The Importance of Stakeholder Management in Delivering Successful Projects
INTRODUCTION
In the contemporary business environment, managing projects with diverse stakeholders is normality that some do not fully optimize, because of lack or of missing knowledge and experience in stakeholder management. This essay emphasizes the necessity of applying effective stakeholder management in project management processes for achieving successful projects. The essay describes the stakeholder management roles, challenges, and skills, illustrating four case studies that dealt with stakeholder management in their project management processes. The analysis of the four case studies increases the understanding on how stakeholder management applied to project management processes can lead to a successful or to a failed project.
BODY
The Importance of the Stakeholder Management Process in Project Success
Scharioth and Huber (2004) describe stakeholder as a concept utilized for referring to all actors interested in the stake of a company or institution. Organizations, persons, groups, or anybody who can influence the activity or the success of a project in a positive or a negative way is called stakeholder (Kelley, 2014). Stakeholder management usually means identifying the stakeholders, in different projects, and striving to achieve their maximum commitment in the underpinned project, by understanding their needs and by answering those needs (Eskerod and Jepsen, 2013). Clearly identifying the stakeholders within a project and their interest in achieving a successful project contributes to having a better insight on each stakeholder’s vision regarding the project. Hill (2009) notes that often, the vision of some stakeholders can differ from the vision of other stakeholders, as the stakeholders’ vision regarding the project is aligned with their interest in the project. Such a situation can lead to a conflict between stakeholders or it can place the stakeholders in a decision making process wherein they will judge and decide to protect their own interests in the project (Hill, 2009). Eskerod and Jepsen (2013) observe that through their role in a project, stakeholders can contribute to the success of the project, or, on the contrary, they can harm the project. Bourne (2012) agrees that the success or failure of any activity within a project depends on the stakeholders’ perception of success or failure. It is the stakeholder manager’s role to effectively align the stakeholders’ interests with the overall project goals, making them understand how their expectations will be attained by respecting the project’s guidelines and by sustaining the project’s objectives. Stakeholders’ contribution within a project can mean financial or non-financial involvement, wherein the non-financial involvement could imply authorization, expertise and working hours, deliverables, or decision makings (Eskerod and Jepsen, 2013). The role of the project manager managing over the stakeholders within a project is to determine all stakeholders to positively contribute to the project’s success. Eskerod and Jepsen (2013) state that stakeholders will only contribute in the project as needed if they are motivated, which require from the stakeholder management to identify the stakeholders who are not motivated enough and to motivate them to contribute to the project. Motivating stakeholders to contribute to the project means, according to Bourne (2012), identifying each stakeholder behind every activity included in the project. The author remarks that for managing the stakeholders’ expectations and perceptions, the managers need to communicate effectively how their expectations will be reached through specific activities (Bourne 2012). Moreover, the stakeholder manager needs to educate the stakeholders towards understanding the significance of the project. In MASCA project, an aviation process meant to manage change across air transport system, the shareholders (airlines, airports, maintenance companies) involved in the project were trained on how the change management would bring benefits for them and they were informed about how they needed to contribute to making the project a success (Leva, McDonald, Ulfvengren and Corrigan, 2012). Nevertheless, if conflicting expectations are identified among stakeholders, the stakeholder manager needs to apply a negotiation process for guaranteed that the project’s objectives are aimed, in exchange of benefits provided to stakeholders (Eskerod and Jepsen, 2013). The stakeholders’ needs and expectations must be clarified as soon as possible in the project formation and introduced in the project planning phase, otherwise the stakeholders might feel neglected, which will lead them to jeopardize the success of the project (Eskerod and Jepsen, 2013).
