Stakeholder Management of Construction Projects - Literature review Example

Running Header: Stakeholder Management Student’s Name: Instructor’s Name: Course Code & Name: Date of Submission: Stakeholder Management Introduction Programme stakeholders play a major role in determining the success of a project in any field but more so in large construction projects. Large construction project is an extremely large and expensive construction project normally costing billions of US dollars, mostly funded by the government and other private investors. The uncertain and complex large construction projects nature need an effective approach of stakeholder management to accommodate conflicting interest of stakeholders. In addition, there are a number of stakeholders involved in any construction project due to extensive knowledge required to complete any construction. In this regard, the ability to manage stakeholders plays a major role in determining successful completion of the project1. The main aim of the construction project is to develop wealth and business. To manage this, stakeholders are needed to take part in the process whether consequently or intentionally by contributing inputs, experiencing inconveniences and incurring costs. Construction industry in Karim et al. views is a very risky and competitive business. Its competitive form together with the participants conflicting objectives in processes of construction have posed numerous challenges to the industry. Therefore, successful management of construction project depends highly on management skills, relationships and successful deliverables to effectively attain the objectives of the project2. Therefore, the project manager has to identify the stakeholders involved in any project. In addition it is very essential for project manager to address expectations of stakeholder in the entire project lifecycle, stating their concern on handling the conflicting range of wishes and need which require further attention in creating project strategic objectives. Managers require re-evaluating their operations and strategies to optimize the needs and satisfactions of the stakeholders via efficient and effective management. This paper explores various literatures addressing the issue of stakeholder management in the construction projects focus on the challenges and how to resolve them. Literature Review Stakeholders Stakeholders can be referred as groups or persons found outside and inside an organisation, or any individual or group that can impact or is impacted by the organizational objectives achievements. According to Olander stakeholders act based on their interest and they employ their power to effect the product in their desired direction3. In Karim et al. views, any organisation or an individual with authentic interest in a programme, who can be affected by or can affect organizations with their behaviours of management and by product in the entire life cycle of a product, those that share a certain set of meanings and in understandings regarding the development of a provided technology, those containing a non-negotiable and moral rights to impact its outcome and those having spiritual, symbolic, informational, affiliation, political, and material interest in the project and that they are in a position of advocating for these interests via formal political or economic power can be referred to as stakeholders. Problems with Stakeholder Management in Construction Project Construct projects involves a number of stakeholders that include internal, external and key stakeholders. The key stakeholders include the project management team, performing organization, suppliers, and project owners. The internal stakeholders include individuals that are directly taking part on the project, while the external stakeholders refers to individuals include statutory authorities, interested parties and other individuals affected by the project. All those individuals may have different interest toward the project goals and overall project achievements. This may result to a number of conflicts that may require the manager to stop the project and address them first before continuing with it. This simply means that the managers’ inability to solve conflict related to stakeholder managements can subject a programme into other risks that include delay, budget overflow and scope aspects. Therefore, generally, stakeholders’ management plays an essential role in ensuring successful project completion Moreover, according to Olander a project cannot be considered successful if it does not satisfy all project stakeholders. In this regard, the project manager must develop a way of handling all project challenges and start by agreeing on the path to follow while handling the project based on the stakeholder determinant. The inability to resolve stakeholders needs results into different forms of conflicts4. The possible conflicts that be experienced is conflict among the external stakeholders. External stakeholders in this case include the owners of real estate, the general public, local industry and trade, the environmentalists, national and local authorities, media, political interested groups and organizations, as well as professional and social organization. Normally, the main conflict in this case regards the land ownership and the land use and how it influences the surrounding community. According to Yang and Chen the project can never continue if it has any issue related with land ownership and if the land is not cleared by the government official regarding its rates payment among other governmental requirements satisfactions. Therefore, the private or public developers must have a clear land ownership documents which are satisfied with consented land transfer. In addition, the land intended use must adhere to the governmental defined requirements. If this is not satisfied, the project manager may experience issues with the government, land owner or the general public5. Another issue that can commonly arise is the conflict with the public and the environmentalist with regard to the land purpose. In