Literature Review of Stakeholder Management

The purpose of this paper is to reflect on various personal experiences I have had in my professional career to date, where I was involved in different relationships between various stakeholders in the context of the construction and engineering industry as a construction project manager working for main contractors in particular in the Middle East from 2007 to 2009, overall I have approximately 10 years experience in stakeholder management within the construction industry in various roles.

I will be examining my personal experiences, actions / in actions and emotions and comparing these to academic literature on the topic of Stakeholder Management in the above contexts.

The reason why I have chosen this particular topic and set of experiences, is because I would like to be able to use my experiential learning and apply the suggested lessons for stakeholder relations, conclusion and recommendations to ensure the successful realisation of the project outcomes, that meets the needs and wants of the stakeholders involved during the project life cycle, in the future.

A general and broader definition of stakeholders is “any group or individual who can affect or is affected by the achievement of an organisation’s purpose” (Freeman 1984), the definition as defined be PMBOK, that I will be using in this paper is “individuals and organisations that are actively involved in the project or whose interest may be affected as a result of project execution or project completion”.

I have lived, worked and travelled extensively over the last 7 years living in the UK and UAE, while I was in the UAE I worked as a Construction Project Manager for two different construction companies, Dutco Balfour Beatty LLC and Cliff Creek Building Contracting LLC.

The projects I was involved in, were large and complex new build and fit-out fixed lump sum contracts which consisted of 3B + G + 11 + Roof + Upper Roof with a separate Services Block for RAK Bank at DSOA and RAK Bank – RAK was G + 9 + Roof including a cafeteria/kitchen and Upper Roof with a separate Services Block for DBB which involved various stakeholders, and it will be this experience I will be exploring.

For both companies I commenced my tenure part way through the construction phase of the project life cycle (refer below for a typical project life cycle) where the policies, procedures and systems where already in place, i.e. Project Management Plan, WH&S, Quality and Environmental Plan etc. which did not formalize the stakeholder management process.

Source: Assudani, r. & Kloppenborg T. J. 2010

Generally the stakeholder management process was less formally implemented within the companies I have worked for although they have an Integrated Management System (ISO9001, ISO14001, OHSAS18001) which address Quality, Environmental and Occupational Health and Safety, CSR policy, in particular DBB, but did not specifically address Stakeholder Management, and where more of a tick the box exercise i.e. paid lip services to the whole thing.

Generally in construction projects as was the case here we have overarching constraints of cost/budget, time/programme, scope and safety which must be satisfied regardless of any other consideration, two of the most restrictive ones are time and cost in fixed lump sum contracts.

Brief review of the personal experience (situation, events, feelings)

One experience was due to the confined space on site I as the project manager decided to use the vacant land adjacent to my site for storage and also to erect a tower crane on to aid with material handling, construction and to recover the program slippage.

The original programme was planned with two tower cranes however the Contracts Manager in his wisdom decided on one tower crane which was bigger than we actually required and was plagued with problems from the beginning, contributing to the programme slippage as both time and cost are two of the most important constraints on the construction project.

I had to balance the needs and wants’ (Aaltonen et al 2008) of the stakeholders to the project which included the Client, the clients representative and the design team plus my internal stakeholders i.e. my workforces down the line which was multicultural i.e. Indian, Pakistani, Chinese etc. and my bosses up the line, my subcontractors and suppliers, to try to deliver the project on time, to budget and meeting the clients expectations in terms of quality and safety etc., was a key objective of mind and my clients.

Other stakeholders where the neighbours as there was a housing estate right next to the site, the DSOA (Dubai Silicone Oasis Authority) which is the authority responsible for the project i.e. planning, approvals, statutory inspections etc., and of course the land owner of the vacant block adjacent to our site.

We had no choice but to use the vacant block for storage due to the confined space of the site and also to erect the second tower crane (if we had of known earlier in the project life cycle than we could of erected the tower crane on our site but due to the construction technique i.e. precast this was not possible at this late stage and would of had to go into the basement B3 as the precast would not support the loads).

We knew that the vacant land was not going to be built on until after our project had been completed as there was no planning approval through the authority, so we took the risk without contacting the land owner’s as there was tension between them who were also a bank from Egypt, and our owners/client and end users RAK Bank., as our client had tried to purchase that land.

