Impacts of Stakeholder Management and Engagement on Project Success
In 1984, Freeman defined the term stakeholders in his book “Strategic management: A Stakeholder Approach”.
“A group or individual who can affect or is affected by the project/achievements of the organization’s objectives”.
Many other authors and researchers defined the term stakeholders but freeman’s definition serves as basis for all definitions. Management and engagement of project stakeholders is widely acknowledged as an integral part of project management and consider as a major factor contributing toward project success (Cleland, 1986; Olander & Landin, 2005). Despite the acknowledged importance of stakeholder management and engagement, project management research regarding stakeholders still lacks both theoretical knowledge and empirical evidence of various project stakeholder. (Achterkamp & Vos, 2008; Yang et al, 2009). Importance of management and engagement of stakeholers related to power sector in Pakistan are neglected. Due to this stakeholder have many concerns and apprehensions about safe operation during the whole life of the power plant, and later on safe decommissioning of power plant. Stakeholders have many questions in their mind like Does Pakistan has enough technical manpower to construct and operate a power plant? Do all power plants meet all the safety guidelines provided by international agencies like IAEA, OSART, and WANO etc? Does Pakistan has enough technical skills and abilities to mitigate emergencies? If emergency occur on a power plant, then what will be the evacuation plan of general public in order to save them from chemical/radiation exposure? Impacts of thermal, hydel power plants on environment? Until today, research on project stakeholders has primarily focused on the conceptual development of stakeholder management and engagement tools and frameworks in order to better manage stakeholders. However, the majority of the research about stakeholder management, stakeholders’ identification tools and management frameworks gives only a static aspects of the project and focused primarily on the project execution phase. Clearly less attention has been devoted to understanding stakeholder dynamics, i.e. attitudes/behaviors, changes in stakeholders’ attributes and positions, power/interests, degree of influence towards the project, both empirically and theoretically during the early project front-end stage (Aaltonen & Kujala, 2010; Olander & Landin, 2005).
Thermal and hydel power plants have become an economical and important alternative source for electricity generation after many years of research for them to be safe and secure for the communities and the environment. Since this kind of megaprojects are complex and involve a huge sum of money and time, as well as involved high number of stakeholders and these stakeholders have different power/interest constellations and degree of influence, the study of them is a tool in the way to achieve the success of the project. (Mitchell, Agle, & Wood, 1997) and (Bourne & Walter, 2005) among others, have showed how an understanding/addressing the needs and expectations of the stakeholders can drive to the success of the project. In November 21, 2014 Sindh High Court issues stay orders against construction of two (1100MWe each) nuclear power plants in Karachi. Petitioners have major concerns about preservation of environmental safety, assurance of operational safety and evacuation plan of population (22millions) of Karachi in case of emergency at nuclear power plant. Nuclear power projects have stakeholders which are diverse in nature and may spread different geographical boundaries (international countries are involved), these stakeholders are significantly different from stakeholders of conventional power plants. Different international/local organizations, governments, associations, governing agencies/authorities have stake in the project. For successful construction, commissioning and operation of nuclear power plants successful management and engagement of stakeholders is mandatory, even if the scope is achieved by the manager, a project can still be a not successful if one of the stakeholders are not completely satisfied. Stakeholders Management and engagement, as it is called now, has been studied in different types of projects having low, medium and high complexity/budget size. The intention of this proposal is to use the study of stakeholders, to understand the importance and the relationship between stakeholders in power plants construction, commissioning and operation in order to (1) Understand how power sector has been developed in Pakistan; (2) Recognize the importance of stakeholders in power plants in Pakistan; (4) Generate a conceptual model of stakeholder management/configuration based on the experience of different countries.
Four research questions were developed in order to better understand the objectives of this research proposal. The answer of these questions will be described in this proposal. These questions are:
Q1) Why a power project’s scope and objectives can be affected by its
Q2) which are the most important stakeholders in Power Projects in Pakistan? Which stakeholders are the most influential ones?
