Introduction
Projects and project management are undertaken in a broader environment and this environment
determines whether a project and project management succeed or fails. Therefore, this Lecture is
dedicated to identifying different factors in the environment of projects and project management
and discussing their influence. It should, however, be mentioned that there are many factors that
can affect a project and project management. Nevertheless, for purposes of this course and this
lecture, only factors such as project stakeholders, organisational influences, organisational systems
and organisational culture and styles are discussed.
PROJECT ENVIRONMENT
Projects and project management are undertaken in a much broader environment than that of the
project itself. The project management team have to understand this broader environment to be
able to select the life cycle phases, processes, tools and techniques that appropriately fit the project
and its environment.
The question then is; what constitutes the project environment?
1. Project Stakeholders
Project stakeholders are individuals and/or organizations that are actively involved in the project,
or whose interests may be affected as a result of implementing the project. Project stakeholders
may also exert influence over the project’s objectives and outcomes. The project manager and
his/her team must identify the stakeholders, determine their requirements and expectations, and,
where possible, manage their influence in relation to project requirements so as to ensure that the
project is successful.
Project stakeholders have varying levels of responsibility and authority when participating on a
project and these are subject to change over the course of the project’s life cycle. Their
responsibility and authority range from occasional contributions in surveys and focus groups to
full project sponsorship, which includes providing financial and political support.
Stakeholders who ignore this responsibility can have a damaging impact on the project objectives.
Similarly, project managers who decide to ignore key project stakeholders should expect a
damaging impact on project outcomes.
The figure below illustrates the relationship between stakeholders and the project team.
Source: Project Management institute (2004)
There is, therefore, need to identify all project stakeholders, especially key ones. Sometimes,
stakeholder identification can be difficult. However, there are certain tools and techniques that can
be used to identify project stakeholders. There are usually disagreements among the project team
as to who the project stakeholders are. Failure to identify a key stakeholder can lead to project
failure. Stakeholders may have a positive or negative influence on a project.
TYPES OF STAKEHOLDERS
i. Positive Stakeholders
Positive stakeholders are those who see benefits from the outcome of the project. For example,
business leaders from a community that will benefit from the proposed Lower Zambezi mining
project may be positive stakeholders because they see economic benefit to the community from
the project’s success. In the case of positive stakeholders, their interests are best served by helping
the project succeed, for example, helping the project obtain the needed permits to proceed.
ii. Negative Stakeholders
Negative stakeholders are those who see negative outcomes from the project’s success.
Environmental groups opposed to the proposed mining project in the Lower Zambezi could be
regarded as negative stakeholders since they view the project as doing harm to the environment.
The negative stakeholders’ interest would be better served by impeding the project’s progress by
demanding more extensive environmental reviews. Negative stakeholders are often overlooked by
the project team at the risk of failing to bring their projects to a successful end.
Key stakeholders on every project include:
• Project manager; the person responsible for managing the project.
• Customer/user; the person or organization that will use the project’s output (product or service).
There may be multiple layers of customers. In some sectors, customers and users are synonymous,
while in others, customer refers to the entity acquiring the project’s product/service and users are
those who will directly utilize the project’s product/service.
• Performing organization; the entity whose employees are directly involved in doing the work
of the project.
• Project team members; the group that is performing the work of the project.
• Project management team; the members of the project team who are directly involved in project
management activities.
• Sponsor; the person or group that provides the financial resources, in cash or in kind, for the
project.
• Influencers; individuals or groups who are not directly related to the acquisition or use of the
project’s products/services, but due to their position in the customer organization, performing
organization or society/community, can influence, positively or negatively, the course of the
project.
In addition, there are many different categories of project stakeholders, who may include; owners,
investors, suppliers, contractors, government agencies and media outlets, individual citizens,
temporary or permanent lobbying organizations, and society-at-large.
Project managers must manage stakeholder expectations, which can be difficult because
stakeholders often have very different or conflicting objectives. To do so, they must first identify
the stakeholders, for several reasons. Stakeholder identification and analysis is conducted in order
to:
• Familiar with the stakeholders;
• Understand how the coalition of stakeholders can be kept together;
• Balance the contributions of the stakeholders and the rewards they will receive from the project;
• Establish information distribution channels; and
• Establish a basis for goal setting.
