Stakeholder Management in Construction I

STAKEHOLDER MANAGEMENT IN
CONSTRUCTION INDUSTRY
PROJECT SEMINAR REPORT - II

Thesis work submitted in partial fulfillment of the requirement for the
Degree of Masters in Building Engineering and Management
School of Planning and Architecture, New Delhi
GIRISH KUMAR SINGH

SPA/NS/BEM/612
DEPARTMENT OF BUILDING ENGINEERING AND MANAGEMENT
SCHOOL OF PLANNING AND ARCHITECTURE
NEW DELHI – 110002
DECEMBER 2015
CERTIFICATE
Certified that the seminar titled “Stakeholder Management In Construction Industry”

submitted by Girish Kumar Singh in partial fulfillment of the requirement of award of the
Degree of Master’s in Building Engineering and Management of the School of Planning and
Architecture (deemed to be a university), is a record of the student’s own work carried out by her
under our supervision and guidance. The content embodied in this seminar has not been
submitted for the award of any other degree or diploma.
Prof. (Dr). V. Thiruvengadam Prof. (Dr). V. K. Paul
Seminar Guide Head of the Department

Visiting Professor Department of Building Engineering
Department of Building Engineering and Management
and Management School of Planning and Architecture
School of Planning and Architecture, Delhi Delhi
ACKNOWLEDGEMENT
First and foremost I offer my sincerest gratitude to my guide, Dr. V. Thiruvengadam, Visiting
Professor, Department of Building Engineering and Management, School of Planning and
Architecture, New Delhi, who has supported me throughout the study with his patience and
knowledge, while still giving me the freedom to work independently. One simply could not wish
for a better guide.
I am grateful to Dr. V.K Paul, Head of Department, for his support at various stages of the
work.
I would also like to thank all the teaching and non-teaching staff of the department for their co-
operation and help during the course.
Last but not the least, I would like to thank my classmates and friends, for their never ending
support and encouragement. I am grateful to the most important people in my life who have
made me what I am today with their unending love and affection, my parents, who are my
constant source of Inspiration.
Girish Kumar Singh

New Delhi
Chapter Formulation
Chapter 1 Introduction
This chapter include all the basic information about the stakeholder and stakeholder management
Chapter 2 Literature Review

This chapter includes all the literature reviews used for the this report and help in the drafting
this report.
Chapter 3 Management of Stakeholders

This chapter includes PMBOK stakeholder part and also ISO which have portion for stakeholder
is covered.
Chapter 4 Stakeholder
In this chapter all the type of stakeholders and there roll in the project is describe.
Chapter 5 Chapter 5 Stakeholder involvement in Project Life Cycle
This chapter include the various project life cycle of the project and a generalized involvement of
stakeholders in all the phases of the project and their roles and responsibilities will be described
in this chapter
Chapter 6 Stakeholder Management in Real Estate Industry

In this chapter all type of stakeholder involve in residential type of project are covered, the
involvement of each body will be different according to the project will be discussed in detail in
this chapter. Most of the stakeholders in this kind of project have limited but efficient influence
on the project for example in a real estate project the end user have a strong hand after the
competition of the project rather than any of the stakeholder involved during the construction or
before the construction. But during the construction the project team as well as the financial
supporter like banks and other company which supply fund to the project have a very strong
hand during the construction.
Chapter 7 Stakeholder Management in Infrastructure Project
In an infrastructure project several government as well as private body is involved which have
different policies regarding the land allotment, project execution etc. which will be covered in
this chapter. In most of the projects like road development, dams, metro people who are using it
are not the biggest stakeholder the person who give his land for the development of that project
become the strongest stakeholder and many policies are involve in this to handover and takeover
the land which will be discussed in this chapter
Chapter 8 the Analytic Hierarchy Process For Ranking Stakeholders

