Project Stakeholder Management Tutorial

Project Stakeholder Management

Welcome to the twelfth lesson ‘Project Stakeholder Management’ of the CAPM Tutorial, which is a part of the CAPM Certification Course offered by Simplilearn. In this lesson, we will focus on project stakeholder management.

Let us begin with the objectives of this lesson.

Objectives

After completing this lesson on Project Stakeholder Management, you will be able to:

  • Define stakeholders

  • Identify different stakeholders on a project

  • Describe stakeholder classification models and stakeholder engagement assessment matrix

  • List the skills needed to manage stakeholders

  • Describe the Project Stakeholder Management processes

In the next section, let us take a look at project management process map.

Project Management Process Map

There are 47 processes in project management grouped into ten Knowledge Areas and mapped to five Process Groups. In this lesson, we will look at the tenth knowledge area, i.e., Project Stakeholder Management and its processes. In the next section, let us understand who stakeholders are.

Stakeholders

A stakeholder is anybody who has a stake in the project. A stakeholder may be an individual, a group, or an organization, who may affect or be affected by or perceive to be affected by a decision, activity, or outcome of a project.

Further, the nature of the impact can be positive or negative, thus giving rise to the notion of positive or negative stakeholders. Irrespective of whether a stakeholder is positive or negative, it is important to engage with the stakeholders and get them involved in the project.

This can make a critical difference to the success or failure of the project. A single disgruntled stakeholder can bring the entire project to its knees, whereas an actively engaged and influential stakeholder can have the opposite effect.

Let us understand who the common stakeholders of a project are.

There are several examples of stakeholders.

The project managers themselves are important stakeholders.

The project team members represent stakeholders in the project.

The senior management of the organization, which is working on the project, has a stake in the project.

The sponsor (i.e., the person or entity that provides the money and resources for the project and essentially champions the project) is an important stakeholder.

The customer (which may be different from the sponsor) is a stakeholder as well. For instance, in many of the projects in the social sector, the sponsor may be the government or a development agency, whereas the customers would be the people who actually benefit from it.

The end users (which may be different from the customers or the sponsors) are stakeholders too.

The vendors or suppliers who provide goods or services to the project are important stakeholders.

People, whose lives may be impacted by the output of the project, are also stakeholders. For example, if a highway project requires possession of the privately owned land, people whose land is being taken away are the stakeholders.

If the construction of a dam or water reservoir benefits the downstream farming communities, they are the stakeholders here.

Competitors, who provide alternative goods or services, are stakeholders too.

Sometimes, environmentalists or other social groups may become stakeholders.

The government or political leadership may become stakeholders for projects in the public domain.

It is sufficient to state that there could potentially be hundreds of stakeholders for a large project. It is in the interest of the project manager and the project team to clearly identify all such stakeholders up-front and then actively manage them throughout the project.

In the next section, let us discuss the classification models for stakeholder analysis.

Classification Models for Stakeholder Analysis

Not all the stakeholders have the same amount of influence or power over the project. Therefore, the way to manage each stakeholder needs to be calibrated based on a proper classification of the stakeholders. This is the role of the classification model.

You can come up with a grid that maps the power of the stakeholders, the interest they have, the influence they may have, or the impact that they can have on the project through the Power/Interest, Power/Influence, or Influence/Impact grids.

It can be represented by mapping stakeholders to a power (or) interest grid.

The following diagram has X-axis which represents interest level and Y axis which represents the power level.

Based on the various combinations of power levels and interest levels, the grid can be divided into four quadrants.

Top Right Quadrant

The stakeholders on the top-right quadrant (with high power and high interest), need to be managed closely, i.e., you have to monitor their involvement and engagement very closely.

Bottom Right Quadrant

The stakeholders on the bottom-right quadrant (with high interest, but low power) need to be kept in the loop, i.e., you should share information with them and keep them regularly informed.

Top Left Quadrant

The stakeholders on the top-left quadrant (with high power, but low interest) can be managed by keeping them happy (for example, by making sure that their interests and opinions are taken into consideration).

Left Bottom Quadrant

The stakeholders on the left-bottom quadrant (with low power and low interest) may be managed less actively, by simply monitoring how things are going with them.

The Salience model describes classes of stakeholders based on their power (ability to impose their will), urgency (need for immediate attention), and legitimacy (appropriateness of their involvement level). This is a useful framework to guide the stakeholder management strategy on a project.

