Urgent

Stakeholders and Risk Management (graded)

Both the PMBOK® Guide and the ATOM process discuss the role of stakeholders in risk management. How does a project manager identify stakeholders for a project? How does a project manager involve these stakeholders in risk management?

Should a project manager treat all stakeholders as equals, or are some stakeholders more important to a project than others?

Some stakeholders are more important than others unfortunately. Identifying those that might approve a project and determine if your entire budget will be granted, etc. are the primary parties to appeal to. Getting to understand what is important to that person and focusing on benefits your project will accomplish as to those areas will better position your project to receive the green light. I agree Jill. Some stakeholders carry more weight than others for a project. While the text went into a list of different stakeholder attribute combinations I like the Agile approach a little better. In an Agile project (Scrum specifically) the Scrum Master/Project Manager focuses on 3 main stakeholders: the Product Owner who determines what should be worked on and deals with organizational politics, the Team Member who executes the work, and the Scrum Master who facilitates, communicates, and reports status. This simplifies greatly from the list in the text though the types of stakeholder attribute combinations would still be applicable for the Product Owner as they navigate organizational or interpersonal politics.

Our text provides an assessment of different types of stakeholders and provides a grid that allows a project manager and sponsor to place them based upon:

Attitude - attitude toward the project, either supportive or resistant.

Power - power to influence the project for better or worse.

Interest - level of interest in the project and its success or failure.

Important Stakeholders to pay attention to include:

Not only does identifying these stakeholders play a big part for the PM but also finding ways to involve them that will be beneficial to the project is also a key factor. One thing to remember is that some of these stakeholders are more important to the project than others. What I mean by that is that some of these stakeholders can have a larger impact on the success or failure of the project as a whole. For those that have the potential to exercise a large amount of influence it becomes important to get them on the support side of the fence early on in the project. By doing so it is easier to move the project forward with little to know fear of failure. For those who have the potential to influence the project in a negative way it is very important to put controls in place to limit the amount of influence that these stakeholders can exercise on the project as a whole.

There are different levels of stakeholder’s involvement and some of the stakeholders are surely more important to a project than others. Stakeholders can be categorized in the following groups:

Primary stakeholders - These are the group of people that are directly affected, either positively or negatively, by an effort or the actions of the project organization. Shareholders of the company would be the primary stakeholders for the project undertaken by the company. Project sponsors could fall into the primary stakeholders.

Secondary stakeholders - These are the group of people that are indirectly affected by the project organization. The environmental and community group affected by the project could fall into this group.

Key stakeholders - These are the group of people which are important within or to an organization and are directly engaged in the work. Project director, project manager and other project people such as project finance director would fall into this group.

Primary and key stakeholders are some of the stakeholders who are definitely more important to a project than others.

References: http://ctb.ku.edu/en/table-of-contents/participation/encouraging-involvement/identify-stakeholders/main

With any organization or project, there will be major and minor stakeholders; those that should have more influence and decision making ability and those who will have a more advisory role. The level of importance that each stakeholder will bring to the project will be identified and determined by the stakeholder analysis where each stakeholder's level of attitude, power and interest will be determined. Based upon this analysis and the resulting conclusions, it will provide to the pp project manager and leadership how involved and important each of the stakeholders are and what level of influence and input they should have. Those with more positive, constructive and beneficial information should be assigned a higher level of importance than those that will have a negative and destructive influence.

Managing the expectations of stakeholders throughout the project life cycle is critical to the success of the project and treating all stakeholders the same could lead a project to failure. The treatment of each stakeholder depends on the circumstance. Stakeholders of power are given more attention than those who are not. Stakeholders who are more engaged are treated differently then those who are not. Those in the public eye are praised more than those who are not.

I believe in any project, the most important stakeholders are the client and the client executive team. They are the one funding the project and monitoring every step of the way and if they are not happy, then the project will fail before it even begins. For example, when taking on many Windows 7 migration projects last summer, we had to deal with our client's executives directly and was quite a pain. We needed to send and get the approval from the CEO, CFO, Presidents before proceeding with the orders and implementation. Most people in these positions are not to computer savvy and have a lot of questions. When something is not communicated properly or set up, many issues arise. What I learned from working with these individuals is to listen, document, communicate, and making sure EVERYONE is on the same page because if they are not, it will come back to haunt the project team in the end.