In this chapter for analysis Analytic Hierarchy Process (AHP) and Stakeholder circle is used in
the different phase of the project as well as the different type of the project.
In this chapter different project are analyzed and according to the project stakeholders are
ranked/Priorities with the phases of the project.
ABSTRACT
The notion of stakeholder was coined in an internal memorandum at the Stanford Research
Institute in 1963 and means “those groups without whose support the organization would cease
to exist”. IN a famous article Freeman and Reed define stakeholders as "those groups who have a
stake in the action of the corporation” (Freeman & Reed, 1983).
Stakeholder management is a critical component to the successful delivery of any project,

programmer or activity. A stakeholder is any individual, group or organization that can affect,
be affected by, or perceive itself to be affected by a programmer.
In this report the various type of stakeholder are explained with their need, requirement, role and
responsibility of every stakeholder. The involvement of stakeholder is very important according
the stage of the project and to manage it we need to adapt the stakeholder management theory.
All type of stakeholder involve in residential type of project are covered, the involvement of each
body will be different according to the project will be discussed in detail in this chapter. Most of
the stakeholders in this kind of project have limited but efficient influence on the project for
example in a real estate project the end user have a strong hand after the competition of the
project rather than any of the stakeholder involved during the construction or before the
construction. But during the construction the project team as well as the financial supporter like
banks and other company which supply fund to the project have a very strong hand during the
construction.
In an infrastructure project several government as well as private body is involved which have
different policies regarding the land allotment, project execution etc. In most of the projects like
road development, dams, metro people who are using it are not the biggest stakeholder the
person who give his land for the development of that project become the strongest stakeholder
and many policies are involve in this to handover and takeover the land.
For analysis Analytic Hierarchy Process (AHP) and Stakeholder circle is used in the different
phase of the project as well as the different type of the project.
Different responses by survey are analyzed and according to the project stakeholders are
ranked/Priorities with the phases of the project.
Contents
Chapter 1 Introduction .................................................................................................................................. 6
Introduction:-- ...................................................................................................................................................... 6
Project stakeholders ............................................................................................................................................. 7
The stakeholder categories identified as: ............................................................................................................. 7
Need of study........................................................................................................................................................ 8
Aim ........................................................................................................................................................................ 8
OBJECTIVE ............................................................................................................................................................. 8
Scope of the Study: ............................................................................................................................................... 8
Methodology ........................................................................................................................................................ 9
Chapter 2 Literature Review ....................................................................................................................... 10
External Stakeholder Management in the Construction Process (Olander, 2003) ............................................ 10

Investigating the Stakeholder Management in Construction Projects in the Gaza Strip ................................... 10
Stakeholder management in construction: An empirical study to address research gaps in previous studies
(Jing Yanga, 2010) ............................................................................................................................................... 11
Construction project success analysis from stakeholders' theory perspective (Moradi, 2011) ......................... 11
Strategic Management of Stakeholders: Theory and Practice (Eden, 2010) ...................................................... 11
Project Stakeholder Management (Jepsen, 2013) .............................................................................................. 12
Chapter 3 Management of Stakeholders .................................................................................................... 13
PROJECT STAKEHOLDER MANAGEMENT ............................................................................................................ 13

3.1 Identify Stakeholders .................................................................................................................................... 14
3.1.1 Identify Stakeholders: Inputs ................................................................................................................. 16
3.1.1.1 Project Charter .................................................................................................................................... 16
3.1.1.2 Procurement Documents.................................................................................................................... 16
3.1.1.3 Enterprise Environmental Factors ...................................................................................................... 16
3.1.1.4 Organizational Process Assets ............................................................................................................ 16
3.1.2 Identify Stakeholders: Tools and Techniques ............................................................................................ 16
3.1.2.1 Stakeholder Analysis ........................................................................................................................... 16
3.1.2.2 Expert Judgment ................................................................................................................................. 18
3.1.2.3 Meetings ............................................................................................................................................. 18
3.1.3 Identify Stakeholders: Outputs .................................................................................................................. 19
3.1.3.1 Stakeholder Register ........................................................................................................................... 19
3.2 Plan Stakeholder Management .................................................................................................................... 19
3.2.1 Plan Stakeholder Management: Inputs ..................................................................................................... 20
3.2.2 Plan Stakeholder Management: Tools and Techniques ............................................................................ 21
Stakeholder Management In Construction Industry
3.2.2.1 Expert Judgment ................................................................................................................................. 21

