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HomeBlogProject ManagementWho are Project Stakeholders and Why They are Important?
One of the critical challenges that project managers face to ensure project success is managing stakeholder expectations. The project's success is almost guaranteed when the project manager can drive consensus and influence the stakeholder community toward a shared purpose. But unfortunately, the reverse is equally true. This article introduces you to who a project stakeholder is, what stakeholder management is, why it is critical, and how to go about it.
You can divide Project stakeholders into two broad groups. One group is the people who will be affected by the project outcome, for example, customers and users. As a result of the project outcome, their way of working or behavior will change, and hence, they are critical stakeholders for the project.
However, there will be another group who can influence the project outcome through their decisions. It can be the executives of the performing organizations and project sponsors who decide on the resource availability for your projects or even your customers who can provide you with the feedback that determines your project's direction. These people or entities are also your project stakeholders.
Beyond the above broad categorization, the interest in the project outcomes determines the extent to which the stakeholder is critical for project success. Here is a concise definition of who is the project stakeholder.
Any person or entity, who is influenced by or can influence project outcomes and is interested in those outcomes, is a project stakeholder. Project Management Institute (PMI) provides the following project management stakeholder definition.
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 successful project completion.
Beyond the ability to influence the outcomes, the stakeholders in a project are essential for several reasons.
Given the ability of the stakeholders to determine the project's success, their role is vital and thus requires active management efforts from the project managers. Taking up an online course for Project Management, that helps you understand the nature and scope of stakeholders in the context of project management could be a good idea for your career growth.
Stakeholders can exist both within the project organization and outside of it. Therefore, classifying stakeholders in project management is essential for project managers to develop better stakeholder management strategies and plans.
Internal stakeholders can include various people groups inside the organization and the project team such as:
There are many kinds of external project stakeholders, ranging from customers to regulatory agencies and competitors; a project manager should be aware of them and their functions.
Effective project stakeholder management starts with identifying the right stakeholders. Specific stakeholders are easy to identify, as is evident from the list above. However, identifying the right project stakeholders in project management takes effort. These are a few actions you can take to do just that:
It is essential that once you have identified project stakeholders, you manage them effectively throughout the project. Therefore, it is crucial to understand what Project stakeholder management is and what it entails. Project management frameworks like the PMBoK and PRINCE2 expand on project stakeholder management as a critical aspect of a project manager's responsibilities. Taking up certified PMP training online or a PRINCE2 Project Management certification course will prepare you further in this area. However, the following is an indicative list of actions you can take for your reference.
1. Analyze stakeholders for various parameters to gauge their influence on project outcomes and classify and prioritize them. There are many frameworks and tools available to classify stakeholders. Power-Interest Grid or Influence-Interest Grids are primary among those. These tools will help you understand how you should engage with the stakeholders.
2. Create a stakeholder communication and engagement plan. The plan can be represented with a RACI Matrix or any variation thereof. Such a matrix defines project stakeholders' roles and responsibilities. However, the plan will enable you to ensure that you engage with the stakeholders appropriately and monitor their engagement and approach toward the project.
3. Ensure the stakeholders know project objectives, key assumptions, and risks. Understand their requirements and expectations from the project and work out a strategy to balance those expectations with project plans. While doing that, ensure that you adopt the stakeholders' point of view (POV).
4. Continuously engage with the stakeholders to proactively assess changing needs or expectations and manage such challenges. Ensure they know the project's progress and any issues and risks the team faces.
5. Gauge their reactions and attitude through continuous communication and appropriately adjust your stakeholder management strategy.
There are many advantages to effectively managing stakeholder expectations. Let us take a look at a few primary ones.
Effective stakeholder management builds a strong foundation for project success. Identifying the stakeholders can be tricky given the diversity. They can be internal to your organization or external. Some of them can be obvious, like project sponsors or customers. But others, like government agencies or social groups, may not be easily identifiable. But once you identify them, generate a sense of shared purpose and common success criteria. Then, build a communication plan around those expectations and engage with them throughout the project lifecycle. Taking up any of KnowledgehHut's certification courses for Project Management will prepare you to manage your project stakeholders effectively and significantly increase the chances of your project's success.
A good stakeholder must have relevant domain knowledge, communication skills, the ability to help project managers manage expectations of other stakeholders, and objectivity to evaluate the outcomes appropriately. In addition, an ideal project stakeholder should be able to work collaboratively with other stakeholders to guide the project manager and project team.
To understand the success criteria for each stakeholder, you must first be clear about their expectations from the project, hidden and explicit. For everyone, these criteria may be different, sometimes even competing. That's why, while performing stakeholder management, it is essential to lay out the set of common criteria that will be considered for measuring project success.
While developing the stakeholder communication plan, consider each stakeholder's preferences. For example, some prefer "pull" communication, while others prefer "push" communication. In addition, some prefer formal emails to report progress, while others prefer summary presentations and analysis through project management systems. Identify the best possible medium and frequency for each stakeholder and use the communication plan to report the project's progress.
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