and set the price accordingly. Sometimes the exciters have a negative impact as they are not in the list of necessities of the customers but they add to the price significantly. By this the customer tends to ignore the product. It is important that exciters should be present in the product but the cost impact should not be that high that the customer ignores it. Also exciters should not add complexity in the product and make it difficult to use.

There are two kinds of customers

Internal Customers: These are the type of customers that are present inside the organization. For example there is a project of installing new assembly line of the automobile manufacturing company. In that case the customers will be the production or maintenance team of the company.

External Customers: These are the type pf customers that are present outside the organization. Taking the example automobile industry, the people who purchase the automobiles are the external customers of the project.

There can also be different tiers of customers of one project or one product. For example during the launch of a new pharmaceutical product, the first customers of the product are the doctors to whom the product is introduced. After that the patients or people who use that product are also the customers and finally the insurers of the patients that pay for the product. It is important that all tiers and levels of customers are satisfied.

SPONSOR

As discussed earlier, the sponsor is the person, group or organization that pays for the project. The sponsor is the master of the company as he’ll be mostly affected by the success or failure of the project. The project is conceived by the sponsor of the project and keeping in view how much he can invest, decided for the fate of the project because at the end of the day it is the pocket of the sponsor from where the money is being injected in the project.

Following are some of the roles and responsibilities that the sponsor of the project has to perform

Spokesperson: The sponsor acts as the spokes person on behalf of the project team in front of the higher management, the general public and the government. As the spokesman he (or in case the sponsor is a group or a company, their representative) tells and explains the different stakeholders the necessity of the project, its important and what positive impact it would have once it is completed. In other words he gathers the support of different stakeholders so that everybody in on board and there is no conflict with anyone so that the project can get successful and maximum benefit can be taken from the project.

Development of Scope and Charter: The sponsor of the project is involved and plays a major role in the development of the initial scope of the project and the charter. Scope includes that what is the domain of the project and defining the deliverables of the project. On the other hand the charter is defining the path through which the targets of the project can be achieved. Charter includes the standard operating procedures, the staff and responsibilities of the project manager and staff.

Selection of the team: One of the most important tasks of the sponsor of the project is to select the team for the project. This is very important as good team can lead to better outcomes of the project in lesser cost and time. The fate of the project in terms of its execution is in the hands of the project manager and his team, more efficient they are better will be the results.

Authorizing changes: During the execution of the project, the situation is always changing and changes are needed to the made in the scope, time or cost of the project. Also strategies are to be made to handle stakeholders as stakeholders are also changing during the course of the project. All these changes are done and approved by the sponsor of the project and at the end of the day, it is his responsibility to make necessary changes.

Miscellaneous roles: During the course of the project there are different roles that the sponsor has to play and he has to be vibrant and proactive to play those roles effectively. For example when ever the situation goes out of control of the project manager, the sponsor has to step in and help the project manager to resolve the issue. It is important to mention here that the sponsor when feeling that the things are not going as planned should step in and should not wait for the things to get worse. Similarly the sponsor has to fill in the shoes of the higher management sometimes.

PORTFOLIO MANAGERS

Portfolio managers are the people who are governing different projects at a time at a high level. The projects being governed by the portfolio manager may or may not be interdependent and can be independent of each other. This makes the job of the portfolio manager even tougher as the projects of different areas are being managed by him. If the projects are dependent on each other then the portfolio manager has to determine the most sensitive project which can cause delay in other projects as well. He is a stakeholder because although secondary but it is also his responsibility that the project is a success.

Portfolio managers are the member of the portfolio review board/ committees which generally comprises of the directors of the company and its job is to select the project to be initiated. It selects the project to be executed form the all the options available to them. The parameters on which the committee/ board select the projects are as follows

Return on investment: One parameter to judge the viability of the project is to calculate its return on investment. There are many ways by which the return on investment can be calculated which will be discussed later. For the basic understanding at this stage the return on investment means that how quickly the investment made will be recovered from the project through earned profits.

Value of the project: The board calculates the value of the project. The value does not necessarily means the cost of the project, but the value also suggests towards the benefits of the project both tangible and non tangible.

Risks in the project: The board also looks for the risks that are associated with the project. This is so because increase in the risks endangers the success of the project. This is why risk analysis and ways to mitigate the risks is very important.

The role of the portfolio manager is to take strategic decisions, sometimes individually or sometimes being a member of the committee can takes the strategic decisions.

PROGRAM MANAGER

Program managers are the people who are responsible to manage different projects which may or may not be dependent on each other in a coordinated way so that maximum benefit can be taken out of the project which is otherwise not possible if the projects are managed and handled separately. It is the responsibility of the program manager to interact with each and every project manager and provide support to project managers and also give them guidance for better performance and efficiency.

