Stakeholder management is the ongoing maintenance of relationships with those impacted by a project. This concept is used when setting expectations for those who have invested time or money in a project, or are directly impacted by it.
Stakeholder management is the process of managing the expectation of anyone that has an interest in a project or will be effected by its deliverable or outputs.
The intent of stakeholder management covers the following topics:
- To influence the perceptions of investors regarding the likely outcomes of their investments. In particular, it is used to corral over-optimism regarding the possibility of an unusually strong outcome.
- To integrate into the project the recommendations of the stakeholders. When they see that their opinions are being incorporated into a project, their support of the project tends to increase.
- When there is full engagement by stakeholders, they are more likely to support the project in the face of criticism by third parties.
Stakeholder management requires ongoing communications with investors and others, sometimes on a milestone basis, to keep them apprised of the progress of a project, as well as the preliminary returns from it. Without this approach to stakeholder relations, it is likely that there will be stakeholder disappointment, accusations, and perhaps lawsuits regarding the improper use of funds. It is also possible that the remaining funding for a project will be withheld, or that its scope will be reduced.
The project manager will find that the number of people treated as stakeholders should be limited to just those having the most influence over a project. Expanding this group to peripheral players takes time away from the project manager, while not demonstrably increasing the level of support accorded to the project.
This concept is a key task of the project manager, who depends on the goodwill of stakeholders to ensure the continuing inflow of funds while a project is in progress. It is also part of the investor relations officer’s work, who must continually discuss the affairs of a business with its shareholders.