Management & Development of Complex Projects Course Code - 706 MS Project Management Management & Development of Complex Projects Course Code - 706 Stakeholder Management in Complex Projects Lecture # 7

Summary of Previous Lecture In previous Lecture, we have discussed about Construction projects types Structure of Construction Industry of Pakistan National economy and construction Work hunt in construction Registrations, decision to bid, construction project organization Engaging supplier/ sub contractors, establishment of site camp, site surveys Issues in construction industry

Definition of Project Stakeholder Many organizations may have different definitions of stakeholders. In PMBOK 4, the stakeholders were defined as „individuals and organizations that are actively involved in the project, or whose interests may be affected as a result of project execution or project completion“. [Project Management Body of Knowledge, 4th Ediction 2008, p.23]

Definition of Project Stakeholder The definition of the project stakeholders has been revised in PMBOK 5 and now project stakeholder is defined as „ A 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“. [Project Management Body of Knowledge, 5th Ediction 2013, p.28]

Definition of Project Stakeholder Stakeholders include all members of the project team as well as all interested entities that are internal or external to the organization. The project team identifies internal and external, positive and negative, and performing and advising stakeholders in order to determine the project requirements and the expectations of all parties involved. [Project Management Body of Knowledge, 5th Ediction 2013, p.28]

Project Stakeholders: An Alternative Definition Development Financing and Implementing Institutions have a different perception as to who constitutes a project’s stakeholders. Example: According to the African Development Bank’s Handbook on Stakeholder Consultation and Participation in ADB Operations, Stakeholders are people/communities who may - directly or indirectly, positively or negatively – affect or be affected by the outcomes of projects or programmes; Source: Dr. A Z Khan‘s Lecture Presentations

The Project Stakeholders; Some Facts Stakeholders must be „managed“ throughout a project so that their ideas and concerns are taken into consideration, they can contribute to the project, they understand the project decisions taken and accept them more readily and they will be project supporters instead of project adversaries Depending on the nature of the project, the stakeholders can, at one extreme, be very small in number and easily identifiable, or they can be numerous, highly dispersed, and difficult to identify on the other. Terms commonly used in the project management literature to denote and differentiate stakeholders on a project are „Primary Stakeholders“ and „Secondary Stakeholders“, „Internal and External Stakeholders“ and „Key Stakeholders“ Source: Dr. A Z Khan‘s Lecture Presentations

Project Stakeholder Management “Project Stakeholder Management includes the processes required to identify the people, groups, or organizations that could impact or be impacted by the project, to analyze stakeholder expectations and their impact on the project, and to develop appropriate management strategies for effectively engaging stakeholders in project decisions and execution“. [Project Management Body of Knowledge, 5th Ediction]

Project Stakeholder Management Identify Stakeholders: The process of identifying the people, groups, or organizations that could impact or be impacted by a decision, activity, or outcome of the project; and analyzing and documenting relevant information regarding their interests, involvement, interdependencies, influence, and potential impact on project success. Plan Stakeholder Management The process of developing appropriate management strategies to effectively engage stakeholders throughout the project life cycle, based on the analysis of their needs, interests, and potential impact on project success. Source: PMI‘s PMBOK 5

Project Stakeholder Management Manage Stakeholder Engagement The process of communicating and working with stakeholders to meet their needs/expectations, address issues as they occur, and foster appropriate stakeholder engagement in project activities throughout the project life cycle. Control Stakeholder Engagement The process of monitoring overall project stakeholder relationships and adjusting strategies and plans for engaging stakeholders Source: PMI‘s PMBOK 5

Project Stakeholder Management Framework Project Stakeholder Management Process 1 Understand the Project Context 2 Identify All Project Stakeholders update 3 Analyze and Map the Project Stakeholders revise 4 Design Stakeholders Engagement Strategy revise 5 Implement Stakeholders Engagement Strategy Project Completion 11

Understand the Project Context (Complexity of Project) High On projects, the attention given to managing the stakeholders will vary, depending on the type of stakeholder. Project Complexity It is reasonable to assume that as a project’s complexity increases, more care needs to be exercised by the project implementers in “managing” the project stakeholders otherwise the project goal and the project investment may be jeopardized. Low Focus on Effectively Managing the Project Stakeholders Low High

