1 Apr, 2018

How to Effectively Manage Project Stakeholders

Today, large projects are developed in an environment where communication is instantaneous and prolific. In addition to internal stakeholders, external stakeholders and influence groups can be quickly organized and mobilized.  More than ever, effective stakeholder management is necessary to achieve successful project outcomes.

So, who are the stakeholders? They can be an individual, a group or organization who might affect, be affected by, or perceived itself to be affected by a decision, activity or outcome of the project.  Much of the stakeholder management information today focuses on the following external stakeholders:

  • •  People in nearby communities
  • •  Landowners
  • •  Local government entities
  • •  Regulators
  • •  Goods and services suppliers
  • •  Partners
  • •  Environmental groups
  • •  Labor unions

However, for many projects, some of the most crucial stakeholders to manage are internal to the sponsoring company. Internal stakeholders who often get involved include managers and reps from the following areas:

  • •  Production and operations
  • •  Other projects
  • •  Central engineering disciplines
  • •  Human resources
  • •  Supply chain and purchasing
  • •  Land
  • •  Legal
  • •  Health, safety, and environmental

Depending on how your project is perceived, internal stakeholders can easily become either proponents or detractors of your project objectives. These proponents or detractors may not be focusing on just your project. They may be reacting to a general issue that your project represents. For example, there may be several projects competing for scarce resources. There may be an internal reluctance toward change, or a feeling that internal groups will lose control or influence when staff are temporarily assigned to a project. In some cases, the issue is simply that there are other work or personal priorities.

Examples (from my experience) of environments where internal stakeholder struggle exists are:

► A chemical plant where the design, maintenance and operating groups had little respect for each other.

► An operating location in Scandinavia where projects were run by one of the foreign partners using an engineering and construction agreement.

► A project development location in the Mideast, where there was misalignment between upper management and the project development group.

So, what do we do?

Focus on building relationships. Our project management goal is always to build a beneficial relationship that fosters an open and honest dialogue that addresses both the project needs and internal stakeholder needs and wants.

Typically, there’s an external stakeholder management process followed by companies. Just simply apply it to internal stakeholders within your company.

 

 

IDENTIFY STAKEHOLDERS

The first step is to name internal stakeholders and figure out their needs and goals. To find these stakeholders, follow the

Money

•  Who has the authority to spend funds?

•  Who gains financially?

Resources

•  Who supplies project team members?

•  Who will spend time coordinating work in the field?

Deliverables

•  Who receives products and/or services?

Change

•  Who might lose influence?

•  Who may be concerned with the status quo?

Signatures

•  Who approves, signs off, etc. for both the operating facility and corporate groups?

Once internal stakeholders are identified, they can be categorized based on their orientation for the project.  Are they (a) for the project, (b) neutral, or (c) against the project. Once their orientation is known, their need or goal can be clarified. This step may be completed by simply talking to them and learning where their concerns are. It is important to document and track these as they may change over time.

 

 

IDENTIFY STRENGTHS AND WEAKNESSES

Once stakeholders’ reasons for being involved are understood, you can start looking at how much influence they may have on the success of the project. Influence is a matter of degree, and some stakeholders weigh more heavily on a project than others. 

Degree of Influence

 

How do internal stakeholders influence a project?

Withholding - directly or indirectly restricting access to resources needed

Resource Building - acquire and recruit critical and capable resources to their group to increase their power base

Coalition Building - alliance billing with other stakeholders

Conflict Escalation - attempt to escalate the conflict beyond the initial project related causes and promote other non-project related goals

Credibility Building - increased or that their legitimacy by requiring credible incapable resources such as capable individuals with good reputations and networks

Communication - actively using different communication channels to highlight the urgency of their claims

The list of influencers may be long, so who should we focus our relationship building efforts on? 

We need to find the critical few who have1) high or moderate influence, 2) are strongly opposed or supportive, and 3) are inclined to strategize their effort. Next, we start building our plan.

 

 

DEVELOP STAKEHOLDER PLAN

While the process for stakeholder management planning is simple, the actual analytical work needed to set up the plan, and the effort needed to implement it is challenging.

Our plan can be tracked on a stakeholder management register that includes:

• A list of the internal stakeholders

• The issues that they are concerned about

• The type of relationship needed to resolve the issue

• What is be communicated

• How the communication is to be done…by whom and to whom

• How often the communication will occur

• Status of the issue: resolved, in progress, unsuccessful

Despite our best effort, internal stakeholders still may not buy into our shared goals. Their actions may not be direct and open, but subtle and hidden. Resistance may appear in the form of interference, political forays, domineering behavior, opportunism, indecision or unavailability. 

So, who should be involved in developing and implementing an internal stakeholder management plan?   

The project manager and a few of his or her direct reports. 

Due to the sensitivity of this effort, the plan should be communicated with discretion. It is a plan for quiet diplomacy and is important to work with our peers by bringing matters of concern to them behind closed doors. This approach reduces the risk of embarrassment and loss of face—or even retaliation.  We must always strive to build long-term beneficial relationships. As you might expect, this is often best done quietly.

 

 

SUMMARY

Much of this article has focused on reducing the negative influence that internal stakeholders may have on your project. However, having a successful project outcome is akin to winning the game in professional sports. To win, a team’s game plan must focus on both a strong defense and a strong offense. The internal stakeholder management effort must also focus on offense, that is, building up the influence of supporters.

Managing stakeholders is an ongoing process during project development. As can be seen below, the last step is to monitor and adjust the plan to the ebb and flow of influencers and issues during each stage of the project.

Many projects are still struggling due to non-management of internal stakeholders. If the degree of management control is light and the company culture is aggressive or self-serving, the problem can strongly affect project outcomes.

Several PetroSkills project management courses deal with stakeholder management.  If you would like more information on building stakeholder support and reducing opposition, we recommend attending one of the following project management courses:

 

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