Copyright 2007. Butterworth-Heinemann. All rights reserved.

. May not be reproduced in any form without permission from the publisher, except fair uses permitted under
U.S. or applicable copyright law.

7 Stakeholder management
Almost any person or organization with an interest in a project can be termed a stakeholder.
The type and interest of a stakeholder are of great importance to a project manager since
they enable him or her to use these to the greatest benefit of the project. The process of listing,
classifying and assessing the influence of these stakeholders is termed stakeholder analysis.
Stakeholders can be divided into two main groups:
1 direct (or primary) stakeholders, and
2 indirect (or secondary) stakeholders.
1 Direct stakeholders
This group is made up, as the name implies, of all those directly associated or involved in the
planning, administration or execution of the project. These include the client, project sponsor,
project manager, members of the project team, technical and financial services providers,
internal or external consultants, material and equipment suppliers, site personnel, contractors
and subcontractors as well as end users. In other words, people or organizations directly involved
in all or some of the various phases of the project.
2 Indirect stakeholders
This group covers all those indirectly associated with the project such as internal managers
of the organization and support staff not directly involved in the project including the HR
department, accounts department, secretariat, senior management levels not directly responsible
for the project, and last but not least the families of the project manager and team members.
A sub-section of indirect stakeholders are those representing the regulatory authorities such as
national and local government, public utilities, licensing and inspecting organizations, technical
institutions, professional bodies, and personal interest groups such as stockholders, labour
unions and pressure groups.
Each of these groups can contain
1 positive stakeholders who support the aims and objectives of the project
2 negative stakeholders who do not support the project and do not wish it to proceed.
Direct stakeholders mainly consist of positive stakeholders as they are the ones concerned
with the design and implementation of the project with the object of completing it within the
specified parameters of time, cost and quality/performance. They therefore include the sponsor,
project manager and the project design, construction/installation teams. This group could also
have negative stakeholders such as employees of the end user, who would prefer to retain the
existing facility because the new installation might result in relocation or even redundancy.

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28 Project Management, Planning and Control

The indirect group contains probably the greatest number of potential negative stakeholders.
These could include environmental pressure groups, trade (labour) unions, local residents
associations, and even politicians (usually in opposition) who object to the project on principle
or on environmental grounds.
Local residents associations can be either positive or negative. For example when it has been
decided to build a by-pass road around a town, the residents in the town may well be in favour
to reduce traffic congestion in the town centre, while residents in the outer villages whose
environment will be degraded by additional noise and pollution will undoubtedly protest and
will try to stop the road being constructed. It is these pressure groups who cause the greatest
problems to the project manager.
In some situations, statutory/regulatory authorities or even government agencies who have
the power to issue or withhold permits, access, wayleaves or other consents can be considered
as negative stakeholders.
Figure 7.1 shows some of the types of people or organizations in the different groups and
subgroups.
Although most negative stakeholders are clearly disruptive and tend to hamper progress,
often in ingenious ways, they must nevertheless be given due consideration and afforded the
opportunity to state their case. Whether it is possible to change their attitude by debate or
argument depends on the strength of their convictions and the persuasiveness of the project
supporters.
Diplomacy and tact are essential when negotiating with potentially disruptive organizations
and it is highly advisable to enlist experts to participate in the discussion process. Most large
organizations employ labour and public relation experts as well as lawyers well versed in
methods for dealing with difficult stakeholders. Their services can be of enormous help to the
project manager.
It can be seen therefore that for the project manager to be able to take advantage of the
positive contributions of stakeholders and counter the negative ones most effectively, a detailed
analysis must be carried out setting out the interests of each positive and negative stakeholder,
the impact of these interests on the project, the probability of occurrence, particularly in the
case of action by negative stakeholders and the actions, or reactions, to be taken.
Figure 7.2 shows how this information can best be presented for analysis
The Stakeholder column should contain the name of the organization and the main person
or contact involved.

Positive stakeholders
Direct
Indirect
Internal
External
Internal
External
Management
Stockholders
Sponsor Client
Project
manager
Project
team
Project
office

Contractors
Suppliers
Consultants

Accounts Dept
HR dept
Tech. depts
Families

Banks
Insurers
Utilities
Local
authorities
Government
agencies

Negative stakeholders
Indirect
Internal
External
Disgruntled
Disgruntled end
employees
user
Pressure groups
Unions
Press (media)
Competitors
Politicians
Residents
associations

Figure 7.1 Stakeholder groups

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Stakeholder management 29

Stakeholder Interest Influence

impact

Probability

Action to
maximize support

Reaction to
minimize disruption

Figure 7.2 Stakeholder analysis

The Interest column states whether it is + or and whether it is financial, technical,

environmental, organizational, commercial, political, etc.
The Influence/impact column sets out the possible effect of stakeholder interference, which
may be helpful or disruptive. This influence could affect the cost, time or performance criteria
of the project. Clearly stakeholders with financial muscle must be of particular interest.
The Probability column can only be completed following a cursory risk analysis based on
experience and other techniques such as brainstorming, Delphi and historical surveys.
The Action column relates to positive stakeholders and lists the best ways to generate
support such as maintaining good personal relations, invitations to certain meetings, updated
information, etc.
The Reaction column sets out the tactics to assuage unfounded fears, kill malicious rumours
and minimize physical disruption.
The key to all these procedures is a good communication and intelligence-gathering system.

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