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Why It Is Essential to Focus on Stakeholder Identification

Poor stakeholder management and risk management regarding stakeholder identification may have a negative impact on project success.

Stakeholders and project success

One of the main reasons for project failure is poor communication management and poor stakeholder management.

Project success means that once the project is completed it will add business value beyond the achievement of the project constraints of cost, schedule, scope and quality. In order to achieve these objectives, an appropriate stakeholder identification is essential.

Stakeholders will participate in during the requirements collection, and will also validate and approve the project deliverables. If the project does not add business value, even if it is completed according to the project constraints it may not be successful. Often, poor stakeholder management and the risks of failure to identify them properly in the early stages of the project have had a global impact on project development by not allowing objectives to be achieved.

The internal politics and culture of the company are some of the biggest barriers that project managers have to manage, being forced to satisfy many actors who have different objectives.

Appropriate stakeholder identification early in the project

Requirements are what stakeholders need from a project or product, and stakeholder identification is a continuous process throughout the project lifecycle, but sometimes it may happen that the PM collects the project requirements by involving certain stakeholders that are not appropriate or missing a key stakeholder who may appear in latter phases of the project when the deliverables needs to be validated, and these stakeholders reject the deliverables because they are not according to specific requirements which were not taken into account during the project initiation. In this case, the PM will have to manage the changes probably having impact on:

  1. Project cost: Even when managing the changes successfully it may be necessary to redo work.

Requirements must be approved by stakeholders. If the PM has not been able to successfully manage the change there will be an impact on the project costs, which could be high according to the volume of changes demanded.

Project scope

The changes required by the new stakeholders will be translated into a new scope since it will not match the one defined at the beginning.

Project quality

Even if the quality of the deliverables were appropriate, they would be adjusted to an incorrectly defined scope which would not be valid in terms of the quality perceived by the stakeholders.

User satisfaction

Negative impact on business value and user satisfaction. This situation may generate uncertainty and a poor perception of the project by business users. The PM has now the challenge to turn it around, having worse conditions than he had in early stages of the project. Stakeholder satisfaction is a new risk to manage.

Team morale and productivity

Rework usually has a negative impact on team motivation, who could also consider that their work has not been valued.

New stakeholders may appear during the project lifecycle who were not possible to identify in earlier phases due to different reasons: the organization may have changed, new people have been involved in the project, etc. The PM must be careful keeping track of these possible changes identifying any new stakeholder during the entire project lifecycle, and keep a stakeholder register up to date through appropriate stakeholder management and risk management.

How can we improve stakeholder identification?

Communication Management

During the requirements collection the PM must determine the best way of communication desired, define the type of information to communicate, in what format and language, the level of detail, how often and in what time slot the information should be sent, also defining when it would be required to call face-to-face meetings. In this communication plan, the PM must take into account the different stakeholder groups that should be informed since not all of them will need to receive the information in the same time and form, and taking care of the stakeholders who are not engaged to the project because excessive reporting of information in this case could have the opposite effect.

Actively listening to the stakeholders and the team members while giving feedback is essential.

Effective Stakeholder Engagement

Continuous reporting about the project goals and results in terms of added business value may help. Project objectives should be known from the beginning. During the project initiation, many risks and constraints are identified and stakeholders can provide support on that. As the project progresses, these stakeholders who have been highly involved at the beginning will become required only for specific support, and others such as end users will increase their participation and importance to the project. In general, stakeholder participation decreases as the project progresses.

Effectively managing stakeholder engagement reduces the resistance and increases the support required from stakeholders.

Tools

Impact Matrix or Influence Matrix can be useful to manage stakeholders throughout the project lifecycle:

Impact Influence Matrix

PMO

A PMO helps to improve transparency and visibility in project execution and results. PPM tools allow stakeholders to access project status as well as output data to meet their needs, avoiding blocking and confusion over irrelevant data or misunderstanding of receiving information from other parties and not from the PMO.

An active PMO can also improve stakeholder morale, reduce the reporting time at the executive level and increase stakeholder engagement. It´s not about the real value of the work that is being done and achievements, but about the perception of value by the stakeholders. A mature and active PMO will demonstrate that these perceptions fit the reality.

An active PMO that has an appropriate PPM strategy, resource problems will be minimized and stakeholders will consider PMO as a strategic center, providing an environment that contributes to business success.

Organizations with a PMO improve communication between the project team and stakeholders.

Agile Methodologies

In projects using agile methodologies, roles and interactions are defined and frequent revisions of partial product deliveries are required, more frequent meetings are needed to collect requirements and test partial deliveries. Communication Management also plays a relevant role as a greater degree of stakeholder participation is required.

On the other hand, in some organizations there may also be a cultural and methodological change in Project Management, increasing the difficulty especially in those companies that are not mature using agile methodologies, so an appropriate Stakeholders Management and Risk Management become essential in order to achieve the objectives.

When agile methodologies are used, the PM has to focus even more on managing stakeholder engagement.

Risk Management

Any failure in identifying the appropriate stakeholders or not getting enough involvement from them could result in deliverables not approved by the correct stakeholders having the consequences mentioned above. Stakeholders participation is essential to identify high probability and impact project risks. Without the right partners, the PM could miss risks that could be turned into incidents hampering the project success.

Stakeholders will provide support in identifying project risks.

It is essential to focus on stakeholder identification from early stages of the project, manage them closely and keep them informed and satisfied during the project lifecycle. These actions will significantly increase the chances of project success.