The importance of stakeholders

and how to manage them during the negotiations in project management

FEATURED PAPER

By Tiphaine Helene Couanau

SKEMA Business School

Lille, France

ABSTRACT

This paper is carried out as part of the International Contracts class led by Dr. Paul D. Giammalvo, within the MSc Programme and Project Management & Business Development in SKEMA Business School. The purpose of this paper is to take a deep look into the relationship between stakeholders, negotiations and contracts. In this paper, several questions will be answered: why are there so many stakeholder-related failures in negotiations? Why are negotiations crucial for contracts in project management? What are the best tools to be used for successful negotiations?

The non-compensatory model and the multi-attribute decision-making model will be used to quantify, assess and rank the different possible alternatives. Ultimately, the findings of this research show that the key to managing stakeholders in construction project’s negotiations lies in collaboration.

Key words: Conflict of interest, Influence, Construction Industry, Compromise, Disagreement, Impact, Power

INTRODUCTION

The first attempt of the construction project of the Channel Tunnel between the United Kingdom and France between 1957 and 1975 was finally abandoned by the British government for several reasons. Indeed, as Gourvish T. stated, “The difficulty in getting the two governments to pledge unequivocal support for the project tried the patience of businesspeople used to a more straightforward environment.”^[1]. The specificity of this megaproject derived from the multiplicity of the stakeholders, namely two different governments with different levels of intervention, private construction companies and railways companies. Finally, a last indirect stakeholder played a decisive role in the future of the project: the public opinion. At the time, the crisis was plunging the UK’s economy and the UK government had no choice but to give up the project to avoid a conflict with the population.

This example is the living proof that stakeholders, as many as they are, play a crucial role for the future success of the project^[2]. As the Max Wideman Glossary states, a stakeholder is “any individual, group or organization that can affect, be affected by, or perceive itself to be affected by, an initiative.”^[3]. Their number, power, influence and interests vary and determine their position during the negotiation of the contract. The Guild of Project Controls Compendium identifies 6 usual categories of stakeholders:

Beneficiaries
Negative Beneficiaries
Implementers
Decision Makers
Financiers
Regulators^[4]

During negotiation phase, they “reach an acceptable agreement through communication and compromise”^[5]. This means that the negotiation phase is a decisive step because it will determine the final contract, and thus the future obligations deriving from this contract. Construction contracts are particularly concerned with this stage, considering that it often involves subcontractors and a multiplicity of stakeholders, whether they are direct or indirect. However, as we know, negotiations are sometimes never-ending, or even worse, they do fail. To ensure peaceful and successful negotiations, we need to understand why they can turn into failures.

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Editor’s note: This paper was prepared for the course “International Contract Management” facilitated by Dr Paul D. Giammalvo of PT Mitratata Citragraha, Jakarta, Indonesia as an Adjunct Professor under contract to SKEMA Business School for the program Master of Science in Project and Programme Management and Business Development. http://www.skema.edu/programmes/masters-of-science. For more information on this global program (Lille and Paris in France; Belo Horizonte in Brazil), contact Dr Paul Gardiner, Global Programme Director paul.gardiner@skema.edu.

How to cite this paper: Couanau, T.H. (2019). The importance of stakeholders and how to manage them during the negotiations in project management, PM World Journal, Vol. VIII, Issue IX, October. Available online at https://pmworldlibrary.net/wp-content/uploads/2019/10/pmwj86-Oct2019-Couanau-the-importance-of-stakeholders.pdf

About the Author

Tiphaine Helene Couanau

Lille, France

Tiphaine Couanau is a student in MSc Programme and Project Management and Business Development. Born in Georgia, U.S.A, she grew up in Strasbourg, France, where she attended the International High School and later entered Preparatory Class. She joined the management program in SKEMA Business School (Lille) in 2016, and studied abroad for a year, notably in the United States (Raleigh) in Fall 2017 and Russia (St Petersburg) in Spring 2018. After two years studying management, she decided to take the path of Project Management & Business Development. She acquired various experience in Project Management and Business Development through several internships as business developer or sales assistant; she moved to Amsterdam in January 2019 for an internship as business developer. She was recently certified PRINCE2 Foundation and AGILEPM Foundation and will be graduating in May 2020.

Tiphaine can be contacted at tiphaine.couanau@gmail.com or tiphaine.couanau@skema.edu

You can also view her LinkedIn profile via the following link : www.linkedin.com/in/tiphaine-couanau

[1] Gourvish, T. (2006). The Official History of Britain and the Channel Tunnel (1st Edition). London, United Kingdom : Routledge.

[2] Karlsen, J.T. (Dec – 2002). Project Stakeholder Management, Engineering Management Journal, Vol. 14, No. 4, pp. 19-24. Retrieved from https://www.researchgate.net/publication/228934223_Project_Stakeholder_Management

[3] Wideman Comparative Glossary of Project Management Terms v5.5. (n.d.). Retrieved from http://www.maxwideman.com/pmglossary/PMG_S07.htm

[4] Identifying and Engaging Stakeholders (Nov-2015), Guild of Project Controls Compendium and Reference, Planning Planet, retrieved from http://www.planningplanet.com/guild/gpccar/identifying-engaging-stakeholders

[5] Wideman Comparative Glossary of Project Management Terms v5.5. (n.d.). Retrieved from http://www.maxwideman.com/pmglossary/PMG_N00.htm