It is helpful for the project manager to regard the project as a coalition of stakeholders, which
means a network of individuals and groups who have the intention of creating something together.
This network or alliance is not of a contractual type, but purely mental. If the project manager
views the project as a network of stakeholders, he/she will try to keep it together to achieve the
best possible results. The project will need the common efforts of the stakeholders. But the project
manager may be faced with situations where some may withhold contributions because they feel
that what they do for the project is not in balance with what they will get in return. The project
manager must seek to retain the balance between the contributions and the rewards.
Stakeholder Analysis
Stakeholder analysis involves; identification of stakeholders and describe their relationships to the
project - especially their areas of interest, identification of stakeholders’ contributions project
requirements, and their expectations (in return) from the project. Stakeholder analysis also
involves identification of the kind of power stakeholders possess and what they may do if they
disagree with the project - processes or results.
Table 1 shows how to present results from the stakeholder analysis exercise. It covers the most
important factors, like:
i. Area of interest of the stakeholder (e.g., environmental protection, wild life, natural
heritage, education, economic development, health, economic empowerment etc.);
ii. Stakeholders’ contributions to the project (e.g., resources, labour, finance, support,
positive or negative engagements);
iii. Stakeholder expectations from the project (e.g., jobs, pollution, displacement, loss
livelihoods, destruction of the environment, improved standard of living etc.);
iv. Power of stakeholders (the way the stakeholder can affect the project in case of a
conflict and whether they can increase their power by cooperating with others);
v. Strategy to work with the stakeholder (the way the stakeholder should be treated by the
project); and
vi. Person responsible (the person within the project who is responsible to carry out the
strategy).
Table 1: Stakeholder Analysis Table
Stakeholder Area of interest Contributions Expectations Power Strategy Responsible
Stakeholder
Stakeholder
Stakeholder
Stakeholder
Stakeholder
The stakeholder analysis should be carried out early in the project – it is part of creating the
foundation for the project. The results can be used to evaluate the main goals of the project and
see how they fit with stakeholder expectations. In some cases, project goals may be changed in
order to increase project support. The stakeholder analysis is also of value when determining how
to inform the stakeholders of the progress of the project.
2. Organizational Influences
Projects are typically part of an organization that is larger than the project. These organizations
may include; corporations, government ministries/depts., healthcare institutions, international
bodies, professional associations, etc. Even when the project is external (joint ventures,
partnerships-PPP), the project will still be influenced by the organization or organizations that
initiated it. The maturity of the organization with respect to its project management system,
culture, style, organizational structure and project management office can also influence the
project.
a. Organizational Systems
Project-based organizations are those whose operations consist primarily of projects. These
organizations fall into two categories:
a. Organizations that derive their revenue primarily from performing projects for others under
contract – architectural firms, engineering firms, consultants, construction contractors, and
government contractors.
b. Organizations that have adopted management by projects. Such organizations tend to have
management systems in place to facilitate project management. Their financial systems are
often specifically designed for accounting, tracking, and reporting on multiple and
simultaneous projects.
Non-project-based organizations often may lack management systems designed to support projects
in an efficient and effective manner. The absence of project-oriented systems usually makes the
management of projects difficult. However, non-project-based organizations may have
departments or subunits that operate as project-based “organizations” with systems in place to
support projects. The project management team should be aware of how its organization’s structure
and systems affect the project.
b. Organizational Cultures and Styles
Most organizations have developed unique and describable cultures. These cultures are reflected
in numerous factors, including, but not limited to:
• Shared values, norms, beliefs, and expectations
• Policies and procedures
• View of authority relationships
• Work ethic and work hours.
Organizational cultures often have a direct influence on the project. For example: A team
proposing an unusual or high-risk approach is more likely to secure approval in an aggressive or
entrepreneurial organization; project manager with a highly participative style is likely to
encounter problems in a bureaucratic organization. On the other hand, a project manager with an
authoritarian leadership style will be equally challenged in an organization which promotes a
participative leadership style.
c. Organizational Structure
The structure of the performing organization will often have an influence on whether the project
succeeds or fails. The influence may include making resources available for the project or limiting
resource availability and in some cases even the authority of the project manager. The figure below
shows key project-related characteristics of the major types of organizational structures.
Source: PMI (2004) PMBOK and Source: Newell (2005)