The Influence of Stakeholder Values on Project Management

By McManus, John | Management Services, June 2002 | Go to article overview

The Influence of Stakeholder Values on Project Management


McManus, John, Management Services


Whilst important, technical and economic risk in project management are not the real reasons why software projects continue to fail. Research data provided by the Gartner Group, and other market research companies show that technical risk and immature technologies cause project failures in less than five percent of cases.

If that is true, then why do so many projects fail? Again research shows the major causes of project failure continue to be people-related issues.

The critical risk in project management involves stakeholders and stakeholder values (that is individuals or groups of people who can effect and influence the outcome of projects) and how management mitigates risk in respect to those individuals or groups. The following paper examines paradigm changes in stakeholder values and reviews some of the influences and challenges faced by practitioners in project management. Specifically, the article seeks to investigate stakeholder influence and looks at the determinants of that influence.

Some General Theory

So what defines stakeholders? Freeman's original definition, which is still widely used, provides an insight. His definition labels a stakeholder as "any group or individual who can affect or is affected by the achievement of the project organisation's objectives" (1984). As we examine stakeholders - in addition to shareholders - we see various groups highlighted by stakeholder theorists. For example, Freeman's listing of stakeholders includes such diverse constituencies as owners of various kinds, supplier organisations, customer segments, employee segments, various members of the financial community, several levels and branches of government, consumer advocate groups and other activist groups, trade associations, political groups, unions, and competitors. Brenner and Cochran (1991) form a diagram with such stakeholders as stockholders, wholesalers, sales force, competition, customers, suppliers, managers, employees, and government. Hill and Jones (1992) list managers, stockholders, employees, customers, suppliers, and creditors. Clarkson (1995) lists the company itself, employees, shareholders, customers, and suppliers as primary stakeholders, with the media and various special interest groups classified as secondary stakeholders. And Donaldson and Preston (1995) show stakeholders as investors, political groups, customers, employees, trade associations, suppliers, and governments.

Consensus has it that stockholders, employees - of all types - suppliers, customers, governments and activist groups, even competitors can all be considered as stakeholders.

An attractive feature of Stakeholder Theory (ST) lies in its post-modern, pluralist and constructivist leanings. The approach constitutes a middle-range `social actor' alternative to the positivist methodologies often prevailing in studies of resource management practices. Given its focus on people's intentions and self-identified interests or stakes, the method emphasises processes of social construction; biophysical properties and economic interests being assigned not to objective systems but rather to agents and socially positioned perspectives on social and natural reality. ST also goes beyond participatory methods and practices that emphasise popular involvement and that pay little attention to inherent structural problems and multilevel conflicts plaguing 'local peoples!

By the same token ST represents a challenge to conventional economic analysis, an approach that does not adequately consider the distribution of costs and benefits among different stakeholders - the winners and losers. It ignores the fact that different stakeholders do not perceive environmental problems in exactly the same way and will therefore seek different solutions and use different criteria to assess the desirability or worth of an intervention. Ways for better anticipating and dealing with stakeholder opposition and conflict, and better incorporating various interests, especially those of weaker groups in society, are therefore crucial for improving policy design and project implementation. …

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