case the constructed structure is required for the purpose that threatens the environmental health, the environmentalist may influence the project with the support of the general public either to change the design or the main project objective. In additional, the government safety department influence the projects decision based on their final approval of the construction plan or even the commissioning after a complete construction. They may influence the change of plan or model to fit what they consider viable or safe in their judgement. Adhering to their demand in this case is necessary otherwise the project will never be approved. Lack of approval may imply that the project will experience delayed start an aspect that will influence the budget and the completion time too. Although media is not highly considered in determining the final decision of the project development, however, media according to Winch plays a major role in influencing the manager finial decision, only that it is not normally attracted to small construction projects. However, where large constructions projects are involved, media is always there focusing on various progress and raising alarm in case of a controversial issue. This attracts all other concerned external stakeholders and as a result pushing them to influence the project direction6. Conflicts among the internal stakeholders involve those individuals that are directly concern about the project development and they are also involved in its development. They include the project management team, employees, designers, sub-contractors, contractors and suppliers, creditors and financiers, end-users and customers, as well as the project owners. Internal stakeholders contrary to the external stakeholders of a construction project are normally tied by shared agreement arrangements. In these agreements, duties and rights of parties are set, together with the risks every party must bear and if the risk can be insured. Moreover, according to 90 contracts normally determine the resolution procedure for any probable conflict originating from this association. In this regard, it is easier to resolve any form of conflict as compared to the external related conflict which can arise at any point of the project development. In this group, the project owner is the only individual with much influence on the project main objective. In addition, the project owner can also highly determine the project success as compared to others. Based on literature, most construction projects are managed to satisfy the owner’s requirements. Therefore, other internal stakeholders work to satisfy the project owner’s requirements. However, the project direction may be changed based on sub-contractors and contractors’ advice. Nevertheless, the project owner interest on developing a project especially in commercial environment is influenced by the consumers’ needs. In this regard, they act as the main determinant of the project. In this regard, their stability in the time of the project development is necessary to retain the project’s goals and objective. Another challenge experienced in stakeholder management is the conflict with the project creditors and financiers. Normally, financial investors focus on the investment return and enough profitability where the private companies are used in the financing. Therefore, the observation of other cost related constraints that include time, budget, scope and quality is very essential to them. In case the cost of the project escalates, the profitability of the project may be weak or the income may go lower than anticipated. Thus the financiers might stop allocation of capital or creditors might claim for the debt payments and thus, threatening the completion of the project. This can result to a huge problem since lack of funds can result to a deadlock. This can also result to a conflict between the manager and the employees as well as a number of suppliers who prefer payment on delivery. In this regard, creditor and financers play an essential role in determining the next move in construction project. They can easily introduce a huge conflict between the project managers and other internal stakeholders since they offer the finances which are the main determinant of the project success. Designers, contractors, and semi-contractors also play a major role in developing a feasible plan on how the project will be handled. This assists in lowering risks and cost of operation. In addition, the work to ensure that the project plan and the final output satisfy all external stakeholders’ demand to avoid more conflicts. In this regard, they are among the most essential stakeholders in the internal stakeholders. They also determine the project progress a great deal since they assume the role of managers or supervisors at the site. They are normally involved in directing the workers and influencing the orders and new supplies. The main conflict that contractors who take over from the designer can cause include defective contractual documents, delays, work suspension change of orders, inability to resolve workers conflicts, poor supervision, and contradictory orders. Their supervision determines the behaviour of the workers and also the work quality and thus, they can easily influence the project operation and direction. According to Yang et al. based on how a conflict influences the associations among the stakeholders, the relation among the stakeholders can be categorized into three groups which include coercive, pluralist, or unitary. A coercive association among stakeholders describe a condition where parties have no common system of value though one stakeholder is strong enough to ensure dominance of their system value. They therefore force the other stakeholders to consent to their system. In pluralist condition, stakeholder do not share anything or agree with the system value of each other and neither any of them dominates, although parties should consider compromising on values and objectives. A unitary association on the other hand is a form of conflict in which most stakeholders contain similar