3.2.2.2 Meetings ............................................................................................................................................. 22
3.2.2.3 Analytical Techniques ......................................................................................................................... 22
3.2.3 Plan Stakeholder Management: Outputs .................................................................................................. 23
3.2.3.1 Stakeholder Management Plan .......................................................................................................... 23
3.2.3.2 Project Documents Updates ............................................................................................................... 23
3.3 Manage Stakeholder Engagement ................................................................................................................ 23
3.3.1 Manage Stakeholder Engagement: Inputs ............................................................................................ 25
3.3.2 Manage Stakeholder Engagement: Tools and Techniques .................................................................... 26
3.3.3 Manage Stakeholder Engagement: Outputs ......................................................................................... 26
3.4 Control Stakeholder Engagement ................................................................................................................. 27
3.4.1 Control Stakeholder Engagement: Inputs.............................................................................................. 28
3.4.2 Control Stakeholder Engagement: Tools and Techniques ..................................................................... 29
3.4.3 Control Stakeholder Engagement: Outputs........................................................................................... 30
Chapter 4 Stakeholders .................................................................................................................................. 1
4.1 Internal Stakeholder ....................................................................................................................................... 2

4.1.1 Project Owner .......................................................................................................................................... 3
4.1.2 The Project Professional .......................................................................................................................... 3
4.1.3 Suppliers/Contactors ............................................................................................................................... 3
4.1.4 Customer ................................................................................................................................................. 3
4.2 External Stakeholder ....................................................................................................................................... 6
4.2.1 External Public Parties ................................................................................................................................. 7
4.2.2 External Private Parties ................................................................................................................................ 7
4.2.1.1 Interests groups ........................................................................................................................................ 7
4.2.1.2 The Media ................................................................................................................................................. 7
4.2.1.3 Local and National Authorities ................................................................................................................. 7
4.2.2.1 The Public.................................................................................................................................................. 8
4.2.2.2 Trade and Industry .................................................................................................................................... 8
Chapter 5 Stakeholder involvement in Project Life Cycle........................................................................ 11
5.1 Phase Of construction Project and stakeholder involvement according the phase:- .................................. 11
5.1.1 Prefeasibility Phase .................................................................................................................................... 11
5.1.2 Feasibility Phase......................................................................................................................................... 12
5.1.3 Planning Phase ........................................................................................................................................... 12
5.1.4 Initiation Phase ...................................................................................................................................... 12
5.1.5 Execution Phase ......................................................................................................................................... 14
Girish Kumar Singh SPA/NS/BEM/612

Building Engineering & Management Department,
School of Planning & Architecture, New Delhi
5.1.6 Closing/Handover Phase ........................................................................................................................ 15

5.2 Stakeholders Role and Responsibility in Construction Projects ................................................................... 15
5.2.1 CUSTOMER/CLIENT ................................................................................................................................ 15
5.2.1.1 The Project Owner .............................................................................................................................. 15
5.2.2 PROJECT MANAGEMENT TEAM ............................................................................................................. 17
5.2.3 PROJECT TEAM MEMBERS ..................................................................................................................... 20
5.2.4 SUPPLIERS .............................................................................................................................................. 24
5.5.5 REGULATORY BODIES/GOVERNMENT ................................................................................................... 24
5.2.6 PRESSURE GROUPS/INFLUENCERS ........................................................................................................ 25
CHAPTER 6 Stakeholder Management in Real Estate Industry ............................................................ 26
6.1 INTRODUCTION ............................................................................................................................................. 26

6.2 Stakeholder in real estate ............................................................................................................................. 26
6.3 Customer Satisfaction ................................................................................................................................... 61
6.4 ADVANTAGES OF CUSTOMER SATISFACTION ............................................................................................... 61
6.5. DISADVANTAGES OF CONSUMER DISSATISFACTION................................................................................... 62
6.5.1 Reasons of customer dissatisfaction in construction sector ..................................................................... 62
6.6 QUALITY MANAGEMENT PRINCIPLES: ISO 9000 ........................................................................................... 63
6.6.1 Principle 1- Customer Focus ...................................................................................................................... 63
Key benefits: ................................................................................................................................................... 63
Applying the principle of customer focus typically leads to: .......................................................................... 63
6.6.2 Principle 2- Leadership .............................................................................................................................. 63
Key benefits: ................................................................................................................................................... 63
Applying the principle of leadership typically leads to: .................................................................................. 64
6.6.3 Principle 3- Involvement of people............................................................................................................ 64
Key benefits: ................................................................................................................................................... 64
Applying the principle of involvement of people typically leads to: .............................................................. 64
6.6.4 Principle 4- Process approach .................................................................................................................... 64
Key benefits: ................................................................................................................................................... 65
Applying the principle of process approach typically leads to: ...................................................................... 65
6.6.5 Principle 5- System approach to management.......................................................................................... 65
Key benefits: ................................................................................................................................................... 65
Applying the principle of system approach to management typically leads to: ............................................ 65
6.6.6 Principle 6- Continual improvement .......................................................................................................... 66
Key benefit: ..................................................................................................................................................... 66
Applying the principle of continual improvement typically leads to: ............................................................. 66
6.6.7 Principle 7- Factual approach to decision making ..................................................................................... 66
Key benefits: ................................................................................................................................................... 66

