At times, it seems as though technology does all the heavy lifting in our economy. A closer look, however, reveals that it is always people who make the technology produce. On projects, we call these movers and shakers stakeholders, because they have a stake in the project. The first task of a project manager is to identify these stakeholders.
Customers, decision makers, vendors, and employees obviously belong in this group, but, in a larger sense, anyone who contributes to the project or who is impacted by its result is a stakeholder.
Identifying stakeholders is a primary task because all the important decisions during the definition and planning stages of the project are made by these stakeholders. These are the people who, under the guidance of the project manager, establish agreements on the goals and constraints of the project, construct the strategies and schedules, and approve the budget. In addition, the people and organizations that ultimately judge the success of the project are considered stakeholders.
It's clear that we need to know who our stakeholders are. It is also true that many projects fail to involve one or more critically important stakeholders during project definition and planning. The resulting problems are easily predictable: requirements conflicts and rework, at a minimum; and sometimes more dire consequences, including lawsuits or hefty fines.
This chapter is designed to guide the stakeholder identification process. We recognize the most common stakeholders and introduce a checklist tool for making stakeholder identification more methodical.
Defining our stakeholders as the people and organizations involved in project performance or affected by the project casts a wide net. How can we possibly find or manage such a large and diverse group?
Although a project can contain many stakeholders, most of them fall into a predictable set of roles. By understanding the classic roles, it will be easier to seek out stakeholders and understand their stake in the project. Since these are common stakeholder roles, it follows that some people will play more than one role and some roles will be filled by more than one person.
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How to Identify Stakeholders
Sometimes identifying stakeholders is easy; other times you have to go out and find them. When searching for stakeholders, rather than asking, "Who is the customer?" or "Who is the project team?" ask, "Who will make a contribution?" and "Who will be affected by this project?"
What does a project manager contribute to the project? Magic, or, more precisely, practical magic. Just as a symphony conductor directs the orchestra to bring out the magic in the music, the project manager must keep all the disparate groups in a project moving in harmony. Whether he or she is planning the project, identifying the stakeholders, watching for cost overruns, or refereeing disputes, the project manager has the primary role in any project. And, while balancing all the various tasks can make project managers appear to be magicians, the skills that form the basis of this magic can be learned.
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Because this book is mostly about the contribution project managers make to projects, the description here is brief; however, one point needs to be made. Once selected, the project manager should clearly identify the stakeholder roles on the project, including his or her own. The project manager must ask questions like: "What is my authority?" "To whom do I report?" "Does this mean I'll be relieved of other responsibilities?" "What are my expectations?" If you are a project manager, you are an important stakeholder, too. Don't forget to satisfy yourself!
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Find All the Project Managers!
As projects grow in size and cross organizational boundaries, the role of project manager can be spread among multiple people. Titles such as technical lead and team leader recognize an attempt to spread project management duties around. That's okay, but be clear about everyone's responsibilities and authority.
Who will do the work? The answer is the project team, in tandem with the project manager. All groups and individuals who contribute time, skills, and effort to the project are considered team members. In addition to the people from the company assigned to the project, these can include contractors, vendors, and even customers.
The concept of customers as team members might seem confusing, because they are the ones being served by the project. But it is not unusual for customers to have specific project tasks to perform. For example, on information systems projects, customers are often active participants in the system definition and design phases. Or, when the project involves switching to a new office complex, the customer might take responsibility for organizing the training associated with operating the new facility.
Determining who will be a part of the team happens at the start of the project, during definition and planning. This process is complete when the team members have agreed to their responsibilities and roles on the project. Let's look at the steps of this process, from start to finish:
Tasks are broken down until the different skill requirements emerge.
The project manager and sponsor then begin recruiting people and organizations with the necessary skills.
The project manager negotiates the involvement of these new team members.
The project manager clarifies the plan and ensures that all members understand it.
Team member responsibilities are documented in both the statement of work and the project plan.
It's often easy to identify the essential players on small projects, but much more difficult and time-consuming on large projects. However, this time is well spent because the makeup of the project team is critical to project success.
