How to Manage Project Stakeholders

Effective Strategies for Successful Large Infrastructure Projects

Pascal Bohulu Mabelo

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781000054422
• Edition: 1
• Topic: Business
• Subtopic: Infrastructure
• Index: Business

This book outlines how to identify stakeholders, analyse theirs stakes, and plan and implement an engagement strategy to secure relevant input and dependable buy-in to assure the successful delivery of Large Infrastructure Projects. It also addresses common stakeholder management "inadequacies" and is supplemented with four extended practical exercises to help readers apply the principles to their own large, complex projects and ensure project success.

The project management industry, particularly the Large Infrastructure Projects domain, has only recently awakened to the reality that failed Stakeholder Management probably leads to a failure of the project altogether. Due to the complexities involved, most traditional approaches to managing stakeholders have developed serious difficulties in dealing with large and complex projects. This book presents a Systems Thinking approach to managing stakeholders that accommodates these complexities and seeks to crystallise the notion that "managing projects means managing stakeholders", while also introducing an ethical perspective (i.e., stakeholders have legitimate rights regardless of their power to influence the project). This shifts the paradigm from "Management of Stakeholders" to "Management for Stakeholders".

It is essential reading for all those involved with managing large projects including project managers, sponsors, and executives. It will also be useful for advanced students of project management and systems engineering looking to understand and expand their knowledge of infrastructure projects and Systems Engineering.

1 Introduction

Stakeholder Management (SM) is fast becoming a “knowledge area” of focus in Project Management (PM); entire sections are dedicated to this topic in the recent literature. There is a growing realisation that any inadequate or sheer omission of Stakeholder Management is an open invitation for complications and to failure in large projects.

Yet a Large Infrastructure Projects survey in 2015^[35] revealed that 23% of entities do not consider SM as a “core” project activity; in half of those entities, respondents could not even tell whether SM was core or not – this just shows how confused many entities might be about SM in their megaprojects. Many project practitioners still treat SM as an “off-line” and/or “ad hoc” process; in truth, some found it somewhat degrading, an embarrassment that they should be expected to manage stakeholders!

When referring to a stakeholder, one shall appreciate that the operative word is stake. A “stake” is the degree to which one is involved in something … or wants it to succeed or fail. So virtually every entity (e.g., organisations, individuals) “interacting” in the project environment constitutes a “project stakeholder”, and is important in projects, be they infrastructure (e.g., power plant, rail/road network, hospital) or information and communications technology (ICT) in nature (Figure 1.1).

Figure 1.1 Relationship between stakeholders and the project, as per Ambler^[4]

Since 2013, PMBoK^[47] has included Stakeholder Management as a “specific Knowledge Area”; “The Knowledge Areas are: Project Integration Management, Project Scope Management, Project Time Management … and Project Stakeholder Management. Each Knowledge Area within the PMBoK® Guide is contained in a separate section”. PMBoK further states:

Stakeholders are persons or organisations (e.g., customers, sponsors, the performing organisation, or the public), ^[i]who are actively involved in the project or ^[ii]whose interest may be positively and negatively affected by the performance or the completion [or outcomes] of the project. Stakeholders may also exert influence over the project, its deliverables, and the project team members.^[47]

Both are involved!

From this definition, it is clear stakeholders are not “bystanders, those folks out there”, but include “those who are actively involved … or affected” – e.g., community or project team. Moreover, Freeman proceeded to suggest, “A stakeholder in an organisation [e.g., project] is (by definition) any group or individual who can affect or is [or could be] affected by the achievement of the organisation’s [e.g., project’s] objectives”.^[21]

The notion of stakeholder is inextricably linked to objectives; for stakes derive from the pursuit of objectives. Hence:

The most important issue in project management is for the project manager to get project staff, beneficiaries, and other stakeholders to develop a common understanding, agreement, and commitment to a project’s objectives. A shared perception about objectives, agreement that the project is worth doing [i.e. stakes], and the commitment to make it happen does not happen automatically. It takes effort and involves a considerable amount of communication [i.e. engagements].^[72]

In fact, in a video material titled, “Accepting Accountability When Things Go Wrong”, Morris (PMP)^[42] suggests the main reasons for project breakdown include the following: (1) insufficient or disorganised communication; (2) lack of continuous risk identification and mitigation management; (3) inconsistent issue management resulting in delayed resolutions; and (4) inadequate vendor or stakeholder engagement management. Items (1) and (4) directly relate to SM, while items (2) and (3) still partially relate to SM.

