Who are Project Stakeholders and Why are they Important for a Project?

Project Management


A stakeholder is an individual, group, or organization who may affect, be affected by, or perceive itself to be affected by a decision, activity, or outcome of a project. Stakeholders are either directly involved in the project or have interests that may be affected by the project’s outcome. It includes normally the members of a project team: project managers, project sponsors, executives, customers, or users.

It’s beneficial and advisable to know about good stakeholder management skill and communicate constantly with stakeholders in order to collaborate on the project because after all, they are also affected by the product.

If a project is small in size, the number of stakeholders can be small. However, if it is large and expanded to a large area, one may have a huge number of stakeholders, including communities or the general public. Also, all stakeholders are not alike. They have different expectations and needs. One must treat every stakeholder uniquely according to their needs or else the stakeholders might feel left out which can put the project in danger.

Different stakeholders often have opposing expectations that might create clashes within the project. Stakeholders may also interfere in the project, its deliverables, and the project team to fulfill their strategic business objectives or other requirements.

Project governance

Project governance is the alignment of the project with stakeholders’ needs or objectives. It is critical for achieving organizational goals. It enables organizations to manage projects consistently and exploit the benefits of a project. It provides a framework which helps the project manager and sponsors to make decisions that suit both stakeholder needs and organizational objectives or deal with situations where they may not be aligned.

Type of Project Stakeholders

Project stakeholders can be classified into two types:

  1. Internal Stakeholders: As the name suggests, these are the people involved in a project from within. They include:

    • A sponsor

    • An internal customer or client (if the project started due to an internal need of the organization)

    • A project team

    • A program or portfolio manager

    • Management

    • Another team’s manager of the company

  2. External Stakeholders: These stakeholders are not directly involved but are engaged from outside and are affected by the project outcome.

    • An external customer or client (if project started due to a contract from external party)

    • An end user

    • Subcontractors

    • A supplier

    • The government

    • Local communities

    • Media

Why are stakeholders important for a project?

  • Stakeholders have different levels of duties and authority when contributing on a project. This level may differ as the project proceeds. It can range from occasional contributions to full project sponsorship.

  • Some stakeholders may also detract from the success of the project, either actively or passively. These stakeholders need the project manager’s attention during the whole time of project’s life cycle.

  • Stakeholder identification is a continuous process during the entire project life cycle. Identifying them, understanding their level of effect on a project, and satisfying their demands, needs, and expectations is essential for the success of the project.

  • Just as stakeholders can affect a project’s objectives positively or negatively, a project can be perceived by the stakeholders as having positive or negative results.

  • One of the most important responsibilities of a project manager is to manage stakeholder expectations, which can be problematic as stakeholders often have very diverse or conflicting objectives.

Project Stakeholders

Project Stakeholders

  • Sponsor:A sponsor is the person or group who provides supplies and support for the project and is liable for assisting success. He may be external or internal to the organization.

  • Customers and users: Customers are the people or organizations who will approve and manage the project’s product, service, or result. Users, as clear from the name, use the product.

  • Sellers: Sellers, also known as vendors, are external companies that enter into a contractual agreement to provide services or resources necessary for the project.

  • Business partners: They are external organizations that have a special relationship or partnership with the enterprise.

  • Organizational groups: Organizational groups are internal stakeholders who are influenced by the actions of the project team. For example, human resources, marketing, sales, legal, finance, operations, manufacturing, etc.

  • Functional managers: They are key individuals who play the role of management within an administrative or functional area of the business. For example, human resources, finance, accounting, etc.

  • Other stakeholders: They are additional stakeholders which include financial institutions, government regulators, subject matter experts, consultants, and others, which have a financial interest in the project, contributing inputs to the project, or have in the outcome of the project.

Stakeholders are people who get affected by your project or have any kind of interest in it. They can be internal, external, positive, negative, high power, low power, etc. However, to complete your project successfully you have to manage all these stakeholders and fulfill their prospects. If you fail to do so, your project may get jeopardized.

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