Applying the principle of factual approach to decision making typically leads to: ........................................ 66
6.6.8 Principle 8- Mutually beneficial supplier relationships ............................................................................. 67
Key benefits: ................................................................................................................................................... 67
Applying the principles of mutually beneficial supplier relationships typically leads to: ............................... 67
6.7 QUALITY MANAGEMENT SYSTEM................................................................................................................. 67
6.7.1 Quality management systems approach ................................................................................................... 67
6.7.2 Construction Quality System ..................................................................................................................... 68
6.7.3 Duties and responsibilities of stakeholders to the objective of building on quality assurance .............. 69
Investor ............................................................................................................................................................... 69
Designer .............................................................................................................................................................. 69
Contractor ....................................................................................................................................................... 70
Building owners .............................................................................................................................................. 70
Administrators and the users: ........................................................................................................................ 70
6.8 Conflict management in Real Estate ............................................................................................................. 71
6.8.1 INTRODUCTION ...................................................................................................................................... 71
6.8.2 TYPES OF CONFLICTS IN THE CONSTRUCTION ACTIVITY ....................................................................... 71
6.8.3 CONSTRUCTION STAKEHOLDERS AND POTENTIAL CONFLICTS ............................................................. 72
6.8.3.1 External Stakeholders’ Conflicts ......................................................................................................... 73
6.8.3.2 Internal Stakeholders’ Conflicts .......................................................................................................... 76
6.8.5 RESOLUTION OF DISPUTES FOR INTERNAL STAKEHOLDERS...................................................................... 80
6.8.5.1 Abandonment ..................................................................................................................................... 80
6.8.5.2 Negotiation ......................................................................................................................................... 80
6.8.5.3 Mediation and conciliation ................................................................................................................. 80
6.8.5.4 Expert assessment .............................................................................................................................. 81
6.8.5.5 Adjudication ........................................................................................................................................ 81
6.8.5.6 Arbitration .......................................................................................................................................... 81
6.8.5.7 Litigation ............................................................................................................................................. 82
6.8.6 RESOLUTION OF DISPUTES FOR EXTERNAL STAKEHOLDERS ..................................................................... 82
6.8.6.1 Dialoguing ........................................................................................................................................... 83
6.8.6.2 Negotiation ......................................................................................................................................... 83
6.8.6.3 Not in my backyard ............................................................................................................................. 85
Case Study Cosmos Builders Case in Gurgaon ................................................................................................... 88
Chapter 7 Stakeholder Management in Infrastructure Project ............................................................... 97
7.1 INCEPTION STAGE ......................................................................................................................................... 98

7.1.1 Client’s Objective ................................................................................................................................... 99
7.1.2 Client’s Internal Team ............................................................................................................................ 99

7.2 FEASIBILITY STAGE ...................................................................................................................................... 100
7.2.1 Client’s objectives ................................................................................................................................ 101
7.2.2 Outline Project Brief ............................................................................................................................ 101
7.2.3 Site selection and acquisition .............................................................................................................. 104
7.2.4 Detailed project brief ........................................................................................................................... 105
7.2.5 Scheme design ..................................................................................................................................... 106
7.2.6 Project execution plan (PEP) ................................................................................................................ 107
7.3 STRATEGY STAGE .................................................................................................................................... 108
7.3.1 Client’s objectives ................................................................................................................................ 109
7.3.2 Project organization and control ......................................................................................................... 109
7.3.3 Project planning ................................................................................................................................... 109
7.3.4 Cost planning ....................................................................................................................................... 110
7.3.5 Cost control .......................................................................................................................................... 110
8.3.6 Procurement ........................................................................................................................................ 112
7.4 PRE-CONSTRUCTION STAGE ....................................................................................................................... 114
Case Study Delhi’s Signature Bridge needs environmental clearance ............................................................. 133
Project: Signature Bridge, New Delhi ............................................................................................................... 133
Case Study 2 ...................................................................................................................................................... 139
(IMPLEMETATION OF STAKHOLDER MANAGEMENT TECHNIQUE IN PROJECT) ............................................... 139
Chapter 8 Summery and Conclusion ........................................................................................................ 143
Bibliography ................................................................................................................................................ 147

