STAKEHOLDERS MANAGEMENT BY ROBERTO RODRIGUEZ THE FLYING KITE INCORPORATED NOVEMBER 2014

WHAT IS STAKEHOLDERS MANAGEMENT? Includes the processes required to identify people, groups, or organizations that could impact or be impacted by the project, to analyze their expectations and impact on the project, and to develop appropriate management strategies for effectively engaging stakeholders in project decisions and execution. It also focuses on continuous communication with stakeholders to understand their needs and expectations, addressing issues as they occur, managing conflicting interests, and fostering appropriate stakeholders engagement in project decisions and activities. Stakeholder satisfaction should be managed as a key project objective. (PMBOK – 5 th Edition, Section 13)

WHY DO WE CARE? Non-technical risks: Defined as all risks and opportunities that emerge from interactions with regulatory, public, socio-economic, governmental and environmental organizations, for the management of related aspects of a project’s operations. Companies in energy and mining face real and growing costs from non-technical risks driven by communities, governments, non-government organizations and media – both social and traditional. International oil companies’ projects now take double the time to come online compared with a decade ago, causing significant increase in costs. Non‐technical risks account for nearly half of the total risks, with stakeholder‐related risks the largest category. (Valiant & Company Ltd) Non-Technical Risks can account for up to 70-75% of cost and schedule failures in projects in the form of schedule delays and cost overruns, lost deal opportunities, and a host of stakeholders-related issues. (Society of Petroleum Engineers – SPE International and the Australian Petroleum Production and Exploration Association Ltd.)

Of the 190 projects, average delay of 12 months for non-producing fields Study of Top 190 Oil & Gas Projects Projects in: N America S America Europe Africa Asia-Pacific Asia-Middle East Source: From Shell presentation “Managing Non-Technical Risk at the Project Level” at Social and Environmental Risk Management Conference, 2011; adapted from Goldman Sachs Investment Research “The Top 190 Projects to Change the World”, Non-technical risk (NTR)

WHO ARE THESE SO CALLED STAKEHOLDERS? InternalUnknown Project Team Customer Functional Organizations Vendors and Contractors Regulatory & Government Others External Financial Institutions Public Neighbors Stakeholder: A stakeholder is any individual, group or organization that can affect, be affected by, or perceived itself to be affected by a program or project.

THINGS THAT AFFECT STAKEHOLDERS MANAGEMENT PersonalityPowerInterestsKnowledgeAttitude Situations and Circumstances

PERSONALITY: The combination of characteristics and/or qualities that form an individual’s distinctive character Keen Persistent Capable Charming Precise Confident Dutiful Encouraging Reliable Exuberant Helpful Humble Suave Imaginative Meticulous Adventurous Conscientious Cultured Dependable Discreet Fair Fearless Observant Impartial Independent Optimistic Intelligent Obedient Trusting Valiant Slovenly Self-centered Boorish Surly Unfriendly Unruly Stingy Bossy Vulgar Malicious Conceited Obnoxious Impatient Lazy Picky Sullen Pompous Dishonest Finicky Sarcastic Arrogant Cowardly Sneaky Rude Quarrelsome Impulsive Irresponsible Source:

PERSONALITY TRAITS Openness refers to traits such as how inclined someone is to conform to societal or cultural norms, how concretely or abstractly they think about things, and how open or resistant someone is to change. Conscientiousness has to do with a person's degree of organization, level of discipline, and how prone he or she is to taking risks. Extraversion is a personality characteristic that describes things like how social a person is, or how warm and loving they tend to be. Agreeableness takes into account how kind, dependable, and cooperative a person is. Neuroticism is a personality characteristic that describes how nervous or anxious a person tends to be, as well as, the degree of self-confidence and self-contentment he or she possesses. Source:

