Why Effective Stakeholder Engagement Matters

Systematic stakeholder management results in successful projects

We all know that a systematic stakeholder management process is important in order to deliver successful projects or to implement any changes in any organisation.

We also know that the process starts prior the first engagement when we are selecting our customers or when partners or suppliers approach us to develop business.

Stakeholder management in the projects is linked to all major activities and when done effectively should improve the decision base for other activities (e.g. risk management, requirements management, claim management, communication matrix and so on).

Many organisations when defining their project management framework and guidelines embed the stakeholder management requirement into their core practices. And that is great!

So how is it possible that when we looked into the number of times the executive management had to be drawn into major issues resolution in some of the projects (occasionally leading to legal settlement cases!) causing substantial losses and write-offs, the two main reasons behind this were:

1. Poor stakeholder management
2. Poor communication

It pays off to invest into stakeholder management in an early phase

In complex and large projects the smart move is to appoint a project director whose focus is to manage stakeholders.
In the current world of digitalization, the speed of data exchange is going to have an impact on how we manage information and the people affected by it.

Where the scope is split amongst several partners (e.g. consortia set up) or the internal structure warrants dealing with multiple divisions (often the internal issues amongst businesses hinder much more than dealing with the external partners!) the investment into developing appropriate relationships is even more important.

If you are dealing with a difficult customer it pays off to understand their pain points and drivers, why are they behaving the way they do and who needs to be engaged at what level in order to overcome the major blockers. I have many examples and even though the reasons behind the issues look different initially, after digging deeper the root cause falls back under the same category – stakeholder management, relationships & communication.

In one particular project (energy sector) the contract specifically outlined that the communication channels with the end client were strictly out of limits unless “extraordinary” circumstances or events took place. Which, of course, is exactly what happened.

In this case, the team was subcontracted to deliver a combined cycle power station supplying only portion of the scope to the overall EPC supplier appointed by the end customer. During the commissioning phase, the technicians on site followed their testing and commissioning procedures to the dot (as agreed within their scope of works and contract with the EPC construction company).

Unknown to the team was the impact of the outage on the overall plant and the effect on the local town during their commissioning!

It was perceived that the team did not fully comprehend the importance of having the power supply into the grid continuous because this power station was indeed the only source of electricity for the local town and mines (one of the main stakeholders!).

Imagine people underground working continuous shifts inside the mines dependent on the power supply, or the local hospital staff and patients in operating theatres, and so on. This could have been avoided altogether if all relevant stakeholders engaged upfront in the planning if the key impact of tasks performed on site were clearly understood and communicated if the correct procedures were put in place to avoid unnecessary disruptions and the overall coordination between the parties was done well.

In another example, the project manager described the difficulties during the execution due to the constant re-organisation of the customer entity.

Moreover, the parent organisation of the project team also changed and the offshore counterpart responsible for a large delivery of major components restructured 4 times in 15 months changing their project manager also 4 times!

The changing stakeholders led to the low level of support and the project suffered enormously.

Developing relationships face to face makes a difference

The general consensus from all of the project managers is that it is paramount to create relationships face to face in order to manage stakeholders accordingly. In one of the projects in the area of transportation (mobility sector), the manufacture of components was done offshore and it was agreed that the management of that part of the scope should be controlled locally in the factory. This seemed to be the most cost-effective way or so the project manager thought.

However, as the project progressed, it was apparent that someone from the local project team must be present in the factory to ensure the manufacture is done correctly and in fact done at all! The issue was that the local relatively small order was pushed back to give priority to much larger orders!

Only through having good solid personal relationships was the project manager able to secure priority!

Only by engaging personally, creating empathy to explain why it is necessary to supply on time and to the quality specified, people were willing to deliver the order.

The negative impact on the project could have been avoided if special care was taken to manage the stakeholders from the very start and a relatively small investment was made to prevent major disasters in a long run!