Concepts
In the world of project management, a stakeholder refers to anyone who has an interest in the project. This can include individuals, groups, or organizations that are actively involved in the project or whose interests may be affected by the execution or the completion of the project. Understanding your stakeholders and their interests is crucial to the success of a project, and that’s where Stakeholder Analysis comes into play, especially for those studying for the Project Management Professional (PMP) exam.
What is Stakeholder Analysis?
Stakeholder Analysis is a technique used to identify and understand the needs and expectations of major interests within a project environment. The analysis is usually performed at the beginning of a project and is essential for the smooth running and successful completion of any project. It involves the identification of stakeholders, understanding their needs and expectations, and managing and influencing those expectations.
Conducting a Stakeholder Analysis
There are several ways to conduct a stakeholder analysis, but one popular method is using the Power Interest Grid. Power Interest Grid is a visual tool that helps you classify stakeholders based on their level of authority/power (how much influence they have over your project) and their level of interest (how affected they are by your project’s outcome). The Power Interest Grid is divided into four categories: High Power/High Interest, High Power/Low Interest, Low Power/High Interest, and Low Power/Low Interest. These categories are described as follows:
- High Power/High Interest: These are your key players. They have a high level of interest in the project and the power to affect its outcome. It’s crucial to manage these stakeholders closely.
- High Power/Low Interest: These stakeholders have the power to impact your project, but they have little interest in it. Your strategy should be to keep them satisfied but not overwhelmed with project details.
- Low Power/High Interest: You should keep these stakeholders adequately informed. They may lack power, but their high interest could sway other stakeholders’ perceptions of your project.
- Low Power/Low Interest: These stakeholders require minimal management efforts. It’s still important to monitor them, but you don’t need to invest significant time or resources into keeping them engaged.
Classifying Stakeholders: Power Interest Grid and Influence-Impact Grid
While the Power Interest Grid helps classify stakeholders, Influence-Impact Grid is another tool that can help determine the priority of stakeholders based on their influence on the work and their potential to impact the project. The grid is divided into low and high impact/influence. Stakeholder with High influence and high impact should be managed closely, while stakeholders with Low influence and low impact are simply monitored.
To illustrate, if you’re managing an IT project for a new software implementation, your stakeholders may include your project team, the end-users of the software, department heads, and the organization’s executive leadership team.
The Importance of Stakeholder Analysis in PMP
Meticulous stakeholder analysis facilitates effective communication, clears obstacles, encourages stakeholder engagement, and ensures the successful execution of a project. As a PMP candidate, understanding, and effectively managing your stakeholders is imperative to the success of your project and a key factor in passing your exam. Therefore, Stakeholder Analysis, Power Interest Grid, and Influence-Impact Grid are quintessential PMP elements that every candidate should understand and know how to use effectively.
Answer the Questions in Comment Section
True or False: In stakeholder analysis, stakeholder influence means the power or capability of the stakeholder to influence the project decisions and activities.
- True
- False
Answer: True
Explanation: Influence in stakeholder analysis refers to the measure of authority a stakeholder has over the project, its activities and its decision-making process.
In the power interest grid of stakeholder’s analysis, who are considered to be the low interest and low power stakeholders?
- A) Keep Satisfied
- B) Keep Informed
- C) Monitor
- D) Manage Closely
Answer: C) Monitor
Explanation: The power interest grid categorizes stakeholders as “Manage Closely”, “Keep Informed”, “Keep Satisfied”, and “Monitor”. “Monitor” refers to low power and low interest stakeholders.
True or False: All stakeholders have the same level of interest and influence on a project.
- True
- False
Answer: False
Explanation: Stakeholders vary in their levels of interest and influence on a project. This variation is captured in techniques such as the power-interest grid.
Which group in the Power Interest matrix requires high communication and active engagement?
- A) Low Power, Low Interest
- B) High Power, High Interest
- C) Low Power, High Interest
- D) High Power, Low Interest
Answer: B) High Power, High Interest
Explanation: The High Power, High Interest group requires the most attention with high communication and active engagement as they have significant influence on the project’s outcome.
Stakeholders with high power, regardless of their interest, should always be fully satisfied. Is this statement true or false?
- True
- False
Answer: True
Explanation: Stakeholders with high power must be kept satisfied even if they have low interest. If they become dissatisfied, they can use their power to negatively impact the project.
True or False: Stakeholder mapping does not help to visualize stakeholders’ influence and interest.
- True
- False
Answer: False
Explanation: Stakeholder mapping, such as power-interest grid, is a technique used to visualize the level of power and interest of each stakeholder.
Who are considered as High power, low interest stakeholders in the power-interest grid?
- A) Keep Informed
- B) Monitor
- C) Manage Closely
- D) Keep Satisfied
Answer: D) Keep Satisfied
Explanation: High power, low interest stakeholders are those which need to be kept satisfied as they can significantly impact the project but have lesser interest in its day-to-day operations.
True or False: Stakeholder analysis is a one-time process at the beginning of the project.
- True
- False
Answer: False
Explanation: Stakeholder analysis is a continuous process. Stakeholder’s interests and influence can change as the project progresses and thus, analysis needs to be updated regularly.
The power-interest grid is also known as:
- A) Stakeholder matrix
- B) Matrix chart
- C) Power/responsibility chart
- D) All of the above
Answer: A) Stakeholder matrix
Explanation: The power-interest grid is commonly referred to as a Stakeholder Matrix in project management.
The ‘Keep Satisfied’ group in the Power-Interest Grid requires:
- A) Low management effort
- B) High management effort
- C) No management effort
- D) Variable management effort
Answer: B) High management effort
Explanation: The ‘Keep Satisfied’ group, having high power but low interest, require high management effort to ensure they remain positive towards the project as their support can be critical.
True or False: All stakeholders have direct authority over the project.
- True
- False
Answer: False
Explanation: Not all stakeholders have direct authority over the project. Their level of authority can range from high to low, depending on their role and interest in the project.
The ‘Monitor’ stakeholders in the power-interest grid are stakeholders with:
- A) High power and high interest
- B) High power and low interest
- C) Low power and low interest
- D) Low power and high interest
Answer: C) Low power and low interest
Explanation: In a power-interest grid, the ‘Monitor’ category includes stakeholders who have low power and low interest in the project.
The Power-Interest Grid is really useful for categorizing stakeholders in the PMP exam. It helps in prioritizing stakeholder engagement based on their level of power and interest.
Can anyone explain how to analyze stakeholder influence and impact effectively?
This blog post was very informative, thanks!
Is there a difference between stakeholder interest and stakeholder impact?
Excellent article! Helped clarify so many doubts.
I didn’t find the section on influence particularly helpful. Could have included more examples.
Learning about the Influence/Impact grid was so enlightening. It’s essential for the PMP exam.
Thank you for the detailed breakdown!