value, and the conflicting parties are highly probable to decide on objectives, though might still contain interest conflicts7. Solving of the Stakeholder Management Issues In different construction project stages from the launching to the handover of a complete project, a huge number interest will be impacted both negatively and positively. During the process of construction, the stakeholders express expectations and needs regarding the project that frequently conflict with that of another stakeholder and it is improbable that expectations of all stakeholders will be satisfied. Therefore, according to Nguyen et al. the project manager in construction industry are faced by a challenge of assessing the expectations and needs of stakeholders in association to the project’s main objectives so as to establish which expectations and needs are to be met8. The project manager’s ability to comprehend the influence and power of different stakeholders which is frequently hidden is a critical project management skill. A project will never be considered successful if the manager failed to pay attention to expectations and needs of a wide range of stakeholders. This is irrespective of whether the project manager was able to remain within the initial scope, budget and time. One of the techniques supported by a number of literatures to manage the stakeholders is by identifying them and their role in the project. There are a number of stakeholders involved in project development, all with different roles and interest. In this regard, the manager should try to identify their legitimacy and significance to determine what is viable and what is not practical in the project. The manager is also required to listen and react to their concerns and interests. These processes of management according to Newcombe are necessary in establishing how the different stakeholders are probable to react to decisions of a project, the impact their reaction will hold, and how the stakeholders may interact with one another, with professional, or with project managers to influence the chances for proposed project approach success9. This approach is supported by Winch and Bonke who claims that effectual project managers need keen intuitive and analytical skills to stakeholders’ identification and operate with them to understand their influence and expectations upon the success of the project. This process of analysing and identifying stakeholders’ influence on a project assist in maximizing the positive input of the stakeholders and minimizing any negative or detrimental impact10. Stakeholders’ identification is regarded as drawing a line between individuals to be engaged and those not to be engaged. Moreover it is essential while identifying the stakeholders it is essential to determine the variation between various stakeholder theory versions. The stakeholder theory has been justified and advanced with various aspects though mutually supportive it contains three levels. These levels include the strategic level, the multiple trustee technique and the new synthesis. The strategic level encourages taking into account the interest of stakeholders as a way of attaining economic goals of a company but with no moral content. The multiple trustee technique is based on morals and it demonstrates company’s manager fiduciary role towards all stakeholders at equal measures irrespective of whether they are non-owners or owners. The new synthesis on the other hand differentiates between particular fiduciary roles toward the owners as well as other limited, non-fiduciary roles toward other stakeholders. Thus, based to Chinyio, stakeholders’ identification must begin with key stakeholders who play an essential role in determining the project direction11. Key stakeholders are defined as groups or individuals whose project’s interest must be acknowledged if the project is to be successful. This specifically involves individuals who will be negatively or positively impacted while the project is in progress, or on project successful completion. On the other, non-key stakeholders are referred to as those groups or individuals whose requirements do not require to be recognized for the success of the project, but will be identified when all stakeholders are being identified. Amirhossein et al. have provided a comprehensive way of resolving conflicts among construction project stakeholders. Similar to previous reviewed scholar work, Amirhossein et al. identifies stakeholders’ identification and analysis as the first steps of resolving the conflict in a construction project. This is followed by conflict description where possible disputes are identified before they take place. This stage involves identifying possible conflicts topology, structuring the disputes, identifying the dispute processes and basic centre of the dispute and finally drawing the conflict cycle for each possible dispute. With this in mind, the project manager can proceed and handle the project where all possible measures are employed to lower the chances of disputes and conflicts12. The project manager should also consider that all legal requirements are employed to lower conflicts with most external shareholders. In case a conflict takes place among other stakeholders, the project management should consider dialogue where litigation, arbitration, adjudication, mediation or negotiation should be employed to find a feasible solution. During this time, the two conflicting parties should consider focusing more on obtaining a solution rather than justifying their claims. The next step should fully depend on the kind of the identified conflict. In this case the following options should be considered based on the nature of the conflict which includes social interaction, minimizing effects, change of the project, or employing technical decision. The best possible solution should then be applied. According to Moura and Teixeira, conflict solving is a cycle which should be continuously followed to a level in which the project manager gets a feasible solution to handle the problem and to completely resolves it or to