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 1. Stakeholder definition

 The definition of stakeholders is very broad in the PMBOK® Guide:

Stakeholder: An individual, group or organization who may affect, be affected by, or perceive itself to be affected by a decision, activity or outcome of the project.

 2.   Three Groups of Stakeholders

Let’s consider first the scope of the definition. The first group of stakeholders to be considered are those within the project, i.e., the project team. The second group of stakeholders are those outside of the project, but within the organization. This group includes the sponsor, functional managers, and organizational groups. Then there is the third group that are outside of the organization. This group includes business partners, sellers or suppliers, customers or users, government regulators and possibly other entities as well.

So stakeholders may not necessarily be involved in the project, but their interests may be affected by the project either positively or negatively. It is important to take the negative stakeholders into account on a project. A local environmental group could be considered a negative stakeholder for a new refinery project for example, because they could protest against the project. A government regulatory authority might also be a negative stakeholder if the new project is found now to conform to governmental regulations.

Now there is a diagram of all the stakeholders in the 5^th edition PMBOK® Guide page 31. The diagram was complete in that it listed all of the categories of stakeholders; however, it was a bit confusing because it lumped together all of the stakeholders that were external to the project itself, whether they were within the company or outside of it.

I think my way of dividing the stakeholders into three groups, internal to the project, internal to the organization, and external to the organization, is perhaps a bit better in helping understand how the various stakeholders can affect a project.

3.  Stakeholder Groups–expanded view

For an expanded view of these three groups, take a look at the following diagram representing categories of stakeholders on a project. The center circle in purple represents those stakeholders internal to the project that are actually working on the project itself. Those three circles outside of that in various shades of blue represent those stakeholders outside of the project, but within the organization; these include the sponsor, the program/portfolio managers, the functional managers and the managers of ongoing operations at an organization. The third category comprises the outer two circles in different shades of green which represent those stakeholders that are outside the organization: sellers, business partners, customers/users, and then regulatory agencies. There is a detailed explanation of each circle of stakeholders below the diagram.

Fig. 1. Categories of Stakeholders on a Project

1. The innermost circle is that of the people actually working on the project, namely the Project Manager, the Project Management Team (the other members of the team that assist with the management of the project), and the Project Team members who actually do the work.
   
2. The second circle is that of the Sponsor, the person or group that provides the financial resources for the project and the one who champions the project within the organization when it is first conceived. The Sponsor acts as a spokesperson to higher levels of management within the organization, which is why I placed the Sponsor in the second circle.
   
3. The third circle contains those higher-level organizers of projects, such as the program manager, who manages related projects in a coordinated way, and a portfolio manager, who manages a collection of projects or programs which may not be related in content, but which all serve the business model of the organization at large. I put them in this circle because they monitor the performance of the project and can even terminate if the business case for the project no longer holds.
   
4. The next circle is still within the organization, but rather than the three inner circles that deal with project work, this circle represents the interests of the ongoing operational work, with the functional managers in charge of areas such as human resources, finance, accounting, and procurement. Depending on the type of organization, project managers will have to negotiate with them to allow their staff with expertise that would assist the project to work on that project for its duration. The operations management people will have to be consulted during the course of the project, because the project when completed is often handed off to them on account of the fact that they take care of normal operations and will provide long term support for the result of the project.
5. Now we get to the circle which is outside of the organization, but one in which there is a business relationship between the organization and that stakeholder, such as business partners that may have a financial interest in the project, sellers/suppliers in the case of a B2B relationship, customers/users in the case of a B2C relationship
6. The last circle consists of elements of society that may not have any formal relationship to the organization, but which may contain groups that are affected by the project or that can influence the project. The PMBOK® Guide labels this group generically as “Other Stakeholders”, but I have put an example of “Regulatory Agencies” as just one type of entity that could be considered a stakeholder. A non-governmental organization such as an environmental awareness group that is an NGO would also be an example of a stakeholder at this level.

These concentric circles, I believe, show a little more of the different kinds of stakeholders and why some of them have more influence than others. I found this diagram helpful for our group to gain awareness of the different types of stakeholders, and I hope that it is helpful for those studying for the PMP exam as well.

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