Stakeholders are key people involved in a project. They have an interest in the execution of the project, provide approval and resources, and have a stake in the project outcome. They may not have an official role on the project but these are the people that will ultimately deem the project a success or failure.
Are Stakeholders Necessary?
All projects, regardless of their size, need agreement on: who decides the requirements, who provides the budget, who provides the resources, who authorises any changes, and who defines the required standards. While a project manager could decide all these factors, unless the key stakeholders agree, then the project cannot progress and has no hope of success.
Why are Stakeholders Key People on Projects?
The project sponsor works with the project manager to identify all key stakeholders. Large projects can have a project board to support the project sponsor, and it is the key stakeholders that make up this board (although not all stakeholders may be on the board). Stakeholders can include a range of people and can come from many areas of the business: senior management, human resources, finance, marketing, IT and many more. Stakeholders typically have a particular business stream and their interest in the project is focused on the needs of their area. Some stakeholders will have more interest and involvement than others.
Managing the Stakeholder Relationship
A project manager neglects a stakeholder at his or her own peril. Such as with any business relationship, a strong stakeholder relationship needs effort. A effective project manager gets to know his or her stakeholders and understands what their key drivers are. A positive stakeholder relationship will take time and effort. Stakeholders are known for getting difficult if they think their needs are being ignored or they don't feel that they know what is going on.
Communicating with Stakeholders
Communication with stakeholders is essential for project success. The project manager establishes the communication objectives with all stakeholders, so they understand their contribution on the project and know when and how they will receive information.
A communication plan defines, for each stakeholder or stakeholder group, the information they should receive, the format, and when. Communication is key to success on a project. Stakeholders need information on a timely basis and they need the right information to be able to react accordingly. A well-informed stakeholder can prevent a project from continuing on a path that will fail to deliver the required benefits, by highlighting issues and concerns as soon as they arise.
Stakeholders are an important aspect of project management and these key people provide the key to a project success. A wise project manager takes the time to understand their stakeholders and ensures that they remain actively involved in the project throughout its life.
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