2018 AACE® INTERNATIONAL TECHNICAL PAPER

PM.2774

Project Lifecycle Stakeholder Management

J. Michael Devine, CCP; and Rachael Konke
Abstract–While much literature and guidance has been developed regarding stakeholder
management within a mature organization, fewer bodies of work have addressed this need
during a project’s lifecycle. Therefore, this paper focuses upon stakeholder management over
the lifecycle of a project with some examples and discussions related to nuclear sector
construction or decommissioning. One should note however, that the examples provided in this
paper are also relevant to, and can easily be translated to any project within any sector. Some
stakeholders are “more important” than others over a project’s lifecycle, this paper will also
clarify this aspect of project management and delivery.

The term “Stakeholder Management” at times has carried negative connotations. However,
through exploration of the lifecycle of a project, and the role that different stakeholders play at
different times, one can understand how efficient stakeholder management is critical to the
delivery of a project. A well, thought-out plan, with a valid stakeholder strategy and engagement
schedule, that logically reflects the work schedule, is just as important to the delivery of a project
as the brick and mortar.

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Table of Contents

Abstract .......................................................................................................................................... 1
Introduction ................................................................................................................................... 3
Project Planning ......................................................................................................................... 3
Baseline Development ............................................................................................................ 3
Scope Development ................................................................................................................ 3
Schedule Development ........................................................................................................... 4
Risk Analysis ............................................................................................................................ 4
Cost Estimate Development ................................................................................................... 5
Project Execution Plan ............................................................................................................... 6
Stakeholder Planning ..................................................................................................................... 7
Stakeholder Identification .......................................................................................................... 7
Stakeholder Needs Analysis and Importance ......................................................................... 7
Align Stakeholders with Delivery Schedule Milestones ........................................................... 10
Frequency of Interface ......................................................................................................... 10
Provision and Type of Information Required ....................................................................... 11
Required Lead Time and Engagement Duration(s) .............................................................. 11
Project Monitoring and Reporting ............................................................................................... 11
Earned Value Management System ......................................................................................... 11
Risk Analysis and Management ............................................................................................... 12
Stakeholder Updates and Plan Adjustments ........................................................................... 13
Conclusion .................................................................................................................................... 13
References .................................................................................................................................... 14

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Introduction

The term stakeholder is highly ambiguous and can refer to a variety of parties involved within or
around the lifecycle of a project. The Project Management Institute defines project stakeholders
as, “individuals and organizations who are actively involved in the project, or whose interests
may be positively or negatively affected” [1, p.503]. For the purpose of this paper, the term
stakeholder, or stakeholders, refer to the individuals or entities whose support and influence is
required for successful delivery of the project’s objectives, scope, or outcomes. Most literature
and guidance regarding stakeholder management focuses on the involvement of a stakeholder
within a mature organization; however, it can be much more beneficial to develop stakeholder
involvement at planning stages and throughout the lifecycle of the project. Stakeholder
involvement throughout the lifecycle of a project is important because the stakeholder is the
ultimate deciding factor determining a project’s success [2, p.1]).

To most efficiently and effectively complete a project according to the stakeholder’s needs, a
viable stakeholder management plan must be developed during the earliest stages of project
development. Early involvement ensures that all project deliverables are fully understood and
met and completed in a timely manner [2, p.2]. Stakeholders and their importance to the project
and deliverables must be documented and defined before any detailed project planning begins.
A stakeholder management plan must also be developed in correlation with the project plan to
ensure a successful delivery. This paper examines the typical project development process with
significant emphasis on stakeholder management techniques. Before, and as the project is
planned and the baseline scope, cost, schedule and risk are documented, stakeholder
engagement must also be planned and documented.

Project Planning

Baseline Development
Developing the project performance measurement baseline (PMB), or delivery baseline, requires
integrating the technical scope, schedule, risk analysis, and cost estimate. Each of these four
major components must be fully developed and must be aligned. Changes to individual
components will have an effect on the other components and the PMB components will
necessarily alter or affect the others. Therefore, the stakeholder engagement plan must be
developed concurrently with the project baseline, considering each baseline element.

Scope Development
Scope development requires all project personnel and team members to define the project
objectives, goals, and deliverables. This group of individuals is often referred to as subject matter
experts (SME). SMEs consists of owner representatives, project engineers, technical specialists,
project manager(s), risk analysts, planners, cost estimators, and other stakeholders. To develop
a viable and deliverable scope, input from all team members and subject matter experts is
significant and should be considered. Enlisting a professional facilitator to assist with scope
development meetings can be very beneficial for the planning process.