All stake holders should not be treated as equals because they are not equals within their own organizations, so why should they be equals when it comes to the projects. Just like there are levels of hierarchy and authorization within a company, so should it be in a project. Some information in a project like employee pay is confidential and proprietary information. Every stakeholder involve will not have clearance for that information.

Stakeholders will have their differences and this will make them to be of more or less importance to the project. The importance of stakeholders to a project varies according with their category:

•Unaware of project and potential impacts.

•Resistant to change but aware of project and potential impacts.

•Neutral by being not supportive nor resistant and aware of project.

•Supportive to change and aware of project and potential impacts.

•Leading to ensure the project is a success, aware of project and potential impacts.

(PMBOK Guide, 2013).

Is relative power also something we should use to analyze stakeholders? Why?

Stakeholder power analysis is particularly useful for assisting in decision-making situations where various stakeholders have competing interests, resources are limited, and stakeholder needs must be appropriately balanced. As well as evaluating existing policies and institutions, it can be used to appraise possible situations. It is about asking questions like: Whose problem? Who benefits? Who loses out? Analyzing stakeholders' relative power has great merit on stakeholder assessment. One of the main goals of Stakeholder Analysis is to reveal, and therefore potentially assist in reducing, the power imbalance among weaker groups which is often revealed during policy reform process. Relative power of the stakeholders is a key in determining the influence that the stakeholders in question will have on the project. Along with attitude and interest, power is a key component in analyzing the stakeholders for a project and the relative or perceived power of the stakeholder, either their own perception or that given to them by others, plays a significant role in how much additional power and influence they will have on a project and whether or not that influence will have a positive or negative effect. Assigning or giving a stakeholder more power than they actually have can change their level of access and ability to impact a project and needs to be accounted for and examined during the stakeholder analysis to ensure the appropriate level of relative power is assigned for each stakeholder.

it let understand key factors in a decision-making situation, it helps to recognized critical stakeholders and to know their interest in the project as well conflicts in priorities, this tool helps to decision-making in a moment when there is different goals with the stakeholder’s expectations. Clarifies issues such as differences, benefits, limitations, relationship, and helps to avoid negative outcomes and turn it around. Why used? Because it helps in relationship stakeholders, and maintains focus monitoring the process, to examine well-bell of the company and plan changes, to predict the consequences of decisions and be able to agree with the outcomes.

The stakeholder's position on the grid shows the actions that the project manager should take with them. Stakeholders that are high power and interested in the details are those that has to be fully engaged and the maximum amount of effort must be used to satisfy them. Stakeholders that are high-powered, but less interested are those that you have to keep satisfied, but it is not necessary to overload them with information. Stakeholders that are very interested, but have low power are those that you keep sufficiently informed because they can be helpful with project details. Stakeholders that have little power and aren’t very interested should be monitored, but not bogged down with details and excessive communication.

Relative power should be used to analyze stakeholders because by doing it we can better place their involvement with the project. In a team or group of stakeholders will be some with more or less interest in the project. Their influence to others will variate since each individual is different in what influencing a project concerns. By using relative power to analyze stakeholders, we are able to give them a level of influence in the duration of the project, that way, we can prioritize stakeholders, to be able to count with them in a certain part of the project. Stakeholders can make the project to succeed and also, the project may go wrong by not using the right stakeholders in the right activity, task or operation.

A stakeholders relative power is deffinently something that needs to be analyzed. Different stakeholders have different power levels and on SH with littler power but with positive attitude and the drive to help the project out will be good for the project he may not have enough power to make much of a difference. A SH with a larger amount of power but is no interested in the project will not help the project go very far. He could do so much with his influence and power but does not use it. As a PM you would not want the stakeholder with all the power not caring about the project.

To my understanding a potential stakeholder can be everywhere for example within the project team, senior management, other competitors who have a project on mind, suppliers of past projects, business partners, and previous customers. A project needs a stakeholder to be able to be successful therefore a project manager should be able to answer all sponsors questions and concerns, proceed with a risk identification of factors that can impact negatively on the project and minimized as much possible, also be able to analyze and measure potentials risks. The goal is to my understanding is to motivated the stakeholder to proceed with the project with confidents and without concerns, and develop a plan to increase the satisfaction of the stakeholder.

