13 PROJECT STAKEHOLDER MANAGEMENT Objective of This Chapter:

A stake is an interest or a share in an undertaking while a stakeholder is an individual with

a stake. Hence stake holder is a person(s), group(s) or organization(s) that has direct or indirect interest or concern in ongoing project. Stakeholders can affect or be affected by the project, its objectives and policies. Their

influence can be minor or major and can be exerted either deliberately or incidentally. Individuals and organisations need to be wary of their stakeholders and their influences.

Stake holder management includes the processes required to identify people, groups or organizations who could impact or be impacted by the project, to analyze stakeholder expectations and their impact on the project , and to develop appropriate strategies to

effectively engaging stakeholders in project decisions and execution. Stakeholder management is used to indicate that a wider set of interests needed to be satisfied through real

estate project certainly beyond the narrow and dominant interests of the builder and expanded to include customer ,contractors, sub-contractors, suppliers and construction workers.

Stakeholder management is important because it helps an project manager to complete project successfully . Stakeholder management is also important because it helps identify

positive existing relationships with stakeholders. These relationships can be converted to coalitions and partnerships, which go on to build trust and encourage collaboration among the stakeholders.

Objective of this chapter is to understand the best practices in real estate project stakeholder management.

The checklist of stakeholders in a construction project is often large, following figure shows key stakeholders in a real estate project

Types of stakeholders Internal stakeholders i.e persons within the project team and external stake holders i.e

persons outside project team who can influence project or are influenced by project.

Please note that in a typical real estate project:

External Stake Holders :

o Customers relationship is managed by sales , marketing or relationship manager team

o Relationship with government and banks / financers is managed by head

office i.e. by directors , legal , finance department etc o Contractors , consultants related to construction site are appointed by head

office and relationship is managed by on-site project team

Internal Stake Holders : For small real estate project the on-site project team comprises of project manager (who may handle one site or multiple sites, senior

engineers, junior engineers, supervisors, store in charge, store keepers).

As the complexity of the project increases more roles and responsibilities are added to project team. Following is example of project team structure for a big construction / real estate project

Let’s understand the interests of key stake holders in a construction project:

Builder :

o Ensure the project will support the organization’s strategy o Ensure the organization’s resources will be used economically and effectively

o Ensure the project is completed successfully in terms of quality, time and cost o Provide financial support; maximize return with minimized risk o Purchase the construction product

Architect : o Develops the design of the project

o Produces drawings and specification o Ensures that a project is implemented within cost and time, and according to

quality control

Contractor :

o Carries out and completes the work designed by consultants to meet time, cost and quality objectives

o Supervises and manages operations on site o Sometimes assists in design o Coordinates and supervises all sub-contract work, materials and suppliers

o Sub-contractors : Carry out work assigned by main contractors o Labourers : Finish tasks assigned, earn living, learn skills

Suppliers Supply, install and commission the hardware that constitutes the finished building (e.g. materials suppliers, equipment suppliers and manufacturers)

Government authorities : Ensure that the project abides by laws and regulations; may

be indifferent to any project so long as it complies with codes (e.g. planning department, electrical and mechanical services department, transport department,

highways department, etc.)

Town planning board : Ensures the project will be in line with district planning

Customer : Make sure that the builder delivers project on time without any cost escalation and as per the promised specification & quality.

It is worthwhile to consider stakeholders as being supportive, neutral, or anti. The anti’s are often in the minority but can create bigger issues for successful project delivery. The Project

team’s endeavour should be to shift stakeholders from the neutral and especially anti side of the fulcrum to the supportive side.

The key considerations in practical stakeholder management should include the following:

Who are our stakeholders?

What are their stakes?

What opportunities do they present?

What challenges or threats do they present?

What responsibilities do we have towards our stakeholders?

What strategies or actions should we use to engage our stakeholders?

Should we deal directly or indirectly with our stakeholders?

Should we be aggressive or defensive in dealing with stakeholders?

How and when should we accommodate, negotiate, manipulate or resist the overtures

of our stakeholder?

Principles of stakeholder management:

Acknowledge and actively monitor the concerns of all legitimate stakeholders, and

should take their interests appropriately into account in decision-making and operations.

Listen and openly communicate with stakeholders about their respective concerns and contributions, and about the risks that they assume because of their involvement with

the corporation.