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The role of a professional facilitator is to lead the thought process for scope development and
record relevant meeting information for team members. This is beneficial because it allows SMEs
to focus on brainstorming and providing input, rather than taking notes. Having a facilitator
involved in the scope development process can also causes questions to be asked and resolved
that might otherwise not be brought up [3, p.1]. Several professional organizations and
companies specialize as professional facilitation. Notes recorded by the professional facilitator
will later be used by project team members for decision-making and work breakdown structure
(WBS) development.

The SME’s input can subsequently be arranged into viable scope statement(s) for the project and
sub-projects required to support the primary goals and objectives. Once the high-level scope is
developed, it can be broken down into successively lower levels of detail through a WBS, which
creates a work hierarchy from the highest to the lowest level of detail required for delivery of the
project.

Schedule Development
Schedule development must run in parallel with scope and cost development. As scope definition
increases, the project development team must assign durations to the required work activities.
Certain schedule activities must conclude before the sequential work activity can start. This
creates a finish to start relationship or logical tie between these activities, and establishes the
critical path (CP) to completion. The CP is the longest timeline from start to finish of the project
where predecessor and successor logic ties are properly defined [4, p. 2]. Not all activities form
a part of the critical path at the inception of the project, and have a considerable amount of float.
Float is the time available before the activities must be completed due to their absence from the
original CP logic. However, since all work must be completed to successfully deliver the project,
those activities with float (sometimes referred to as lag) must be completed, else they lose their
float and become part of the CP.

Risk Analysis
As the project definition is developed, it must be recognized that certain tasks are potentially
more difficult to complete due to their attributes and uncertainties. Risks, to a certain extent,
can be divided into three categories. First, where there are insufficient benchmarks, cost norms,
or project definition associated with the task, a level of estimating uncertainty (EU) should be
assigned to the cost estimate. AACE® International Recommended Practice No. 18-R97 provides
a good general source of the expected range of EU based upon the level of project definition [5,
p. 3]. While this is a good reference and source of explanation, the cost estimator and project
team must apply their own “engineering judgement” to properly assign a level of EU based upon
the level of project or design definition completed. Second, the project team must hold a
workshop to identify potential discreet risks in a risk register, and potential mitigation strategies
along with the cost and schedule impacts if the risks occur. In some cases, depending upon
organizational policy, these risks are carried in the baseline schedule to keep them visible and,
also, to keep all stakeholders aware of the risks until they can be retired or have been mitigated.
The project team should also consider international cultural differences regarding the
management and treatment of project risk. International stakeholders may have a different
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understanding of risk and project management practices [6, p.3]. Therefore, the location of the
project, the financing, and the industry sector will also affect the risk management and planning
and be integral to the stakeholder management approach. Finally, a project planning team must
realize that there are likely unknown risks associated with the project, especially if it is a first-of-
a-kind project, and should agree to a set-aside an amount of contingency funding to deal with
the unknowns. This must also be explained in detail to the stakeholders. However, some
unknown risks can be so catastrophic as to preclude a set-aside of contingency funding and will
have to be dealt with by the various funding mechanisms and stakeholders if they occur. It is not
the intent of this paper to cover the finite details of project risk management.

Figure 1, below, depicts the project baseline development process from concept to final baseline
development. This figure demonstrates the thought process and how the different components
of scope, schedule, cost and risk are intertwined. During every step of a project’s baseline
development, the stakeholders’ scope, schedule, cost, and risk must also be considered.

Cost Estimate Development

As the project scope is developed, a cost estimate is prepared. The scope and estimate are
aligned with the WBS. A WBS is defined as the scope of a particular WBS element [4, p. 125]. The
accuracy of the cost estimate is commensurate with the level of project detail defined and
available. All cost estimates must be supported by a basis of estimate (BOE) to define how the
costs were developed. The WBS also contains the estimate history as future changes to the cost
estimates occur because of increasing levels of detail and definition become available through
increased design efforts and work definition. Through each step of this development process, the
project team must consider the potential stakeholders involved and make appropriate
allowances in their project planning to accommodate stakeholder needs.