No. of Project Stakeholders Understand the Project Context (Complexity Involved in Managing Project Stakeholders) High New Product Development projects Complex, capital-intensive and high-visibility projects such as dams, roads, power stations and pipelines. No. of Project Stakeholders Projects being imple-mented in and for individual departments of organizations. Some social development projects undertaken by NGO’s Low Level of Heterogenity of the Project Stakeholders and Complexity of Managing Them Low High

Number of Stakeholders and Project Stakeholder Engagement More time, effort and cost must be spent here High Number of Stakeholders Moderate Low Importance of Developing and Implementing Effective Project Stakeholder Engagement Strategies Low High

New Technology and Project Stakeholder Engagement More time, effort and cost must be spent here High Technological use Moderate Low Importance of Developing and Implementing Effective Project Stakeholder Engagement Strategies Low High

Identify Stakeholders Identify Stakeholders is the process of identifying the people, groups, or organizations that could impact or be impacted by a decision, activity, or outcome of the project, analyzing and documenting relevant information regarding their interests, involvement, interdependencies, influence, and potential impact on project success

Information Regarding Stakeholders When in project life cycle, this information will be collected? What are the available sources of information on the project stakeholders? Which tools can be used to gather information? Who will collect the information and when? Is the information accurate, adequate and cost-effective? How can the information be safeguarded? To whom, when and how will information be distributed? What will happen to the information after use?

Identification of All Project Stakeholders Brainstorming Survey Ask the Consultant Ask Experienced Team Members Ask other Project Managers Organization‘s Existing Documentation Locals Case Studies Other Organziation‘s Stakeholder Dirctory Website

Project Primary & Secondary Stakeholders According to Cleland/Ireland [Strategic Design and Implementation, 2002]: Project primary stake-holders are those individuals or organizational entities who or which have a contractual or legal obligation to the project team and have the responsibility and authority to manage and commit resources according to schedule, cost and technical performance objectives. Using Cleland/Ireland‘s definition of primary stakeholders s a reference, Project secondary stakeholders are those individuals, groups of individuals and organizational entities [and, as we shall see, communities and even countries] who or which have no formal contractual relationship to the project in question, but who/which believe they have a stake in it because it can affect them in some way or other.

Project Primary Stakeholders: Examples Corporate Shareholders Project Team Primary Stakeholders can be internal or external to the Project-implementing organization Managing all these stake holders is challenging but routine for the project manager and project team Senior Management Project Partners Project Sponsor Project Customers & Users Project Steering Committee Project Input Suppliers & Vendors (ext.) Project Management Office Project Contractors / Subcontractors Chief Project Officer / Programme Manager Project Consultants Functional / Resource Managers Project Financers (ext.) Project Manager Local, State and Federal Government Entities

Project Secondary Stakeholders: Examples Secondary Stakeholders are external to the project organization Managing secondary stakeholders can be especially challenging for the project manager and project team Competitors Intervenor Groups Consumer Interest Groups Environmentalists Civic and Professional Organizations Local Communities Political Organizations Private Individuals Local, State and Federal Government Entities Tourists Media The General Population Academia & Researchers Countries, Regions, World Community

Stakeholder Analysis Stakeholder analysis is a technique of systematically gathering and analyzing quantitative and qualitative information to determine whose interests should be taken into account throughout the project. It identifies the interests, expectations, and influence of the stakeholders and relates them to the purpose of the project

Stakeholder Analysis Stakeholder Analysis is a useful and frequently used tool by project managers for identifying, understanding and planning for engaging the stakeholders on a project for success of the same.

Project Stakeholders: The Power Factor Power Factor is the measurable degree to which stakeholders can have a positive or negative impact on a project. On any given project, some stakeholders may be quite powerful and able to intervene in it ‚positively‘ by providing resources and support to the project manager and team or they may intervene in it ‚negatively‘, causing at best a delay or cost increase in the project, or a change in its scope, or at worst causing its abandonment.

