Stakeholder Identification Techniques

It is surprisingly easy to forget about a minor project stakeholder who then exercises a disproportionately large influence on the project’s success after they feel like they haven’t been adequately consulted.  It happens on countless projects every day.

For this reason, project stakeholder management is used to obtain, or maintain, stakeholder support for the project.  And the first step in stakeholder management is to identify all the stakeholders.

The Project Management Body of Knowledge (PMBOK) specifies the creation of a Stakeholder Register, which is a listing of the project’s stakeholders, the result of the Stakeholder Identification process.

PRINCE2 specifies the creation of a Communications plan as part of the Organization theme.  This plan requires each stakeholder to analyzed to determine their communication needs.

The IPMA’s Individual Competence Baseline has a competence element for project managers called, simply, Stakeholders.  This element contains the identification of stakeholders as its first out of five key performance indicators.

Project stakeholders can be subdivided into four categories according to their general needs:

1. Upwards – Executives, project sponsor, and investors
2. Sideways – External stakeholders who have an interest in the project
3. Outwards – Other project managers and projects who compete for limited project resources
4. Downwards – The project team, subcontractors and suppliers

Upwards

The upwards category are involved in the initiating and funding of the project, and they have a business interest in its success.

It contains 3 groups of stakeholders:

1. Executives
   Management of the parent organization has a desire to see the project succeed within budget and schedule.  They probably initiated the project and funded it.  Generally speaking, they don’t like project changes, with some exceptions, like when the project identifies new market opportunities that could be exploited for an additional cost.
2. Project Sponsor
   The project sponsor is the organizational contact for the project within the parent organization.  They are the first point of contact outside of the project.  They wish the see the project succeed, in fact, they were often the person who championed the project and drummed up support for its initiation and funding.  The project sponsor’s needs are similar to the executive’s, however they have additional communication requirements.  They need to be aware of project status so that they can decide what, if any, issues need to be escalated to the next executive level.
3. Lenders
   Many projects obtain loans to fund their operations.  The lender’s primary need is to see their money returned with interest.  Beyond that, they wish to be communicated with regularly so as to satisfy themselves that the project is able to pay the loan back.  With the exception of certain high risk lenders, banks do not wish to assume the project risks.
4. Creditors
   Some projects have been funded using bonds, or similar types of debt.  Investors in these instruments, like lenders, also do not wish to assume the project’s market or other risks.  However, they wish to see a fixed income throughout the term of their investment, and they wish to see the value of the bond grow as the project succeeds.  Thus, they are somewhat invested in project success.
5. Shareholders
   Shareholders who own stock in the project or the organization that initiated it have fully exposed themselves to the risks of project failure.  Although sometimes they receive small payouts in the form of dividends, these are minor and don’t represent a significant portion of their motivation for making the investment.  Rather, they wish to see the project’s products or services succeed in the marketplace, which will result in large returns on their investment.  Likewise, if the project fails there is a large negative return.

Outwards

This category contains traditional project stakeholders who have a stake in the project.  Their needs vary according to how the project affects them.

1. Customers
   The most important stakeholder is the customer.  They must purchase the product or service that the project creates or the project will be a failure.  For many projects, the project sponsor is the customer who pays for the project’s products.  For example, for a road construction project the government agency who is building the road is the customer who takes delivery from the contractor who built it.  Enough market research should have been completed prior to project initiation in order to make the decision to proceed with the project, but the project itself may require information flow back to the parent organization to refine that market research with new information.  Also, market research may be appropriate within the project itself, if the budget exists for it.
2. End Users
   Often the end users of the project’s products and services are the same as the customers, but sometimes they are not.  For example, software development projects often have as a customer the owner who pays for the development of the product, who is different than the end user who uses the software product.  End users require their lives to be enhanced in a meaningful way.  They wish to improve an area of their life with the minimal amount of inconvenience and cost.  The project must consider the ways in which the end user’s lives change because of the project and what features and innovations could add benefit for them at an acceptable cost.
3. Government Regulatory Agencies
   It is rare these days that a project can be initiated that doesn’t require some form of government permits and approvals.  Large infrastructure, mining, and oil projects require years of consultations from many different agencies culminating in many different permits, before they can break ground.  These regulatory agencies do not wish to stop projects.  Rather, they seek to find acceptable middle ground between the proponent (the project) and a group of specific stakeholders that might be opposed to the project.  Usually, they take the project’s design information and advertise it to the stakeholder group.  They then hold consultation sessions and bring requests for changes back to the proponent.  If the opposition is extremely fierce, they could withhold permits, however this rarely happens.  When the stakeholder group is satisfied, or at least sufficiently satisfied to the regulatory agency, the permits are granted.
4. The General Public
   The general public is not usually a stakeholder in most projects, with a few exceptions like road construction projects where the public is inconvenienced.  But most projects have some form of interface with the general public something could go wrong that would affect the public, and this possibility usually represents a significant expense.  The possibility of it happening might be small, but the consequences are very high, hence it might be worth giving some passing thought or performing a risk analysis on it.

Sideways

This group contains stakeholders that are in competition with the project resources.

1. Other project managers
   Many organizations have other projects that compete for limited resources to perform their projects.  These projects become stakeholders that need to be monitored and controlled during project execution to ensure that the project has the resources it needs, when it needs them.  The other project managers wish to complete their projects, and must be consulted regularly.  In a perfect world, all the resources would be available right when we need them, but unfortunately, it’s not a perfect world.
2. Technical / Department managers
   Department managers often provide the resources used by a project.  They are the owners of the resources, and they usually have some form of operations / maintenance role in which they use the resources.  They want their normal activities to continue without impact (or with minimal impact) and their resources returned in the condition in which they delivered them to the project.
3. Local committees and boards
   Many projects have committees and boards that impact their activities.  For example, development review boards for new condo projects, technical committees for a review of building codes, or an environmental review board for an industrial development.  These boards have a desire to maintain the standards in a certain area.  The project must appease their desires, but their power to stop the project can range from nil to full.
4. Unions and Trade organizations
   Unions wish to improve workers pay and satisfaction levels.  Some projects in unionized organizations must be familiar with and abide by union legislation.  Trade organizations wish to provide employment for their members.

Downwards

The downwards category contains those stakeholders that produce the project’s products and services.  They wish to be fairly treated and compensated, and finish the project with a slightly better chance at obtaining the next one. 

1. The Project Team
   The project team puts in the work that produces the products or services for the customer.  They are one of the most important pieces of the puzzle who require the most day to day management time of the project manager.  Often each member of the project team has different needs, but they all want two main things:
   1. To feel that they are making an important contribution.
   2. To leave the project with slightly better prospects at being chosen for the next one (or a better job).  This means that they must be developed in the form of training.  New knowledge, skills, and additions to a portfolio are not a nice-to-have bonus, rather they are a necessity that is integral to project success.
2. Suppliers
   Most projects have suppliers who provide resources in the form of equipment, materials, or tools to allow the project to achieve its goals.  These suppliers have two main desires:
   1. To be paid fairly for their products and services
   2. To leave the project with a slightly better chance at receiving work on future projects (i.e. a good reference)
3. Contractors
   Contractors are similar to suppliers, but they involve a manpower component.  For that reason, contractors have the same needs as suppliers with the exception of one additional one.  Their needs are:
   1. To be paid fairly for their products and services
   2. To be treated fairly and with respect
   3. To leave the project with a slightly better chance at receiving work on future projects (i.e. a good reference)