E ffective P roject S takeholders M anagement Presented by Dr. Tony Prensa, PMP For NWA PMI Chapter February 2014

Project Stakeholder Management

Agenda Project Success Parameters Current Facts! Literature review Project Stakeholder Management Processes Identify Stakeholders Plan Stakeholder Management Manage Stakeholder Engagement Control Stakeholder Engagement Concluding thoughts Q&A References Adjourn

According to an IBM study, only 40% of projects meet schedule, budget and quality goals. Further, they found that the biggest barriers to success are people factors. Geneca, a software development company, noted from its studies that ‘fuzzy business objectives, out-of-sync stakeholders and excessive rework mean that 75% of project participants lack confidence that their projects will succeed.’ A truly stunning 78% of respondents reported that the “Business is usually or always out of sync with project requirements” McKinsey recently found that ‘while an increasing number of non-IT executives give IT a score of 61% for basic services like and laptop support, only 26% rank IT high in the most vital area of proactively engaging with business leaders on new ideas or systems enhancements.’ One Canadian study actually stated: “Bad communications between parties are the cause of IT project failures in 57% of cases they studied.” KPMG New Zealand found ‘…and incredible 70% of organizations have suffered at least one project failure in the prior 12 months and 50% of respondents indicated that their project failed to consistently achieve what they set out to achieve.’ Retrieved from: reasons/, 2/10/14

Literature Review

R. Edward Freeman (1984) Father of Stakeholder Theory Stakeholder theory is about identifying the groups who are stakeholders in a corporation and need to be managed "Principle of Who or What Really Counts” Suggests to put stakeholders' needs at the beginning of any action The quality of relationships with stakeholders are the key determinant of corporate reputation Stakeholder management is the core of public affairs management Symmetric and asymmetric communication theory is relevant to stakeholder management

Literature Review (cont.) Study shows a strong correlation between project communication and project stakeholders’ commitment. Lack of stakeholder commitment is listed as a key cause for project failure. It is caused because of inefficient project communication and inadequate project information. Clarity of project information fosters commitment among stakeholders. Effective project communication makes workers feel that they are cared Boosts their commitment to undertake tasks. Effective project communication creates a feeling of responsibility and attachment between a stakeholder and the project tasks. The study suggests that project managers should ensure efficient project communication Project team members cannot be committed to projects unless they have clear project goals. (Nangoli, Namagembe, Ntayi, & Ngoma, 2012)

Literature Review (cont.) A project stakeholder management process – Six Steps PlanPlan IdentifyIdentify AnalyzeAnalyze CommunicateCommunicate ActAct Follow up (Karlsen, 2002) 1.Define the purpose 2.Identify 3.Analyze 4.Communicate 5.Strategize 6.Evaluate

Literature Review (cont.) Project Stakeholder Analysis/Strategies (Karlsen, 2002) Mixed blessing Non- supportive SupportiveSupportive MarginalMarginal Potential for collaboration with the project CollaborateCollaborate DefendDefend InvolveInvolve MonitorMonitor Potential for collaboration with the project Potential to affect the project Potential to affect the project H L H H L L L H Project Stakeholder Categories Project Stakeholder Strategies

Management of project stakeholders is one of the most important tasks for a project manager because project’s success depends upon many individuals Trust is viewed as essential for stable relationships and vital for the maintenance of cooperation Trust enables cooperative behavior, Promotes adaptive organizational forms, reduces damaging conflicts and transaction costs, and promotes more effective responses to crisis Trust is something that must be earned over time by listening, talking and making sure that you “walk the talk”. The study results show that the parties should be aware of how trust is built in relations Which factors are important in building trust. Emphasis should be put on improving communication skills Behaving reliably, showing commitment, being sincere, benevolent and competent, having and acting with integrity, working towards reaching project milestones and establishing common goals. Clarify the roles and responsibilities in the beginning of the project. (Karlsen, Græe, & Mona, 2008) Literature Review (cont.)