List of Figures
Figure 1The Relationship between Stakeholders and the Project (PMBOK) ..................................... 6
Figure 2Different Stake Holders ......................................................................................................... 7
Figure 3 Project Stakeholder Management Overview ..................................................................... 14
Figure 4 Identify Stakeholders: Inputs, Tools & Techniques, and Outputs...................................... 15
Figure 5 Identify Stakeholders Data Flow Diagram ......................................................................... 15
Figure 6 Example Power/Interest Grid with Stakeholders ............................................................... 18
Figure 7 Plan Stakeholder Management: Inputs, Tools & Techniques, and Outputs ....................... 19
Figure 8 Plan Stakeholder Management Data Flow Diagram .......................................................... 20
Figure 9 Stakeholders Engagement Assessment Matrix ................................................................... 22
Figure 10 Manage Stakeholder Engagement: Inputs, Tools & Techniques, and Outputs ................ 24
Figure 11 Manage Stakeholder Engagement Data Flow Diagram ................................................... 24
Figure 12 Control Stakeholder Engagement: Inputs, Tools & Techniques, and Outputs................. 28
Figure 13 Control Stakeholder Engagement: Data Flow Diagram ................................................... 28
Figure 14 Stakeholder in construction project (Cleland 1999) ........................................................... 2
Figure 15 Splitting conflicts among several parties into a set of conflicts between two parties. ..... 72
Figure 16 Conflict management phases ........................................................................................... 79
Figure 17 Guidelines to help solve the NIMBY syndrome ............................................................. 88
Figure 3 Power Matrix ...................................................................................................................... 93
Figure 18 Outline project brief template ......................................................................................... 103
Figure 6.2: Figure 19 Content of a Detailed Project Brief .............................................................. 106
Figure 3 Power Matrix .................................................................................................................... 136

Chapter 1 Introduction
Introduction:--
The notion of stakeholder was coined in an internal memorandum at the Stanford Research Institute in
1963 and means “those groups without whose support the organization would cease to exist”. IN a
famous article Freeman and Reed define stakeholders as "those groups who have a stake in the action of
the corporation” (Freeman & Reed, 1983).
Stakeholder management is a critical component to the successful delivery of any project, programmer
or activity. A stakeholder is any individual, group or organization that can affect, be affected by, or
perceive itself to be affected by a programmer.
According to PMBOK 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 may be
actively involved in the project or have interests that may be positively or negatively affected by the
performance or completion of the project. Different stakeholders may have competing expectations that
might create conflicts within the project. Stakeholders may also exert influence over the project, its
deliverables, and the project team in order to achieve a set of outcomes that satisfy strategic business
objectives or other needs.
Stakeholders include all members of the project team as well as all interested entities that are internal or
external to the organization. The project team identifies internal and external, positive and negative, and
performing and advising stakeholders in order to determine the project requirements and the expectations
of all parties involved. The project manager should manage the influences of these various stakeholders
in relation to the project requirements to ensure a successful outcome. In Figure illustrates the relationship
between the project, the project team, and various stakeholders.
Figure 1The Relationship between Stakeholders and the Project (PMBOK)

Project stakeholders: - Individuals and organizations who are actively involved in a project, or whose
interests may be positively or negatively affected as a result of project execution or successful project
completion. The project management team must identify the stakeholders, determine what their needs
and expectations are, and then manage and influence those expectations to ensure a successful project
The stakeholder categories identified as:

1) Shareholders 7) Social/political organizations
3) Clients 8) Land owners
4) Suppliers 9) Environmentalists
5) Financiers/creditors 10) nearby residents
6) Local and national authorities 11) Media
The stakeholders in a project can be divided into internal and external stakeholders,
The internal stakeholders are those who are members of the project coalition or who
Provide finance the external stakeholders are those others affected by the project in a
Significant way
Figure 2Different Stake Holders

