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Project Advisory / Leadership Series 3 /01 Project Advisory / Leadership Series 3 /01 PROJECT ADVISORY Stakeholder management and communication Leadership Series 3 kpmg.com/nz About the Leadership Series KPMG’s Project Advisory Leadership Series is targeted towards owners of major capital programmes, but its content is applicable to all entities or stakeholders involved with major projects. The intent of the Project Leadership Series is to describe a framework for managing and controlling large capital projects based on the experience of our project professionals. Together with our simplified framework, we offer a sound approach to answer the questions most frequently asked by project owners. Introduction Stakeholder management and Stakeholder management and This installment of the KPMG Project communication is critical to the successful communication can be complex and time Advisory Leadership Series discusses key completion of capital projects. Connecting consuming. Depending on the specific issues elements of stakeholder management and with the right people and satisfying impacting your project (i.e. regulatory scrutiny, project communication. The key stakeholders stakeholder demands throughout the environmental concerns, local contracting are identified, along with their responsibilities planning and execution phases can opportunities, joint venture profitability) the to the project, and we provide guidance on significantly affect the perception of a successful management of stakeholder how to communicate effectively through projects utility. This is true for the direct interest ensures that stakeholders: tailored project reports. An outline for users and employees of the project, for the » Have a voice. developing a monthly status report for formal community in which the project is located » Participate in the management process. record reporting is also presented. and for the project owner. » Contribute to the overall success of the project. Project Advisory / Leadership Series 3 /02 1. Stakeholder identification responsibilities What committees, boards or oversight The Project Board collects and reviews Stakeholders can be both internal and groups should you have in place? project metrics on a monthly basis and external to the projects owner organisation. The appropriate level of stakeholder challenges the data supplied by project Internal stakeholders are those in the ‘chain governance and oversight depends on many teams before it is packaged for review of command’ for developing and approving factors including the size of the project, its by the Executive Committee. the expenditure of project funds as identified complexity, its financing, the number of in the section above. Engineers, consultants, Project Sponsor participants etc. A large capital project with construction contractors, equipment vendors, The Project Sponsor is responsible for the labour organisations, community watchdog high visibility and multiple funding sources overall technical and financial performance groups, regulatory and public inspection in the public sector will need more oversight of the project and for the alignment of the agencies, utility companies, operators, than a smaller capital project for a private project with the entity’s overall business users and others all compose the external firm. In either case, a well balanced project strategy. The Project Sponsor shepherds the stakeholder category. Stakeholders have governance structure includes several layers project through corporate channels and is one or more of the following interest in of management control. Multiple layers of the point of contact for resolving stakeholder the project: management control allow for the escalation issues and complaints. The Project Sponsor of stakeholder issues to the appropriate level and Project Director participate in Project Approval: Whoever approves the development of governance for appropriate risk mitigation Board meetings and present project and use of a project is a stakeholder. and decision making. information and updated to the Project Board. Financial: Whoever pays for the cost For example, stakeholder governance Project Director of a project is a stakeholder. oversight for a large transmission project may The Project Director manages the day-to- Resources: Whoever provides resources involve an entity’s Board of Directors, the day function of the project team and is (e.g. labour, equipment, materials, and Executive Committee, the Capital Projects responsible for project administration, scope facilities) is a stakeholder. Review Committee and its Project Sponsor. management, cost and schedule controls, quality assurance, project safety, risk and Users: Whoever receives or utilises Board of Directors contingency management, stakeholder a project upon completion is a stakeholder. The Board of Directors monitors an entity’s identification and communication, project largest capital projects, especially those with Key stakeholders include the board, reporting, document control and other a high financial and reputational risk. The committees and oversight groups. assigned functions. purpose of the Boards continued involvement In addition stakeholders may include: is to remain informed and consulted about How do I identify other stakeholders? » Corporate environmental, proposed management decisions and actions Stakeholder identification occurs early in health and safety coordinator that may increase the risk of the project or the planning stage through the project result in significant cost growth. management teams understanding of the » Finance political, social, technological and historical » Legal Executive Committee context. For example, the Eurotunnel Project The Executive Committee approves and » Procurement was the product of two previous failed monitors large capital projects over a certain attempts (in 1855 and 1973). Political will » Human Resources value threshold and those with high financial between the United Kingdom and France, » Internal Audit and reputational risk. The Executive Committee improvements in tunnel boring technology, controls spending on projects in accordance » Operations greater demand from business and the with the entity’s approved delegation of public to move freight and passengers » Other regulatory agencies authority matrix and remains informed across the English Channel and a myriad » Community outreach and public relations and consulted about proposed Project of other factors resulted in a third and final » Industry outreach Management Team decisions and actions. attempt and the successful opening of the Project Board Eurotunnel system in 1994. » Contractors, vendors and suppliers. The Project Board is responsible for ensuring that corporate policies and procedures especially stage gate approvals, fund authorisation and change management procedures are followed for all capital projects. The Project Board reviews project execution plans, estimates, schedules and risks for large capital projects over a certain value threshold and recommends spending approval in accordance with the entities stage gate approval process. Project Advisory / Leadership Series 3 /03 For major projects, especially regulated projects, there will be intense scrutiny from many project stakeholders on the current status of the TIP 01: project. This is why it is important to establish the reporting requirements during the planning phase so that key project information is available when needed by project stakeholders. It is also important to ensure that information is accurate and consistent so that regulators are not provided different or conflicting information. This may not be evident during the project but may become a problem if there is a project issue or challenge. 2. Stakeholder reporting How do I know what is really going on, what are reporting tools that consolidate and Scope management: The process of the key risks are, and what specific actions arrange numbers and metrics on a single approving designs, directing change I need to take? screen. Key elements of the dashboard orders, approving change order requests, It is particularly challenging for the project should provide a comparison of the actual reviewing submittals, responding to management team to custom tailor project project results in relation to the project requests for information etc. The project reports and communication that specifically plan including: management team works together with meet the needs of all possible stakeholders. architects, engineers, long lead item » Percent of project completed. Equally challenging is the project management vendors, contractors and sub-contractors team’s role in efficiently managing stakeholder » Percent of project budget expended. to control the scope of the project. feedback and incorporating stakeholder inputs » Progress on key project milestones. If a scope change is needed, the project into the project management framework. management team must follow the » Contract status information. prescribed process for reviewing and Once the project stakeholders are identified, » Revenue and expenditure activity. authorising changes before they are it is the Project Director’s responsibility, with carried out. assistance from the project management » Funding commitments. team, to develop communication plans that Other dashboard or stakeholder reports Schedule management: The process of are specific to each stakeholder. may include risk reports and look ahead planning project activities, predicting the schedules. Risk reports include a risk timing of future activities
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