minimize it to a level that it can no longer affect the project continuation13. The above described procedure of resolving conflict has been successfully employed in a number of construction projects. According to a case study performed by Yu and Shen in Chinese construction firm, the process named as briefing was highly used in managing the stakeholders and lowering the chances of conflicts during the project development14. Briefing in this case involved communicating the project design to stakeholders based on their importance in the project. In this regard, the level of communication differed based on the particular role a particular stakeholder has on the project15. For instance, the environmentalists could get more information regarding the design and how it is related with the environmental issues, in case of conflict in interest the design could be adjusted to fit a compromising situation where the interest and the value of the two parties could be accommodated. The company procedure in stakeholder management involved six steps which included identifying the project stakeholders, evaluating their commitment, evaluating their ability to hinder and aid the modification, evaluating their interest and the way this interest will influence what they do or think about the modification, evaluate their requirements and separating their wants from true requirements, and finally, controlling associations with them. In this case, the project manager was to use his or her means to minimise opposition and gain their support, and generally develop favourable attitudes to the modification. This process is identical to what has been advocated by Olander, Nguyen et al. and Moura and Teixeira proposition of stakeholders’ management. Bourne has also advocated for a different way of managing stakeholders. Bourne uses a stakeholder circle to enhance stakeholder management. This circle contains five steps methodology which gives a structured flexible technique to managing and understanding association around and within the activity. The technique is founded on the idea that any activity can just exist with the stakeholders’ community informed consent and controlling the associations between the activity and this community will raise the chances of success16. In this case, the stakeholder community refers to all stakeholders as defined previously in this paper. The team have to develop knowledge regarding this community and obligation level as well as the communication content required to influence actions, expectation and perceptions. However, according to relation management of stakeholders is a complex aspect which cannot be simplified into a formula. In this case every individual is unique and the association between people demonstrate that complexity and uniqueness. However, Bourne view the circular way of managing stakeholders simplifies the process of managing them or it structuralises this process. The first three stages of this technique are similar to the previously discussed techniques of stakeholders’ management. The technique involves stakeholders’ identification, followed by stakeholders’ prioritization to establish the most important ones. This is followed by mapping where visualization to establish the general stakeholder community is done. The fourth stage involves the engagement of stakeholders via effective communication and finally monitoring the engagement effect. This five circle step is very similar to the other previously discussed techniques; however, the communication in this case does not involve mediators or other legal representative. It is solely done between the project manager and the stakeholder in question. In addition, the other process did not identify monitoring section, although the conflict solving is a process, it did not involve much monitoring, however in this case monitoring is part of the core of the process17. The above described process was used to resolve a construction project conflict in airways terminal whereby after the completion of the construction, there were more to be done before the opening of the terminal. However, the project manager did not communicate to the employees that they had to arrive earlier to ensure that the job is completed before the opening. In this regard, the opening was done prior to completion of the work and the terminal had to inconvenience the customers who were their major stakeholders. There was a conflict between the workers and the management as well as the management and the customers. The technique was used to resolve the most essential stakeholders, who in this case were identified as the customer. Open communication was employed to calm them down and to direct them to another terminal as the employee completed their work in the other terminal. Conclusion Construction projects are among the most risky projects that attracts a huge number of both internal and external stakeholders. These projects are normally faced by a number of conflicts which include conflict between the management and the external stakeholders as well as conflict between the management and the internal stakeholders. These stakeholders based conflicts if not well managed they can result to project failure irrespective of whether the project overcomes all other risk factors that include scope, time, and cost. In this regard, the construction project managers require determining the best way to manage the project stakeholders to ensure that they reduce chances of conflict which contribute highly in projects failures. One of the most featured way to manage project stakeholders in construction projects include identifying the stake holders, analysing the magnitude in which their value and interest can influence the project goals and objective and then resolving the problem based on the stakeholders interest. This technique has been applied in a number of situations in construction projects. Bibliography Amirhossein H, Vaughan C,  Bambang T & Ehsan, S,  ‘Evaluating the influences of stakeholder management on construction project quality. 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