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Stakeholders in Project Management

written by: Tomica Bonner • edited by: Jean Scheid • updated: 10/28/2010

Every project manager needs to identify project stakeholders and determine their needs and expectations of the project. Effective communication between stakeholders will ensure the project is successful and that everyone is on the same page.

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    Project Management Stakeholders

    Stakeholders Diagram A stakeholder is someone that is involved in your project or has a vested interest in its success or failure. Knowing who your stakeholders are is important and the process begins by developing healthy relationships. They help decide on issues from the beginning, during planning and at execution of the project. Therefore, stakeholders should understand how the project functions, including the project scope, milestones and goals.

    There are five major types of stakeholders:

    Within the stakeholders, you have both internal and external classifications. Internal stakeholders are those directly affected by the project, such as employees. External stakeholders are not a part of the business, such as vendors or suppliers, but have an interest in its outcome.

    Primary and Secondary Stakeholders

    Primary stakeholders have a major interest in the success of a project because they are directly affected by the outcome. Customers and end users are primary stakeholders as well as some project sponsors, project managers, and team members.

    Project sponsors are accountable for keeping the project on schedule. They should schedule regular meetings to review timelines, addressing complications that may arise, and assuring that the project manager remains on the task. Sponsors allocate and supply resources and finances to fund the project. The sponsor should have a clear understanding of what's expected in accordance with the scope, schedule, and resources needed for the project. Success of a project is largely dependent on the project sponsors leadership and support. The leadership provided by the sponsor helps identify cost overruns and provides alternatives in order to remain on budget.

    Secondary stakeholders also help to complete the project. Though their role isn't primary, they assist with administrative processes, financial, and legalities. Communication between primary and secondary types of stakeholders will ensure that everyone is working toward the same goal. Lack of communication can cause a breakdown within the project.

    Internal and External Stakeholders

    Project managers are internal stakeholders because they are directly involved in developing the project. They have authority to manage the project by handling responsibility of work performance, organizing and planning; effectively ensuring that all phases of the project are done accurately and efficiently.

    Vendors, suppliers, and outside organizations are external stakeholders because they supply needed elements for a project's success, they need to stay in communication at all times on goals, milestones and deliverables.

    Direct and Indirect Stakeholders

    Direct stakeholders are concerned with the day to day activities of a project. Team members are direct stakeholders as their workloads are scheduled around the project each workday. Indirect stakeholders are not impacted by the project. Those not affected are your customers and end users, because their concern is with the finished project. This would be the quality of merchandise, price, packaging, and availability.

    The management of stakeholder responsibility is very important to the success of a project. It's important to define the various types of stakeholders, their needs or interests, and communicate them effectively.

    Image Credit - Stakeholder Diagram - http://www.dfpni.gov.uk/stakeholders-diagram.gif