You will hear the ‘Stakeholder’ term too frequently in the project management world. In this article, we are going to review the stakeholder definition. Stakeholder definition can be explained as the people whose interests may be positively or negatively affected by the project.
So we can say stakeholder means anybody who can have a benefit or who may be distracted by the outcomes of a project. Stakeholder definition in the project management can be separated into two main groups, internal stakeholders of a project and external stakeholders of a project.
Who can be considered as stakeholders according to the stakeholder definition? How can a project affect the internal and the external stakeholders? Which people are classified as stakeholders in the stakeholder definition?
What is the Stakeholder Definition?
Now let’s give the stakeholder definition and give an example of people classified as stakeholders.
We have stated that stakeholder definition includes everyone who can benefit or can be affected by the outcomes of the project. Identifying stakeholders, understanding their relative degree of influence on a project is critical to the success of a project. The Project Manager should also consider balancing the stakeholders’ demands, needs, and expectations.
The stakeholder definition separates the stakeholders into two groups. Let’s start with the internal stakeholders.
Internal stakeholders include all members of the project team. Because as a direct contributor to the project, they are directly affected by the project.
Now, let’s give an example for external stakeholders. Consider a factory construction project which is expected to cause water and air pollution in a city. This will cause a big resistance from the residents of the city. There might be even protests and actions from the city management to stop the project. Therefore, stakeholder management is a very important aspect in project management.
Stakeholder Definition Illustration
This figure above illustrates the project team, the project sponsor, and other organizations or people that can be categorized as the stakeholders of a project.
As you see, the project team is the inner circle. The stakeholders in the project team are the internal stakeholders and the other stakeholders in the gray areas are external stakeholders. For example, portfolio managers, program managers, project management office, operations management, functional managers, sellers, business partners, customers, users are all external stakeholders of a project.
Sponsor is on the intersection of internal and external stakeholder area. Because sponsor is the spokesperson of the project supports the project financially and also protects the project from external risks.
Stakeholder Definition In an Example Project
To explain the stakeholder definition better, let’s go over one project example, Golden Gate Bridge, and list some stakeholders of the project.
First of all, when the bridge was being built all workers in the project team are stakeholders of the project. According to the stakeholder definition, they are categorized as the internal stakeholders.
The government is also another a stakeholder. It is the sponsor of the project because the government or management of the city finances the construction of the project. Any risk or problem that could have happened during the construction of the project would affect the government as well.
Sea transporters between the two sides of the bridge. According to the stakeholder definition, they are categorized as external stakeholders of the project. Because before the construction of the bridge, the sea transporters were making money with the transfers. After the construction of the bridge, most people or carrier companies might have switched to pass the bridge instead of using a Ferry for instance. So we can easily state that the business of the sea transporters is negatively affected by the bridge. That makes them the external stakeholders of the Golden Gate Bridge construction project according to the stakeholder definition.
Another example for external stakeholder of this particular project may be the people residing closer to the bridge. As we can guess that their properties became more valuable with the bridge, they will be affected in a positive way. On the other hand, they might also be distracted because of the construction. So as you can see in the stakeholder definition the effect can be positive, negative but also both.
Note that there might be several other stakeholders of a project. This list is just to illustrate stakeholder definition better in your mind.
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