Tip
Keep Team Members with Minor Roles Informed
Many team members play essential, but minor, roles. You, as manager, will need to distinguish between these part-time or temporary members and the core team, because communication strategies will be different for each. For example, people from another department may contribute less than 10 percent of the effort to your project and be involved for only a few weeks. You will need to communicate any progress related to their work before they actually get involved, but they won't need to participate in every weekly status meeting. In addition, some people with very specialized skills may make a very limited, but essential, contribution to your project. You will not only want to keep them aware of the progress related to their tasks, but you will have to consult with them concerning their availability to your project.
Working productively with company management is important to the success of any project. Management, in this case, refers to functional management, also known as line management. These can be department managers, first-level supervisors, or executive vice presidents. With the exception of a project-oriented organization, functional managers are responsible for an organizational unit, such as "Engineering" or "Internal Audit" rather than for a specific project. These are the people with long-term control over employees and other resources in the firm. They are also involved in setting company policies—policies that may impact the project. Figure 2.8 shows a typical matrix organization.
Chapter 1 identified "management support" as one of the commonly stated characteristics of successful projects. When asked to expand on what kind of management support is most helpful, most project managers describe help in "getting the right people at the right time" and "timely decisions based on the facts presented by the project team." These perceptions highlight the contributions that functional management makes to the project team. They can also guide the project manager in identifying which functional managers might be stakeholders on a specific project.
The Three Management Stakeholders Every Project Needs
"Management support" as described above really requires three kinds of management contributions:
Sponsorship. A specific executive accountable for project success.
Resources. Functional managers that assign specific people and resources to a project.
Decision authority. Managers that influence project decisions because they represent organizational policy, processes and assets.
Each of these contributions corresponds to a management role described in the next sections.
Project Sponsor
Many projects are organizational anomalies. They cross department and corporate boundaries; they staff up for short periods, then disband; they may span a portion of a budget cycle while drawing funding from multiple groups within a company. The temporary, ad hoc nature of projects can create major problems for project managers because their authority is typically insufficient to cope with these organizational challenges. The sponsor is the solution to these problems.
The sponsor is the person with formal authority who is ultimately responsible for the project. A sponsor may be a senior executive or a junior manager. The sponsor's position and authority in the organization are independent of any project, which enables the sponsor to act as a connection between a project and the normal decision-making process. The sponsor might use his or her power on behalf of the project manager, provide advice, or influence project priority. The sponsor provides the authority that the project manager often lacks.
There are two basic concepts in understanding the importance of sponsors to the project. First, sponsors are ultimately responsible for the success of the project. The real, formal authority that comes from their title and position in the organization endows them with this responsibility. Second, the sponsor's primary task is to help the project team be successful. The best sponsors know they aren't sponsoring a project, they are sponsoring the project manager and the project team. The sponsor's job is to help these people be successful. That's why another term for sponsor is champion, as in "I am championing this project team and I will not let anything stand in their way!"
Duties of a Sponsor
A sponsor's primary contribution to a project is his or her authority. There are many tangible ways sponsors lend their authority to projects. A sponsor may:
Prominently support the project manager by issuing a project charter. The charter is an announcement that names a new project, the purpose of the project, and the project manager. (For more on charters, see Chapter 4.)
Assist in developing a responsibility matrix. The responsibility matrix shows how different stakeholder groups will be involved in the project.
Review and approve the statement of work (SOW). The SOW describes the goals, constraints, and project management guidelines of a project.
Review and approve the project plan. The sponsor must endorse the cost-schedule-quality equilibrium represented in the plan.
Advise the project manager, and discuss the status of the project with this manager on a regular basis. Sponsors must involve themselves in a project before problems arise so that they're able to join in the problem solving. Uninformed sponsors—sponsors in name only—are of little help to a project manager when obstacles arise.
