How Project Stakeholders and Organizational Influences Affect Project Management

Anyone who has worked on a project knows that it’s not just the project teams and its managers that affect project execution and success. This post will identify and examine the key external players that influence a project. 

Project Stakeholders

Project stakeholders are individuals and organizations who are actively involved in the project or whose interests may be affected as a result of project execution or successful project completion. The project management team must identify the stakeholders, determine what their needs and expectations are, and then manage and influence those expectations to ensure a successful project. Stakeholder identification is often especially difficult. For example, is an assembly line worker—whose future employment depends on the outcome of a new product design project—a stakeholder?

Key stakeholders on every project include a:

  • Project manager – The individual responsible for managing the project
  • Customer – The individual or organization who will use the project product

Note: There may be multiple layers of customers. For example, the customers for a new pharmaceutical product may include the doctors who prescribe it, the patients who take it, and the insurers who pay for it.

  • Performing organization – The enterprise whose employees are most directly involved in doing the work of the project
  • Sponsor – The individual or group within the performing organization who provides the financial resources for the project

There are many other ways to define project stakeholders: internal and external; owners and funders; suppliers and contractors; team members and their families; government agencies and media outlets; and finally individual citizens, temporary or permanent lobbying organizations, and society at large. The naming of stakeholders helps the project manager and team consider which individuals and organizations may require attention. Stakeholder roles and responsibilities may overlap, as when an engineering firm provides financing for a plant it is designing.

Managing stakeholder expectations may be difficult because stakeholders often have different objectives that may come into conflict. Some examples include:

  • The manager of a department that has requested a new management information system may desire low cost, while the System Architect may emphasize technical excellence, and then the programming contractor may be most interested in maximizing its profit.
  • The Vice President of Research at an electronics firm may define new product success as state-of-the-art technology, while the Vice President of Manufacturing may define it as world-class practices, and then the Vice President of Marketing may be primarily concerned with the number of new features.
  • The owner of a real estate development project may be focused on timely performance, while the local governing body may desire to maximize tax revenue, an environmental group may want to minimize adverse environmental impacts, and nearby residents may hope to relocate the project.

In general, differences among stakeholders should be resolved in favor of the customer; however, this does not mean that the needs and expectations of other stakeholders can be disregarded. Finding appropriate resolutions to such differences can be one of the major challenges of project management.

Organizational Influences

Projects are typically part of a larger organization, such as a corporation or a government agency. The project will be influenced by the organization or organizations that set it up, especially by their structure.

Project-based organizations are those whose operations consist primarily of projects. These organizations fall into two categories:

  • Organizations that primarily perform projects for others; for example architectural firms, engineering firms, consultants, construction contractors, government contractors
  • Organizations that use management by projects because of the nature of their business, primarily involving non-repetitive or time-limited activities. 

Project-based organizations usually have management systems in place to support project management, such as financial systems designed for accounting, tracking, and reporting on multiple simultaneous projects.

Non-project-based organizations seldom have management systems designed to support project work efficiently and effectively. This can make project management more difficult, so non-project-based organizations often have sub-units that operate as project-based organizations with systems to match.

The project management team should be acutely aware of how the organization’s systems affect the project. For example, if the organization rewards its functional managers for charging staff time to projects, the project management team should be careful that assigned staff members are being used effectively on the project.

Now that we have discussed project stakeholders and organizational influences, the question is how to effectively identify and manage these different interest groups across your organization. Project Assistants is here to support your business goals, so reach out to us today to set up an appointment to discuss a strategy for your individual business needs.

Leave a Comment

Your email address will not be published.