(Karlsen, Græe, & Mona, 2008) Literature Review (cont.) The model for trust building in a project-stakeholder relationship TrustTrust ProjectProject StakeholderStakeholder Good communication CommitmentCommitment SinceritySincerity BenevolenceBenevolence ReliablebehaviorReliablebehavior Goal congruence IntegrityIntegrity CompetenceCompetence Reaching project milestones Factors

Stakeholder theory To identify, classify and categorize stakeholder and understand behavior Manage stakeholder more strategically Understanding project stakeholders needs and requirements Is key for project success. Lack of understanding of internal/external project stakeholders and their interests Might impact project success. Carefully consider external stakeholders and their influence on projects The external stakeholder environment involves all external stakeholders of the project and relationships between them. Interpretation model: Scan and collect data; analyze and interpret data; make decisions and take action (Aaltonen, 2011) Openness, dialogue and active engagement of stakeholders, in the front-end phases of the project Reduce conflict in the project execution phase. (Aaltonen, 2011) Literature Review (cont.)

(Jepsen & Eskerod, 2009) “Effective project managers require keen analytical and intuitive skills to identify stakeholders and work with them to understand their expectations and influence upon project success. This facilitates managing a process that maximizes stakeholder positive input and minimizes any potential detrimental impact” (Jepsen & Eskerod, 2009, p.2). StakeholderArea of interest ContributionsExpectationsPowerStrategyResponsible StakeholderActive Opposition Passive Opposition NeutralPassive Support Active Support Suppliers XO Top Management X Peers X Grumbler Stakeholder Register Stakeholder commitment matrix X = current position, O = necessary/wanted position O O XO

Project Stakeholder Management

Project stakeholders The definition Individuals, groups, or organizations who may affect, be affected by, or perceive themselves to be affected by a decision, activity, or outcome of a project. (PMI, 2013)

ProjectProject Financial institutions Client/ customers End Users Competitors Suppliers/ Contractors Controlling Organizations Consultants/ Advisers Third Parties Labor Unions Insurance Companies Line Organizations Public Authorities Press/Media Performing Organization Project ManagerProject Team Subject Matter Experts Sponsor

Project stakeholders It is critical for project success to identify the stakeholders Early in the project or phase and to analyze their levels of interest, their individual expectations, as well as their importance and influence. This initial assessment should be reviewed and updated regularly. Classify stakeholders according to their interest, influence and involvement in the project. Project manager should focus on the relationships necessary to ensure the success of the project

Project Stakeholder Management the definition 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 develop appropriate management strategies to effectively engaging stakeholders in project decisions and execution. Stakeholder management also focuses on continuous communication with stakeholders: to understand their needs and expectations, addressing issues as they occur, managing conflicting interests and fostering appropriate stakeholder engagement in project decisions and activities. Stakeholder satisfaction should be managed as a key project objective. (PMI, 2013) I am the PM

encourage proactive limiting assist Project stakeholder management is designed to encourage the use of proactive project management for limiting stakeholder activities that might affect the project negatively, and to assist the project team’s ability in taking advantage of opportunities to encourage stakeholder support of project goals. (Karlsen, Græe, & Mona, 2008) Project Stakeholder Management

Vital to develop an understanding that can generate appreciation and trust and lead to constructive working relationships. Efficient management of the relationship between the project and its stakeholders is an important key to project success. The project and its stakeholders can be viewed as a network in which the actors interact with each other and exchange information, resources, and results. Stakeholders ultimately determine whether a project is a success, based on the project results.

Project Stakeholder Management the processes Identify Stakeholders To identify the people, groups, or organizations that could impact or be impacted by a decision, activity, or outcome of the project. To analyze and document relevant information regarding their interests, involvement, interdependencies, influence, and potential impact on project success. Plan Stakeholder Management To develop 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. Manage Stakeholder Engagement To communicate 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 To monitor overall project stakeholder relationships, and adjusting strategies and plans for engaging stakeholders (PMI, 2013)

The key benefit of this process is that it allows the project manager to identify the appropriate focus for each stakeholder or group of stakeholders. Inputs Project charter Procurement documents Enterprise environment factors Organizational process assets Tools & Techniques Stakeholder analysis Expert judgment Meetings Outputs Stakeholder Register (PMI, 2013)

Who is threatening the target of this project? Who is most dependent on this project? Has there been a similar project in the market? If so, to what extent did it succeed? Who was in charge and how did local stakeholders respond? Who possesses claims – including legal jurisdiction and customary use – over the project/resources at stake? Is any government departments to be involved in this project? Are there national and/or international bodies involved in this project because of specific laws or treaties? Who are the people or groups most knowledgeable about, and capable of dealing with the project at stake? Are the stakeholders and their interests stable across the globe or is there any identifiable pattern exists? Are there major events/trends/activities currently affecting the stakeholders? Is this project replaceable by other project(s)?

