Stakeholders Are One of Your Biggest Project Risks

Only with the best processes and methods will your project not be successful. People deliver the project, people do the work. It is also people who can hinder or stop your project, it does not have to be project changes, cost overruns or wrong assumptions. Your stakeholders could be your biggest risks. In this article you will learn more about what this means for your project.

Stakeholders Influence Your Project, Positively or Negatively

Stakeholders of your project are people, groups and organizations that are actively involved in the project, exert influence on the project or its results or whose interests may be influenced positively or negatively by the implementation or completion of the project. These are for example: the client, senior management, project team, customer, departments within the company and—depending on the project—for example the residents near your construction site, authorities or governments.

Never underestimate the ability of stakeholders to ruin your best plans!

At the beginning of the project you do not know too much about the stakeholders. There is also great uncertainty about how the stakeholders will behave in the next weeks and months. Their behaviour can be: destructive, positive, supportive, negative, obstructive, delaying, irritating, damaging to your reputation. Therefore, you should engage with the stakeholders at the start of the project. There are two methods to reduce these stakeholder risks and to get the stakeholders on your side: Stakeholder Management and Risk Management.

Stakeholder Risk Management

The following three questions are central to stakeholder management:

  • who is affected by the project or who is interested?
  • what concerns the stakeholders?
  • what measures are we taking?

With these three simple questions, you try to understand the stakeholders and, if necessary, take actions so that the stakeholders are well-disposed towards the project and support it in various ways.

Stakeholder management is an essential input for your risk management. In the figure below you see the usual risk categories for a project, with stakeholders being a subcategory of project environment risks. Although this is not entirely correct, since there are not only stakeholders in the project environment, but the project team and the client, for example, are also stakeholders. Stakeholders deserve more attention, even if they are slightly out of place in the lower right-hand corner of the following figure.

Project-Risk-Breakdown-Chart

A typical project risk breakdown chart with risk categories

The Three Steps in Stakeholder Risk Management

Step 1: Who is Concerned or Who Is Interested?

It’s like in risk management, we can only manage stakeholders that we know, so be creative in identifying stakeholders. These can be members of the steering committee, the CFO, regulators, end users, customers of the customer, internal support staff, and accounting or procurement. In risk management we identify threats and opportunities. Stakeholders can be both opponents and supporters of the project.

Step 2: Analyze and Quantify the Risk (What Is on Their Mind)

In risk analysis, you evaluate the risks according to the probability of occurrence and impact. We can evaluate stakeholders in a similar way – e.g. by influence on the project (authority) and interest. In the matrix below you can already see the appropriate actions in the fields. The matrix can also consist of 5×5 fields in which you place your stakeholders with their names. This allows you to quickly identify the importance of the stakeholders and assign appropriate actions to them.

Stakeholder-Influence Interest Matrix

Stakeholder matrix (influence/interest)

When you analyze and evaluate the most important stakeholders, these questions are important:

  • What is their interest?
  • How can they influence the project (positive/negative)?
  • How does the project fit into their priorities?
  • What do you need from them to make the project run smoothly?

Step 3: Developing Actions

What are you doing to make better use of your supporters and minimize the impact of your opponents? The more you know about your stakeholders, the better you can work with them and “influence” them. One thing is for sure: If you ignore them, their support may dwindle and their opposition may grow. The most important measure in stakeholder management is communication. The following questions are the basis for communication:

  • Who needs information?
  • What information?
  • How often and when?

How Do You Combine Stakeholder Management and Risk Management?

I recommend that you carry out stakeholder management according to your processes and methods and then incorporate the most important risks from this into the risk management of your project. In this way, all risks of the project are discussed together and further actions from this can flow back into stakeholder management.

The Secret of Success in Stakeholder Management Is Simple

The secret of success in stakeholder and risk management is very similar. Especially with these two “immaterial” project management topics, the following four important points make your activities even more successful:

  • Do it
  • Do it with conviction
  • Start early
  • Stay tuned (do it continuously)

What experience have you had with Stakeholder Management and Risk Management? Do you agree or disagree with my statements? Share your experience with a commentary so that we can all get to know another point of view. Thank you!

Project-Risk-Management-Book-CoverWould you like to learn more about Risk Management in Projects? My books on Project Risk Management take you an important step further!

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Posted in Risk Management.

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