Adopt processes and modes of behaviour that are sensitive to the concerns and capabilities of each stakeholder constituency.

Recognise the interdependence of efforts and rewards among stakeholders, and should attempt to achieve a fair distribution of the benefits and burdens of corporate activity

among them, taking into account their respective risks and vulnerabilities.

Work cooperatively with other entities, both public and private, to ensure that risks

and harms arising from corporate activities are minimised and, where they cannot be avoided, appropriately compensated.

Acknowledge the potential conflicts between (a) their known roles as corporate

stakeholders and (b) their legal and moral responsibilities for the interests of stakeholders, and should address such conflicts through open communication,

appropriate reporting, incentive systems and, where necessary, third-party review.

Stake Holder Conflict Management:

Due to differing claims, rights and expectations of stakeholders, they can exert tangential forces in different directions. This results in conflict among the stake holders. Example the builder and RCC contractor might have different view about the quality of work done and

hence there might be dispute in payment processing. This effect must be countered by managing stakeholders collectively in accordance with the

objectives of the project. The assessment of conflict between stakeholders in construction projects depends on four essential factors:

o the type/power, characterization and relationships of the stakeholders (internal,

external, authority/public/contractor); o the stage of the construction project cycle (pre-contractual, execution, post-

completion) o the type, nature and stage of the conflict (behaviour, data, needs, values, latent,

potential, processes, etc.)

o the legal and regulatory context

Following strategies can be used for conflict resolution:

In order to achieve this, a variety of tactics may be employed that may be divided into the following three categories :

o Positional tactics : aim at providing some form of advantage over the other party or at placing the other party at a psychological disadvantage. Examples of this are insisting

that meetings take place at a place you may feel more comfortable than your opponent or trying to outnumber the number of participants of the other side for some functional reason.

o Initial tactics are used in order to try to achieve a favourable bargaining position from the start. Examples are to place your major demand first in the agenda or to start the

negotiation with a higher demand than you really expect to obtain. o A range of general tactics may also be used, the most common of which are:

flattering, persuasion, promises or threats and irreversible decisions.

Cooperative negotiation is sometimes called win/win negotiation and as the name suggests

pre-empts a very different approach from the competitive negotiation. There are five basic elements to this approach:

o Separate people from the problem: The opponent should be regarded not as someone

you do not like and wishing to cause damage to you personally but as someone with whom you will have the chance of solving a problem through a mutual advantageous

solution. Accordingly, negotiators should focus on the problem rather than in each others.

o Focus on interests not on positions: In an organization, interests are what really

matters for problem solving not the victory of your position on the problem. Accordingly, negotiators should focus on the reasons for their demands.

o Generate options for mutual gains: Generally, it is better for you to fi nd ways of increasing mutual benefits than to discuss with your opponent how to share it. Competitive negotiators will seek to obtain as much as possible during the negotiation

process. o Insist on using objective criteria: If criteria used during a negotiation process are

validated by all parties involved, then chances will increase of getting a good agreement. Win/ win negotiators will adopt mutual recognized criteria to measure the outcome of their bargain.

o Consider the best alternative to a negotiated agreement: Negotiators should evaluate the consequences of not reaching an agreement through the negotiation process they

are carrying.

Let’s understand the process of stake holder management

13.1 Identify Stakeholders

This process identifies people and organizations that may be impacted by the project and determines their level of interest, involvement and potential impact on project success. It is vital to identify stakeholders early and devise strategies for maximizing positive influences

and minimizing negative impacts. Considering the limitations on a project manager’s time and the potentially large number of stakeholders, it is also important to prioritize the relative

importance of each stakeholder

13.1.1 Inputs 13.1.1.1 Project Charter: The charter usually provides information about stakeholders such as

customers, the sponsor(s), and people participating in the project (team members, project manager, departments, and external organizations).

13.1.1.2 Procurement Documents: lf a project involves outsourcing and a contract exists, the parties in the contract are stakeholders.

13.1.1.3 EEFs: Factors potentially relevant to stakeholder identification include Organizational culture and structure and governmental or organizational regulations or

standards

13.1.1.4 OPAs: Factors potentially relevant to stakeholder identification include templates for stakeholder registers, lessons learned from previous projects and stakeholder

registers from previous projects

13.1.2 Tools And Techniques 13.1.2.1 Stakeholder Analysis: Stakeholders with sufficient influence should be managed carefully and partnerships or coalitions may be formed to maximize project success.

