PROJECT ENVIRONMENT AND STAKEHOLDER ANALYSIS (UNIVERSITY OF LODZ)

Every project, including innovative or research projects, is implemented in conditions that create project environment. The environment is perceived as a set of phenomena, processes, institutions, groups or entities, both external and internal, which form interrelations with the project. They are affected by the project, however they can also affect the project. Therefore project environment provides a context in which the project is developed and implemented, and has either positive or limiting impact on the project itself.   

Project environments can be differentiated according to various criteria. When analysing the environment in terms of interrelations with the project, the following should be highlighted:

• External project environment which includes elements of such environment as external entities that potentially can become interested in results of research delivered under the project, or local governments which approve implementation of innovative projects addressed to their local communities. This environment can be further subdivided into:
  • Further external project environment – i.e. global environment or macroenvironment, project macroenvironment, which indirectly affect the project (e.g. in the field of … ),
  • Closer project environment, which directly affects the project, e.g. through direct contacts with companies supplying materials used to perform studies;
• Internal project environment composed of all elements that “create the project”, and which can be divided into:
  • Intra-organisation project environment – i.e. units of the entity implementing the project, which cooperate with the project team, for instance technology transfer centres, scientific centres, teams of lawyers,
  • Intra-project teams – i.e. taskforces which compose project teams (e.g. teams responsible for project contents, teams responsible for project implementation in terms of organisation).

The purpose, soundness, feasibility and efficiency of projects, innovative and research ones in particular, are not only affected by the knowledge on the project environment, but also the skill of collaborating with it. That is why identification of this environment, performed at the start of project, is of crucial importance.

Project environment can be analysed using:

• Classical strategic analysis (SWOT), which involves assessment of four groups of factors: Strengths – external factors that facilitate project implementation, Weaknesses – internal factors that limit your project, Opportunities – external factors that can support project implementation, Threats – external factors that can constitute barriers / difficulties to project implementation;
• Stakeholder analysis described in this part of the manual, which involves three elementary questions:

Which individuals / groups of individuals / institutions should be identified as potential project stakeholders?
What is the stakeholders’ influence on the project objectives?
How will the stakeholders behave in relation to this project?

The concept of stakeholder analysis developed by R.E. Freeman is the most common method used to analyse project environment. Freeman defines a stakeholder as ‘any group or individual who can affect or is affected by the achievement of the organization’s objectives’. In accordance with the definition of the European Commission, stakeholders are natural persons or institutions that can indirectly or directly, positively or negatively affect or be affected by the project. “Positive stakeholders are those who would like normally benefit from a successful outcome from the project, while negative stakeholders are those who see negative outcomes from the project’s success”. Thus they are groups of individuals, entities, institutions, enterprises, public entities, which can be related to entities implementing the projects. Stakeholders can differ, for instance in terms of their legal form, nature of their tasks and roles, resources (financial, physical, time-related and HR), access to knowledge or decision-making processes. Unequal status of stakeholders can negatively affect project development and implementation. The resulting differences and disproportions should be analysed and addressed in the process of building project team and identifying target group in particular. The skill of identifying individual stakeholder groups and their interests, assessment of their potential influence on the project as well as the skill to build relations with them represent key elements of project management – this is a multi-stage process in which some of the following various tools are used.

Stakeholder Map Development 

It is the first stage to identify and group stakeholders according to their roles and types of influence on the project.

Stakeholder Identification

Under this stage we should first identify different stakeholders who form rather homogenous groups:

• The project can affect them,
• They can affect the project,
• They can be helpful during project implementation and become partners even if the project is implemented without their participation,
• They can become a party to a conflict in the project or perceive it as a threat to their interests or status quo,
• They must be engaged in the project.

Next, the stakeholders should be grouped according to their roles and types of influence on the project. Under the step of grouping a set of several questions can be used:

• Will the stakeholder group be involved in project implementation, support it financially, or benefit from its implementation (e.g. as a target group)?
• Is this a group which remains in a positive or negative relations with the project?
• Is this a group that holds control-related authority, other power-related status, etc.?

