Who are Project Stakeholders and Why are They Important?
Projects do not exist in isolation. The project exists within a “team” environment, and team members are all those who have a particular stake or interest in the outcome of the project. This “team” environment and expectations of team members represent a significant risk to the project.
In this article we will define stakeholders, understand why stakeholders are important in a project, and learn some of the techniques of effective stakeholder management.
What is a Project Stakeholder?
Stakeholders are defined as:
“Any individual, group, or entity who can affect or is affected by the project process or the project outcomes”
For a private organisation, this can include top management, functional management, the project manager, project team, contractors, clients, customers, regulators and so on. For a public organisation such as city council or state body, local citizens and working contractors are major external stakeholders in project.
Stakeholders are those who have interest in a project. They may benefit from the project and so will be supportive and positive about it; conversely, the project may damage their interests or they may perceive it will have a negative outcome for them so they will seek to stop it or, at the very least, project it in a bad light.
Project managers are expected to manage the stakeholders. Project managers manage stakeholder expectations throughout the project life-cycle. In my experience, the most successful projects are those whose stakeholders and I have established a strong, professional relationship. That means we trust one another. As project manager, you often need to ask a question – how this project impacts the stakeholders and devise ways to work together to meet their day-to-day needs while also completing the work of the project.
Stakeholder influence is often the most in the early stages of a project. The project is flexible at this stage and can be changed and stakeholders are generally aware of this. Once it starts to progress, it takes on a momentum and a power of its own and the cost of stopping it or altering its direction becomes high. Stakeholder influence often drops off markedly when execution starts, but will increase again as handover nears.
Stakeholders in a project can be broadly categorized into internal and external stakeholders. Understanding the distinction between these two groups is crucial for effective project execution.
Types of Stakeholders
Internal Stakeholders
Internal stakeholders are individuals or groups within the organization who are directly involved in the project. They typically have a vested interest in the project’s success and are often part of the project team or the organization executing the project.
The examples of internal stakeholders include:
- Employees: Staff members who are working on the project.
- Managers: Individuals who oversee the project and ensure it aligns with organizational goals.
- Project Team Members: Specific team members assigned to work on the project tasks.
- Internal Clients: Departments or units within the organization that will use the project’s deliverables.
- Sponsors: Individuals or groups who provide financial resources and support for the project.
External Stakeholders
External stakeholders are individuals or groups outside the organization who are affected by the project or have an interest in its outcome. They do not work directly for the organization but can influence or be influenced by the project.
The examples of external stakeholders include:
- Customers: End-users or clients who will benefit from the project’s deliverables.
- Suppliers and Vendors: External entities that provide goods or services necessary for the project.
- Regulatory Bodies: Government agencies or industry regulators that ensure the project complies with laws and regulations.
- Community Groups: Local communities or interest groups that may be impacted by the project.
- Investors: Individuals or entities that have a financial stake in the project’s success.
Negative vs. Positive Stakeholders
A negative stakeholder is one whose interests are not aligned with the project objective. They believe that they will be negatively impacted by the outcome of the project. They are also referred to as resistant stakeholders.
A positive stakeholder seeks benefits from a project’s success. They believe that they will be positively impacted by the outcome of the project. They are also called supportive stakeholders.
Why Stakeholders are Important?
Projects are governed, managed, and executed by project stakeholders. Projects wouldn’t exist without them. They provide requirements, share knowledge, oversee a project, and contribute resources, as well as do many other things that are essential for completing a project. They are instrumental for a project’s success.
The project stakeholders (not including the PM or the project team) are responsible for all of the following project tasks:
- Give authorization to start the project.
- Provide necessary resources to the project.
- Decide project budget and assist with securing project funding.
- Provide project requirements.
- Help with planning.
- Give approvals to the project team.
- Identify project risks.
- Oversee the project.
This is not an exhaustive list of tasks. A good PM will try to involve stakeholders in as many ways as possible.
Identifying and Analyzing Stakeholders
Most commonly the expert judgement of the PM, the project sponsor, and the project team are employed to identify the stakeholders. Brainstorming sessions with project team and key organisational members are conducted to identify potential stakeholders.
After identifying stakeholders, a stakeholder register should be created to maintain key information about them, including contact information, their requirements and expectations, and what stage of project they likely have the most interest in.
After stakeholder register is prepared, these stakeholders need to be prioritized. It is not really possible to give equal attention to all the stakeholders. Each stakeholder is assigned scores, typically on a scale of 1-5 and based on the following categories:
- Impact ON the project: Does stakeholders’ involvement contribute to the outcome of a project?
- Impacted BY the project: When the project is complete (or while the project is occurring), is a stakeholder positively or negatively affected?
Once the scores are assigned to all the identified stakeholders, they are entered into a stakeholder register (see below). The two scores are then multiplied, with the product giving an indication of the importance of the stakeholder—i.e., the higher the score, the more “important” the person or group is in the eyes of the project manager.
The example below is a commonly used stakeholder register template which you can use in your projects:
Analyzing Stakeholders
One tool that is important in analyzing stakeholders is the Power-Interest Grid.