Monitor and maintain the priority of the project relative to other projects. Because an organization has limited resources, there are always more valid projects proposed than time, money, and people can deliver. To execute projects efficiently, an organization must be clear about the priorities of its various projects, including the amount of funding and other resources assigned to each. In spite of stated intentions to prioritize, however, the reality is that people are often pulled from one project to fight fires on another. This robbery may continue until the original project falls so far behind that people are thrown back at that one. The sponsor's job is to keep this unproductive staffing practice from affecting the project. He or she must keep the size of the project team and the size of the budget as constant as possible.
Assist the project manager in overcoming organizational obstacles. When the project manager lacks the authority to overcome bureaucracy, the sponsor will have to step in on behalf of the project. Proof of the value of this type of intervention comes from a study by an information systems department in a Fortune 500 firm. This study determined that having a known and active sponsor was the number one reason for a project's success, because problems were given timely attention by a manager who had authority to effect a solution.
In most corporate environments, enlisting a powerful, interested sponsor is critical to the success of a project. This manager will promote and protect the project and provide the formal authority in the organization that a project manager often lacks. We have discussed the qualities to look for in a sponsor. Now we turn to the second type of management stakeholder.
Resource Manager
The project manager must work closely with functional managers in getting the best people for the job. After management has initiated a project and described its scope, the project manager designs a work plan that details the skills required for the project and which departments the workers possessing these skills will come from. Armed with this information, the project manager is now ready to identify the managers of those departments; these are the managers who will have control over the workers assigned to the project team and who will decide when they are available. These managers must approve the statement of work (as described in Chapter 4) and the project plan, because the potential team members identified in these documents will come from their department. Throughout the life of the project, these functional managers can be extremely helpful in solving personnel or performance problems.
Managers with Decision Authority
"Making timely decisions based on the facts provided by the team" is the other major responsibility of management. Identifying the managers who will make decisions can be tricky. Start with the obvious ones:
Managers whose operations will be affected by the outcome of the project
Managers representing other stakeholders, such as the customer
The manager to whom the project manager reports
For each of these managers, keep in mind why they will be interested in your project and which decisions they will influence.
After identifying the obvious decision makers, the project manager needs to identify the less obvious ones, such as those with veto authority. As an example of the importance of this task, consider the story of a training department in a large company that decided to create a project management curriculum. The training specialist responsible for the curriculum proposed a progression of courses, from basic topics, such as scheduling, through advanced topics, such as negotiating and program management. It was a very thorough curriculum, based on requirements gathered from organizations throughout the company and available courses from respected vendors. But the proposal wasn't implemented. The manager responsible for purchasing and administering this curriculum looked at the number of students projected annually for the intermediate and advanced topics, and he decided there was not enough demand to warrant the overhead associated with these courses. It was difficult to dispute his decision because this manager was applying sound, stated company policy.
The training specialist had not considered this stakeholder or his veto power, and the result was a dramatically scaled-down curriculum with a far smaller scope. The question that wasn't asked soon enough was, "Who will be involved in approving this curriculum?" (Miller and Heiman describe this decision maker in their book, Strategic Selling. While this is primarily a book about selling, any project manager promoting organizational change will benefit from understanding the decision-making processes outlined in the book.[3])
Tip
Ask the Right Questions about Managers
Which managers will make decisions? Who has veto power? Who is indirectly affected by these decisions? These are the kinds of questions a project manager needs to ask when considering who the stakeholders in management are. The responsibility matrix described in Chapter 4 is an excellent tool for distinguishing between the different types of stakeholder involvement.
Whenever a project exists, somebody will be paying for it. And whoever pays usually gets the first and last word on product description, budget, and the criteria by which success will be measured. Although other stakeholders may try to squeeze in extra requirements, the final say on the product will come from the customer, because the customer is paying the bills.
This sounds simple enough—the customer is the one who pays the bills—but in reality, identifying the customer is not always that simple. Consider a project manager who is given the task of installing the latest Microsoft operating system on all the desktop computers in her company. Since there are a number of possible options when installing this operating system, the question arises: Who should decide which options will be installed? Should this decision come from the 335 employees using the computers? Is this group the customer? Or is the president of the company, who is funding the project, the logical choice? In this case, the project manager must go beyond the question, "Who is the customer?" and instead ask, "What process should I use in determining the installation requirements, and who should be involved in making the cost-benefit trade-off decisions?"