Q3) Why and which are the factors that affect the stakeholders’ configuration model?
Q4) which should be the stakeholder configuration model of a country that wants to develop
a Power Plant?
The importance of stakeholder’s management and engagement is emphasized especially in nuclear power field where stakeholder’s negative attitude towards a project can severely obstruct project progress, cost overruns and exceeded time schedules etc. This study focuses on the understanding of stakeholder dynamics of two power projects in Pakistan. Power projects enable to overcome load-shedding issue, as shortage of electricity puts erroneous effects on Pakistan economy. Such power projects can be described to be the most ambitious power projects in the history of Pakistan because these projects strengthen Sino-Pak trade relationship and open new dimensions for further trade with china.
The technology used in the construction, installation, commissioning and operation of the nuclear power plants is mature and technically proven, but gaining the diverse stakeholders support and managing stakeholder dynamics is a challenge during the project’s early stages.
The aim of this proposal is to enrich our understanding of stakeholder dynamics during the project’s front-end stage. This is done by analyzing the changes in stakeholders’ salience attributes: power, interests, influence, legitimacy and urgency (Mitchell et al, 1997) and in their position either they are supportive or adversarial towards the project. Stakeholder’s management and engagement is necessary and beneficial i.e. cost effective on the project’s front-end stage which covers all the activities from the project’s idea generation to the more detailed planning phase, because it is a stage, when stakeholders’ positions are shaped and the stakeholders’ potential to influence the project management’s decision-making is highest (Aaltonen and Kujala, 2010).
Hence, on the practical perspective, this proposal will increase our understanding of how project management in the perspective of nuclear industry in Pakistan can actually influence and manage stakeholder dynamics. The methodology used for the identification of stakeholders is ‘stakeholder mapping theory’, and the methodologies used for comprehensive analysis of stakeholders impacts on project success are power/influence matrix, stakeholder salience-position matrix, an analytical framework, ‘power, legitimacy, urgency theory’ (Mitchell, Agle, & Wood, 1997), resource dependency theory (Pfeffer & Salancik, 1978), Agency theory (Chang & Taylor, 1999), Network theory((Galaskiewicz & Wasserman, 1994)), power/interest matrix theory (Johnson & Scholes, 1999) etc.
Power projects fall in the category of mega projects due to their higher degree of social and environmental impact. They are unique and highly complex due to involvement of mature technical skills and technological processes which are exercised around the world. The construction of a power plant required huge sums of money, long time horizons, safe and reliable operation during the design life of the plant and most important activity; management of fuel and safe disposal of waste. These properties make this project very complex and due to its severe environmental/social impacts, it involves diverse stakeholders to be able to carry it out (International Finance Corporation, 2007). Due to mis-operation of power plant its adverse consequences may face the entire world. Therefore, it is very important to carefully identify the existing stakeholders and potential stakeholders during the planning phase of the project so that the project can complete successfully, and after completion can operate safely.
International atomic energy agency(IAEA) provides procedures and guidelines to the world for the initiation, execution, commissioning, operation and decommissioning of the nuclear power plant. Following table enlists the stakeholders proposed by the (International Atomic Energy Agency,2009), that are present when the decision of construction of a nuclear plant is taken. These stakeholders are categorizing into different categorizes to help to understand their role in the construction of a nuclear power plant project. According to IAEA there are four categorizes of stakeholders.
