Stakeholder Analysis – Why is it important?

by on January 10, 2014 in Course Preparation, Featured Articles, Guests Column, PMP®, Project Management, Trainer Articles

Stakeholder Analysis – Why is it important?


Stakeholder Management is the buzzword of 2014. Stakeholders have always been the most important entities in the project management arena. Positively or negatively affected by the project’s execution or outcome, stakeholders have a say in your project. This particular fact was regarded by the PMBOK and identify stakeholder process was introduced as a part of Initiating Process Group in the fourth edition of PMBOK.

Stakeholder Management is tricky at any given point of time and it is important to keep steady flow of right information between the Project Manager and Stakeholders. PMBOK 5th edition has incorporated a new knowledge area Project Stakeholder Management in order to address this concern.

Managing stakeholder’s expectations and objectives which were mutually agreed upon is one of the best ways to create positive relationship with your stakeholders.

Why Stakeholder Analysis?

Stakeholder analysis is the vital function of Stakeholder management. It is an active decision making tool with which the project manager will be able to mark the authority, relationship, interest, impact and influence a stakeholder exhibits on the project.

Though a project per se is a temporary endeavour, the only aspect which is permanent is change. While safeguarding the interest of the stakeholders, a project manager must primarily focus on the aspect of change and forecast the subtle variations which the project poses in the future. Among all the traits of a stakeholder; it is the attitude that matters. Stakeholder analysis helps the project manager gauge the attitude of the stakeholders towards the magnitude of the changes in the project.

The 3Is of stakeholder

Most conflicts in the project generally arise due to problems with schedule, cost and most importantly communication. If all blocks of communication are placed properly, there is a less scope for conflict. Stakeholder analysis focuses on the right flow of information to all the stakeholders thereby optimizing stakeholder’s level of engagement.

Let us first understand the 3Is of stakeholder engagement

Interest: The level of concern a stakeholder possesses for a particular project is the interest which he exhibits in the project.

Influence: The level of involvement the stakeholder has in your project decides his influence on the project.

Impact: The capability of the stakeholder to bring in the changes to the project is the impact of the stakeholder on the project.

Stakeholder analysis is uses these 3Is of project stakeholder for analysing stakeholder’s expectations and requirements from the project.

How to carry out Stakeholder Analysis

–          Identifying people who are going to get affected positively or negatively by the project is the first and the foremost step of stakeholder analysis as it gives the base data.

–          Based on the interest, influence and impact decide upon the method through which the stakeholders can be approached.

–          In a project many situations may arise and most of them might not be favourable. Knowing the reactions of stakeholders at a given point of time is the third step. The project manager should be well equipped with the influencing strategy to reduce the impact of negative situations on the stakeholder and increasing their support for the project.

The decision model – stakeholder analysis

Power is the fourth dimension of a stakeholder. The 3Is when plotted on the horizontal axis of the decision model with power on the vertical axis will yield you the methodology or the approach to be adopted to handle the expectations of the stakeholders.

Based on this decision tool you can deduce the stakeholder management strategy applicable for all your stakeholders.

You may group the stakeholders and classify them as per the interest, influence and impact they possess along with power on your project. Accordingly, you may choose to keep some of them satisfied with appropriate high level information or you may manage some of them very closely providing them with lowest level of information available. You may also monitor some of them and keep some of the stakeholders satisfied with the right flow of information at right frequency.

The importance of stakeholder analysis

At the start of a project, you may not have the clear picture regarding project’s stakeholders but with stakeholder analysis, your goal about managing stakeholder’s expectation becomes clear achieving the most important objective of it.

Snehal Stakeholder Analysis – Why is it important?Snehal Joshi, PMP is currently working as a PMP Trainer/Corporate Trainer at Reputed Global REPs. Snehal is an avid blogger and is also working independently as a Content Writer specialized in Project Management, Internet and Allied technology. Prior to this, Snehal was working at Cushman & Wakefield Ltd and Gherzi Eastern Ltd

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  • Amol Palekar - January 10, 2014

    Good Blog. A lot of projects are deemed unsuccessful just because project managers fail to manage the perception of stakeholders. So yes, identifying the right stakeholders and maintaining steady and appropriate communication (you do not want to over communicate either) throughout is vital for the sucsess.
    As rightly idetified, most conflicts arise due to schedule, cost or miscommunication…there is another type of conflict that is common – Scope conflict. Often termed as an aftermath of poor communication between stakeholders,…or is it that not identifying right stakeholders contribute to this?
    Indetifying right stakeholders is a preamble, what follows is managing effective communication between those…(your next blog?)
    Looking forward to reading more from you Snehal. Keep posting!

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