Game theory

Much as project managers would like to believe that their projects exist in isolation, they do not. Outside the neat confines of the scope of works exists a political environment populated by all those who have an interest in the outcome of the project – and it is unlikely that all their interests will coincide. This environment adds significant risk to a project, as pressure from stakeholders is transmitted to the project team in the form of change and uncertainty. Changes increase the complexity of the management task, jeopardising cost and programme certainty.

Traditionally, project managers have always felt justified in putting whole areas of project risk into the political category and leaving them to the client to cope with. The plea is: "Why can't the client just tell me exactly what it wants, for how much and when, and then go away and leave me to deliver it?"

Well, OK … but of course it is not that simple. There are many groups that have an interest in a project and the power to influence it. On a sizeable publicly funded project, it is easy to identify 40-50 stakeholder groups, all with different requirements, levels of influence over the project and levels of interest in doing so. The client is faced on the one hand with negotiating these conflicting interests and on the other with passing clear instruction to the project team.

Political awareness
So, should the politically astute project manager be able to assist the client in the management of project stakeholders? I would say that if it is to maximise the chances of project certainty, it must. Which means that a method is needed.

A model to analyse, understand and therefore better manage project stakeholders was developed by business strategy theorists Gerry Johnson and Kevan Scholes. It was initially developed as a tool to help organisations implement strategic developments, but is equally applicable to project management.

Here's how to use it. First, you need to identify your stakeholders; you can't manage them if you don't know who they are. Compile a list of them. Next, decide on the level of power and interest they have in the project. This is not a precise science – the assessment can only be based on the perceptions of the team, but it is important that you consider the interest from their point of view, not yours. For example, the funding your project may have received from the National Lottery will be of great interest to you, but is your project of great interest to it? If your particular project does not happen, it can always fund something else.

You now plot the stakeholders on a matrix (see graphic). You will probably find that those with a high level of interest, on the right of the matrix, are either strongly supportive or hostile; this is not surprising, as their interest is high.

The aim of the game is to get positive stakeholders into the bottom right hand corner and negative stakeholders out of that corner. But before we discuss how to play it, I should remind you that the matrix is dynamic; it will need to reflect changes of individuals in stakeholder organisations or changes to your project.

How to play
So, what strategies might you adopt to deal with the different sections in the matrix? Let's take the easiest first: those with little power and little interest in the project, such as the general public. You probably don't need to worry too much about them, but if they are supportive, provide them with information – be nice to them.

You are probably all too familiar with stakeholders with significant power and a high level of interest. If they are positive, provide them with information to maintain their support. Look after them well. They are important, so let them know that. Don't ignore them just because they are not causing you any problems at the moment. Make them part of your project steering group (if they are not already), involve them in decisions, use them to lobby other groups and make sure they voice their support.

Those with a great deal of power and interest in the project, but who are negative about it are obviously the biggest problem and you need to put effort into dealing with them (see positive and negative arrows in diagram). Use positive stakeholders to lobby them to change their views, attempt to counter the influence they may have on other groups, and reduce their power – if the means exist to do this.

Influential stakeholders with a negative view tend to respond to bargaining – or at least, I have found so. Strike a deal with them if you can – find out what is important to them, help them out and buy their favour. Some also respond if you keep them informed and show that you are interested in their opinions. Think of the hotel next to your site that believes it is losing business because of the noise and dust you are creating. Invite it onto your site, show it the measures you have taken to reduce disturbance and discuss the best times for noisy work. If it sees that you are sympathetic to its needs and that you are doing your best to mitigate the effects, it may not phone the council immediately. Some sources suggest that you should "keep them in the dark"; I have not had to resort to this yet.

Those in the high power, low interest group – such as a large public sector funder, the government or the press – are the unexploded bombs. However, if the project alters or the individuals involved change, the interest of the stakeholders in this group may suddenly increase, and they will use their power to influence the project. In short, keep an eye on them.

My particular favourites are high-interest, low-power stakeholders, such as end users, community groups and small funders. If they are positive they are your best friends – treat them well, provide them with information, involve them and use them to lobby other groups. If they are negative, they will probably deluge you with emails and phone calls – but keep smiling and don't waste too much time on them.

Like all management models, the key benefit of stakeholder analysis is that it helps bring understanding to a complex situation. In this way it helps project managers and teams to manage and communicate with stakeholders in the most effective way – by concentrating resources where the most benefit will be derived and informing communications planning for the project.