Morris further contends, “These are key areas that must be managed well for project success; the slightest breakdown in any of those areas will cause a negative ripple throughout the project”.^[42] It therefore follows that “the slightest breakdown in Stakeholder Management will cause a negative ripple throughout the project”, even leading to failure. Indeed, inadequate or failed Stakeholder Management would lead to project failure, particularly (it shall again be underscored) in large and complex projects!

INCOSE^[25] maintains, “There is a near unanimous agreement that successful projects depend on meeting the needs and requirements of the stakeholder/customer”. Hence, “You increase the likelihood of customer acceptance and delight at the end of your project if you manage stakeholder expectations from concept through delivery”.^[7] Accordingly, the project manager “works through the issues raised and facilitates resolutions in order to avoid discouraging or disengaging stakeholders [i.e. in LIPs]”.^[46]

Therefore, Stakeholder Management should not be a mere public relations exercise; SM has a twofold, intertwined purpose. SM purposes align to the notion of Corporate Social Responsibility (CSR). The World Business Council for Sustainable Development^[55] states that CSR is, “The continuing commitment by business to behave ethically and contribute to economic development while improving [not ruin] the quality of life of the workforce and their families as well as of the local community and society at large”.

It is accordingly expected that business should apply the same “principle” in all their projects and/or similar endeavours, and should thus consider the needs, concerns, or interests of various stakeholders in the project environment. By way of confirmation, a recent survey conducted by KPMG and the United Nations Environmental Programme has also revealed that stakeholders are generally concerned with the following issues:

1. (1) The quality of the company’s product or service [i.e., input to requirements];
2. (2) The trust and confidence [i.e., buy-in] the stakeholders have in the company.

A summary of the King III Report on Governance for South Africa also noted “It is evident that stakeholders [i.e. their input and buy-in] cannot be ignored”. Moreover, in “The March of Folly” (1984), Barbara Tuchman^[65] equates “ignoring the ^[i]interest of, and ^[ii]information held by key stakeholders” to folly; she suggests that it has led to disaster, from Troy to Vietnam, and to the failure of many large projects!

There is no more excuse for project practitioners getting confused about the purposes of Stakeholder Management or for just going through the motions of whatever SM process is imposed on them, or hoping to put some would-be stakeholders to sleep till the project is done – It is unambiguously clear what purposes SM will seek to achieve:

1. (1) Securing relevant input (e.g., requirements) into the project delivery processes;
2. (2) Securing buy-in (i.e., support for a winning coalition) on the part of the various role-players (i.e., whose interests are at stake) within the project environment.

In addition to gathering relevant input from key, pertinent stakeholders, a structured Stakeholder Management will equally seek (i.e., by engagement) to secure dependable buy-in from various role-players, both internal and external. This is achieved through a delicate balancing of “forces” of power, politics, interest, and influence emanating from different (or differing) parties. Securing input and securing buy-in go hand in hand. There is no better (winning) coalition than stakeholders identifying themselves with the project; “People support what they create, and resist what they’re excluded from”.^[68]

It flows from the foregoing that any “uncertainty” in securing stakeholder input and/or buy-in in terms of project objectives will constitute a “risk” to the project outcomes!

Therein arises the realisation that any inadequate or failed Stakeholder Management has the potential to cause a large and complex project (e.g., Large Infrastructure Projects, LIPs) to fail. This should convince even the most stubborn of project practitioners that SM is definitively not a side-dish, delegated to a junior team member to “deal with the people out there!”

Having understood the real purposes of SM (i.e., not about mesmerising some vocal antagonists), the project manager relies on SM processes to, let us say, identify relevant stakeholders from which “system requirements” should be elicited. Moreover, should a dependable buy-in be secured through suitable engagements of stakeholders, the project manager will also enjoy the benefits of having stakeholders actually supporting and promoting the project – and its outcomes (e.g., its products). This is markedly true in LIPs due to their scale and complexity; LIPs entail a multiplicity of contexts, involving stakeholders in the broader environment.

In fact, Principle 16 of the King IV Code of Governance (South Africa) states, “In the execution of its governance role and responsibilities, the governing body [e.g., board of directors] should adopt a stakeholder-inclusive approach that balances the needs, interests and expectations of material stakeholders in the best interests of the organisation over time”.

Bourne (2009)^[11] takes a radical stance regarding Stakeholder Management by asking, “Can an organisational activity deliver its outcome on time and on budget and still be considered a failure, despite delivering 100% of its scope?”; she argues,

The answer must be, “Yes, it can, because people [i.e. the project stakeholders] are the key to success or failure!” Other factors can influence the perception (and possible reality) of how successful an activity may be. The process of building Heathrow's Terminal 5 a...