| Facility Owner
| Regulators (Nuclear safety)
Researches and Scientists
Each of these stakeholders is very important in each and every step of the construction and operation of a nuclear power plant. The influence of these stakeholders depends on the country developmental and political system, maturity of technological processes and the type/model of nuclear power plant. The importance/influence of every stakeholder changes with respect to time, depends upon many factors. That is why, it is necessary to effectively and efficiently identify supportive and adversarial stakeholders in the planning phase of nuclear power plant project. Megaprojects as exposed by (Flyvbjerg, Bruzelius, & Rothengatter, 2003), requires large number of physical, technological and financial resources, which are not very common around the world only the developed countries have. Megaprojects are great concerns of the actual and potential sponsors/financiers of such projects make important to calculate entire cost of feasibility study, construction and operations of megaprojects. In all projects specially in mega projects like nuclear power plant project stakeholder’s supports are mandatory because large sums of money are at stake. (Mitchell, Agle, & Wood, 1997) and (Bourne & Walter, 2005) and other researcher stated that how an understanding of the needs/expectations of the stakeholders can lead towards success of the project. Stakeholders role/involvement may change during the lifecycle of the project. (International Finance Coorporation, 2007). Needful care should be granted to the most relevant stakeholders during each phase of the project. For this purpose, stakeholder identification could be done wisely and systematically. (International Finance Coorporation, 2007). Clearly less attention has been devoted to understanding stakeholder dynamics, i.e. attitudes/behaviors, changes in stakeholders’ attributes and positions, power/interests , degree of influence towards the project, both empirically and theoretically during the early project front-end stage (Aaltonen & Kujala, 2010; Olander & Landin, 2005). The aim of this proposal is to enrich our understanding of stakeholder dynamics during the project’s front-end stage. This is done by analyzing the changes in stakeholders’ salience attributes: power, interests, influence, legitimacy and urgency (Mitchell et al, 1997) and in their position either they are supportive or adversarial towards the project. Stakeholder’s management and engagement is necessary and beneficial i.e. cost effective on the project’s front-end stage which covers all the activities from the project’s idea generation to the more detailed planning phase, because it is a stage, when stakeholders’ positions are shaped and the stakeholders’ potential to influence the project management’s decision-making is highest (Aaltonen and Kujala, 2010).
Hence, on the practical perspective, this proposal will increases our understanding of how project management in the perspective of nuclear industry in Pakistan can actually influence and manage stakeholder dynamics. The methodology used for the identification of stakeholders is ‘stakeholder mapping theory’, and the methodologies used for comprehensive analysis of stakeholders impacts on project success are power/influence matrix, stakeholder salience-position matrix, an analytical framework, ‘power, legitimacy, urgency theory’ (Mitchell, Agle, & Wood, 1997), resource dependency theory (Pfeffer & Salancik, 1978), Agency theory (Chang & Taylor, 1999), Network theory((Galaskiewicz & Wasserman, 1994)), power/interest matrix theory (Johnson & Scholes, 1999) etc. After identification of all relevant stakeholders, it is very easy to classify the stakeholders according to the degree of interest they show, after classification devise strategies to address their concerns. Stakeholder mapping technique is inspired by concepts of social constructivism, usually recognized as the Social Construction of Technology, which is developed and applied by (Bijker, 1987). Bijker(1987) defines an artifact, the artifact is the mission of the project, the related social groups characterize project stakeholders in two categories which are proponents(favorable to project) and opponents(against the project).
Stakeholders are integral part of any real life project. They play their role during the entire life of the project either in favor or against the project. Their higher degree of influence on the project may halt the execution of the project or complete the project by satisfying project scope. There are multiple studies on stakeholders management and engagement in power sector but there are few studies regarding power sector stakeholders. Power plants are completely different because of their diverse impacts on environment as compare to conventional power plants. Stakeholders are involved across the borders i.e. countries, international nuclear regulatory agencies, environmental agencies, international communities, organizations etc. There are many local stakeholders such as local community, environmental agencies, media, governments, political system, financial system etc. Complete understanding of each and every stakeholders attitude/behavior either supportive or adversarial, degree of interest, legitimate power to influence project either positively or negatively is necessary. In past, there is lack of study in nuclear power sector in Pakistan to understand stakeholder dynamics, this study will provide the insights about stakeholders. Pakistan is a developing country and facing load shedding challenges, cannot bear cost overruns due to unnecessary delays. Therefore, significant number of supportive stakeholders should always present.