What are the consequences of failure to identify, assess, and manage stakeholders? Can you provide examples of when this has occurred?

One consequence would be a stakeholder, who is not a key stakeholder, that is part of the decision making process regarding risk. Not all stakeholders need to be part of the decision making process. Not understanding the different types of stakeholders you have could slow down the risk assessment process and make decisions that may be incorrect. Stakeholders are extremely important to any project, they have the power to endorse or reject a project at any given time, a project manager has the obligation to identify what requirements and expectations has the stakeholder and able to extent their satisfaction to the best possible. Therefore an effective two way communication between the project manager and the stakeholder is necessary to avoid and manage frequently project changes. They can influence in a positive or negative on a project for example when a project manager requires the approval to expand the construction of a building that will increase profits for the company, a stakeholder could have a negative influence by delaying or requesting more investigation of the expansion or refusing to pay for the project, by the other hand a stakeholder could help to acquire the permission and support to achieve the project successful.

A consequence would also be communication failure. If stakeholders are not identified, assess and manage then the project manager can get confused with who needs what information and when. Approvals may go unnoticed and emails unanswered or multiple decisions would be made that would ruin the entire project. Privilege information could go to the wrong person which could lead to a law suit. Knowing who is who and what the position is in the project help to build better and tighter communication plan.

Failure to identify stakeholders can cause a huge problem particularly if you're not made aware of it until the end of the project. Let's say a construction job is 85% complete but the end client isn't who you thought it was and you actually have to get final approvals from someone who wasn't involved at all during the earlier parts of the process and now, they want major changes made. For every project each and every stakeholder should be identified, assessed, and monitored. Failure to do all three of these could have adverse affects on a project. For example, during a project the PM could identify the stakeholder, but fail to assess them and as the project progresses the stakeholder may not be happy with the direction of the project. By failing to assess this stakeholder the project schedule could be delayed or aspects of the project may have to be changed which will result in additional resources. If you fail to identify, assess, and manage your correct stakeholders in essence it could cause your project that was completed on time and within budget to be a failure. This is due to having the wrong stakeholders and perception is key with customer satisfaction. For example not understanding a user group that used an application primarily caused an issue with development of the application. The development team at my organization thought they had identified all stakeholders and gathered requirements. They were complete with all of their work when someone mentioned another group of users that needed to be consulted before finalizing all the modifications that were being worked on. This caused a lot of rework on the development teams part since if they hadn't completed the new requirements they would have finished the project with unhappy users causing the project to be labeled a failure in the end.

Another way of determining stakeholders is to identify those who are directly impacted by the project and those who may be indirectly affected. Examples of directly impacted stakeholders are the project team members or a customer who the project is being done for. Those indirectly affected may include an adjacent organization or members of the local community. Directly affected stakeholders will usually have greater influence and impact of a project than those indirectly affected. While these details are developed and analyzed further in the Stakeholder Analysis process, it is important to begin thinking about them now and helps provide a systematic way to identify stakeholders.

First, when analizing stakeholders using the ATOM method you have to use three dimensions:

Attitude toward the project

Power to influence he project

Level of interest in the project

This will help to identify the key stakeholders that will contribute to decisions about the risk process. Stakeholders need to be informed about resolved issues, approved changes, and general project status. If stakeholders are kept in the loop of the progress of the project this will help to maintain or increase the efficiency and effectiveness of stakeholder engagement activities as the project evolves and its environment changes. This will keep the stakeholders informed and will assist when you have shortfalls and need help with achieving milestones.

Stakeholders can have a direct impact on the success or failure of your project. Project manager should identify all the stakeholders at the beginning of a project and categorize them into Primary stakeholder, secondary stakeholder and key stakeholders. Key stakeholders are group of people whose interest in the project must be recognised if the project is to be successful. The key stakeholders can positively or negatively affect the successful completion of the project. Project manager needs to assess their interests in relation to the problems which the project is seeking to address and also needs to identify conflicts of interests between stakeholders. If the project needs to get the environmental clearance to get started then it is extremely important that the project and organization identifies the environmental clearance bodies and get the required approval for the project to get started.

Identifying, assessing and managing stakeholders should be done through the project charter and failure to do so leads to delays in the decision making because without commitments it would be hard to get management and sponsors to sign off and agree on items. There would be risk because there would be no clear statement of the project goals and objectives. There would most definitely be a lack of authority leading to budget, resource, and authority issues.