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PROJECT BASELINE DEVELOPMENT COMPONENTS BASELINE

DOCUMENTS
PROGRAM
MISSION

RECYCLE

Identify
Develop Mission Requirements and Select Organize Project Document Project Develop Design Technical
P
R Need Statement Evaluate Alternative Requirements Definition Basis Summary Baseline
E Alternatives
L
I
M NO
I
N
A Disposition
R Alternatives
Y

Establish
Define Project Sequence Project Estimate Activity Conduct Network Allocate Activity
Schedule Schedule Baseline
Activities Activities Durations Analysis Resources
Contingency

Establish Estimate and Schedule

Risk Management
Uncertainty and Perform Discreet
Plan
Risk Analysis

Develop Time- Develop Total

Develop Calculate Establish Cost
Phased Cost Review Estimate Estimated Cost Cost Baseline
Estimating Basis Escalation Contingency
Estimate and TPC

Figure 1–Project Baseline Development Components and Process Flow

Once the project baseline is established, it should be placed under change control by the project
management organization (PMO) with defined procedures for implementing any change(s) to
the baseline. A well-documented change control process provides valuable information to all
stakeholders when changes to the original plan are required to assure successful project delivery.
An earned value management system used for reporting of key performance indicators is
discussed later in the Project Monitoring and Reporting section.

Project Execution Plan

The project execution plan (PEP) serves as the project’s guidance document to achieve successful
delivery of the defined scope and required outcome. The following are essential requirements of
a PEP:

• An introduction to define the project’s background, its objectives and importance;

• A defined scope and explanation of the high-level scope, project deliverables, and plan
for measurement of progress and success;
• A defined work plan and general approach to achieve scope delivery, including any
previous lessons learned that could benefit a successful delivery;
• An identified delivery team from all organizations involved in scope delivery with their
responsibilities (e.g. owner’s representative, contractors, project management
organization, key staff, etc.); and,

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• A definition of what constitutes a stakeholder and Identify key stakeholders and point of
contact information; this should be referenced out to separate document containing a
stakeholder plan of engagement (especially for large complex projects).

Stakeholder Planning

Stakeholder Identification

Stakeholder Needs Analysis and Importance

Similar to how a basis of estimate fortifies and supports a cost estimate, a stakeholder plan needs
to be created for each stakeholder and should include the frequency and type of reporting
required. As a first step, all stakeholders must be identified. The following is a simple table that
can be used to identify and list known stakeholders. Typically, this table will include the primary
point of contact, secondary points of contact, physical address, email address, and telephone
number. Table 1, below, illustrates a simple table for stakeholders. Once the stakeholders are
identified, the table can be expanded and customized to define each stakeholder’s importance,
based upon their level of influence spanning the project from start to finish.

Stakeholder Name/Group Importance Physical Email Address Telephone

(L/M/H) Address
Stakeholder 1
Stakeholder 2
Stakeholder 3, etc.
Table 1

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Stakeholders Labor,
Equipment,
Materials
PM and PCM
You are here! Senior
Project Construction
Management Supply Chain
Project
Controls Fabrication
Organization and Testing

Financial &
Budget Private
Organization Sector
Funding 2

Special
The Project Private
Interest
Groups Sector
Funding 1

Public and
Private Government
Intervenors Sponsor and
Funding 3

Science R&D Government

Sponsor and
Government
Engineering Funding 2
Sponsor and
and Design
Funding 1

Figure 2–Stakeholder Identification and Interfaces

Figure 2, above, demonstrates how all stakeholders are ultimately linked together throughout
the project when it comes to information dissemination and sharing. Some stakeholders have
considerable influence and can potentially halt a project until certain needs or criteria are met to
move forward. Other stakeholders may have less influence and there is less need for project
interface. For example, in the case of decommissioning a nuclear reactor, local municipalities or
businesses have traditionally counted on the reactor site for business and local tax revenues.
Therefore, when planning for stakeholder management, some stakeholder interfaces are
mandatory. Once the stakeholders have been identified, a stakeholder plan should be developed
for each.

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Below is an example of a template that can be used as part of an individual stakeholder plan. This
planning document can be directly linked to the project WBS and potentially the PMB schedule
activity identification (ID) number.

STAKEHOLDER NAME AND POINT OF CONTACT______________

WBS ______________

Activity ID / Milestone_____________

INDIVIDUAL STAKEHOLDER PLAN AND REPORTING REQUIREMENTS/FREQUENCY

The planning for each stakeholder, should be aligned with the project WBS hierarchy and
associated schedule activity ID and/or milestone noted at the top of this example template form.
The process for managing a stakeholder plan could be compared to the process for maintaining
a project risk register; every stakeholder comes with a certain element of risk.

