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Stakeholder management is one of the major aspects of project management, stakeholders management is 1 of the s' out of 7's framework of project management which was promoted by McKinsey and Co. (Maylor, 2005). The importance of stakeholder management is not from a long time and has recently realised. By doing stakeholder management a project can finish in time and can give a good outcome. There are various definitions of stakeholder management and views by different authors. Some author states that stakeholders are those individuals or group of individuals that are actively involved in a project, can be affected positively or negatively by the outcome of the project, who have influence over the project and its result and those who have any input in the decision making related to project (Freeman, 1984, Project Management Institute, 2004, Phillips, 2003). Other authors distinguished between influencer and stakeholder. Influencers are those who can influence but they don't have stake and stakeholders have stake but cannot influence in the project. For doing stakeholder management in a project it is necessary to identify the stakeholder first. Stakeholders are both internal and external. Stakeholders can be varying from project to project both internal and external. "Internal stakeholder are defined as project owners in the sense they have overall managerial responsibility and power usually linked to a financial stake and organisation teams or individuals who have a contractual relationship with the project owner" (Chapman, 2008). Internal stakeholders are mostly top management, accountant, other functional managers, project team members. The other type of stakeholder is external shareholders "who may be positive or negative about a project, who may seek to influence the project through political lobbying, regulation, campaigning or direct action" (Ward, 2008).
External stakeholders are mostly clients, competitors, suppliers, environment, political, consumer, customer, local communities, government, regulators, and media. After identifying the stakeholders the project team and project managers have to build a relationship with them so that they can find and manage their power and influence on the project. To identify the influence and power of stakeholders on project, project managers use matrix or charts to solve the problem.
After identifying types of stakeholder project manager should make a responsibility matrix to know there role on the project for that project manager should include responsibility Assignment matrix in the project.
Responsibility Assignment Matrix (RAM):
A responsibility assignment matrix is useful to define general roles and responsibility on projects which includes stakeholders in the project. The figure of RAM below shows that whether the stakeholder are participants or accountable in part of the project and whether they are required to review, provide input or sign off on parts of the project. This matrix is a very simple tool but can be very effective tool for the project manager to communicate roles and expectations of different stakeholders of and on project (Schwalbe, 2006).
- R-Review Required
- I-Input Required
- S-Sign off Required
Another way of mapping the stakeholder is RACI charts which is most commonly used by the project managers. RACI charts is explained below with a chart
The other charts which is commonly used by the projects managers is RACI chart which shows Responsibility, Accountability, Consultation, and Informed roles of project stakeholders. The figure below shows a RACI charts in which tasks are vertical and group or individual on horizontal. Responsibility(R) stands for those who have to deliver the project or some aspect of it. Accountability(A) stands for the senior managers who have a right to commission the project. Consult(C) stands those whose views have potential impact on the project or they can be affected heavily by the outcome of the project. Informed(I) stands for those people whom to inform about the project status. The R shows only once in the figure and only one group is responsible for different task, ACI can be appear number of times for each groups.
Johnson and Scholes(1999, cited in Verweire & Berghe, 2004 and lecture slide, 2010) identified the power/matrix to map the different types of stakeholder see below figure 3. It is important to detect gaps between the current stakeholder and future stakeholder expectations and to study the actual quality of the relationship with these different stakeholders.
Secondly, in the early phases of a project, stakeholders will have a difficult time reaching agreement on deliverables because of competing goals and interest. This produces conflict, which project managers may tend to avoid or accommodate, instead of engaging in collaborative problem solving to attain good outcomes (Antonioni, 2009). "It is often specific events which trigger off the formation of stakeholder group. For this reason it is helpful to speculate in the degree of the unity or diversity between the various groups if faced with a number of possible future events, this process can be very helpful during strategic analysis in uncovering potential alliances or rifts which may be significant when thinking about future strategic choices" (Johnson & Scholes, 1999, cites in Miller & Wilson, 1998).
