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What Is Stakeholder Analysis and Why Should You Do It?
By Michael L Young

Scottish poet Robert Burns coined the phrase: “The best laid schemes of mice and men gang aft agley”. It happens often with project management.

You put a great plan together, hire contractors, procure equipment, train staff and get management on board. Then, out of nowhere it comes unstuck because somebody you didn’t even think about has concerns with the way the project is running and you have to start again from scratch or, worse still, scrap the whole thing.

People can just as easily grease a project’s wheels as stop it in its tracks. Stakeholder analysis is about identifying all persons, groups and institutions who may have an interest in a project and taking steps to manage their interests and expectations so that the project runs as smoothly as possible.

This analysis needs to be done in the early stages of a project so that any risks and required communication can be included in the overall project plan. In this respect, stakeholder analysis is closely linked to risk management and change management.

Organizations and people at different levels have different motives, expectations and interests. Contemporary project management considers not only the needs of the customer and the organization but looks further afield to the way in which it impacts on society as a whole. Environmental considerations are a classic example of this.

What Is a Stakeholder?

In general, a stakeholder is anyone who will make use of, develop, or have an impact on any aspect of your project. Stakeholders can be either direct or indirect. Direct stakeholders are those people (developers, managers, customers) whose actions can directly impact your project – they are involved in the project life cycle, or are impacted by the project – they use the system or output the project puts in place. Indirect Stakeholders are those who have some political power to influence the project or those who are interested in its outcomes. In short – stakeholders are those who have a stake in the project.

Identifying Stakeholders

Stakeholder identification and analysis is best conducted using brainstorming techniques. This procedure is generally carried out in a workshop setting, with representatives of key participants in a project.

The first step is to list all parties which are likely to be affected by the development, both positively or negatively, directly or indirectly.

It sometimes helps to use categories and think of all the individuals and sub groups within that category. Common categories include: Management, staff, customers, media, community, finance.

Through the brainstorm process capture all the names of stakeholders who might:

  • Be concerned in any way with the project
  • Hold an influential position, or
  • Be affected by the problems addressed in the project

Often the project team will know the stakeholders intimately and have a good idea of their concerns. In other cases – particularly if the stakeholders are removed from the project – the team will need to find out information to help assess stakeholder needs. To do this research is conducted.

Gathering Information

There are three main ways to get information on the needs of stakeholders. Which ones you use depend on the resources available and the importance or level of the stakeholder. These are surveys, interviews and focus groups.

Online, telephone and mail surveys are the simplest and least expensive of the research methods. Surveys are generally best used when there are a lot of stakeholders (e.g.: staff) many concerns are known and you need to know the general feeling. Surveys use closed and multiple choice questions and statistical analysis. Surveys generally have a low response rate but this increases with people’s interest level in the project.

Focus groups are about getting together a representative group of stakeholders, asking them questions and recording consensus and diverse views. Focus groups can be used to identify concerns that are then put into a quantitative survey of stakeholders.

Interviews are the most time-costly and are best reserved for high-power stakeholders. The purpose is to get as much information as possible about the stakeholder and their views on the project so that plans can be put in place to address their needs or leverage their support.

Once the PM has gathered sufficient information on stakeholder needs they can conduct a thorough assessment of the stakeholders and plan a communication strategy.

Assessing Stakeholders

Once you have a good list of stakeholders and you know what makes them tick, you can then make some judgements about how much effort to put into dealing with their needs. This depends on their level of interest and their power to influence project outcomes.

Using a interest/power grid is a useful tool. You can plot each stakeholder or group on the grid and take appropriate action as specified in the grid. Plot a grid with power along the Y access (running from low to high) vs interest on the X access (again running from low to high). Divide into four quadrants. The top left quadrant need to be kept satisfied, top right need to be managed closely, bottom left need to be monitored and the bottom right need to be kept informed.

For those in the left and top squares, you then need to answer and record some basic questions about them to guide your actions. This information can form the basis of a stakeholder report. The questions are:

  • What makes them stakeholders?
  • What do they need from the project team?
  • What does the project team need from them?
  • What issues does the project team need to brief them on?
  • What methods would be the best way to brief them?
  • How frequently do they need to be briefed?

Stakeholder Report

You can then start to prepare your Project Stakeholder Analysis report using all the information you have collected to summarize stakeholder interests and recommend action.

For smaller projects a summary table is sufficient to capture the information on stakeholders. Prepare a table with the following headings and contents:

  • Stakeholder group – broad heading for the group (e.g.: Executive, community, users)
  • Specific groups – List sub-groups within these (e.g.: Management team, CIO, Minister)
  • Main issues/concerns – Summarize what are the areas of interest you have learned from your research. What are the key risks posed by each?
  • Major communications channels – List the media with which you will communicate with each group (e.g.: Formal meetings, email, fact sheet).
  • Frequency – State how often you will communicate with this group (e.g.: daily, weekly, quarterly, ad hoc).

Communicating with Stakeholders

The end product of a stakeholder analysis is a communication plan that forms part of the overall project plan.

Communication effort, mode and frequency depends on the cost and the level of influence of the stakeholder. Some will require simple and infrequent updates, others will require regular, detailed and frequent communications.

Information will need to be tailored to effectively communicate with, and sufficiently inform, different stakeholder groups. Communications tools and channels can include:

  • Formal Meetings – with powerful stakeholders
  • Informal Meetings – with interested people
  • Mailing list – to disseminate information to people on project progress
  • Newsletters – either through the mailing list, email or printed
  • Information displays – visual representation of project progress in public venues
  • Web site – regular updates of project information for ‘self service’
  • Individual briefings – for those with more interest who are prepared to attend
  • Tours and Demonstrations – for interested external people and organizations
  • Public forums – more appropriate where there are community stakeholders
  • Media releases – report on achievement of significant project milestones
  • Advertisements and Postings – Newspapers, magazines, notice boards
  • Liaison Committee – Representatives of larger groups. Distribute minutes.

Summary

A good project manager recognizes the key impact stakeholders can have both in assisting and impeding project progress.

A thorough stakeholder analysis and communication plan will maximize a projects chances of success in achieving deliverables on time and on budget.

Michael Young is Principal Consultant with ‘Transformed’ – Project Management Unleashed. http://www.transformed.com.au

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