External projects are those undertaken by the organization for an independent client or, alternatively, by an external project management company for the sponsoring organization. Either way, the project is the subject of a legal agreement and, since the parties are otherwise independent of one another are said to be "at arm's length". The presence of a legal agreement tends to put project management's emphasis on the external stakeholders. However, the internal stakeholders should not be overlooked and should still be treated as described in the previous section.
The following recommendations are written for a public construction project, but it is not difficult to apply the principles to other types of project with appropriate changes in wording.
Why External Project Stakeholders are Different
There is a big difference in external project stakeholders. This is because all communications in an external project are subject to the terms of the legal agreements involved and external projects characteristically include many public stakeholders.
Jack Lemley, formerly chief executive of Transmanche-Link (TML), had this to say about image versus reality in managing the immense English Channel tunnel project:
"Today, managing the public image of major civil engineering projects is at least as important as managing their physical creation. Poor public perception can damage or stop a project as surely as bad ground or shortage of labor and materials. The Channel Tunnel is a classic example: for much of its formative period it existed in an often-destructive climate of adverse public opinion. Most of this was avoidable but it resulted in the project team spending much of its time fighting a rearguard action rather than simply getting on with the job."
Therefore, it is quite wrong for the project manager to think that the client is the only real stakeholder to worry about. For example, on a construction project there are many stakeholders involved. They may include the following:
- Prime contractor
- Financial institutions and bonding companies
- Government agencies and commissions; judicial, legislative and executive bodies.
Of course not all these turn up on every construction project, but many of them do. Figure 1 shows the potential complexity of this type of project.
Figure 1: Typical "Stakeholders" in a Construction Project
Just as important are the members of the public, some of whom can have a significant influence over the course of the project and the project management process. They may include the following:
- The local community that is affected by the project
- The general public, often represented by advocacy groups, such as consumer, environmental, social, political, and others
These people are not stakeholders in the sense that they have an invested stake in the project and expect to get money out of it. Rather, they have a stake in the project because they are affected by its results and/or can have varying degrees of influence over its conduct. In this case, perhaps constituent is a better label than stakeholder for describing such people.
Through various legislations, members of the public can have the power to stop the project entirely if their concerns are not heeded and give appropriate consideration. Therefore, even on medium sized projects, project managers should give some attention to the project's public.
4. From Civil Engineer International, April 1996, p34
5. Cleland, D. I., Project Management: Strategic Design and Implementation. Blue Ridge Summit, PA: TAB Professional Reference Books, 1990, p105
6. Wideman, R. M., Cost Control of Capital Projects, Vancouver, BC: BiTech, 1995, p1-6