PERSONALITY TRAITS – SAMPLE ITEMS Openness I have a rich vocabulary. I have a vivid imagination. I have excellent ideas. I am quick to understand things. I use difficult words. I spend time reflecting on things. I am full of ideas. I am not interested in abstractions. (reversed) I do not have a good imagination. (reversed) I have difficulty understanding abstract ideas. (reversed) Conscientiousness I am always prepared. I pay attention to details. I get chores done right away. I like order. I follow a schedule. I am exacting in my work. I leave my belongings around. (reversed) I make a mess of things. (reversed) I often forget to put things back in their proper place. (reversed) Source:

PERSONALITY TRAITS – SAMPLE ITEMS Extraversion I am the life of the party. I don't mind being the center of attention. I feel comfortable around people. I start conversations. I talk to a lot of different people at parties. I don't talk a lot. (reversed) I keep in the background. (reversed) I think a lot before I speak or act. (reversed) I don't like to draw attention to myself. (reversed) I am quiet around strangers. (reversed) I have no intention of talking in large crowds. (reversed) Agreeableness I am interested in people. I sympathize with others' feelings. I have a soft heart. I take time out for others. I feel others' emotions. I make people feel at ease. I am not really interested in others. (reversed) I insult people. (reversed) I am not interested in other people's problems. (reversed) I feel little concern for others. (reversed) [ [ Source:

PERSONALITY TRAITS – SAMPLE ITEMS Neuroticism I am easily disturbed. I change my mood a lot. I get irritated easily. I get stressed out easily. I get upset easily. I have frequent mood swings. I often feel blue. I worry about things. I am much more anxious than most people. I am relaxed most of the time. (reversed) I seldom feel blue. (reversed) Source:

POWER (THE NEED TO HAVE IT): The capacity or ability to direct or influence the behavior of others or the course of events Legitimate (Official authority) Coercive (Like bullying at the work place) Expert (Based on knowledge and experience) Informational (Possess needed or wanted information) Reward (Linked to who controls raises and bonuses) Connection (Networking) Referent (Held by people with charisma, integrity, positive qualities)

INTERESTS: A stake or involvement in an undertaking. Something of concern or importance. Their career – Themselves Being the leader Project success Money – Just for the paycheck Reporting – Receiving reports Relationships - Team Safety and Environment Quality of work Learning - Knowledge

KNOWLEDGE: Facts, information, and skills acquired through experience or education; the theoretical or practical understanding of a subject Knowledge of the task, work process Knowledge and Experience in Project Execution Knowledge and Experience in Project Management Previous good or bad experiences Perceptions – Pretending or perceived as knowledgeable Trust levels – Sharing of knowledge Influence of Cultural and Language barriers

ATTITUDE: A feeling or way of thinking that affects a person's behavior Friendly and Helpful Threatening and hostile Negative Cool, cocky, defiant, arrogant Ignoring and lacking attention Conflictive Selfish In despair or affected Caring and responsive Attitude may be affected by circumstances inside or outside of the project environment, such as: family/personal crisis, did not get promoted, previously acquired commitments, health issues, etc.

KEY QUESTIONS… Who should perform Stakeholder Management? PE Assistants Drafters PM Managers Sponsors Leads Engineers At what level? Project Work Process Activity Escalated to the Project level

CUSTOMER SATISFACTION Wikipedia: It is a measure of how products and services supplied by a company meet or surpass customer expectation PMI: Within the quality management system, a state of fulfillment in which the needs of a customer are met or exceeded for the customer’s expected experiences as assessed by the customer at the moment of evaluation. 1.It’s creates customer loyalty and repeated business 2.It increases number of customers – Good reputation spreads fast 3.It reduces customer’s worries, concerns, and upsetting 4.It reduces negative propaganda 5.It creates stability and security for the organization, hence improving employee loyalty 6.It improves profit margin due to continuity of work and the reduction of advertising costs 7.It makes your organization more effective and competitive

