Who are Project Stakeholders? 7 Effective Ways to Manage Them
Who are Project Stakeholders? 7 Effective Ways to Manage Them
Blog Article
Who are Project Stakeholders?
“PMI defines stakeholders as individuals and organizations who are actively involved in the project or whose interests may be positively or negatively affected as a result of project execution or completion.”
In other words, project stakeholders can be individuals or groups with a “stake” in a project and can either influence it or be influenced by its outcome. Among these, key stakeholders have major control over the project scope. They can even disrupt or bring the project to an abrupt halt if they withdraw their support. Therefore, the failure or success of the project is highly dependent on the satisfaction of its stakeholders.
For example, if you create a website for a client, the business owner (your client) is a key stakeholder. You must understand their requirements, develop the website accordingly, make any feasible changes requested, and convey the progress regularly. Doing so is critical because if they disapprove of certain features/elements or reject the UI design if it doesn’t meet their expectations, it can halt progress and even lead to a project failure.
Given the basic definition of project stakeholders, let’s understand the types.
Types of Project Stakeholders
There are two main categories of project stakeholders: internal and external. Both groups play unique roles in the project’s success.
Internal Stakeholders
Individuals or parties within an organization who are directly involved in a project are called internal stakeholders. They actively participate in its planning, execution, and delivery. Moreover, internal stakeholders can influence a project’s progress and decision-making. Examples are the project team, project manager, sponsors, and other internal teams, such as sales or marketing.
External Stakeholders
Individuals or parties outside the organization who may not be directly involved in a project are called external stakeholders. However, the project’s outcome can affect them, or they can indirectly influence it. Examples are clients, investors and sponsors, communities, shareholders, end-users, government, and regulatory authorities.
Now that we know the primary types of stakeholders, let’s learn how to differentiate between project stakeholders and shareholders.
Examples of Project Stakeholders
The stakeholders can vary depending on the type of project and the industry. Some common examples of project stakeholders are:
- Project Manager: Responsible for planning and overseeing the project from start to finish.
- Team Members: Individuals directly working on the project tasks.
- Resource Managers: Responsible for securing resources necessary for project execution.
- Executives & Senior Management: Provide strategic direction and make high-level decisions.
- Company Owners: Have a direct interest in the success of the project.
- Investors & Financiers: Provide financial backing and expect a return on their investment.
- Sponsors: Support and fund the project and the team working on it.
- Vendors: Provide goods or services needed for the project.
- Consultants: Offer expert advice or specialized knowledge to help with the project.
- End Users: The individuals who will use the product or service once the project is complete.
- Communities: Local communities that may be affected by the project and care about its impact on health, safety, and economic development.
- Government: Government agencies that collect taxes and are concerned with the project’s broader social and economic impact.
As we have gone through the examples of stakeholders, we must know why stakeholder management is important.
Read More: What is Resource Availability in Project Management, and Why Does It Matter?
Why is Project Stakeholder Management Important?
Stakeholders hold control over various aspects of a project, including funding, resource allocations, and approvals. If one fails to engage these key stakeholders and fulfill their expectations, they may withdraw their consent, leading to the project’s failure. The best example is the client, who may disapprove or cancel the project if it fails to meet their requirements in any aspect. This may not only cause revenue loss but also hamper the company’s reputation.
That is why managing stakeholder expectations and demands is critical. Besides, they have experience in the given industry, and some are subject matter experts. Hence, they can guide project managers and help them determine budgets, milestones, deliverables, resource requirements, and project constraints. Their valuable insights and support increase the probability of a project’s success exponentially.
Furthermore, engaging stakeholders helps in the early identification of potential risks and challenges that can hamper project progress. As a result, project managers can proactively develop risk management strategies and contingency plans to minimize the impact. Besides, effective stakeholder management facilitates open communication and fosters trust among involved parties, which leads to better project performance.
Therefore, by actively keeping stakeholders involved, updated, and engaged, project managers can meet their expectations, minimize conflicts, and ensure successful project delivery.
How to Perform Stakeholder Analysis?
Stakeholder analysis helps you identify and understand the people or groups who can impact or be impacted by the project. The process to do that is as follows:
Identify Key Project Stakeholders
The first step is to identify internal and external stakeholders. For this, you can review the project documentation and gather insights from team members on who should be considered. You can also consult other departments, such as finance and operations, to ensure no key stakeholder is overlooked. For a comprehensive assessment, you must consider those who influence the project, benefit from it, or might face negative impacts from its failure.
Prioritize Project Stakeholders by Influence and Interest
Not all stakeholders hold the same level of interest or power in a project. Some may be involved in decision-making, while others simply focus on the end result. Thus, it is crucial to categorize and prioritize stakeholders based on their level of influence and interest in the project. An influence/interest chart is one of the best ways to identify, visualize, and prioritize the project stakeholders.
The influence/interest matrix categorizes stakeholders as follows:
High influence, high interest – These are the key decision-makers in a project. Managing their concerns, expectations, and requirements closely and diligently is crucial. For example, investors and sponsors.
High influence, low interest – They are not directly involved in a project but can significantly influence and even disrupt it. Thus, it is necessary to keep them satisfied. For example, the Government and political groups.
Low influence, high interest – They have a strong interest in the project’s outcome but lack the power or authority to significantly impact its direction, decisions, or end result. For example, community members or junior resources.
Low influence, low interest – These are the least significant project stakeholders. Still, it is imperative to monitor them on a timely basis and keep them in the loop to check if their interest or influence have changed over time. For example, the general public.
Develop Stakeholder Engagement Plans
To ensure consistent project stakeholder support, you can create a formal engagement plan that clearly outlines communication protocols. This includes determining frequency and modes of communication (synchronous or asynchronous). You can also customize the information or updates to each stakeholder’s needs. These measures help ensure that key stakeholders are highly attuned to the project’s progress.
In the following section, we will learn about the strategies you can employ to manage project stakeholders efficiently. Report this page