Objective of this research is to find the ways the stakeholders exercise their options either for or against the project. They can exercise both hard and soft options depending upon the situation/phase of the project. Their degree of interest may vary from project to project and situation to situation. Following are the objective of this research:
1-To analyze the impact of the stakeholder’s influence on project success.
2-To understand the relationship between stakeholders involved in power plant construction, commissioning, operation and decommissioning.
3-Understand how power sector has been developed in Pakistan.
4-Recognize the importance of stakeholders in power plants in Pakistan.
5-Generate a conceptual model of stakeholder management/configuration based on the experience of different countries.
Four research questions were developed in order to better understand the objectives of this research proposal. The answer of these questions will be described in this proposal. These questions are:
Q1) To what extent power project’s scope and objectives can be affected by its
Q2) To determine which are the most important stakeholders in Power Projects in Pakistan?
Q3) To determine which stakeholders are the most influential ones?
Q3) To explore which are the factors that affect the stakeholders configuration model?
Q4) What should be the stakeholder configuration model of a country that wants to develop
a Power Project?
Theoretical framework developed for this study, having complex nature of variables because nuclear technology is inherently complex in nature. Following is the list of all (but not limited too) variables including independent variable, intervening variable and dependent variables taking from different studies.
Independent variables: legitimacy, influence, interest, behavior, power, relevancy, urgency, environmental factor, social factor, economical factor.
Intervening variable: scope satisfaction
Dependent variable: project success
If the legitimacy needs satisfy scope this will leads to project success, if the stated needs cannot satisfy by the scope of the project then existence of the project is in danger. Many projects in the world stop their execution due to legal implications. Power plants have number of legal constraints which are imposed by both local and international agencies.
Influence has major role in success of any real life project, positive/supportive influence of stakeholders lead to project success, similarly negative/adversarial influence lead to project failure. Negative/positive influence also effect project scope. Stakeholders may have high interest in the project in the positive way; meet stakeholders need and expectations, stakeholders may have concerns about project. Highly interested stakeholders may effect project scope either positively or negatively. Stakeholders behavior also effect project scope, favorable attitude/behavior is always good for project scope and success of project. Negative behavior/attitude may halt project execution, unnecessary delays, scope changes which leads to cost overruns.
Powerful stakeholders require more attention than others, because their participation is mandatory for project success during entire lifecycle of the project. They are always involved in project decision making, scope development, scheduling, execution, monitoring and control and closing/ operation of the nuclear power plant. Higher relevancy of stakeholders leads to higher involvement of stakeholders, which can effect project scope and project success. Urgency of stakeholders means they require urgent response from project management, these stakeholders are usually regulatory agencies/commission etc. Satisfaction of these stakeholders lead to project scope satisfaction which ultimately leads to successful completion of the project.
Environmental factor is major contributor of project success, because nuclear power plants have higher environmental consequences during their operation/ decommissioning, their adverse consequences during mis-operation can cross national border. Environmentalists satisfaction is required for project success. Social factor is also a major contributor towards project success, because nuclear power plants requires more land and security as compare to conventional power plants. General public of the area where the project is undertaking have concerns and apprehensions regarding radiations and gaseous discharge which can cause cancer and other diseases. General public normally do not accept nuclear power plants due higher involvement of law enforcement agencies/departments, as they cannot move as they desire.
Economic factor is life blood for any project, because without finance you cannot think about the project. Power plants fall in the category of mega projects which requires huge sums of money. International finance corporations, banks, countries are involved because Pakistan cannot afford these billion dollars’ projects. If project scope satisfies financiers only, then they will provide finance and the project could start. Project successful completion requires finance during all phases of the project.
Ha1: legitimacy needs satisfaction leads to project scope satisfaction.
Ha2: project scope satisfaction leads to project success
Ha3: project success is affected by stakeholder’s influence through scope satisfaction
Ha4: lesser the environmental impact, the greater the project success
Ha6: project success is affected by stakeholder’s power to intervene through scope satisfaction
Ha7: supportive behavior of stakeholders leads to project scope satisfaction
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