As this example demonstrates, accurately identifying the customer on a project can be difficult. In a large and diverse customer group, it can be unclear exactly who has the authority to represent the group. Therefore, in our search for stakeholders, it is useful to break the customer role into two primary contributors: those who supply requirements and those who provide funding.
Customers Establish Requirements
Requirements are essential to defining the quality dimension of the cost-schedule-quality equilibrium. That means answering questions that include, "Who can approve the product requirements (or changes to the requirements)?" "Who will judge the success of the product?" "How will the product's users be represented to the project?" Those answers will unearth a variety of customers. Here are some guidelines for dealing with different customer groups:
The project manager must distinguish between the people with final authority over product requirements, those who must be consulted as the requirements are developed, and those who simply need to be informed what the requirements are. Where there is a known customer, such as on defense, construction, professional service, or information system projects, it might seem easy to identify this stakeholder. But problems arise from the fact that so many people in the customer organization are anxious to offer product requirements, while so few of them will actually be paying the bills. (The responsibility matrix, described in Chapter 4, is a good tool for managing this challenge.)
In the case of industries whose products have many customers (automobiles, software, appliances, etc.), the project manager must ascertain which departments should be included as stakeholders. In companies like these, there are so many ultimate customers that the project must develop alternate "customer representatives." Marketing departments often fill this role by performing market research on what the next product should be, but problems may arise when other departments also want to be included.
In public sector projects, project managers need to follow the customs and laws governing public works projects. These municipal projects present special challenges, because the customer group is composed of all the citizens who will use the utility, road, or other service built by the project. Citizens also fund the project. "Do I need to listen to all my stakeholders?" lamented a project manager for a major municipal government. "There are over 200, 000 people who'll be affected by the sewage treatment system we're installing!" Fortunately, his answer existed in the laws describing the public comment process used in his municipality. These laws lay out an orderly process for including the citizen stakeholders in public hearings on the proposed project. Despite this legitimate process, however, it's important to note that public works projects are very often contentious; they can be held up by lawsuits from citizen groups or become political footballs. A project manager can only put out information on the project, follow the rules, and hope for the best.
Identifying the people and organizations with a stake in the product's features and performance is the first step toward managing the cost-schedule-quality equilibrium.
The resources for any project are paid for by someone. It doesn't matter whether the resources are external vendors, purchased equipment and materials, or internal salaried staff. All of these resources cost money. Who approves this expenditure?
Funding for internal projects may seem to cloud this role, particularly when the same manager who is a project sponsor is also paying for a project. Simplify the discussion by staying focused on who approves the expenditure and who judges whether the money was effectively spent. These people will be key stakeholders.
Federal, state, and local government agencies have laws and regulations affecting all facets of our lives, and their represtatives are frequently stakeholders on all kinds of projects. Do you need a permit? An inspection? Approval from the Federal Energy and Regulatory Commission or the Food and Drug Administration?
Are you borrowing money to fund a project? The bank may require more insurance than you consider necessary. Will your computer system communicate with other systems? That interface represents an external constraint.
These stakeholders are neither for nor against your project, but they all impose their own requirements that your team must understand.
The list of stakeholders that represent external constraints goes on and on. To find these stakeholders, ask these kinds of questions:
Are there laws and regulations directly affecting my project? If yes, who represents these rules and laws?
Does the project need approvals from outside people or organizations?
How does my project or product connect to existing systems, infrastructure, and processes, and who represents these interfaces?
The effects of a project can be like the ripples caused by a stone hitting the water. Thinking past the first few ripples helps identify the innocent bystanders who could become opponents if you don't understand their stake. Here are a few more questions: Whose daily routine, whose property, whose products or profits will you affect either during the project or as a result of it? Who will be worse off because of your project?
By considering more than the obvious stakeholders, we encounter a much wider audience. These people and organizations may become advocates or opponents, but you can't influence them if you don't understand their stake.