For the purpose of explaining the power-interest grid tool, we will use the example of a process improvement project that is about to be launched at the hospital with the goal of reducing turn-around times for patients’ stress tests. During an early team meeting, the PM and process improvement team identified the following stakeholder groups: radiologist, cardiologist, hospital administration, stress test technician, and the patient/families.
In the Power-Interest Grid, stakeholders are analyzed on two dimensions – their interest in a project, and their relative power in the organization and over the project.
Each dimension is divided into half, high and low, resulting in four groups, each with its own needs. Based on these two dimensions, the model then suggests an appropriate relationship between PM and each stakeholder group, ranging from simple monitoring to closely managing.
Referring to the power-interest grid, we observe that the PM should work closely with the cardiologists and hospital administrations given their high interest in the project and the organisation. Also the PM should proactively keep the radiologist satisfied, given their high power. The test technician has low power but a keen interest in a project and thus needs to be kept continually informed on the status of the project. Finally, patients/families are clients of the hospital and should be constantly monitored regarding their concerns and other issues they may have.
Analyzing level of commitment of stakeholders
It is also important to assess what level of engagement and commitment is needed from various stakeholder groups in order for the project to succeed. A useful tool for accessing the level of commitment needed from the stakeholder is the Commitment Assessment Matrix. In this matrix both the current level of commitment and the desired level of commitment are assessed for each stakeholder.
In comparing current and desired levels of commitment to the process improvement project, we can observe that cardiologists are more committed than desired, indicating a possible risk that they will interfere in unproductive ways with the project. On the other hand, greater commitment is needed from Test technicians and Radiologists. The project manager can devise a communication plan to reduce the cardiologists’ commitment to the project and substantially increase the commitment of the test technician and radiologists.
Active Management of Stakeholders
The Power-Interest Grid is dynamic. It will change as per changes in the project team and changes in the projects. The following are some ideas for strategies that you may wish to adopt to deal with the various stakeholder groups.
High Power and High Interest
For positive stakeholders:
- Provide information to maintain their support
- Consult with them prior to making project decisions
- Meet with them regularly
- Consult with them, involve them and seek to build their confidence in the project and the team
- Encourage them to act as advocates for the project
- Nurture them, look after them, they are critically important to you and to the project
For negative stakeholders:
- Attempt to develop their support and change their view by ensuring they fully understand the project and the benefits it will deliver. Their resistance maybe due to lack of information or understanding.
- Attempt to build their confidence in you and in the team.
- Find out what is important to them, if you can help them out or minimise negative impact on them they may be more helpful.
- Demonstrate that you are doing your best to limit adverse effects on them.
- Counter any negative influence they may have on others.
High Power and Low Interest
For positive stakeholders:
- Maintain their enthusiasm and interest in the project, they are good allies to have.
- Provide them with information, invite them to presentations, involve them as much as resources allow. This can be done fairly cheaply through a project website, newsletter or open presentations.
- Seek their input and opinion if you can, they will be happy to help.
For negative stakeholders:
- This is a group that you will probably know all too well, because of their high level of interest they will probably deluge you with e-mails and other correspondence. You need to be sure that you do not spend too much time on them, remember their power is low.
- You may need to get the project sponsor or client representative to take a firm line with them they can use a lot of time and resource.
Low Power and Low Interest
Make sure you don’t spend too much time on them but if they are supportive provide them with information and be nice to them, their position or view may change in the future
High Power and Low Interest
The high power, low interest group are the unexploded bombs – their interest is low, at the moment. However if the project alters or the individuals change their interest may suddenly increase and they will use their power to influence the project.
- Maintain a careful watch on these stakeholders and make sure that changes in the project does not suddenly increase the level of negative interest.
- Find out what is important to these groups and make sure that the project does not adversely affect this. If the project is likely to have a positive effect for them, make sure they are aware.
Summary
Stakeholders are the people or groups of people who are involved, interested, or impacted by the project. They could be internal or external, negative or positive, and high or low in power.
Identifying stakeholders is a continuous process that runs throughout the entire project timeline. The number of stakeholders can grow as a project progresses. New stakeholders can be identified, and the role of stakeholders can change with time.
Recognizing a stakeholder, understanding their degree of influence on a project, and addressing their needs, demands, and expectations is vital to every project’s success.
Analyzing stakeholders with the Power-Interest grid helps project manager to adapt different strategies to manage the stakeholder groups.
PML would like to extend a huge thank you to Siddharth for sharing his knowledge and wisdom with the PML community! Learn more about him below and reach out to connect!
About the Author
Siddharth was born and bought up in Pune. Pune, is a city in state of Maharashtra and geographically at eastern part of India. Pune is often referred to as the ”Oxford of the East” because of its educational institutions and has historically been a major cultural centre.
Siddharth holds a Mechanical Engineering degree and an MBA in Operations Management. He is also PMP and ACP certified practitioner from Project Management Institute.