Practice creating power grids for business scenarios. This will help in understanding the level of engagement a project manager needs to maintain with various stakeholders.

In the next section, let us discuss the stakeholder engagement assessment matrix.

Stakeholder Engagement Assessment Matrix

The stakeholder engagement assessment matrix allows visualizing the current and desired states of a stakeholder’s involvement in the project.

The five levels of involvement are:

  • Unaware is where the stakeholder is not aware of the project or its impact.

  • Resistant is where the stakeholder is aware of the impacts and is resistant to change.

  • Neutral is where the stakeholder is aware of the project and is neither supportive nor in opposition to the project.

  • Supportive is where the stakeholder is aware of the project and its impact and is supportive of the change.

  • Leading is where the stakeholder is aware of the project and impacts and is actively engaged to ensure that the project is successful.

Let us now look at the matrix.

Stakeholder

Unaware

Resistant

Neutral

Supportive

Leading

Stakeholder 1

C

   

D

 

Stakeholder 2

 

C

D

   

Stakeholder 3

   

C

D

 

Stakeholder 4

   

C

 

D

Stakeholder 5

     

D, C

 

The table has one row per stakeholder identified.

You place C in the column which best indicates the current level of engagement for that stakeholder.

Then you place D in the column which best indicates the desired state of engagement. This table can be a quick visualization tool that helps understand where work has to be done in the stakeholder management activities.

In the next section, let us discuss the skills required for stakeholder management.

Stakeholder Management Skills

Stakeholder management is both an art and a science. Since it involves dealing with people and people are inherently non-linear and unpredictable, there is no one size that fits all strategies or tools that will work while managing them.

However, a project manager may use few traits and techniques while managing stakeholders, which are classified as inter-personal skills and managerial skills.

Interpersonal Skills

A project manager must possess good interpersonal skills, that is must invest the time and energy to build trust.

This involves multiple things, such as establishing a personal rapport, following through on commitments, being punctual, etc. Once the trust is established, it helps in smoothing many difficult bends. Conflict management is an important skill for a project manager.

While communicating with stakeholders, the project manager must practice active listening. They must not assume that they have all the answers; instead, they should spend some time to understand the issues and the stakeholder’s point of views.

This alone can go a long way in smoothing ruffled feathers and building constructive relationships. Resistance to change is natural. A project manager must know how to convert that into a positive energy in its favor.

Managerial Skills

Managerial skills that may help in accomplishing the project objectives.

A project manager must be able to build consensus among the group. While absolute uniformity may not always be possible (or desirable); the project manager must use techniques to ensure widespread discussions and arrive at a path that the group can buy into.

The project manager must be able to influence people—often without necessarily being in the position of authority. The project manager must be skillful to negotiate agreements. The project manager must be able to understand and modify organizational behavior in order to move the project in a certain direction.

In the next section, let us look at the processes under the stakeholder management knowledge area.

Project Stakeholder Management Processes

There are four processes in Project Stakeholder management.

The first process is “identify stakeholders”, which is performed during the initiating process group.

The second process is “plan stakeholder management”, which is performed during the planning process group.

The third process is “manage stakeholder engagement”, which is performed during the executing process group.

The fourth process is “control stakeholder engagement”, which is performed during the monitoring and controlling process group.

Let us now proceed to look at each of these processes in detail. In the next section, let us look at the Identify Stakeholders process.

Identify Stakeholders

Identify stakeholders is the process of identifying the people, groups, and organizations that could affect, or be affected by a decision, activity, or outcome of a project. Clearly, the process of stakeholder management begins with the identification of the stakeholders in a project.

The first input is the project charter. The charter provides a high-level overview of the project, its customers, and is a useful document to help you start with stakeholder identification.

The procurement documents help to identify the suppliers, and hence those are useful in identifying stakeholders.

The enterprise environmental factors and the organizational process assets provide the context within the organization and are used for this process as well. It helps to identify the key people in the organization, who may be interested, or be able to offer something for the project.

The tools and techniques for this process are pretty straightforward. Apart from identifying the stakeholders, their interest in the project needs to be identified. This is done through stakeholder analysis, series of meetings, and by consulting experts who can provide valuable guidance.

The primary and only output of this process is the stakeholder register. The stakeholder register is a document that enlists all the stakeholders on the project, their interest, how to ensure their involvement and engagement throughout the project, and so on.