Failure to identify stakeholders can hinder a project from being approved. Several years ago, I was heading an supplier E-procurement initiative for a technology company. During the process I researched over several months that the organizations top customers were investing in ERP applications to source capital equipment. This represented about $240mil in current revenue that was at risk if we didn't adapt the our customers requests. The project was presented without the sponsor (sales department) actively involved to sign off on the upgrade. The CIO determined that the benefit wasn't strong enough to move forward. The presentation should have heavily involved the stakeholder/sponsor to display the level of importance of adapting to the customers buying behavior change. The project was represented with the proper stakeholders involvement, which achieved executive support to adopt the project.

How does a project manager know which stakeholders are more important to a project?

Project Managers will discover the key stakeholders from the results of analysis. The analysis is very beneficial and helps to determine the following.

•Who are the stakeholders?

•Will they support or not support the project?

•How much influence do they have over the project?

•What is their interest level in the project?

The lecture mentions that a stakeholder with both high interest and power is not automatically considered a key stakeholder. Project Managers should learn about the stakeholders interests, expectations, and goals before making the final determination (key or not).

A project manager has to identify the project sponsor, users or customers, any functional managers or organizational groups that will be affected or needed along with any external business partners or vendors. This is a good place to start identifying who the stakeholders are first. Afterwards when a PM learns what each group or person has to contribute or take away from the project is when he/she can review the priority of importance. A PM has to continuously identify stakeholders and manage their expectations. There may be more than one group that is critical to the success of the project and a PM has to work with that. A PM has to know all the different functions and personnel involved in the project to help identify which stakeholder is more important on a project.

All, Do you have examples of situations where stakeholder interests are not in alignment?

Some of the examples that I could think of where the stakeholders interests are not in alignment are that of the project managers vs suppliers/vendors. Project manager would like to source the best possible materials/products at the lowest cost whereas the supplier and vendor would like to maximize their return on the product sales made by them to the project/company. Another example could be of the environmental agency vs the project sponsors or the company. Generally, the environmentalists object to mega construction projects as these projects usually lead to lot of deforestations and land encroachment and in some cases environmental pollution also. I think a lot of times you find yourself learning about stakeholders after it's too late. Sometimes, a local government isn't approving your design while your business client does and there's a conflict there. It's critical to figure out exactly who plays into each part of the project to try and make everyone happy and to stay within budget and legal parameters.

One example of a situation where stakeholders interested are not in alignment is between our legal department and our IT department. We have a project where we would like to go to the cloud to save money for different applications. Legal has issues with us going to the cloud due to security concerns but IT needs to do it since it is a priority for the company. Both are viable stakeholders but are on different sides of the spectrum. We have to come up with a solution that works for both departments to proceed with the project.

My example of stakeholder interests not being in alignment takes place between the attorney's and the public relations communications team. The attorney's are typically trying to mitigate the risks of liability and lawsuits while the public relations and communications team are trying to mitigate the risks of misinformation and poor communication that leads to damaging media relationships and the brand. The legal team will take an aggressive or passive aggressive approach while PR and communications spend more time on being approachable and appealing. It is important that a project manager exercises balance when dealing with these two stakeholders because there is value in both approaches as well as a time and place for one or the other.

The example I have of stake holder interest not being in alignment is the moving of a baseball field. In Atlanta, the city wants to move the Braves stadium to another county. The stakeholders in this project are the government and the citizens of the county where they want to move the stadium. The citizens are not on board with this move because the people in this county are concerned with the tax increase that will be imposed to pay for the stadium and the traffic it will bring. Whereas the city officials just see an improved stadium.

The project manager will be able to identify the key stakeholders and assign level of importance to all stakeholders through the stakeholder analysis. The analysis will help identify who the stakeholders actually are, the level of importance and/or attitude to the process, their interest to the process and their power level for the process. This analysis will help filter out and categorize the stakeholders so that the project manager can develop strategies to effectively interact with the stakeholders to ensure a positive influence and outcome for the project or process; working to ensure that the stakeholders are an asset and not a distraction or negative influence.

How is a stakeholder’s tolerance incorporated into a risk management plan?

