Saturday, July 01, 2017

PMP Protein: Identifying Stakeholders

By Sathish Babu, PMP

Takeaway: Stakeholder management is a new knowledge area in the 5th edition of PMBOK® Guide. Though it is new and relatively small compared to other knowledge areas, be very careful in answering questions in your PMP® examination. In this article, I’ll elaborate on ‘Identify Stakeholder’ process – the first process in stakeholder management knowledge area and also one of the two processes in initiating process group. As you are going to get good amount of questions from the initiating process group, the importance of the process is high. You are also going to apply the it in all of your real-world projects. 

Identifying Stakeholders is an important process used to identify the key people, determine their needs, requirements, expectations, power and influence level on the project. It helps to engage the right people in the right way in your project throughout the lifecycle of your project.

This process leaves us with so many questions. Let’s take them one by one in a question-answer format.

Who are your Project Stakeholders?
A person or group or organization whose interests may be positively or negatively impacted by the project or its product, as well as anyone who can exert positive or negative influence over the project. Listed below are few of them.

1. Sponsor,
2. Team member,
3. Senior Management,
4. Subject Matter Expert,
5. Project Manager,
6. Customer,
7. Vendors,
8. Functional Managers,
9. Operational Managers,
10. Government Regulatory agencies.

Why do we Identify them?
Listed below are few important reasons.
1. It gains buy-in.
2. It puts more ideas on the table.
3. Any stakeholders who are missed will likely be found later, they will probably request changes, which may cause delays.
4. Changes made later in the project are much costlier and would impact to other project constraints.
5. It increases the chances for the success of your effort.

To satisfy and fulfil the requirements of your stakeholders, you will have to find them, involve them, and keep them engaged with your project. Let’s take the following example for better understanding of this topic.

You are in charge of building a shopping portal. You are fairly confident as you have a team experienced in doing such work. As per the agreement at the end of the first month you organize a demonstration of the software. You invite the sponsor and key stakeholders. Later the sponsor informs you that she is not very happy with the progress indicating that one of the clients who would be using this software is not satisfied as her needs are not being met. To satisfy this client's needs would mean some radical changes with an impact to both cost and schedule. 
Question: What could be the root cause of this issue?

A. Deliverables were not as per requirement.
B. The stakeholder is making unrealistic demands.
C. The scope statement was ambiguous leading to this.
D. All the stakeholders were not identified.

Answer: D
Reason: The correct answer in this case is improper stakeholder analysis - Option D. While options A, B and C could be true the question gives no indication of these being the case. The question does mention about an important client whose expectations were not met. Stakeholder analysis deals with identifying all the stakeholders, their needs and expectations and their influence. In this case as the client's needs are not being met - it means that stakeholder analysis and identification was not done correctly.

How do we Identify them?
There are many ways to identify Stakeholders. I have outlined a few of them,
1. Project Charter: It gives you an initial set of Stakeholders who’s funding and championing the project.
2. Contract or Procurement documents: Any suppliers or vendors listed in contracts should be part of your stakeholder list.
3. Organizational Process Assets and Enterprise Environmental Factors: Knowing the way your company runs should help you to find the people who will be impacted by your project.
4. Interview the Experts and talking to all of the experts on your project to identify more stakeholders, and learn more about the ones you’ve identified.
5. Conduct Brainstorming Sessions and getting everyone together to think through the stakeholders who might be impacted by your project.
6. Stakeholder Analysis: It is a technique used to determine each stakeholder’s interest, influence, participation, and expectations for a project. You can divide your stakeholders into groups based on their level of involvement and need for communication.

How do we analyze them?
There are many ways to analyze stakeholders and mentioned below is an example of Power/Interest Grid analysis.

Once you identified all of them, plot them on a power/interest grid. This is shown below (reference source PMBOK Guide 5th Edition). You can determine who has high or low power to affect your project, and who has high or low interest.
Figure: Stakeholder Analysis Grid
1. People with high power and low interest need to be kept in the loop. You need these people to be kept satisfied with the project, even if they aren’t interested in it.
2. The people who are high power and high interest are the decision makers who have the biggest impact on project success, so closely manage their expectations.
3. You shouldn’t have to worry too much about the people with low interest and low power; they require the least amount of attention here.
4. Folks with high interest and low power should be kept in the loop as the project progresses. If they’re kept informed, your project will get good buzz.

Let’s take the following example for better understanding of this topic.

As a project manager, you understand the importance of identifying all relevant stakeholders, their interest and influence and their needs and expectations. You have been assigned to handle a large construction project. You decide to do a thorough stakeholder analysis and you identify Laura and Sean. Based on your interactions and analysis - you know that both Sean and Laura are low in the pecking order so they do not wield any significant authority or power. However, where it differs is in their interest in the project.  Laura has a lot of interest while Sean is disinterested. You decide to plot them in a Power / Interest grid to help determine how you would manage these stakeholders. 
Question: Which of the following is the best approach to handle these two stakeholders?

A. Both Sean and Laura should be Kept Informed.
B. Sean should be Monitored and Laura should be Kept informed.
C. Both Sean and Laura should be Monitored.
D. Sean should be Kept informed and Laura should be Monitored.

Answer: B
Reason: Both Sean and Laura do not wield a lot of power and authority. However, the differentiator seems to be their level of interest. While Sean is, disinterested Laura has a high level of interest in the project. Stakeholders who have a high level of interest but who wield insignificant authority or power should be kept informed - in this case Laura. Stakeholders who have a low level of interest and who wield insignificant authority or power should be Monitored - in this case Sean. The correct answer being - Option B.

Should you identify and address all the stakeholders?
Yes. You identify all the stakeholders and find an effective way to address their needs and expectations. In a long, complex, and big project there can be many stakeholders. You, as the project manager, should identify all possible or potential stakeholders, analyze their needs and expectations and engage them continuously. 

Let's take another scenario to understand it.  

You are working as a project manager for the ground station build up for a geosynchronous satellite project. This project is being developed by collaboration of your country and few neighbouring countries, who lack the technical know-how, but are keen on the success of this project. The project is expected to bring weather information to the farmers, fishermen, and also will help in navigation. There are over 250 possible stakeholders in this project. 
Question: Which one of the following will be the BEST way to address the stakeholders?

A. Contact your supervisor and find out who among the stakeholders are the most important ones, as you can’t possibly take inputs from 250 stakeholders.
B. Find out the most important stakeholders yourself and create a stakeholder engagement plan (management plan) to engage the stakeholders.
C. As it is the beginning of the project, some of the stakeholders are not very active; you can ignore these stakeholders.
D. Identify all the 250 or more possible stakeholders and find an effective way to gather their needs and expectations.

Answer: D
Reason: It doesn't matter if you are early in the project and some of the stakeholders are not very active. It also doesn't matter if you have more than 250 potential stakeholders. You, as the project manager, should identify all possible/potential stakeholders, analyze their impact and assess how they are likely to react to various situations. Hence correct choice is D. 

With large number of stakeholders, an effective way can be to divide them into groups. Remember that stakeholders also can be groups, not only individuals? When divided into groups, you can incrementally break them (based on your need), to find out their needs, expectations and influences. 

Where to capture their information?
All the information about stakeholders is captured in the Stakeholder Register and it may include the following.

Written by Sathish Babu:
Sathish Babu is working for Kodiak Networks as a Project Manager and having 11+ years of experience in Product, Project Management and Service Delivery in Telecom domain.

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