Stakeholder Management Process in Real Life Projects
First Case Study – UK Government
The failure of aligning the stakeholders’ expectations with the project’s objectives led the UK government towards a dead end in its project meant to achieve an effective planning for economic infrastructure (“HM Treasury: Planning for Economic Infrastructure”). The planning for economic infrastructure requires estimated expenses of £310 billion to be spent on “energy, rail, roads, water, waste, flood defenses and digital communications” until 2015 (“HM Treasury”). This project implies the involvement of private companies, other sponsors and the taxpayers for attaining the proposed objectives. However, the UK government’s economic infrastructure project implies that the taxpayers should pay for their benefits as future consumers of the facilities built under the project, which makes the project a burden for the taxpayers. In addition, while the private companies and other sponsors might be tempted to invest in this project due to its return of investment potential, the government failed to communicate effectively with these stakeholders. Like this, the lack of a clear policy focused on the planning for the economic infrastructure might divert their financial capabilities towards other projects (“HM Treasury”). This project is not successful because the stakeholders manager (in this case the UK government) failed to communicate effectively with the stakeholders the objectives of the project and the benefits that each stakeholder will enjoy by contributing to the project. The lack of a policy to guarantee the sponsors’ investment made them reluctant to participating in this project. The lack of participation of the private companies on the project implies increased taxes for the taxpayers, which will be the end-users, as consumers, of the facilities (deliverables) produced during the project. Increased taxes are perceived as burdens by the taxpayers stakeholders. Like this, the UK government failed to motivate the taxpayers to sustain this project. Effective communication, negotiation, motivation are three aspects that stakeholders managers need to master in developing successful projects while aligning stakeholders expectations and the UK government failed to use these strategies in determining the stakeholders to support its project.
Second Case Study – The Sheep Island Heliport Project
In the case of The Sheep Island Heliport Project, the stakeholder management process implied the alignment of various stakeholders’ needs. As such, the tourists would benefit from the heliport as they could more easily visit the Sheep Island, enjoying the walks and the sights offered that this location offers. In the same time, the residents of this island would have improved traveling or conditions and the heliport would increase their living conditions by the facilitation of tourists’ access to the local touristic attractions. Moreover, the heliport project creates working places for the local people (employed through Island Construction local firm), who, otherwise, would have not been employed (Lock and Flouris, 2009). Therefore, this project is effectively managed, as through the stakeholder management process the involved stakeholders’ expectations are addressed from the initial phases of the project. Knowing their benefits, the stakeholders are motivated to contribute to the success of the project. The workers (contracted by the local company (Island Construction) contribute to the project’s success through their work time and expertise (Lock and Flouris, 2009). The local authorities contribute through authorization and the facilitation of the works. The end-users (the tourists and the local residents) assure the success of the project through the correct utilization of the deliverables (Eskerod and Jepsen, 2013).
Third Case Study – Ubisoft
Ubisoft, the video game multinational company activating in 19 countries (ubisoftgroup official website), is often challenged with stakeholder management project, because it develops multi-site projects. As such, for its Assassin Creed Unity game, studios from Canada assure the graphic design, France subsidiaries manage the programing working closely with the Romanian and Ukraine teams, while the testing is assured by the Romanian subsidiary in collaboration with the Chinese studios, gathering around 10 subsidiaries that develop this game (Makuch, 2014). For the effectiveness of the stakeholder management process, this situation requires the understanding of the various needs of the stakeholders involved. Beyond the different studios that assure different aspects of the video game (the deliverable), which constitute the internal stakeholders, there must be considered the external stakeholders as well. The external stakeholders are the end-users of the game to be produced (the clients), the critics, the shareholders and Ubisoft’s business partners. Effective corporate communication is essential in video game industry, as it can affect the way in which the game it will be received by critics and implicitly by clients. By slipping information about the number of subsidiaries involved in this project the company formulated its strategy to increase the expectations of the external stakeholders into receiving the game, motivating them to believe that Ubisoft put all its creative efforts into delivering a qualitative game. The eventual internal disputes between the different subsidiaries that might encounter disagreements regarding the deadlines imposed or regarding their multi-site collaboration are carefully managed inside, so that everything remains under control, not affecting the end result. This is a successfully managed project, as the company managed to motivate the stakeholders, addressing their anticipation by announcing the multi-site collaboration for creating Assassin’s Creed Unity.
