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Chapter 11a of Advances in Project Management (978-1-4724-2912-4) by Darren Dalcher

What Does the Project Stakeholder Value?

Pernille Eskerod and Anna Lund Jepsen

 

A project is a means to create value for stakeholders. This is a two-way street as contributions from the stakeholders are imperative to create the desired value. The existing project management literature offers advice on how to manage project stakeholders to enhance the likelihood that agreed upon deliverables will be delivered within time and budget by the project team. The literature is based on a notion of a stable environment in which both the project task and the stakeholders are ‘manageable’. Today’s projects, however, are often faced by unexpected changes in the environment. This means that the project representatives (the project sponsor, the project manager and the project team members) continuously need to adjust the project plan and thereby potentially affect the stakeholders. Further, many organisations desire sustaining relationships with their stakeholders. Only satisfied stakeholders will want to sustain their relationships and knowledge about their preferences is therefore necessary. Our claim is that the current literature on project stakeholder management is not well-suited for dealing with the challenges related to project stakeholder management facing today’s project representatives as the understanding of project stakeholders’ interests and value perception is not sufficiently unfolded. A clear understanding of the project stakeholder values may enable the project representatives to create better value for all stakeholders.

To better address project stakeholder values in a broad sense we suggest that the project management literature should be enriched by concepts, tools, and theories from (1) stakeholder management within the strategic management literature; and (2) consumer behaviour within the marketing literature.

With inspiration from these theoretical frameworks, four major considerations of each project stakeholder can be determined:

1. What is in it for Me, and What is Fair?

A stakeholder has a free will to decide whether to contribute to a certain project or not. In this decision-making process the stakeholder will consider the net satisfaction, that is, whether the anticipated benefits for the stakeholder are higher than the anticipated costs of contributing. However, research has shown that the stakeholder’s willingness to contribute is influenced by his or her perception of fairness, that is, how project representatives approve of the way in which the project sponsor, the project manager and the project team members treat the stakeholders. The perception of fairness relates to the distribution of benefits among the stakeholders and how project processes take place, for example, whether the stakeholders are sufficiently involved in the decision making as well as informed properly in a timely manner. Further, ways of interaction are also taken into consideration in the fairness assessment, that is, do the project representatives interact with the stakeholders in a respectful way?

2. What is Appropriate for a Person Like Me in a Situation Like This?

 

Stakeholders make their decision as regards contribution in a social context. Therefore, the stakeholders also take into account what they believe they are supposed to do, that is, they consider ‘what would a person like me do in a situation like this?’. Through interactions with their environment, the stakeholders have developed a certain understanding of their role and how others see them – a social self-image – and they act in a manner which they believe will support and sustain this image. This holds true for the project stakeholder’s interactions with the project representatives but also with other stakeholders.

3. I Have My Own Stakeholders!

 

Classical project stakeholder management theory/guidelines emphasises the dual relationships between the project and each of the stakeholders. It can be tempting for the project representatives to see the project as the centre of the world as this helps focusing on accomplishing the project. It is important to remember, however, that the project may not be the centre of the world for the stakeholders and that each project stakeholder has his or her own stakeholders to relate to – and other stakeholders may be perceived as equally or even more important than the project representatives.

4. I Am the One Who Knows My Priorities!

 

When unexpected events happen in the project course, project representatives often need to make tradeoffs. If the project representatives don’t know the considerations and priorities of the stakeholder, but only stick to their own priorities, the consequences of a change response may not be adequate to the interests and the values of the stakeholders. This is illustrated in the case example below.

CASE

The author (the stakeholder) of a well-known text book in project management who also was the publisher himself had gotten a new printing company (which undertakes the project) to print the ninth version of his book. Agreements on, for example, specifications, budget and deadlines were stated in a contract and everything seemed fine. A characteristic of the previous versions of the book was that the second half of the book was printed on yellow paper to emphasise that this half was not traditional text chapters but appendices presenting project management tools. This design was also chosen for this particular version. However, the printing company’s supplier could not deliver yellow paper in time. The author was not informed about this problem. Shortly before the agreed upon deadline for the book deliverance, he received a message from the printing company saying that the book would be delayed due to the lack of yellow paper supply. As a result the book was not available in book stores for the semester start, resulting in a lot of frustrated students and professors; less revenue from the book sale; and the risk that the book would not be on next year’s book lists. The author was very unhappy about the situation. ‘Had they just contacted me,’ he said, ‘then I would have told them to print the appendices on white paper. To have the text book delivered in time for the semester start had my highest priority.’

The case example shows a situation in which none of the four considerations mentioned above were properly taken care of by the project representatives when the unexpected event occurred: (1) The author (the stakeholder) felt that he was not properly informed about the lacking supply. Neither was he involved in the tradeoff decision between time (delivering at the promised deadline) and specifications (delivering the book with white and yellow pages), which related to his perception of process fairness. (2) The author had delivered text books to students and professors for many years. He felt it was threatening for his image as a reliable book supplier that the book was not available in the book stores when needed. (3) The project representatives did not consider the core interests of the stakeholder’s stakeholders, that is, the book stores, the students and the professors. (4) When the project representatives were faced with the need for making a tradeoff decision between time and specifications, they did what they found best themselves (if they considered the alternatives at all), without asking the stakeholder about his priorities.

Our message is this: An unexpected event occurred and the project representatives had to choose a change response. By not considering the stakeholder’s considerations and value perception the project representatives did not minimise the damage. Instead they made it much worse than necessary. Stakeholder management has a lot to offer but must begin with a better understanding of what project stakeholders value.

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