Need of study
There are several conflict in the project between people due to which the time of the project suffer and
these dispute arise only due to involvement of people/parties at wrong time
So a time line need to be defined before the execution of any construction project which tell about the
roll and the involvement of the people
Aim
To find out the involvement of stakeholders in each phase of the different kinds of construction project.
OBJECTIVE
 Identification of different stakeholders.
 Find out the need for the different stakeholders
 TO determine the Time to involvement of different stakeholder in the project
 Prioritize the need of stakeholders.
Scope of the Study:

 This study will focus on the identification of the different stakeholders in a construction project
 This study will also focus on the identification of the various satisfaction of the different
stakeholders
 This study will also focus on identifying the need/requirement and expectation of different
stakeholders

Methodology
 Literature Survey
 Study on stakeholder theory
 Study on Project stakeholder Management
 Identification of Stakeholders
 Identification of Stakeholders satisfaction attribute
 Stages of engagement of stakeholders
 Study on stakeholder conflicts and its management

 Case Study For Stakeholder of a Real estate project
 Conclusion

Chapter 2 Literature Review
External Stakeholder Management in the Construction Process (Olander, 2003)

The purpose of this research project is to contribute to, and increase, our knowledge concerning external
stakeholder management in the construction process, and to develop methods and tools for the evaluation
and management of external stakeholder influence. The contribution of this study to construction project
managers is:
 An increased knowledge of how an external stakeholder management process presents itself in
construction projects.
 Suggests different strategies to an external stakeholder management process.
 Suggests different tools that can be used for analyzing the influence of external stakeholders.
The main tool, described in this study, is the stakeholder map and the power interest matrix.
This study points to the importance of the project management to identify those stakeholders who can
affect the project, and then managing their differing demands through good communication. Thus, the
challenge for the project management is to find the best solutions for all stakeholders involved and try to
get an acceptance for that solution, which probably is only possible through a good and communicative
dialogue, and after a carefully conducted stakeholder management process.
Investigating the Stakeholder Management in Construction Projects in the Gaza Strip (Sawalhi,
2013)
This research aims to empower the role of stakeholders in construction projects in the Gaza Strip. Four
objectives were set accordingly: identification and ranking the most common factors affecting the
stakeholder management process in construction project; assessed the stakeholders based on their
influence; evaluate the current practice approaches of stakeholder management; and developing a
conceptual framework for stakeholder management process.
A literature reviews on the topic related to the stakeholder management was conducted. A questionnaire
survey was carried out among professionals in the construction industry. Ninety-eight questionnaires
were distributed to governance, municipality, NGO’s, UN and INGO’s agency's experts, sixty seven
questionnaires were received with a 68% response rate

Stakeholder management in construction: An empirical study to address research gaps in

previous studies (Jing Yanga, 2010)
This paper concentrates on identifying gaps in the scope of previous studies on stakeholder management,
and starting to address those gaps by conducting an empirical study. To complete these research
objectives, literature review, interviews, questionnaire survey, and a case study were used in this study.
Four gaps regarding critical success factors, stakeholder management process, methods for stakeholder
management and stakeholder relationship management were identified. Based on an empirical study, a
framework for effective stakeholder management is proposed, and the application of a Social Network
Analysis technique, as a means of determining the influence of stakeholders on decision making, is
illustrated and validated by a case study. These findings can serve as initial references towards a more
systematic approach for stakeholder management. Since the empirical study was conducted only in Hong
Kong and Australia, further studies should be conducted in other regions to validate and compare with
the finding in this paper.
Construction project success analysis from stakeholders' theory perspective (Moradi, 2011)
The purpose of this study is to investigate to what extent stakeholders’ project performance correlate to
project success. To collect the empirical data, a particular questionnaire was designed and distributed
among owners, consultant and contractor companies who are number 1 in performing oil, gas and
petrochemical projects in Iran. The results of the research show that consultants play the most important
role and owners the least in determining project success. And technical aspect of consultant and contractor
performance has been used as the most important criterion of project success.
Other theories, other type of projects, other companies and countries should be investigated to generalize
the findings. This research concluded that consultants play the most important role in determining project
success and technical aspect of their performance is the most important criterion for project success.
Consequently, project success can be enhanced by focusing on consultants’ performance and other
aspects of performance such as human, organizing and integration aspect in addition to technical aspect.
To what extent stakeholders’ project performances correlate with project success is studied in this
research paper.
Strategic Management of Stakeholders: Theory and Practice (Eden, 2010)
This article explores how top management teams can increase the robustness of their strategies by
attending to important concepts emerging from the stakeholder literature. Analysis of three themes
emanating from this literature leads to the development of a method composed of three techniques which
elaborates how stakeholder management concepts can be applied in practice. The research, which
spanned a 15 year time period, was based on working with 16 top management teams while they were