Communication Plan: Communication plays an important role in projects, so each and every project should include communications management planning. Communication plan is a document which gives guidance to the project team to communicate at a rite time with the stakeholders and to keep them inform time to time. The communication plan varies with the needs of the project. The communication plan should address few of the following such as Stakeholder communication plan, Information to be communicated including format, who will receive the information and who will produce it, Suggested methods or technologies for conveying the information, Frequency of communication, Escalation procedures for resolving issues, Revision procedures for updating the communications management plan (Schwalbe, 2006).
Example adapted from the article in Financial Times (1996, cited in Maylor, 2005) was about the construction of a new airport terminal building at Jersey Airport which started well. The main was to complete the construction before spring, in time for the tourist come in summer. The design was approved by all the necessary authorities, and contractor was appointed to carry out the work. After the completion in time everyone was happy with the new facility till the time few problems arose. First, the Air Traffic Controllers (ATC's) which is one of the stakeholders of the project complained that they were being dazzled by the sunlight reflected from the roof of the new terminal building. A further complaint was that the new building affects the accuracy of the airport wind speed indicator when wind is in certain direction. While the new site for the indicator was being sought, the ATC's had to advise the pilots to use their own judgement. This case study shows us that importance of having a process for identifying, working and communicating with all stakeholders, which has to analyse at the initial stage of the project.
Another example from personal experience of Bundi Tractors Private Limited, when the company was doing sales very good for the products they know that later they can face problem providing the service of the products sold. Service capacity of the existing plant was already equal to full. The company decide to construct a new service station to reduce the work load and to give a better service to the customer within same time. The service engineers and the employees were also facing problem form the existing service station so the company bought a land and hired the sub contractor for the construction. During the construction the company came to know that the land was under agricultural land and it has to be converted in commercial from government before using it as a service station which also become one of the stakeholders, including customers, workers, consumers and top-management, in the project. So the project managers look into the matter carefully and map the power of the government as a stakeholder and communicate the problem with all the top management of the company, the project manager ask them to convert the land into commercial land so that the project can finish in time and ready to use for the company. As the result the project finished in time and the station was ready to use for organisation and was converted into commercial land.
Risk Management is again on the major aspect of the project management. It is defined or called as an art and science of analyzing, identifying, and responding to risk throughout the life of the project and for the best interest of meeting project objectives (Schwalbe, 2006). "Project risk management, as one of the key disciplines of project management, is defined as the systematic process of identifying, analysing and responding to risk as project-related events, or managerial behaviour, that is not definitely known in advance, but that has potential for adverse consequences on a project objective" (Project Management Institute, 2004 cited in Kutsch and Hall, 2009). Risk management consist of four steps which are Risk analysis or Risk Identification, Analysis of probability and consequences, Risk mitigation strategies, and Control and documentation which goes step by step for the better result of the project, project manager should do the risk management in the starting of the project so that later on they don't face any problem which contains the overall cost of the project, quality of the project, and the time limit for the project to be completed.
To identify what could go wrong in the project and development project at any given point of time during the life of project is risk identification. Identification of risk and uncertainty in the project is to be done, before they can be acted upon to mitigate (Ahmad et al, 2007). Risk identification can be done with the following steps
Checklists- where crucial points are examined for symptoms of potential risk situation (Ahmed, 2007), usually evolve over time through collective experiences and contributions from various functional experts (Ward, 1999).
Influence diagrams - Owing to the visual display, cause-and-effects of risk situations are described and can be used for identifying risk situations before they eventuate. Cause-and-effect diagrams - which means the breaking up of the root causes of any problem into detailed sources (Russell and Taylor, 2000). Failure Mode and Effect analysis (FMEA) and Hazard and Operability study (HAZOP)-FMEA provides a format for determining causes, effects and relationships wherein a scale of 0 to 10 is used to rate the causes (Kumamoto and Henley, 1996). An extension of FMEA, HAZOP can be applied by considering project parameters such as strategy, budget and schedule to identify risk situations (Ahmed, 2007).
Fault trees and Event trees- A technique used for breaking down the chances of failure in the system into source events is performed by fault tree analysis where as "graphical representation is of potential consequences arising from a failure where possible consequences are generated and broken down from an initial event" (Kumamoto and Henley, 1996).