Purpose
Using this form, a plan of engagement and relative importance (near-term and long-term) should
be completed for each stakeholder. This process should be ongoing and reviewed on a regular
basis. Each stakeholder’s plan of engagement must be well defined and supported with adequate
research into each stakeholder’s needs, responsibilities, and areas of influence. The project
management team must also consider the time needed to prepare and disseminate information
for each stakeholder. Schedule milestones can be utilized to notify the project team when to start
preparation for an associated stakeholder meeting or delivery of documents or requests.
Individual stakeholder preparation, depending on the complexity or importance of the
stakeholder, may also be noted as a schedule activity with associated scope.

Details
Stakeholder(s) Name: e.g. Special Interest Group, such as a State Environmental Protection
Agency or Nuclear Regulator____________________________________________

Role and Relative importance to completion of the project: For example: This agency is extremely
important from the start to the finish of the project (the number of interfaces and amount of
information required by some stakeholders can be quite long). Examples of this stakeholder’s
influence and importance to the completion of the project could include; approval of the
Environmental Impact Analysis and/or Environmental Impact Statement; detailed work plan for
monitoring and reporting of contamination (hazardous chemicals or radionuclides) in site plant
life, soil and ground water along with analysis methods and remediation approaches; approvals
for transport of potentially hazardous materials in concert with the local and state departments

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of transportation, approval of final site survey for release to green fields (non-restricted public
use) or brown fields (restricted re-use of area) status; etc._______________________________

Frequency of Engagement and Provision of Project Status ________________________________

Does a schedule milestone or activity exist for engagement with this stakeholder? ____________
Is enough lead time factored or built into the schedule to allow the project or responsible person
to sufficiently prepare for this planned stakeholder engagement? _________________________
Have a Risk Assessment and Mitigation Plan been developed for this stakeholder?
_____________
(Note: This should be maintained as part of the project’s formal Risk Management Plan.)
Include current risks identified with this stakeholder or within this stakeholder’s area of influence
as illustrated below. .

Specific Stakeholder Risk Mitigation Actions

State EPA Director Failure to accept specific Include the EPA team in every
approach to Environmental planning meeting and provide
Impact Assessment Plan regular written and verbal
updates so there are no
surprises.

Once the potential stakeholder relationships are understood, it may be necessary to revise the
initial stakeholder plan and reporting requirements. Some stakeholders may be offended if
another stakeholder that they deem as a peer or of equal stature, gets enhanced attention or
reports they have not received. The project management team and all entities involved in
stakeholder management must do adequate research to understand everything about a
stakeholder’s wants and needs. Regular updates are required.

Align Stakeholders with Delivery Schedule Milestones

Frequency of Interface
The frequency of required interface with the stakeholders will depend upon their relative
importance during various stages of the project. At times, a stakeholder may require a weekly
meeting and, during other stages of the project, they may not require any interaction or
interface. One must always go back to the stakeholder planning sheets and stay cognizant of the
stakeholder milestones in the project delivery schedule or performance measurement baseline
(PMB).

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Figure 3, below, is condensed illustration of timelines leading up to stakeholder milestones and

delivery of information, which are normally much longer than shown. Over the project lifecycle
some key stages are observed, such as approval and funding, design, procurement, construction,
hot or cold commissioning, testing, and operations of production. In Figure 3, the project delivery
team must plan stakeholder requirement and engagement throughout the delivery stages. Prior
to hitting important schedule milestones within each delivery stage, the project delivery team
must assure that the correct stakeholders are informed to garner their support or influence and
keep the project moving forward.

11 May 2014 18 May 2014 25 May 2014

ID Task Name Start Finish Duration
12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Prepare Notice to Nuclear Regulator of

1 5/12/2014 5/15/2014 4d
Intent to Cease Reactor Operations
Meet with Nuclear Regulator and Explain
2 5/16/2014 5/16/2014 1d
Notice to Cease Operations and Timeline
Begin Preparation of Operating License
3 5/19/2014 5/21/2014 3d
Release Document
Schedule Informational Meeting with
4 5/22/2014 5/22/2014 1d
Nuclear Regulator and State EPA
Prepare Operating License Amendment
5 5/22/2014 5/30/2014 7d
and Environmental Impact Assessment

Figure 3–Example Stakeholder Engagement Planning Included in Delivery Schedule

Provision and Type of Information Required

Though many different project KPIs and graphical reports are available, it is best to work with the
individual stakeholders and get them to accept a generic format that can be used for all
stakeholders. Due to limited time and resources, the project team to work out a desired reporting
style with the most involved stakeholder. Once this is established, monthly progress reports
(MPRs) can be developed and provided to stakeholders with regular updates. From this style
template and form, information can be easily customized for specific stakeholders.