Siddharth is passionate about designing, developing, and delivering impactful training programs on various project management topics. Siddharth is a firm believer that an effective facilitator bridges the gap between theory and practice. Drawing from his extensive project management experience, he highlights the relevance of complex concepts through real-life applications. He has successfully conducted numerous open house Microsoft Project Scheduling workshops. Additionally, he has facilitated personal coaching and web-based sessions on various project management topics.
With over 20 years of project management experience, he has worked across various domains, including new product development, high-end technology-driven manufacturing automation, software development for automobile embedded systems, and Oil and Gas projects. In his previous role, Siddharth had successfully implemented a Project Management Office for a $100M project portfolio and established an Enterprise Project Management framework across the organization to streamline project management processes and improve collaboration among project stakeholders. As Head of the PMO, Siddharth played a pivotal role in establishing the Enterprise Risk Management framework, enabling the company to meticulously evaluate risks associated with high-value tenders before making informed go/no-go decisions. Siddharth has managed large projects in fast-paced, complex environments involving cross-functional, multi-site, and multi-vendor teams.
He is skilled in procurement and contract management, project scheduling, and budgeting. Siddharth is proficient in using Microsoft Project for scheduling. By meticulously tracking and monitoring projects with this tool, he has saved the company millions of dollars in liquidated damages. He excels in collaboration, coordination, and multitasking.
Currently Siddharth is working as a Solopreneur. He runs a project management training and consulting firm called pmfornonpm. It stands for Project Management for Non Project Managers. He started this learning platform to help business managers:
- Learn the basics of project management skills to deliver positive results to your organization
- Get acquainted with project management vocabulary so that you will feel confident while talking to other fellow project managers
- Use project management planning tools such as Microsoft Project
- Prepare for global accreditation in project management such as PMP Consult Small and Medium scale Enterprises in Risk Management, Project Schedule development and analysis, Project specific PMO set-up etc.
For training inquiries and project management services, Siddharth can be reached by:
Email: pmfornonpm@gmail.com
Website: pmfornonpm.in
Interested in becoming a PML Contributor?
Project Management Life (PML) is a volunteer team of 🔥passionate project managers🔥 who believe in the *power of this incredible profession* and we provide our knowledge, guidance, and support to all our project management colleagues within the PML Tribe.
If you’re interested in:
1️⃣ Growing your personal brand
2️⃣ Sharing your knowledge with your project management colleagues
3️⃣ Supporting the growth of the PML Community and growing our tribal knowledge together
…then we want to hear from you! It’s a win-win-win scenario!
YOU GET FULL CREDIT! We’ll celebrate your contributions, share your socials, etc. so you can grow your personal brand and build up your following as well! Plus you can collect PDUs for your volunteer and content creation hours!
Message us or send us an email at info@projectmanagementlife.org if you’re interested, and let us know! We can’t wait to hear from you!
Who is Project Management Life (PML)?
Project Management Life (PML) is a team of passionate volunteer project managers who believe in the power of this incredible profession and provide our knowledge, guidance, and support to our colleagues.
We know that project managers are often the unsung heroes that drive innovation and progress, and bring calm to what might otherwise be chaos. We are the leaders behind the scenes that work tirelessly, and deserve to be celebrated for our incredible efforts in making the world a better place.
We founded PML on the idea that we can inspire each other with stories of success and valuable lessons learned, empower each other with career advice and resources to thrive both personally and professionally, and support each other to achieve a fulfilling work-life balance by focusing on our health and well-being.
By living our best project management life, we bring our best selves to our projects, our teams, and the world.
We truly believe that project managers change the world.
Join the PML Tribe
The PML Tribe is a growing online community of project managers supporting our fellow project managers. Whether you’re a new or experienced project manager, this is a place where we can connect, learn, celebrate, and support one another.
Membership is free, and you get access to a weekly, members-only newsletter that is jam-packed with exclusive and curated content about project management, career growth and personal branding, health and well-being, personal self-improvement, professional development, work-life balance, and more. We are also launching an invite-only community forum, an exclusive clothing brand just for us called PML Tribal Gear, various PML podcasts, health and wellness classes, and so much more.
Join us today, and don’t miss out!
Share this Blog Post:
Standard PML Contributor Disclaimer: The views, thoughts, and opinions expressed in this PML Contributor guest post are solely those of the author and may or may not reflect the views of Project Management Life. We appreciate the many diverse perspectives shared by our contributors as part of our commitment to fostering insightful discussions within the PML Tribe Community.
Check out some of PML’s other recent blog posts!
- How to Manage a Project: A Step-by-Step Guide to Leading a Project from Start to Finish
- Smart Snacking: Healthy Snack Options for Busy Project Managers On-the-Go for Project Managers
- Breaking into Project Management: How to Find Your First, Entry-Level Project Manager Role
- The Secrets to a Strong Project Kick-Off Meeting: How to Effectively Launch Your Next Project
- From Chaos to Calm: How Project Managers Can Manage Stress (and Avoid Burnout)
Disclosure: This article may provide links to products or services that PML feels would be beneficial to our fellow project management colleagues and friends. In some cases, PML may be compensated for purchases made, at no cost to you. This is used to support the growth of the PML Tribe community and website, and we promise to continue to provide valuable content as we grow.
