A stakeholder is an individual, group, or organization that may affect, be affected by, or perceive itself to be affected by a decision, activity, or outcome of a project. Stakeholders are either directly involved in the project or have interests that may be affected by the project’s outcome. It normally includes the members of a project team: project managers, project sponsors, executives, customers, or users.
Who are Project Stakeholders?
It’s beneficial and advisable to know about good stakeholder management skills and communicate constantly with stakeholders in order to collaborate on the project because after all, they are also affected by the product.
If a project is small in size, the number of stakeholders can be small. However, if it is large and expanded to a large area, one may have a huge number of stakeholders, including communities or the general public. Also, all stakeholders are not alike. They have different expectations and needs. One must treat every stakeholder uniquely according to their needs or else the stakeholders might feel left out which can put the project in danger.
Different stakeholders often have opposing expectations that might create clashes within the project. Stakeholders may also interfere in the project, its deliverables, and the project team to fulfill their strategic business objectives or other requirements.
Project governance is the alignment of the project with stakeholders’ needs or objectives. It is critical for achieving organizational goals. enabling organizations to manage projects consistently and exploit the benefits of a project. It also provides a framework that helps the project manager and sponsors to make decisions that suit both stakeholder needs and organizational objectives or deal with situations where they may not be aligned.
Type of Project Stakeholders
Project stakeholders can be classified into two types:
- Internal Stakeholders
- External Stakeholders
As the name suggests, these are the people involved in a project from within. They include:
- A sponsor
- An internal customer or client (if the project started due to an internal need of the organization)
- A project team
- A program or portfolio manager
- Another team’s manager of the company
These stakeholders are not directly involved but are engaged from outside and are affected by the project outcome.
- An external customer or client (if the project started due to a contract from an external party)
- An end-user
- A supplier
- The government
- Local communities
Why Are Stakeholders Important for a Project?
- Stakeholders have different levels of duties and authority when contributing to a project. This level may differ as to the project proceeds. It can range from occasional contributions to full project sponsorship.
- Some of them may also detract from the success of the project, either actively or passively. These stakeholders need the project manager’s attention during the whole time of the project’s life cycle.
- Stakeholder identification is a continuous process during the entire project life cycle. Identifying them, understanding their level of effect on a project, and satisfying their demands, needs, and expectations are essential for the success of the project.
- Just as they can affect a project’s objectives positively or negatively, a project can be perceived by the stakeholders as having positive or negative results.
- One of the most important responsibilities of a project manager is to manage stakeholder expectations, which can be problematic as stakeholders often have very diverse or conflicting objectives.
- Sponsor: A sponsor is a person or group who provides supplies and support for the project and is liable for assisting success. He may be external or internal to the organization.
- Customers and users: Customers are the people or organizations who will approve and manage the project’s product, service, or result. Users, as clear from the name, use the product.
- Sellers: Sellers, also known as vendors, are external companies that enter into a contractual agreement to provide services or resources necessary for the project.
- Business partners: They are external organizations that have a special relationship or partnership with the enterprise.
- Organizational groups: Organizational groups are internal stakeholders who are influenced by the actions of the project team. For example, human resources, marketing, sales, legal, finance, operations, manufacturing, etc.
- Functional managers: They are key individuals who play the role of management within an administrative or functional area of the business. For example, human resources, finance, accounting, etc.
- Other stakeholders: They are additional stakeholders which include financial institutions, government regulators, subject matter experts, consultants, and others, which have a financial interest in the project, contributing inputs to the project, or have in the outcome of the project.
Stakeholders are people who get affected by your project or have any kind of interest in it. They can be internal, external, positive, negative, high power, low power, etc. However, to complete your project successfully you have to manage all these stakeholders and fulfill their prospects. If you fail to do so, your project may get jeopardized. To avoid any shortcomings in your projects, enroll in the PMP certification training program to gain the best project management skills, and to manage projects successfully.