Required Lead Time and Engagement Duration(s)

It is important that once the stakeholder engagement milestones are established in the PMB,
planning activities leading up to those milestones are inserted in the schedule. These planning
and report preparation activities must have finish-to-start (FS) logic tied to the stakeholder
engagement milestone or activity. It is also essential that the planning activities allow for a proper
duration of planning and provision for reports and deliverables prior to meeting with or
distributing to the stakeholder.

Project Monitoring and Reporting

Earned Value Management System

A process must be established to report progress, or the lack there of, against the plan. In typical
cases involving a monthly project reporting cycle, project and senior management should
establish agreed reporting techniques, variation tolerances +/- according to key performance
indicators (KPI), and/or trends. This earned value management system (EVMS) will provide
information to project management along with recommendations for corrective actions, course
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corrections, or improvement. Subsequently, this detailed information can be used to inform

stakeholders according to their individual needs. Figure 4, below, illustrates the most common
KPIs used, which are typically incorporated into a monthly graphical and written project report.

The out-turn of the EVMS reporting system should include KPIs presented in a simple graphical
format like the one shown below, in Figure 4, with context explaining the difference between the
plan and the actual cost variance. Normally, a collection of graphs that display various aspects of
project performance are assembled into what is commonly called a project dashboard. Because
most projects require a monthly accounting or financial cycle, this dashboard and written
explanations of any variances from the original plan are represented within a monthly project
report (MPR).

Figure 4–Yearly Cost Performance Index (Efficiency)

Risk Analysis and Management

The best way to develop a risk management program that follows the project requirements and
ensures the best possible risk assessment and action plan, is by following the recommended
practices (RPs) as defined by AACE International.

AACE International offers several RPs that were developed and evaluated by top professionals to
provide a framework of guidelines for project managers to follow to ensure necessary
requirements are met.

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The Project Management Institute® PMBOK® Guide also contains several example guidance
documents related to stakeholder planning and management. It is necessary for the project
planners to create a stakeholder plan that corresponds with the project requirements. Accessing
risk is also a part of the stakeholder management process. Actions to avoid stakeholder risk must
be well defined. For each unavoidable risk, mitigation actions should be developed and factored
into the PMB until the risks can be retired.

Stakeholder Updates and Plan Adjustments

The project delivery team, PMO, or persons responsible for stakeholder management must
remain vigilant and closely monitor the original plan to make any required adjustments or
modifications. Changes to the stakeholder management plan should be processed in the same
manner as any other change to the original baseline plan.

Conclusion

All aspects of project planning and delivery must work together using a proven and validated
process. The often-heard statement “plan the work and work the plan” always holds true. The
successful project delivery team must however, regularly revisit the plan to make any
adjustments or course corrections as required. The aspects and amount of effort required to
perform successful stakeholder management are often overlooked yet highly important. This
overview of the high-level aspects of stakeholder planning and management can be used as a
starting point for one’s thought process and can be as sophisticated or as simple as deemed
necessary by the project delivery team. The crucial point is not to ignore this important
requirement for successful project delivery. As a project is planned, development of a viable
stakeholder management plan is imperative to achieve the expected outcome and success.
Failure to manage the project’s stakeholders is an often-overlooked requirement, and in and of
itself can lead to project failure.

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References

1. Project Management Institute®, “A Guide to the Project Management Body of Knowledge

(PMBOK® Guide, Sixth Edition)”, Newtown Square, Pa, 2017.
2. Jergeas, G., Williamson, E., Skilmoski, G., Thomas, J. (2000). Stakeholder Management on
Construction Projects. AACE International Transaction pp. P12.1-P12.6.
3. International Association of Facilitators. (2015). Professional Development. Retrieved 2018,
from https://www.iaf-world.org/site/home/professional-development.
4. AACE International, Recommended Practice 10S-90 Cost Engineering Terminology,
Morgantown, WV, 2017
5. AACE International, “Cost Estimate Classification System – As Applied in Engineering,
Procurement, and Construction for the Process Industries”, Recommended Practice 18R-97,
Morgantown, WV, 2016.
6. Wong, S. P. (2012). The impact of culture on risk management disclosures: An exploratory
study of international banks. (Master's thesis, Southern Cross University, 2012). East
Lismore:[email protected]:https://epubs.scu.edu.au/cgi/viewcontent.cgi?referer=http
s://www.google.com/&httpsredir=1&article=1316&context=theses.

J. Michael Devine, CCP

Project Time & Cost LLC
[email protected]

Rachael Konke
Project Time & Cost LLC
[email protected]

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