To systematically gathering and analyzing quantitative and qualitative information to determine stakeholders’ interests. To identify interests, expectations, and influence of the stakeholders and relates them to the purpose of the project. To identify stakeholder relationships that can be leveraged to build coalitions and potential partnerships to enhance the project’s likelihood of success. “Stakeholder analysis increases the project manager’s ability to anticipate opportunities and problems for the project at a time when the project team still has time and opportunity for maneuvering” (Jepsen & Eskerod, 2009, p.1).

Stakeholder Analysis IdentifyAnalyzeAssess All potential project stakeholders and relevant information (roles, departments, interests, knowledge, expectations, and influence levels. The potential impact or support each stakeholder could generate, and classify them so as to define an approach strategy. How key stakeholders are likely to react or respond in various situations, in order to plan how to influence them to enhance their support and mitigate potential negative impacts. K now Y our S takeholders

Who is directly responsible for decisions on issues important to the project? Who holds positions of responsibility in interested organizations? Who is influential in the project area (both thematic and geographic areas)? Who will be affected by the project? Who will promote/support the project, provided that they are involved? Who will obstruct/hinder the project if they are not involved? Who has been involved in the area (thematic or geographic) in the past? Who has not been involved up to now but should have been?

Power/Interest grid Grouping stakeholders based on level of authority (“power”) and concern (“interest”) regarding the project outcomes. Power/Influence grid Grouping the stakeholders based on level of authority (“power”) and involvement (“influence) in the project. Influence/Impact grid Grouping stakeholders based on involvement (“influence) and their ability to effect changes to the project’s planning or execution (“impact) Salience Model Describing classes of stakeholders based on their power, urgency, and legitimacy

KeepSatisfied Monitor ManageClosely KeepInformed High Power Low InterestHigh A B H F G D C E Low

Expert Judgment To ensure comprehensive identification and listing of stakeholders: Senior management Other units with the performing organization Identified key stakeholders Experienced project managers Subject matter experts Industry group and consultants Professional and technical associations Meetings Profile analysis meetings are project meetings designed to develop and understanding of major project stakeholders, and they can be used to exchange and analyze information about roles, interests, knowledge, and the overall position of each stakeholder facing the project

Plan stakeholder management The process of developing appropriate management strategies to effectively engage stakeholders … To provide clear, actionable plan to interact with project stakeholders to support the project’s interests. Inputs Project management plan Stakeholder register Enterprise environmental factors Organizational process assets Tools & Techniques Expert judgment Meetings Analytical techniques Outputs Stakeholder management plan Project documents updates (PMI, 2013)

Contains life cycle selected for the project and the processes that will be applied to each phase Contains description of how work will be executed to accomplish the project objectives Contains description of how human resources requirements will be met and how roles and responsibilities, reporting relationships, and staffing management will be addressed and structured for the project Contains the change management plan that documents how changes will be monitored and controlled Contains need and techniques for communication among stakeholders

Stakeholder engagement throughout the project life cycle is critical for success. Engagement level of stakeholders can be sorted 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 StakeholderUnawareResistantNeutralSupportiveLeading Stakeholder 1 CD Stakeholder 2 CD Stakeholder 3 D, C C – current engagement D – desired engagement

The stakeholder management plan It is a component of the project management plan and identifies the management strategies required to effectively engage stakeholders. It should contain at least: Desired and current engagement levels of key stakeholders Scope and impact of change to stakeholders Identified interrelationships and potential overlap between stakeholders Stakeholder communication requirements for the current project phase Information to be distributed to stakeholders, including language, format, content, and level of detail Reason for the distribution of that information and the expected impact to stakeholder engagement Time frame and frequency for the distribution of required information to stakeholders Method for updating and refining the stakeholder management plan as the project progresses and develops

