Performing the PROJECT Stakeholder Analysis

Updated: November 19, 2013

At the most basic level, a project stakeholder is any individual or entity with a vested interest in the project and/or the power to influence the outcome.  In order to deliver successful results, with minimal conflict and maximum acceptance, every invested stakeholder must be effectively "engaged".  Engagement and participation instills pride of ownership, leading to better results, delivered in a more productive manner.  The ability to "engage" begins with a full understanding of stakeholder identity, project interest, and the level of influence they bring to the party.  In procedural terms, this "understanding" is obtained through the stakeholder analysis.

Click here for special savings on our Toolkit series to save time, be more productive and deliver the results you need.The stakeholder analysis is a "must-do" process, utilized to identify stakeholder role, interest and influence (RII), and determine priorities for stakeholder engagement and management planning.  As a process, the stakeholder analysis is ongoing throughout the project lifecycle, but first begins at the proposal (project selection) stage.  The results are then refined as the project is defined, governed and tracked.  When a project is fast tracked, the stakeholder analysis becomes particularly important in order to ensure that project priorities can be effectively negotiated.  And, from a "fast track" point of view, the analysis effort must be multi-use and multi-purpose, acting both as a benchmark to guide decisions and a checkpoint for planning and oversight.

The primary goals of the stakeholder analysis process are to promote stakeholder participation and engagement, maximize positive stakeholder influence, and minimize negative influence.  Specifically, the results of the stakeholder analysis process can be used in the following ways:

1. To anticipate stakeholder motivations, needs and objections when negotiating project priorities, scope, terms, plans, strategies and decisions.
2.  To gather the information needed to evaluate performing organization capabilities and identify performance related constraints, limitations and risks.
3.  To quantify management support and commitment to the project and draw related conclusions for strategic project planning.
4.  To craft stakeholder specific "communication plans" based on interest, influence and actual information needs (saving time and increasing productivity).
5. To assign project roles and responsibilities in a practical and realistic manner considering the stakeholders involved (from an organizational and individual point of view), as well as interests, influence, alliances and capabilities.
6. To organize the project team in the most effective manner possible considering the stakeholders involved and the need for rapid project deployment (maximizing participation and minimizing conflict).
7. To promote a positive, collaborative project work environment considering individual and group motivations, alliances and related internal "political" factors.  You can streamline communicate efforts, maximize positive results and manage conflicts more productively with a good grasp on stakeholder alliances and group interests (target influential stakeholders to amplify positive communication and collaboration).
8.  To identify key stakeholders at the earliest stages of the project to help shape positive opinions and perceptions, gain long term support, and secure essential resources.
9.  To establish the good will needed to overcome problems and sustain positive engagement should project difficulties arise.
10. To identify opportunities to strengthen internal "project" capabilities through an awareness of stakeholder interests and interests.
ANALYSIS STEPS AND STRATEGIES

The stakeholder analysis process should only be as complicated as it needs to be (the process should be sized to fit the project, following "define/align/approve" principles).  It all boils down to three key variables - role, interest and influence, examined from two perspectives - project and process.  Note:  Depending upon the circumstances, stakeholder interest and influence may extend to both the project itself (in terms of outcome) as well as the process used to execute the project (management practices), or it may be limited to one or the other.  For example, an auditor may have a strong interest and influence on the project process, but not be impacted by the project result.  These circumstances must be considered as the following steps are executed:

Step 1:  Who are your project stakeholders?
The first step in the stakeholder analysis process is to identify "the stakeholders" according to their primary project "role".  It is important to consider stakeholders from both an organizational and individual point of view.  Organizational stakeholders include the "entities" engaged in the project, considering departments, workgroups, teams, committees and related entities.  Individual stakeholders are defined by the "people" (and personalities) involved in the project (the human element).   Stakeholder identification can be greatly simplified through the use of the following standardized categories:

Beneficiary Stakeholders:  Group/individual receiving a benefit from the project, typically the customer.
Executing Stakeholders (Management):  Group/individual responsible for managing execution.
Executing Stakeholders (Participants):  Group/individual responsible for active project execution.
Oversight (Sponsor):  Group/individual responsible for executive oversight and sponsorship.
Oversight (Advisor):  Group/individual responsible for advising and overseeing project execution.

Step 2:  Who has a vested interest in the outcome?
Once stakeholders have been identified, it's time to consider the "interest" each has in the project (again from both a "project" and "process" point of view).  Interest is defined by impact and accountability:

Interest Determined by Impact
Every project has consequences, to be realized in a variety of ways and degrees (operational, financial and personal).  Projects can change the way work is performed, lessen responsibility, add responsibility, and the like.  Impact can be felt in numerous ways, both obvious and subtle.  The more serious and significant the impact, the more "interest" in the project (and/or management process).  To streamline this assessment, "interest" can be rated at three (3) levels:

Maximum Impact:  The project will have significant impact on the group and/or individual.
Moderate Impact:  The project will have measureable impact on the group and/or individual.
Minimal Impact:  The project will have minor impact on the group and/or individual.

Interest Determined by Accountability
It goes without saying that accountability is a great motivator.  Accountability is defined by the degree to which a stakeholder will be held responsible for their role in the project, whether for the tasks assigned, decisions made, support provided, participation, attitude, and overall contributions.  The more "accountability" the greater the interest.

Maximum Accountability:  The stakeholder has significant accountability for the project and/or process.
Moderate Accountability:  The stakeholder has measureable accountability for the project and/or process.
Minimal Accountability:  The stakeholder has minimal accountability for the project and/or process.

Step 3:  Who has the power to make a difference?
It takes a lot of effort to make a successful project, but it only takes a small act to undo that effort and take it all off course.  People (and groups) have the power to steer projects to success or divert the outcome in unwanted ways.  This is the two sided coin known as "stakeholder influence".  On the up side, active stakeholder engagement will certainly have a positive influence on the project and/or process (and this possibility must be cultivated).  On the down side, stakeholders also have the capacity for negative influence a project, realized in a myriad of ways (failure to perform, failure to decide, failure to support, procrastination, withholding information and the like).  To streamline analysis, influence "potential" can be determined by the strength of the consequences:

Strong Influence:  The stakeholder has significant capability for positive/negative influence.
Moderate Influence:  The stakeholder has measureable capability for positive/negative influence.
Weak Influence:  The stakeholder has minimal capability for positive/negative influence.

Step 4:  Putting it all together to determine stakeholder "engagement" and management priorities.
The final step in the stakeholder analysis process is to make actionable use of the resulting data to identify "priority" stakeholders to focus engagement and management strategies.  "Level 1" priorities will likely encompass those stakeholders with "maximum" impact and accountability and "strong" influence capability (both positive and negative).  Surrounding project conditions (time, funding, risk and visibility) will determine the extent to which engagement strategies should also address impact, accountability and influence of less significance.  Final tip:  Don't forget to examine the lessons learned from previous projects as a guideline to determine "priority stakeholders" and to refine related strategies.

KEY QUESTIONS FOR STAKEHOLDER ANALYSIS

1. Who are your project stakeholders?
2. How will the project (and/or process) impact each identified stakeholder?
3. How will each stakeholder be held accountable for their involvement in the project (and/or process)?
4. Which stakeholders are likely to have a positive influence on the project and under what circumstances?
5. Which stakeholders have the potential for negative influence and under what circumstances?
6. Who can provide management support at the highest and broadest levels?
7. Who can obstruct the project at the highest and broadest levels?
8. What impact does stakeholder interest and influence have on overall project risk and viability?
9. What are the most viable means and methods for managing stakeholder engagement considering the needs of the project at hand and all known constraints (time, funding and resources).

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