STAKEHOLDERS MANAGEMENT TO CUSTOMER SATISFACTION Customer Satisfaction

STEPS… Stakeholder Management is an important component of successful project execution. It requires discipline and attention to details. The following are recommended steps for effective stakeholder management: 1.Identify who your Stakeholders are 2.Study the contractual requirements and stated expectations (This could be step 1 as well) 3.Perform interviews with a predetermined checklist of things to ask. Try to identify what they are strong about and where there might be some flexibility. Also, try to identify leadership levels and who is in charge of making decisions or influencing them. Some questions should drive toward measuring the maturity and comprehension level that each Stakeholder has over project execution and management. Matured and experimented project people would be more conscious of the impact that their unstated needs and expectations may have in the execution of the project, and of your ability to cope with them for fulfillment. 4.State your needs and expectations to them as well, particularly those where you will require their assistance, input or collaboration. At the end of the session, read back to them what you have stated and if possible ask them to provide acknowledgement.

STEPS… 5.Perform an internal evaluation with your project team to discuss the Stakeholders needs and expectations, the risks of not meeting such needs and expectations, and verbal versus written requirements and/or expectations. 6.Review your project strategic and execution plans and identify any gaps or areas of attention where your plans may not be addressing the Stakeholders needs and expectations (even if such needs and expectations are not written in the contractual documents). Make adjustments to the plans, as required. 7.Hold regular meetings with key Stakeholders to assess project performance against known needs and expectations. Seek feedback, record it, and monitor it against previously stated needs and expectations. If noticing that they have considerably changed, initiate Change Management. 8.Based on such feedback, create action plans for those areas where needs or expectations may be compromised. Make sure that root causes are identified in support of creating the most effective action plans. If at all possible, each area where needs or expectations are compromised should be linked to related work processes. It is the fixing or adjusting of such work processes what would lead to the fastest and most effective fulfillment of unmet needs and expectations.

DOCUMENTING STAKEHOLDERS MANAGEMENT Project needs and expectations analysis Stakeholders interests and expectations analysis Stakeholders Sensitivity Chart Comparison to Project Plans and Adjustments Stakeholders Feedback Chart Further adjustments to plans and corrective action 1 st template 2 nd template 3 rd template 4 th template

PROJECT NEEDS AND EXPECTATIONS ANALYSIS

STAKEHOLDERS INTERESTS AND EXPECTATIONS CHART

STAKEHOLDERS SENSITIVITY CHART

STAKEHOLDERS FEEDBACK CHART

IN SUMMARY - EFFECTIVE STAKEHOLDERS MANAGEMENT 1.Identify your stakeholders 2.Study Contractual (written) Requirements 3.Perform Interviews to seek and document needs and expectations 4.State and document your needs and expectations 5.Prepare Stakeholders Assessment and Sensitivity Charts 6.Review set of expectations against Project Execution Plan with your team – Make adjustments as necessary 7.Foment an atmosphere of trust and cooperation - Get stakeholders involved 8.Seek feedback regularly - Make additional adjustments (corrections) 9.Don’t be afraid to initiate change management, when expectations vary to the point that changes are introduced 10.Stay positive but firm – Elevate issues when conflict appears to be inevitable and or issues become unmanageable

THINGS TO REMEMBER… Performed by ALL Done REGULARLY AND SYSTEMATICALLY Carried out at the WORK PROCESS LEVEL AND THEN ESCALATED TO THE PROJECT LEVEL Based on sharing, understanding and trying to meet EXPECTATIONS FROM BOTH SIDES While taking into account PERSONALITY, POWER, INTERESTS, KNOWLEDGE AND ATTITUDE It should be DOCUMENTED Measured by PERFORMANCE and RESULTS through FEEDBACK

CLOSING REMARKS FACT: Stakeholders’ mismanagement may become the leading cause for failure in a project.  Start by recognizing that project management is about people.  Staying positive and focused may be the differentiator for creating the atmosphere for successful Stakeholder Management. SUGGESTION: Be diligent and proactive. Avoid having to rely ONLY on lessons learned sessions held toward the end of the project, or on Client surveys performed once a year, to manage Stakeholders.