For example let us take an example to increase the literacy rate in the country by improving the basic education system of the country. The program can have many different projects like infrastructure development by making new buildings, training of the teaching staff, revision in the curriculum etc. It is the responsibility of the program manager to coordinate with the project managers and get all the projects completed in time. Without all these three projects getting successful, the literacy rate will not increase as desired and the benefits that were expected out of the program cannot be achieved. In this example the projects are dependent on each other.

The program managers are stakeholders in the project as it is also their responsibility of the program managers to make the projects successful.

PROJECT MANAGEMENT OFFICE

Project management office is a central body in the organization that is established to manage the variety of projects more efficiently, effectively and in a more coordinated manner. The responsibilities of the project management office may be very diverse i.e. from directly handling the projects to mere supporting the project manager and his team. The project management office is a stakeholder as it is directly or indirectly responsible for the success or failure of the project.

Although the project management office can have different set of responsibilities and it depends on the higher management and specially on the top man of the organization, some of the responsibilities of the project management office are discussed below.

Administrative support: The project management office gives the administrative support to the project manager and his team. The administrative support is done by setting policies and procedures, methodologies for the project staff.

Training: It is also the responsibility of the project management office to identify the training needs of the project managers and staff and also give or arrange trainings for the project staff. It is also its responsibility to act as a mentor for and give coaching to the project staff.

Resource alignment: Resource alignment of the project staff is also the responsibility of the project management office. Resource alignment means that all the resources that are centralized are given and distributed by the project management office as they are aware of the bigger picture and do know where to put the resources and what the critical areas are.

Centralized communication: The project management office also provides a platform where all the stakeholders can communicate and through the project management office communication can be done to every quarter of the organization i.e. from the project staff to the top man of the company.

PROJECT MANAGER

Project manager is one of the most important stakeholders as the failure and the success of the project. He is the person who is directly responsible for the outcome of the project. He is directly looking after the project and this career and progress depends upon the outcome of the project. His major responsibility is to perform and give results as per the objectives and goals set by the organization. The role of the project manager is a high profile role, is extremely challenging and always changing, that means is dynamic in nature. For example the tunnel project between United Kingdom and France was started both from UK and France. Two project managers were assigned the job and as the project was a success, people still remember the project managers and all the credit was given to the project manager of the tunnel. Some of the major responsibilities of the project manager are as follows

Developing plans: It is the responsibility of the project manager to build development plans. The plans include the plans as per the time, cost and scope of the project. Also it is the responsibility of the project manager to define the path for the execution of the project. The project manager is involved from the conceptualization phase of the project and all kinds of plans are prepared by the project manager in detail and project manager provisionally approves the development plans and finally it is approved by the sponsor, the executive committee/ board or the head of the organization.

Keeping project on track: It is the responsibility of the project manager to keep the project on track. This means that there are no deviations in the scope, cost and time prescribed in the developmental plans. It is a very challenging job as project is always run in a dynamic environment and despite how well you have planned, there are variations in the environment of the project. It is the responsibility of the project manager the changes in the environment.

Monitoring and control: Monitoring and control of the project is the responsibility of the project manager. It means that through out the life cycle of the project, the quality and quantity of the work done is the responsibility of the project manager. For this purpose, the project manager most of the times hires a trained person for checking the quality and quantity of the work done.

Accurate and timely reports: For any project or even operations, accurate and timely reports to all concerned are very important. In case of the projects, it is the responsibility of the project manager to check for the reports that are generated, verify them and then circulate it to all concerned quarters of the stakeholders. It is the responsibility of the project manager to keep all the stakeholders updated and keep them in loop so that if there are any objections raised from the stakeholders, it can be settled before it gets too late and too costly.

Communication with stakeholders: As the project manager is directly responsible for the project and is the leader of all the stag working in the project, he plays a lead role in communication with all the stakeholders. The project manager frequently communicates and corresponds with the sponsor, project team and all other key stakeholders. He is the link between the stakeholders and the project. Even the program and the portfolio managers sometimes communicate through the project manager with the stakeholders.

PROJECT TEAM

Project team is the group of people that is deputed for the proper execution of the project as per the targets/ objectives set by the organization. The head of the project team is the project manager and all the project team/ staff reports to the project manager directly or indirectly. Sometimes some persons are deputed from the operational or functional departments of the organization to the project. In these cases the team members are partially or indirectly reporting to the project manager.

It is important to mention here that the members of the project team are no necessarily part of the management of the project, most are the members are only present for the execution of the project and accomplish their tasks as per the instructions given to them. There are very few members of the project team that have the managerial authority and those are the persons who define the path of the project.

It is very important that the team members of the project must be from different back grounds and their expertise should be different. This is how the project manager can cover all the areas of the project. For example in an engineering project, there should be some technical human resource, some persons from finance background etc. so that every field of the project management can be covered. Also as the project manager is not the expert of every field, the team members advise the project manager on the subject.

Mostly the project team doesn’t come into the lime light and the project manager get all the attention but the role of the project team is also very critical. It is extremely important to have a good project team because it ensures that maximum output has been achieved from minimum resources and the life of the project manager is made a lot easier if he has good people at his disposal.