Power and Project Stakeholder Engagement More time, effort and cost must be spent here High Power of Stakeholder Moderate Low Importance of Developing and Implementing Effective Project Stakeholder Engagement Strategies Low High

Dimensions of “Power Factor”? There are many dimensions of “power factor”. For example: Formal authority and position in a hierarchy Control over decision-making processes Control over coalition-building processes Control over information Control over incentives, rewards and punishments Control over financial and material resources Control over the environment (e.g. physical, social, technological) Networks (individual, group, organizations) Knowledge, skills and experience Personality Traits Inter-personal skills (communication, motivation, inspiration) Ability to influence perceptions of individuals, groups, general public

Power in Project Stakeholder Networks Managing stakeholder relationships and networks can be complex and considerably challenging for the project manager and team. Some stakeholders may appear relatively less powerful and, hence, unimportant or irrelevant for the project. However, they may be quite powerful because of their excellent links to powerful stakeholders and ability to influence them about the project. Med- Med+ High+ Low+ High Low+ Low- Low Low+ Low- Low- Med Low Med Low

Analysis of Interests and Concerns of Stakeholders Issue-Based Framework of Stakeholder Analysis and few of examples are Economic Financial Social Political Ideologies Conservation (e.g. ecological, cultural, historical, archeological) Health (air, water and land pollution) Personal Development General Attitude towards Change Emotional & sentimental Individual & Collective Prejudices Group Mission Image of Project Owner / Implementer Security Concerns

Interest and Project Stakeholder Engagement More time, effort and cost must be spent here High Intrest of Key Stakeholder Moderate Low Importance of Developing and Implementing Effective Project Stakeholder Engagement Strategies Low High

Analysis of Influence of Stakeholders Few of the tools which may be considered include but not limited to SWOT-Analysis of project stakeholders Anticipated impact of the stakeholders on the project (high, medium, low) Attitude of stakeholders towards project (supportive, neutral, adversarial) Options available to project stakeholders to influence course of project Stakeholder Register Application of stakeholder visualization mapping tools

Classification Models for Stakeholders Analysis There are multiple classification models used for stakeholders analysis, such as Power/interest grid, grouping the stakeholders based on their level of authority (“power”) and their level or concern (“interest”) regarding the project outcomes; Power/influence grid, grouping the stakeholders based on their level of authority (“power”) and their active involvement (“influence”) in the project; Influence/impact grid, grouping the stakeholders based on their active involvement (“influence”) in the project and their ability to effect changes to the project’s planning or execution (“impact”); and Salience model, describing classes of stakeholders based on their power (ability to impose their will), urgency (need for immediate attention), and legitimacy (their involvement is appropriate).

Power Interest Grid Example

Engagement of Stakeholders The engagement level of the stakeholders can be classified as follows Unaware. Unaware of project and potential impacts. Resistant. Aware of project and potential impacts and resistant to change. Neutral. Aware of project yet neither supportive nor resistant. Supportive. Aware of project and potential impacts and supportive to change. Leading. Aware of project and potential impacts and actively engaged in ensuring the project is a success.

Stakeholder Engagement Assessment Matrix This example shows that stakeholder 3 is at the desired engagement level, while stakeholders 1 and 2 require further communications and additional actions to move them to the desired level of engagement

Managing Engagement of Stakeholders Management Skills: Facilitate consensus toward project objectives, Influence people to support the project, Negotiate agreements to satisfy the project needs, and Modify organizational behavior to accept the project outcomes Interpersonal Skills: Building trust, Resolving conflict, Active listening, and Overcoming resistance to change

Goal of Project Stakeholder Engagement Project Stakeholders Resistant Unaware Supportive Leading Neutral Project achieves its goal within time and budget according to its requirements and to satisfaction of all key stakeholders.

Summary of This Lecture In this Lecture, we have discussed about Definition of stakeholder Stakeholder management Project stakeholder management processes & framework Context of project & stakeholder management Identify stakeholders Stakeholder analysis Stakeholder engagement framework

End Note Good judgment comes from experience, and experience comes from bad judgment

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