We were eventually contacted by the vacant blocks owner’s representative and requested to clear the site and remove the tower crane. We then offered them (the Egyptian Bank) incentives (to rent the land temporarily / to provide them access and also use of our facilities to undertake there soil tests, provide them with design information and our soil reports to inform them of what the condition on their site was etc.) to allow us to use the land for another 3 months or so, however these were all rejected.

We also got request by the authority to remove the tower crane and clear the site, however we used delaying tactics with both of them to achieve our objective, to keep the tower crane and use of the site for as long as possible.

This met mine and my stakeholders needs and wants i.e. client/client representatives, design team, my subcontractors/suppliers etc. to the determent of other stakeholders i.e. the neighbouring land owner, the neighbours, and the DSOA.

Indentify where there is resonance or dissonance with arguments in the literature

Although it is not an extensive literature review, the literature that I have reviewed refer to reference lists below, resonates with my experience as outlined above of stakeholder management within the construction industry.

Based on my experience I agree with the author and the literature that I have reviewed highlights the, importance of stakeholder management to the successful completion of the project i.e. Relational Capital, this is not only applicable to the construction industry but also stakeholder management as a whole, refer below: –

Aaltonen et al 2008 “Project Manager must consider stakeholder’s needs and requirements to ensure project success”;

Jergeas et al 2000 “effective management of stakeholders on a project is an important key to project success”; and

Karlsen 2002 “efficient management of the relationships between the project and its stakeholders is an important key to project success”.

Karlsen 2002 indentified from a survey that “clients and end users are significantly more important than all the other stakeholders”, this confirms me experience of indentifying and prioritising my client/end user in this case RAK Bank over all others to achieve my goals and objectives as outlined in the previous section.

His and others work Mitchell et al 1997 using the stakeholder salience model generally confirms my experience as a construction project manager working for a main contractor of prioritising the stakeholders who have the most power, legitimacy and urgency because they control information and resources etc.

In my personal experience outlined I have indentified the relevant stakeholders groups based on my experience and prioritised them in the following order which is confirmed by Karlsen 2002 survey: –

Client/End User “RAK Bank” including Clients/End User Representative;

Client/End User Design Consultants i.e. Architectural/Structural/MEP etc;

Dubai Silicone Oasis Authority (DSOA);

Dutco Balfour Beatty LLC (Main Contractor) who I worked for as a construction project manager including my internal team;

Suppliers and Subcontractors;

Neighbours (we were not to deal directly with the Neighbours, they were supposed to go through the housing association who would go through the DSOA who would then come to us and we would have to do the procedure in reverse);

Neighbouring Landowner (Egyptian Bank).

Critically evaluate both the personal experience and the chosen literature in light of this discussion

If there had been in place a formal stakeholder manager process as part of the Integrated Management System i.e. WH&S, Quality, Environmental, Project Management Plan, in hindsight I probably should taken a consultative approach and contacted the neighbouring landowner and the neighbours to get there buy-in and support for the project, but I knew based on my experience that they would not give it, as they were opposed (Winch 2004) to the project.

Instead of making a unilateral decision which served my purpose but did not take into account the opposing opinions or viewpoints of the other stakeholders i.e. the neighbours and the neighbouring landowner.

I used a combination of ethical frameworks to make this decision which included Subjectivist, Relativist and Consequentialist in the context of my two most important overarching constraints of cost and time which achieved mine and my stakeholder’s i.e. client’s objective.

According to (Olander 2006, Aaltonen et al 2008) by using the stakeholder management salience model as indentified by Mitchell et al (1997) refer page 8 of 12, I would of analysed the stakeholders in much the same way as I did based on experience and still would of indentified my client/end user RAK Bank as my most important stakeholder but would of correctly identified the salience of the neighbouring landowner and neighbours which I had previously ignored refer below: –

Client/End User “RAK Bank” including Clients/End User Representative would be 4. Dominant Stakeholder as they have both power and legitimacy;

Client/End User Design Consultants i.e. Architectural/Structural/MEP etc. would be 7. Definitive Stakeholder as they have both power and legitimacy as they are already members of an organisations dominant coalition as they are via a contractual relationship work for the Client/End User and their representatives;