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. Inputs Stakeholder management plan Communications management plan Change log Organizational process assets Tools & Techniques Communication methods Interpersonal skills Management skills Outputs Issue log Change requests Project management plan updates Project documents updates Organizational process assets updates (PMI, 2013)

Manage stakeholder engagement entails: Engaging stakeholders at appropriate project stages to obtain or confirm their continued commitment to the success of the project Managing stakeholder expectations through negotiation and communication, ensuring project goals are achieved Addressing potential concerns that have not yet become issues and anticipating future problems that may be raised by stakeholders Clarifying and resolving issues that have been identified

Why the communication management plan? It provides guidance and information on managing stakeholder expectations: Stakeholder communications requirements Information to be communicated, including language, format, content, and level of detail Reason for distribution of information Person or groups who will receive information Escalation process

Management stakeholder engagement tools and techniques Communication methods The methods of communication identified for each stakeholder in the communications management plan. The project manager decides how, when, and which of these methods are to be used in the project. Interpersonal skills Building trust Resolving conflict Active listening Overcoming resistance to change Management skills Facilitate consensus toward project objectives Influence people to support the project Negotiate agreements to satisfy the project needs Modify organizational behavior to accept the project outcomes

Organizational process assets updates Stakeholder notifications About resolved issues, approved changes, and general project status Project reports Project status, lessons learned, issue logs, closure reports, and outputs from other knowledge areas. Project presentations Provided to project stakeholders Project records Correspondence, memos, meeting minutes, and other documents describing the project Feedback from stakeholders Concerning project operations can be distributed and used to modify or improve future performance of the project Lessons learned documentation Includes root cause analysis, corrective actions, other types of lessons learned about stakeholder management.

Control stakeholder engagement The process of monitoring overall project stakeholder relationships and adjusting strategies and plans for engaging stakeholders. The key benefit of this process is that it will maintain or increase the efficiency and effectiveness of stakeholder engagement activities as the project evolves and its environment changes. Inputs Project management plan Issue log Work performance data Project documents Tools & Techniques Information management systems Expert Judgment Meetings Outputs Work performance information Change requests Project management plan updates Project documents updates Organizational process assets updates (PMI, 2013)

Concluding thoughts Project managers have to ensure that they communicate the project information that is required at the different stages (Nangoli, Namagembe, Ntayi, & Ngoma, 2012). Project managers should build good relations with the stakeholders who are identified as being most crucial for the end result (Karlsen, Græe, & Mona, 2008). Trust is important for building a well-functioning relationship (Karlsen, Græe, & Mona, 2008). Project success is tied to e ff ectively communicating and managing relationships with the various stakeholders of the project. This makes stakeholder management an important issue in project management (Assudani & Kloppenborg, 2010). Project manager should make deliberate attempts to exert influence on project stakeholders so that they deliver their contributions to the project (Jepsen & Eskerod, Keep in mind that stakeholders are critical for your success!

Questions and Answers

Aaltonen, K. (2011). Project Stakeholder Analysis as an environmental interpretation process. International Journal of Project Management, 29 (2011) Assudani, R., & Kloppenborg, T. J. (2010). Managing stakeholders for project management success: an emergent model of stakeholders. Journal Of General Management, 35(3), Karlsen, J. T., Græe, K., & Mona, J. M. (2008). Building trust in project-stakeholder relationships. Baltic Journal of Management, 3(1), doi: Karlsen, J. T. (2002). Project Stakeholder Management. Engineering Management Journal, 14(4). Jepsen, A. L., Eskerod, P. (2009). Stakeholder analysis in projects: Challenges in using current guidelines in the real world. International Journal of Project Management, 27 (2009) Project Management Institute. (2013). A guide to the project management body of knowledge (pmbok® guide) – fifth edition [ebook]. Retrieved from CTU Online Library X2ludGVybmFsX0J2ZGVwRmxhc2hSZWFkZXI/eG1saWQ9OTc4MTkzNTU4OTY3OS9j Nangoli, S., Namagembe, S., Ntayi, J. M., & Ngoma, M. (2012). Towards building project-stakeholder commitment. World Journal of Entrepreneurship, Management and Sustainable Development, 8(4), doi:

E ffective P roject S takeholders M anagement Presented by Dr. Tony Prensa, PMP For NWA PMI Chapter February 2014