Stakeholders – Crucial to Project Management

Table of Contents

As mentioned in CVG-DFW’s previous post, stakeholder management is crucial for project management and project success. And to affect stakeholders, we must understand who they are and what they value.

For any project, there may be two main types of stakeholders: internal and external. To break that down further:

Internal Stakeholders Are:

The executing organization: This is the domain where a project or important project aspects are developed. The executing organization provides all the material, technology, capital, and human resources necessary to launch a project in accordance with its scope.

The executives: The executives may or may not be directly involved in a project. On large, highly visible projects, the executives are more often involved, which increases communication with the project manager and facilitates the acquisition of material resources and hiring qualified personnel. On the other hand, if the project is executed poorly, its weaknesses will be highly visible, and the executive’s initial support will turn into pressure that will often harm the project’s atmosphere.

The project manager: Launching a project depends on all stakeholders, as each will make their contribution in accordance with their role. However, the project manager is the most involved stakeholder since he/she participates directly in the entire project, from initial phase through closure and turnover.

The project team members: These are the human capital resources who will directly develop and execute the project deliverables. A project team is comprised of various professionals with different areas of knowledge, experience, and skills. Project team members ensure the good execution of the project.

External Stakeholders Are:

The client: This is the person, group of persons, and/or companies that will directly benefit from the product or service developed by the executing company. The client will usually be highly involved in project planning, execution, and will formally accept or reject the delivery of each project phase until project completion.

The suppliers: Many projects rely heavily on the services rendered by material suppliers, which are essential for the project to meet the minimum quality requirements. This reliance is not limited only to the quality of the products and/or services rendered by the suppliers. For example, a late/early delivery of the contracted products or an increase in the cost of labor could seriously compromise the project.

Third parties: Sometimes an executing organization does not have enough personnel of its own to complete the foreseen work. This happens often in large projects especially in the construction and telecommunications sectors, and outsourcing labor is usual. The project manager must be aware of all contracts with external companies to ensure there are no divergences that could compromise project development.

The sponsor: Every project has a sponsor. The project sponsor typically belongs to the organization and identifies the need to launch a project to achieve a given outcome whether strategic, financial, or technological. When a project is demanded by a client outside the company, the sponsor will hold the role of mediator between the consumer and the company executing the project. In sum, the sponsor is the person who bets on the project and who will provide the necessary support for its investment to attain the specified objectives.

Achieving harmony among the project stakeholders is both an important factor of success and a great challenge for the project manager. While often complicated due to different and sometimes competing stakeholder objectives, by encouraging active stakeholder participation and creating an atmosphere of collaboration, chances of achieving harmony increase.

Examples of challenges that can be improved with active stakeholder participation and collaboration include:

– A request from the technical director in the scope of the project that can compromise the dates scheduled by the technical team for the completion of a phase;

– A recently passed law that affects the project;

– Departure of a key member of the technical team;

– Client request for a major change in a project component that compromises prior planning.

3 Stakeholder management

The strong influence of the stakeholders on the project can be remarkable. Some control access to organizational resources and so managing good relations with them is important. Due to their importance, it is necessary to identify their expectations and to develop a form of management that maintains them as project allies. In some cases, poor relations with any one stakeholder can spoil the whole project.

Remember, to manage stakeholders:

– Identify them.

– Establish their roles.

– Determine the project’s impact on different stakeholders.

– Assess their influence on the project.

– Identify relationships among the stakeholders and their common objectives.

And remember, effective stakeholder management will have numerous project benefits such as:

– Facilitating decision-making.

– Improving the flow of information and communication.

– Increasing the satisfaction level.

– Enhancing project stability.

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