developing their strategies, so that the method e which developed incrementally in response to the team’s
reactions to its utility e was grounded in both theory and practice
This research seeks to bring greater clarity to the practice of stakeholder management, so that
organizations can manage their stakeholders in ways that meet their strategic goals: it also has
implications for the development of stakeholder management concepts.
Project Stakeholder Management (Jepsen, 2013)
This book is about stakeholder management in projects. Projects are established to generate benefit
for the permanent organization behind the project (the base organization) (Andersen 2008). For
example, a company may initiate a construction project to establish more production capacity to
increase output and thereby generate more profit In this case, the company is the base organization
and the increased profit is the desired benefit. Benefit are generated through project deliverables
produced by the project team during the project process. In the above example, the production
facility is a deliverable. Other examples of deliverables may be new products, accomplishment of
events, replacement of machinery, or implementation of a new organizational structure.
Unfortunately, most projects do not result solely in benefit they also result in side effects which can
be negative, positive or neutral. Negative side effects are also sometimes referred to as disbenefits.
Benefit and side effects incurred by a project are project outcomes.
In the production facility example, noise from the construction process which bothers the neighbors
may be a negative side effect. This is an example of a side effect that will disappear when the project
is completed. Other side effects such as negative environmental impacts may last for a long time. While
the project deliverables are delivered during or at the end of the project process, project benefit
and side effects may not materialize until sometime after the project has been closed down. This is
likely to be the case for a project for which the main deliverable is a new hospital or for which the
main deliverable is a new product line within a company. It is only once the impact of the hospital is
felt in the local community or that the company can realize sales from its new product line that
benefit and side effects are apparent.

Chapter 3 Management of Stakeholders

In this chapter we discuss about the importance discussed in various standard papers and document.
Stakeholder management is the essential part of the project management process and according to
“Guidelines to the Project Management Body of Knowledge (PMI 2000), and “Quality Management –
Guidelines to Quality in Project Management” (SS-ISO 10006) emphasize the need to identify and
manage all the relevant stakeholders in order to ensure the success of the project.
Project managers need to identify and interact with key institutions and individuals in the project systems
environment. An important part of the management of the project systems environment is an organized
process to identify and manage the probable stakeholders in that environment, and determine how they
will react to the project decisions (Cleland 1999).
PMBOK 5th edition explain about the stakeholder management in its chapter 13 in 24 pages from 391 to
415 i.e.
PROJECT STAKEHOLDER MANAGEMENT
Project Stakeholder Management includes the processes required to identify the people, groups, or
Organizations that could impact or be impacted by the project, to analyze stakeholder expectations and
their impact on the project, and to develop appropriate management strategies for effectively engaging
stakeholders in project decisions and execution. Stakeholder management also focuses on continuous
communication with stakeholders to understand their needs and expectations, addressing issues as they
occur, managing conflicting interests and fostering appropriate stakeholder engagement in project
decisions and activities. Stakeholder satisfaction should be managed as a key project objective.
Figure 13-1 provides an overview of the Project Stakeholder Management processes that include the
following:
3.1 Identify Stakeholders—The process of identifying the people, groups, or organizations that could
impact or be impacted by a decision, activity, or outcome of the project; and analyzing and documenting
relevant information regarding their interests, involvement, interdependencies, influence, and potential
impact on project success.
3.2 Plan Stakeholder Management—the process of developing appropriate management strategies to
effectively engage stakeholders throughout the project life cycle, based on the analysis of their needs,
Interests, and potential impact on project success.
3.3 Manage Stakeholder Engagement—The process of communicating and working with stakeholders
to meet their needs/expectations, address issues as they occur, and foster appropriate stakeholder
engagement in project activities throughout the project life cycle.
3.4 Control Stakeholder Engagement—the process of monitoring overall project stakeholder