When identifying stakeholders, they should be classified using various criteria. The following types can be distinguished:

• External stakeholders (outsiders) – everyone who is not a part of project team, however maintains certain relations with the project. This group can be subdivided into:
  • External non-organisation stakeholders – they are a part of the external non-organisation environment (e.g. suppliers, competitors, buyers, regulators),
  • External intra-organisation stakeholders – they are a part of the intra-organisation environment (e.g. board, supervisory bodies, content-management units of the entity which implements the project, management of this entity);
• Internal stakeholders – individuals / groups of individuals / institutions which are a part of project implementation team (e.g. project management, scientific teams, administrative teams, implementing teams, specialists, experts, consultants).

Stakeholders can be divided into three basic groups based on the hierarchy-related criterion:

• Primary stakeholders whose interests represent key project objective. This group includes stakeholders who directly use project outputs / results and who have the greatest influence on the project course (target group, project management),
• Secondary stakeholders – these are the groups that should be engaged in activities if the project is to achieve planned objectives (e.g. members of project team, voluntaries, project partners),
• Other stakeholders – the stakeholders who initially did not play a significant role, however this can change during project implementation (e.g. suppliers, subcontractors).

Once stakeholders have been identified and grouped, stakeholder analysis should be performed.

Stakeholder Analysis

The aim of this analysis is to describe potential behaviours of stakeholders and degree of their participation in the project. Thus first we should characterise them in terms of their importance to the project (e.g. social and organisational status, gender, the way of making decisions, etc.). Available data and sources (e.g. public stats or data available to entities involved in project development and implementation) are used for this purpose. They can also be supplemented with other materials obtained from qualitative and quantitative studies, analyses and reports, which will allow completing stakeholder characteristics and support project development in accordance with the actual needs of target group. This stage usually covers ID and contact details, qualitative and quantitative characteristics, description of strengths and weaknesses as well as interests and aspirations relating to the project, and project impact. A Project Stakeholder Map Form is used for this purpose.

The stage of developing the characteristics provides the base for stakeholder assessment. Its aim is to identify stakeholder importance and attitude to the project, describing project-related behaviours and their consequences. Two criteria are used for this purpose:

• Influence – holding assets (in-kind, HR and moral) which allow stakeholders to enforce activities beneficial for them,
• Engagement – an extent and intensity of activities delivered by stakeholders to achieve their interests.

Application of these two criteria allows grouping stakeholders according to the level of their importance. It provides a matrix presented Stakeholder analysis. The table also includes examples of stakeholders for innovative projects, although they can change depending on such aspects as project type, its nature, and entities taking part in its implementation.

 

The assessment of stakeholder can be also focused on assessing their attitude towards project. In this case, the following criteria are used: dominant direction of their influence (on the project and vice-versa) and influence type (positive or negative). These criteria allow distinguishing the stakeholders who have positive attitude to the project from those who have negative. The first group includes beneficiaries (they obtain benefits from the project), and promoters (they are interested in the project, support it actively, and are not necessarily driven by their own benefits). The other group includes aggrieved stakeholders (project has negative influence on them, and they are unable to defend themselves actively) as well as the stakeholders who are not only characterised by their negative attitude to the project but also undertake actions to obstruct its implementation.

Stakeholder characteristics and analysis allow developing a set of key information on the stakeholders, identifying their behaviours, and then planning actions for each group. Various strategies addressed to the individual groups can be helpful for this purpose, and are presented below

 

Strategies with an action plan for each group can be included in the stakeholder map, or contained in a separate document constituting a stakeholder action plan

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Sources

• G. Schreyögg, Umfeld der Unternehmung. W: W. Wittmann, W. Kern, R. Köhler, H.-U. Küpper, K. Wysocki, Handwörterbuvh der Betrie
• R. Edward Freeman’s Strategic Management: A Stakeholder Approach, Pitman, Boston 1984
• Projektmanagement-Fachmann, 4th edition, ISBN 3-926984-57-0
• Zarządzanie cyklem projektu. Przewodnik metodyczny, Fundacja Fundusz Współpracy, Warszawa 2007