Given the critical importance of finding the project's stakeholders it should be easy to see the value of the Fast Foundation Stakeholder Analysis form included at the end of this chapter. The form is intended to be a standard checklist your organization can use to methodically find project stakeholders. Over time, the questions can be modified or new ones added to make the tool more specific to your projects.
This chapter started by emphasizing the importance of defining the stakeholders, because not only is project success judged by stakeholder satisfaction, but because every stakeholder makes an essential contribution to the project. As the project manager, you not only need to know who your stakeholders are, you also need to exercise leadership with this diverse group. Since no one knows more about your project than you, it is up to you to lead the project in the right direction. Here are a couple of ways to exercise this leadership:
Control who becomes a stakeholder. As noted, among functional managers and customers there are always plenty of people anxious to influence your project. However, if you feel that certain people don't have the right to this influence, you need to push back. You can get the support of your sponsor or other stakeholders in this endeavor, but you need to use whatever persuasive skills you have to control who is allowed to influence the project.
Manage upward. Many of the stakeholders, including your sponsor, functional managers, and some of your customers, will have more formal authority than you do as the project manager. But they need you to lead them. They need you to ask the hard questions, provide reasonable alternatives, confront them with facts, and continually motivate them toward action by your own persistence and enthusiasm.
Because they include everyone with a vital interest in a project, stakeholders are the heart of a successful project—and the heart of successful project management involves satisfying the expectations of these stakeholders. Finding the key stakeholders is easier said than done. The project manager and team must make a focused effort, asking over and over in different ways the two basic questions:
Who will contribute to accomplishing the project?
Who will be affected—either during or as a result of the project?
At first, stakeholder identification sounds pretty straightforward—name the people that will affect the project or be affected. In fact, all too frequently some very important stakeholders are forgotten. The following downloadable form is a starting point for solving this problem. It is a checklist of possible stakeholders. The twenty questions on the form will prod the team to think about all possible stakeholders, rather than just the obvious ones they already know. The real value will come as new questions are added to this list that are specific to your projects or industry.
Revisit this form at the end of your projects. Did you miss any important stakeholders during your initial stakeholder identification process? Could you add a question to the list that would have uncovered this stakeholder? As your list grows, so will the probability that you've found all the important stakeholders.
Downloadable Stakeholder Analysis[4].
[Project Name] Stakeholder Analysis
Project Manager [name]
Stakeholder Role Profile
These questions will encourage the project team to consider a wide variety of stakeholders. Use these questions to identify as many stakeholders as possible. After generating the list, you may decide some of the stakeholders are represented by other stakeholders or will have so little involvement in the project that you don't need to consider them and you may remove them from your list.
This List Is a Starting Point
Add questions to this list that fit your project environment. If you miss an important stakeholder on one project, add a question to this list that will cause the next project team to identify that stakeholder.
For each of the questions below answer the question: "Who . . .?"
Question | All stakeholders who apply. Use people's names whenever possible. |
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Stakeholder Alignment Questions
These questions will ask for a minimum amount of understanding about each stakeholder. Use these for each stakeholder who has a high interest in the project or who can have a high impact on the project. The better you understand each stakeholder, the better prepared you'll be to win cooperation.
Not for Publication
These questions are meant to stimulate thinking about stakeholders. Your assumptions and insights into the motivations of each stakeholder or stakeholder group are a private assessment and should not be published.
For each significant stakeholder, answer the following questions:
Name: | Title: |
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Plan Communication
Use the Communication Plan and Responsibility Matrix templates to document roles and responsibilities and how you'll keep your stakeholders engaged and informed.
Answers to these questions are found at www.versatilecompany.com/FFMBAinPM.
[3] Robert Miller and Stephen Heiman, Strategic Selling (New York: Warner Books, 1985).
[4] Copyright Eric Verzuh 2008. Original purchasers of this book are permitted to photocopy or customize this page by downloading it from www.versatilecompany.com/FFMBAinPM. The document can then be opened, edited, and printed using Microsoft Word or other word processing software