Fourth Case Study - Holyrood: Scottish Parliament Building
Analyzing the case of Holyrood: Scottish Parliament Building, the main aspect that makes this project a failure from a stakeholder management process point of view is the poor identification of the stakeholders. As the case study indicates, the project manager, the Scottish Parliament, also responsible for managing the stakeholders, did not clearly assigned tasks and authority to specific stakeholders (“Holyrood: Scottish Parliament Building”, 2008). Like this, the project manager failed to negotiate each activity from the project with the corresponding stakeholders. The opportunity of making the stakeholders to understand their benefits and to motivate them to commit to delivering a successful project was missed. Moreover, the lack of identification of the stakeholders also meant a lack of understanding of their needs and of their risks, which, by contract, became the risks of the stakeholder management. The death of the Spanish constructor, which delayed the construction process of building the Parliament House and the 9/11 terrorist attack that influenced the suppliers relation were unpredictable risks that could have not been anticipated. Nevertheless, the over concern for quality in a tight deadline that led to the ten times higher the anticipated cost for building the Scottish Parliament House was a risk that could have been anticipated. The poor communication with the stakeholders was another aspect that marked the failure of the project regarded from a stakeholder management process perspective. As such, the reporting of the stakeholders was blurred, lacking transparency, specifically regarding the costs. Moreover, the reporting was inappropriate and imprecise in the identification of the risks, which ultimately generated huge costs and a three years project delay. The ownership of the stakeholder management was another cause that impacted the quality and success of the stakeholder management process. The project was initially managed by the First Minister and from 1999 it was taken under the responsibility of the Scottish Parliament Corporate Body, which led to an initial cost increase from £62 million to £108 million and to a chaotic management of the existent stakeholders (“Holyrood: Scottish Parliament Building”, 2008). Overall, the Holyrood case is an example of a stakeholder management process failure, wherein the stakeholder management failed to identify correctly the stakeholders, to communicate, to negotiate, to motivate the stakeholders and to remain consistent with the initial plans.
Stakeholder Management Challenges and Skills
At a closer analysis of the stakeholders dynamic within a project, there can be understood that the stakeholder management is a complex responsibility, facing many challenges and requiring diversified skills. The four analyzed case studies indicated that in a project development process, stakeholder management faces various stakeholders with different, even contradictory expectations from the process. For achieving the success of the project, the main challenges of the stakeholder management is to clearly identify the stakeholders and their expectations, communicating and negotiating with them for attaining their support and their motivation for reaching a successful project. Other challenges imply knowing the risks that each stakeholder confronts with in different stages of the project development and trying to mitigate them through different risk management strategies, such as avoidance, transference of the risks, mitigation or acceptance (Kelley, 2014).
Referring to the communication, negotiation and motivation activities that the stakeholder management must master, it is easily understandable that in dealing with stakeholders, one needs leadership skills. Besides having the “sixth sense” people skills, in dealing with multiple stakeholders within a project, one needs technical skills and solid professional expertise for understanding the constraints or the risks of the activities involved in the project (Roeder, 2013, p. 4). Bourne (2012) states that successful stakeholder management requires a combination of hard skills (time control, cost and scope) with soft skills that imply leadership abilities. Moreover, effective stakeholder management requires ongoing control of the tasks, responsibilities and activities, for assuring that the project runs smoothly.
CONCLUSION
Stakeholder management represents a significant responsibility. Having the right set of skills and properly managing the challenges of managing various stakeholders can make the difference between a successful and a failed project. This essay presented the responsibilities, challenges and skills that one requires in managing stakeholders, introducing four case studies for analyzing how the stakeholder management process was handled by the responsible authorities. In project management processes, stakeholder management is an essential role, one that companies need to develop for aligning the expectations of their diverse stakeholders with their own organizational goals, identified through different projects’ outcomes.
References
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