Introduction:

Synergy occurs when the interaction of a cohesive group of elements produces an effect that is greater or more favorable than the sum of the individual efforts. Now, let’s apply this to project management by replacing the word “elements” with “stakeholders.” Projects are no longer governed by one person acting as a project sponsor. Projects are now under the eyes of governance committees. The challenge is how to get the governance committee members to work closely together to make the best team decisions rather than suboptimal individual decisions. While we cannot always prevent stakeholders and governance committee members from having hidden agendas and making decisions in their own best interest rather than in the best interest of the project, there are tools we can use to help create a synergistic environment. Effective metrics/KPIs displayed in a dashboard reporting system are considered to be one of those tools.

 

The Early Years of Stakeholder Relations Management:

From the birth of project management in the early 1960s up to the last decade, stakeholder involvement in projects has been more passive than active. Stakeholders focused heavily on the deliverables expected at the end of the project. And, if they did get actively involved at all, it was close to the end of the project where there were fewer decisions for them to make.

During this time period, stakeholders knew very little about the actual processes used in project management. This included internal stakeholders, stakeholders from the client’s organization, and governance committee stakeholders.  Everything was end-results oriented. Information provided by the project manager was considered as the Gospel, never questioned, and the stakeholders had no way of validating whether or not this was the right information. The majority of the information provided to stakeholders was simply time and cost information. Unfortunately, time and cost information alone cannot tell you the true status or health of the project. The result was that each stakeholder had to draw their own conclusions as to what the time and cost metrics actually showed, and as expected the governance team members had different interpretations of the data.

When decisions had to be made, it was most often seat-of-the-pants decision making rather than informed decision making based upon meaningful information. Simply stated, stakeholders did not know what information they needed and focused mainly on just time and cost metrics.

Today’s View of Stakeholder Relations Management:

Today, stakeholders appear to be much more knowledgeable about project management than in the past. Stakeholder involvement is much more active than passive, and the involvement begins right at the initiation of the project. Continuous stakeholder involvement is mandatory rather than optional. There are several driving forces which necessitated this change:

  • The projects we are working on now are more complex than in the past.
  • Complex projects most often have a higher degree of risk associated with them.
  • Stakeholders are expected to be and want to be more actively involved in certain critical decisions.
  • Stakeholder involvement in project risk management requires meaningful information.
  • Stakeholders understand the difference between traditional decision making and informed decision making necessary for today’s project environment.
  • Stakeholders want to participate in the decision regarding what metrics they wish to see in order to monitor project progress and make synergistic decisions.

As stakeholder involvement became more active than passive, project managers soon realized that that the way that they handled stakeholder relations management also had to change. Project managers must now:

  • Work closely with all of the stakeholders to understand the requirements of the project rather than relying solely upon the client for requirements definition.
  • Work closely with each stakeholder or stakeholder group to understand what metrics they wish to have reported, and how frequently.
  • If necessary, the project manager may have to create a separate project management information system for each stakeholder.
  • The information system will report status in a dashboard format. There may be a different dashboard for each stakeholder.
  • Have a dashboard designer as part of each project team.
  • Understand that stakeholders now recognize the importance of informed decision making rather than ordinary decision making based upon guesses.

The latest version of the PMBOK® Guide introduced a new knowledge area, namely Stakeholder Management. In my opinion, it would have been better to call the new area of knowledge Stakeholder Relations Management because project managers do not manage the stakeholders. Project managers may have some control over managing the relationships, but not managing the actual people. Most of the stakeholders may very well be at a much higher position in their respective organizational hierarchy than the project manager.

The starting point in managing stakeholder relations is a clear understanding of what is expected from the stakeholders in the way of authority, responsibility and decision making. We traditionally map the stakeholders on a Power-Influence Grid and provide most of our attention to those stakeholders that have a great deal of power and can influence the direction of the project. Today, the stakeholders in this quadrant of the grid, possibly along with all of the other stakeholders, are expected to assist the project manager by making informed decisions. Informed decisions require that correct and meaningful metric information be presented in a timely manner.

The Need for Meaningful Information:

For years, stakeholders never fully understood metrics. They knew that a metric was a measurement, but they often failed to understand that not all metrics are equal in importance and that not all metrics provide meaningful information for decision making. Today, we differentiate between metrics and key performance indicators (KPIs). Key performance indicators are those critical metrics that substantiate the health of the project and can be used to predict the future success or failure of the project. Project managers can identify up to 50 metrics on projects but usually somewhere between eight and ten metrics are considered KPIs. The KPIs are what stakeholders need to see for informed decision making.

Governance committee members and stakeholders now have significantly more metrics/KPIs to look at. Each stakeholder can have a different dashboard that contains the metric information that the stakeholder needs to make an informed decision. Now, it should be easier to create a synergistic environment and get the best possible decisions from the various stakeholder committees.

 

All That Glitters is Not Gold:

Providing stakeholders and governance committee members with metric/KPI information is certainly the correct thing to do. However, when something appears to be a great idea, there are always opportunities for bad things to happen.

Metrics management issues can create synergistic opportunities but can also create severe problems when dealing with stakeholders or members of a governance committee. Some of the more critical issues that may surface are:

  • What happens when stakeholders become infatuated with metrics and want all of the metrics in your metric library displayed on the dashboards? If you have 50 metrics in your library, you may end up providing too much information to the point where you have information overload. The dashboard viewers may not be able to recognize which metrics/KPIs are critical for informed decision making. This could slow down the decision-making process rather than speed it up.
  • What happens when stakeholders request specific metrics that you do not understand and do not have the organizational process assets to perform measurements? This could cause delays in the execution of the project as well as delays in decision making. The project team may need to be trained in how to perform new types of measurements for client-specific metric requests.
  • What happens when stakeholders have disagreements with what the metric data shows and conflicts will then occur? This can happen even with the best dashboard designs.
  • What happens when stakeholders state that they do not want to hear any bad news nor do they want to see bad news displayed on the dashboards? This could eliminate effective stakeholder support during a crisis.
  • What happens when stakeholders want to see the data before it appears on the dashboards and filter the information such that they end up stretching the truth? This could be seen as a violation to the project manager’s Code of Professional Conduct.

Obviously, metric management does have a down side. But there are approaches that can be taken to minimize the risks. The future looks bright and the opportunity for a governance synergistic environment is certainly there.