Dubai Silicone Oasis Authority (DSOA) could be classified as either 7. Definitive Stakeholder as they have both power, and legitimacy or could be classified as 1. Dormant Stakeholder as they posses power to impose their will but do not have any relationship or legitimate claim;

Suppliers and Subcontractors would be 6. Dependent Stakeholders have urgent and legitimate claims but no power and depend on DBB is the main contractor who employs them for power;

Neighbours (we were not to deal directly with the Neighbours, they were supposed to go through the housing association who would go through the DSOA who would then come to us and we would have to do the procedure in reverse) would be 5. Dangerous Stakeholder who lacks legitimacy but possess power and urgency; and

Neighbouring Landowner (Egyptian Bank) could possess all three legitimacy, urgency and power would be classified as either a non stakeholder as per my original classification above which was not correct as I ignored them as a stakeholder group. 2. Discretionary Stakeholder possess legitimacy in this case we were using their land without their permission, so they had a legitimate claim.

Olander 2007 states that “To the legitimate stakeholder there is a moral obligation to include their interest in the decision-making process”, which in the case of the Neighbours and Neighbouring Landowner (Egyptian Bank) I did not include their interest in the decision-making process.

Source: Mitchell et al. 1997

Suggest the lessons for stakeholder relations

Some lessons for stakeholder relations in the context of the construction and engineering industry and my role as the project manager, due to the unique nature and intensity of managing projects which are generally a temporary endeavour undertaken to create a unique product, service or result in this case a project, according to A Guide to the Project Management Body of Knowledge (PMBOK Guide).

Specific stakeholder management training should be provided to project managers that will provide them with insights, tools, and techniques to help them plan, implement and create a successful stakeholder management approach within their project management toolkit.

The experience I have outlined above did not have formal policies, procedures and systems in place to directly deal with stakeholder management i.e. Project Management Plan, WH&S, Quality and Environmental Plan etc., stakeholder management was done informally as part of the job but as highlighted it is critical to the success of the project.

This was also highlighted in the literature by Karlsen 2002 “…that in many projects a formal and systematic project stakeholder management process does not exist”.

There need to be a formal stakeholder management process implemented which incorporate tools, techniques and frameworks at an early stage of the project life cycle in my experience above this was not possible as I joined the project during the execution phase i.e. construction.

According to (Yang, J., Shen, G. Q., Drew, D. S. and Ho, M. 2010) and others there are 15 no. Critical Success Factors for stakeholder management in construction projects listed below in order of importance which should be incorporated into the SMP: –

Managing stakeholders with social responsibilities (economic, legal, environmental, and ethical);

Formulating a clear statement of project missions;

Identifying stakeholders properly;

Understanding area of stakeholders’ interests;

Exploring stakeholders’ needs and constraints to projects;

Assessing stakeholders’ behaviours;

Predicting the influence of stakeholders accurately;

Assessing attributes (power, urgency, and proximity) of stakeholders;

Analysing conflicts and coalitions among stakeholders;

Compromising conflicts among stakeholders effectively;

Keeping and promoting a good relationship;

Formulating appropriate strategies to manage stakeholders;

Predicting stakeholders’ reaction for implementing the strategies;

Analysing the change of stakeholders’ influence and relationships during the project process; and

Communicating with and engaging stakeholders properly and frequently.

Some of the tools, techniques and frameworks that should be formally implemented are the stakeholder salience model Mitchell et al (1997) which address item no. 8 of the CSF’s above, power/interest matrix Johsonson and Scholes (1999), impact/probability matrix Ward and Chapman (2003), which should be used in combination.

Cultural sensitivity training to address issues such as etiquette, protocol, communication styles and negotiation approaches (Competition, Accommodation, Compromise, Avoidance and Collaboration), some of this negotiation approaches I used in the experience outlined above i.e. Compromises, Avoidance Competition and Collaboration which resulted in my objective being achieved.

In a competitive world such businesses appreciate that greater cultural sensitivity will assist them in forging longer and more prosperous relationships.

Conclusions and Recommendations

In conclusion a project manager needs to indentify and prioritise key stakeholders and then establish and maintain productive working relationships with them is key in achieving project success.

The lessons I have highlighted earlier above I will taken on board and use them in the future depending on the situation I am faced with.