This document will be generated in this process and needs to be updated as and when the project progresses. It is essential to study the process of identifying stakeholders to answer concept based questions on this topic.

In the next section, let us discuss the plan stakeholder management process.

Plan Stakeholder Management

After identifying the stakeholders, you need to determine how you will manage the stakeholders on a project. The plan stakeholder management process involves analyzing the needs, interests, and the potential impact that the stakeholders might have on the success of the project.

The project management plan and the various subsidiary plans give valuable insights into the stakeholder management strategy. The stakeholder register is prepared during the identify stakeholders process. The enterprise environmental factors and the organizational process assets provide the tools, templates, and policies for devising the stakeholder management plan.

The tools and techniques for this process involve various analytical techniques, which are needed to analyze various alternative strategies for dealing with the stakeholders. Expert judgment and meetings help to devise the proper strategy.

The outcome of this process is the stakeholder management plan, which lays down the procedure for managing the stakeholders. It may also affect other project documents. For instance, what you decide to do about the stakeholder engagement may have a bearing on the communications plan or the procurement management plan.

Now, let us look into the Manage Stakeholder Engagement process.

Manage Stakeholder Engagement

In the manage stakeholder engagement process, you put these plans into action. This helps to ensure that the engagement and contribution of the stakeholders are maximized and their resistance to the project is minimized.

The stakeholder management plan is an important input. It is the master plan, which guides the actions related to stakeholder management.

The communications management plan contains information about the content, frequency, format, technology, etc. that governs all aspects of communication on the project. The changelog is needed to communicate with the stakeholders on all aspects related to changes that occurred or are likely to occur during the project.

The organizational process assets guide us through the normal operating procedures with regard to communication, change management, etc. The primary tools and techniques for this process are various communication methods. It also involves interpersonal and managerial skills.

The project manager and the team need to bring all these skills to bear effective management of the stakeholder engagements. Managing the stakeholder engagements may give rise to issues that need to be captured in the issue log.

It may also give rise to change requests to the product or the project. It may cause changes to the project management plan and various other project documents. As you manage the engagements, it may trigger an update to the organizational process assets with items such as records, reports, feedback, and lessons learned from these engagements.

In the CAPM exam, you may get concept based questions. So ensure that you study the process of managing stakeholder engagement to answer such questions correctly.

In the next section, we will focus on the control stakeholder engagement process.

Control Stakeholder Engagement

As in any monitoring and controlling process, the control stakeholder engagement process involves monitoring the state of various stakeholder relationships and taking specific actions to enhance the engagement of different stakeholders.

The inputs to this process are the project management plan, the issue log, which was generated in the previous process, data related to the work being performed on the project, and various other project documents (which may need to be shared with the stakeholders).

The information management systems provide tools to collect, consolidate, and present the information to various stakeholders. Expertise must also be sought from different stakeholders on how you should perform with this process.

Several meetings may be required to exchange and analyze information on stakeholder engagement and to evolve corrective actions in this regard.

One of the major outputs of this process is the work performance information, which is the work performance data that has been analyzed, interpreted, and presented in an easily comprehensible form.

The other outputs are similar to the manage stakeholder engagement, as this process may also give rise to change requests, updates to the project management plan, project documents, and organizational process assets.

Let us now check your understanding of the topics covered in this lesson.

Summary

Here is a quick recap of what was covered in this lesson:

  • The stakeholder is an individual, group, or organization who may affect, be affected by, or perceive itself to be affected by a decision, activity, or outcome of a project.

  • The different stakeholder classification models are power/interest, power/influence, or influence/impact grids and Salience model.

  • Stakeholder engagement assessment matrix helps in visualizing the current and desired states of a stakeholder’s involvement in a project.

  • Project managers need to demonstrate certain interpersonal and managerial skills to manage the stakeholders and accomplish the project objectives successfully.

  • The four Project Stakeholder Management processes are Identify Stakeholders, Plan Stakeholder Management, Manage Stakeholder Engagement, and Control Stakeholder Engagement.

Conclusion

With this, we have come to the end of this lesson. In the next lesson, we will discuss process group view.

  • Disclaimer
  • PMP, PMI, PMBOK, CAPM, PgMP, PfMP, ACP, PBA, RMP, SP, and OPM3 are registered marks of the Project Management Institute, Inc.

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