The stakeholder's tolerance will be incorporated by effectively assessing and gauging their level of important to the project first. Once the stakeholder's relative power and influence have been determined, then the project manager can assess the tolerance level of the stakeholder and determine the acceptable ranges that the project can operate in. The more key the stakeholder is to the project, the greater the importance of their tolerance level and the greater amount of work is necessary by the project manager to identify and incorporate this into the process before the project begins moving through its phases. If the process can be framed within the tolerance levels of the stakeholder and still achieve its objectives and goals, then there is less chance of disruption. If the project cannot be framed by these levels or the level of acceptance is too low, then it creates a decision point for the project manger and all key stakeholders to develop a strategy to effectively mitigate the issue.

I also think that stakeholders are at a level where they have so much going on that if you can indeed keep the "noise" level down, this will allow them to focus on the other things hat keep them bogged down without adding more on their plate. You have to always know the stakeholders tolerance to all situations involved in the project. Knowing this will allow you to brief the bottom line up front and not waste their time.

Stakeholders’ risk tolerances are the measures of the degree of uncertainty that a stakeholder accepts in respect of the project risk assessment and they are revised during risk management planning. The revised tolerances will be used to identify risks, perform qualitative risk analysis, perform quantitative risk analysis, plan risk responses and monitor and control risks. Stakeholders’ risk tolerances themselves can also be a risk to your project. Stakeholders with high-risk tolerance can oversee some risks that deserve attention, while stakeholders with low risk tolerance concentrate too much on low-impact risks, overseeing risks with higher potential impact. Project risk tolerance does not remain static and changes over time, and risk tolerance assessment is an ongoing process throughout the course of the project.

The project team works with the stakeholders to identify the risk tolerance levels in order to identify risk and level of acceptance so that it can be determined how the risk should be managed. Once risk tolerance is identified they are put into a risk assessment matrix. In order to have a successful project it is important the project team and stakeholders are on the same page of risk identification, management and control.

According with PMBOK® Guide, PM can identify stakeholders thru analysis, where classification models take place to categorize stakeholders. Please read below:

• Power/interest grid

• Power/influence

• Influence/impact grid

• Salience model

(PMBOK Guide, p. 396, 2013).

The PM involves the stakeholders in risk management by identifying the stakeholders that can be of value to identify risks. The PM must know the stakeholder’s information to be able to used them in the risk management process.

What are your most important/valuable Lessons Learned regarding Stakeholders and Risk Management?

I learned that stakeholders and risk management are closely related and both are part of the success of a project when properly aligned and identified by the PM. The right engagement of stakeholders is a must to secure success. Risk management is so important to do it and is a priority in a project in order to start, continue and finish a project. Stakeholders are those people who could be affected by the project outcome, in a positive or negative way. Risk management is the process to manage identified risks and that Project Managers must properly do to raise probabilities of success in a project. most important for me is understanding the risk tolerance of my stakeholders. Not everyone has the same level of tolerance, so it is important that everyone is comfortable with the risks in the project and how they will be mitigated. When a stakeholder is uncomfortable with the risks in the project, there is an impact to the project teams performance. So when I can't bring someone up to my level of tolerance, I always do my best and compromise down to their level of tolerance.

It is important to keep the stakeholders informed of all the risks associated with the project. This will give them insight on what is truly going on and will make them feel involved. Most stakeholders want to feel like they have a part in the project so keeping them informed and up to date on the progress will do just that. If you can ensure to the stakeholders that you have the risks under control, they will be more apt to leave you to your business and just observe from the sideline instead of wanting to get in the game. Knowing who your stakeholders are and understanding their power to influence risk management both positively and negatively is very important. The tolerance of stakeholders is also significant when assessing potential risk. Keeping stakeholders informed and communicating with them by managing risk that effect their expectations is equally important. I also learned that sometimes a stakeholder that appears to have the least amount of influence can be the difference between a potential risk being manageable or becoming an issue.

Stakeholder relationship management is it important. It keeps the PM, project team and stakeholders collectively working together to resolve any issues or needs as it relates to the project. There can be more than one stakeholder and each had their own role and own power. An important lesson learned could be from mistaking who has which level of influence and failing to optimize that relationship accordingly. The most valuable lesson is to communicate and utilize the information/guidance provided by the stakeholders because the positive/negative outcome reflects or affects him or her directly/indirectly because ultimately he or she is responsible for the completion of the project.