What is Stakeholder Analysis

Understanding, extracting, and confirming the project's requirements in written form is one of the most challenging components of a project. For instance, the customer frequently needs to be instructed on how to provide specific requirements. The problem is usually made worse by project managers and other team members who instinctively assume that needs will change but don't prepare for it.

The requirements problem goes beyond the rigorous technical requirements that the project team frequently gathers. The often overlooked derived needs include everything from having specific information transmitted to the team at specific points during the project lifecycle to the deft politics of meeting intrinsic involvement requirements with crucial actors. This kind of requirement is mainly focused on communication.

As a result, project managers invest a lot of effort in communicating by outlining the "requirements" of different project participants and clients. A few other requirements include the following:

• Each team member must know the project's objectives and their unique, particular role and responsibility throughout all project phases.
• Financial sponsors' requirements for assurance that their funds will be used wisely from the outset of a project. Further, related essentials are updated on the project's progress at convenient intervals and provided in a manner that meets their preferences.
• The end user needs to be satisfied that the finished product meets their expectations when delivered at the end of the project.

How should a project manager interpret these kinds of requirements? Finding and then coordinating the project's requirements with the needs and expectations of all stakeholders involved will provide the solution.

What is a stakeholder?

The term "stakeholder" broadly refers to people, groups, or organizations interested in the project and having the power to mobilize resources to influence its outcome. The project manager, the client, the project sponsor, and the team members from the performing organization are typically considered project stakeholders. 

Everyone on a project team wants the project to be successful. If a project starts strong, it is likely to succeed. Getting the project team together and discussing, evaluating, planning, and documenting the fundamental needs of the vital project stakeholders, as well as their impact and influence on the project, is a good place to start.

This information can then be reviewed and revisited as necessary during the project to lessen the tendency to concentrate on moving forward, forgetting that project expectations vary and that communication patterns may need to be adjusted. With the help of the project stakeholder analysis, the team can address these problems.

Also, read what is stakeholder management for a better understanding

What is Stakeholder Analysis?

The stakeholder analysis definition identifies various methods or tools used to recognize and comprehend the requirements and expectations of significant interests inside and outside the project.

This undertaking demands a certain level of political acumen or being street-smart on projects of any importance. The elements, including interfaces, stretching into the external world must also be understood in addition to the internal project environment. To distinguish between project groups, aid in forming prospective support coalitions, or, if required, lessen the impact of hidden resistance involves various skills.

Most of the time, clear and concise human solutions are needed to finish the projects. Using the analogy of a stage production helps to picture the benefactors, marketers, stagehands, financiers, producers, and perhaps even the final customer—the audience that should return night after night—in addition to the actors on the stage. 

The project's ultimate goal is to create a similar script and choreography that can be used to outline policy, identify current and potential interactions between players, plan negotiations and interventions, precisely predict thresholds and risks and foresee potential sources of conflict and cooperation.

On an organizational level, the activities for strategic planning frequently start with a stakeholder analysis. Here, the manager and the team need to consider the requirements of those other than the team and design a future business concept with that in mind. 

Stakeholder analysis approach

When and who should conduct a stakeholder analysis? Stakeholder analysis is most effectively completed before a project is launched or at some beginning point, even though it is valuable all through the project as a technique to reassess critical issues (especially when the project is in crisis). 

The facilitator should be aware of the danger of exposing unproductive interests and hidden intentions while talking to stakeholders because the analysis involves sensitive information. The team members must feel secure enough in one another to discuss these matters openly and deal with material that might be undiplomatic.

The sections that follow describe a straightforward procedure for doing stakeholder analysis.

Identify the project stakeholders

The first step should consist of a brainstorming session with participants carefully chosen and if desired, a facilitator. All stakeholders should be initially taken into account before being eliminated as the analysis progresses. 

It can be challenging to place people into groups and decide who is inside and outside the project area. Instead of using general terms like "customer," "owner," "sponsor," etc., it is typically beneficial to identify such stakeholders by name to acquire a more thorough grasp of their requirements and expectations.

Identify the impact and relative priority of the stakeholders

The analysis map should mention all stakeholders with their primary areas of interest, potential degree of project influence, and relative importance to other stakeholders to improve the previous stage. Each interest should be tied to the relevant project phase; as the project goes from the beginning to the concluding phases, interests change. It is also helpful to describe how the project will be influenced if the key interests are or are not addressed once they have been established.

The best strategy to ensure high involvement is to develop a stakeholder map that specifies the influence-interest level of each stakeholder. This grid, also known as a power-interest grid or even an interest matrix, is the most effective approach to represent the four primary stakeholder groups.

The four primary groups are:

• High influence and high interest.
• High influence and low interest.
• Low influence and high interest.
• Low influence and low interest.

Assess stakeholders for influence and importance

The project's success may depend on whether stakeholders with significant influence have negative interests. The easiest way to achieve this degree of insight is to formally evaluate each stakeholder's influence and relevance on the project.

Influence is a measure of a stakeholder's control over and power within a project. A stakeholder with significant influence can direct essential project decisions, promote task completion, and motivate others to act. 

The project can only be deemed successful to the extent indicated by importance if expectations, needs, and problems are resolved. This metric is frequently created based on the relationship between the stakeholders' needs and the project's objectives.

Influence and importance are two separate metrics from one another. 

A project could have a significant financial sponsor who, while having the power to stop it at any time and for any reason, has no part in the day-to-day management of the project.

In addition to offering insight into stakeholders' interactions, the combination of these measurements also aids in identifying new assumptions and hazards.

Outline risks and assumptions

The reliability of risks and assumptions is another factor in project success. Risks become apparent concerning stakeholders when there are divergent demands and expectations. For instance, a powerful stakeholder's interests might not align with the project's goals, preventing it from moving forward successfully. 

The project manager must define undefined stakeholder roles and duties, create "what-if" scenarios using unmet needs and expectations, and confirm the veracity of assumptions in order to identify critical hazards.

Define the participation of the stakeholders

After making an effort to comprehend the stakeholders, it is time to evaluate their level of participation and informational requirements. Key stakeholder roles will be made clear in a well-designed project, and who participates when will be as clearly defined as possible. 

Only some stakeholders need to be involved in every project component during every lifecycle phase. The manager has identified prospective stakeholder groups using preliminary analysis. They can use this data from analysis to cut down on project report preparation and associated communication expenditures.

Conclusion

The project team members can better comprehend the various stakeholders who have an interest in the project by using the technique of stakeholder analysis. Stakeholder analysis gives the team perspectives and metrics that can assist in identifying and removing obstacles in a setting where office politics frequently appear to obstruct a project's development.

The method presented here forces project managers to recognize and promote the interests of the important groups. Knowing that they exist and what degree of influence the stakeholder may exert can significantly help the project team when demands that cannot be supported develop. 

Stakeholder awareness and the necessity of stakeholder analysis are popular concepts in project management principles and related aspects. Learn about its relevance and importance with a strong pmp certification at StarAgile.