Following three steps for stakeholder analysis:

Step 1: Identify stakeholders and their roles, expectations, and levels of influence.

Step 2: Assess the potential impact of each stakeholder and classify them using

various models such as: o Power vs. interest grid o Power vs. influence grid

o Influence vs. impact grid o Salience model (considers power, urgency, and legitimacy)

Step 3: Assess likely stakeholder responses and plan how to influence them for their support.

13.1.2.2 Expert Judgment: Used to assist in the identification and analysis of stakeholders. Expertise can be obtained through individual meetings, interviews, surveys, focus groups, etc.

13.1.2.3 Meetings

13.1.2 Outputs 13.1.2.1 Stakeholder Register: Contains all the information on identified stakeholders

including:

Identification (name, position, location, role, contact information)

Assessment (expectations, potential influence)

Classification (internal or external, supporter or antagonist)

Stakeholder register is updated throughout project life cycle

13.2 Plan Stakeholder Management

This is the process of developing appropriate management strategies to effectively engage the

stakeholders throughout the project life cycle based on the analysis of their needs, interests and potential impact on project success.

13.2.1 Inputs 13.2.1.1 Project Management Plan

13.2.1.2 Stakeholder Register

13.2.1.3 EEFs : This includes organization culture, structure, and political climate as they help in determining the best options to support a better adaptive process for managing

stakeholders 13.2.1.4 OPAs

13.2.2 Tools And Techniques

13.2.2.1 Expert Judgement 13.2.2.2 Meetings

13.2.2.3 Analytical Tools : Following table is sample for engagement levels of different

stakeholders

Through the analytical tools, gaps between the current and desired engagement level can be identified. Actions and communications required to close these gaps can be identified.

13.2.3 Outputs

13.2.3.1 Stakeholder Management Plan : Identifies the management strategies required to effectively engage stakeholders. The plan also provides

Desired and current level of engagement of key stakeholders

Scope and impact of change to stakeholders

Identified interrelationships and potential overlap between stakeholders

Communication requirements

Method for updating and refining the stakeholder management plan

13.2.3.2 Project Documents Update : Which includes but not limited to project schedule and stakeholder register

13.3 Manage Stakeholder Engagement

This is the process of communicating and working with stakeholders to meet the needs /

expectations, address issues as they occur and foster appropriate stakeholder engagement in the project activities throughout project life cycle

13.3.1 Inputs 13.3.1.1 Stakeholder Management Plan

13.3.1.2 Communication Management Plan : Which includes

Stakeholder communications requirements

Information and content of information to be communicated

Reasons for information distribution

Escalation process

13.3.1.3 Change Log

13.3.1.4 OPAs 13.3.2 Tools And Techniques

13.3.2.1 Communication Methods

13.3.2.2 Interpersonal Skills : Like building trust, resolving conflicts, active listening and overcoming resistance to change

13.3.2.3 Management Skills : Like facilitate consensus towards project objectives, influencing people, negotiate agreements and modify organizational behaviour to accept project outcome

13.3.3 Outputs

13.3.3.1 Issue Log 13.3.3.2 Change Requests 13.3.3.3 Project Management Plan Updates : Which includes stakeholder management plan

updates

13.3.3.4 Project Documents Updates : Which includes stakeholder register 13.3.3.5 OPA Updates

13.4 Control Stakeholder Engagement

This includes monitoring overall project stakeholder relationships and adjusting strategies and plans for engaging stakeholders. The key benefit of the process is to increase the

efficiency and effectiveness of stakeholder engagement activities as project evolves and environment changes.

13.4.1 Inputs

13.4.1.1 Project Management Plan 13.4.1.2 Issue Log

13.4.1.3 Work Performance Data 13.4.1.4 Project Documents : Which includes project schedule, stakeholder register, issue log,

change log and project communications

13.4.2 Tools And Techniques 13.4.2.1 Information Management Systems 13.4.2.2 Expert Judgement

13.4.2.3 Meetings

13.4.3 Outputs 13.4.3.1 Work Performance Information 13.4.3.2 Change Requests : recommended corrective actions and preventive actions

13.4.3.3 Project Management Plan Updates 13.4.3.4 Project documents updates : Which includes stakeholder register and issue log