Relationships and adjusting strategies and plans for engaging stakeholders. These processes interact with
each other and with processes in other Knowledge Areas as described in detail in Section 3 and Annex
A1. Every project will have stakeholders who are impacted by or can impact the project in a positive or
negative way. While some stakeholders may have a limited ability to influence the project, others may
have significant influence on the project and its expected outcomes. The ability of the project manager to
correctly identify and manage these stakeholders in an appropriate manner can mean the difference
between success and failure.
Figure 3 Project Stakeholder Management Overview
3.1 Identify Stakeholders

Identify Stakeholders is the process of identifying the people, groups, or organizations that could impact
or be impacted by a decision, activity, or outcome of the project, analyzing and documenting relevant
information regarding their interests, involvement, interdependencies, influence, and potential impact on
project success. The key benefit of this process is that it allows the project manager to identify the
appropriate focus for each stakeholder or group of stakeholders. The inputs, tools and techniques, and
outputs of this process are depicted in Figure 4. Figure 5 depicts the data flow diagram of the process.
Figure 4 Identify Stakeholders: Inputs, Tools & Techniques, and Outputs
Figure 5 Identify Stakeholders Data Flow Diagram
Project stakeholders are individuals, groups, or organizations who may affect, be affected by, or perceive
Themselves to be affected by a decision, activity, or outcome of a project. They are comprised of persons
and organizations such as customers, sponsors, the performing organization, and the public who are
actively involved in the project, or whose interests may be positively or negatively affected by the
execution or completion of the project. They may also exert influence over the project and its deliverables.
Stakeholders may be at different levels within the organization and may possess different authority levels,
or may be external to the performing organization for the project. Section 3.1.2.1 identifies various types
of project stakeholders.
It is critical for project success to identify the stakeholders early in the project or phase and to analyze
their levels of interest, their individual expectations, as well as their importance and influence. This initial
assessment should be reviewed and updated regularly. Most projects will have a diverse number of
stakeholders depending on their size, type, and complexity. While the project manager’s time is limited
and should be used as efficiently as possible, these stakeholders should be classified according to their
interest, influence, and involvement in the project, taking into consideration the fact that the affect or
influence of a stakeholder may not occur or become evident until later stages in the project or phase. This
enables the project manager to focus on the relationships necessary to ensure the success of the project.
3.1.1 Identify Stakeholders: Inputs
3.1.1.1 Project Charter
Described in Section 4.1.3.1. (PMBOK 5th Edition)The project charter can provide information about
internal and external parties related with the project and affected by the result or the execution of the
project, such as project sponsor(s), customers, team members, groups and departments participating in
the project, and other people or organizations affected by the project.
3.1.1.2 Procurement Documents
Described in Section 12.1.3.3. (PMBOK 5th Edition) If a project is the result of a procurement activity or
is based on an established contract, the parties in that contract are key project stakeholders. Other relevant
parties, such as suppliers, should also be considered as part of the project stakeholder list.
3.1.1.3 Enterprise Environmental Factors
Described in Section 2.1.5. (PMBOK 5th Edition) The enterprise environmental factors that can influence
the Identify Stakeholders process include, but are not limited to:
• Organizational culture and structure;
• Governmental or industry standards (e.g., regulations, product standards); and
• Global, regional or local trends, and practices or habits.
3.1.1.4 Organizational Process Assets
Described in Section 2.1.4. (PMBOK 5th Edition) The organizational process assets that can influence the
Identify Stakeholders process include, but are not limited to:
• Stakeholder register templates,
• Lessons learned from previous projects or phases, and
• Stakeholder registers from previous projects.
3.1.2 Identify Stakeholders: Tools and Techniques
3.1.2.1 Stakeholder Analysis
Stakeholder analysis is a technique of systematically gathering and analyzing quantitative and qualitative
information to determine whose interests should be taken into account throughout the project. It identifies
the interests, expectations, and influence of the stakeholders and relates them to the purpose of the project.
It also helps to identify stakeholder relationships (with the project and with other stakeholders) that can

be leveraged to build coalitions and potential partnerships to enhance the project’s chance of success,
along with stakeholder relationships that need to be influenced differently at different stages of the project
or phase.
Stakeholder analysis generally follows the steps described below:
• Identify all potential project stakeholders and relevant information, such as their roles, departments,
Interests, knowledge, expectations, and influence levels. Key stakeholders are usually easy to identify.
They include anyone in a decision-making or management role who is impacted by the project outcome,
Such as the sponsor, the project manager, and the primary customer. Identifying other stakeholders is
Usually done by interviewing identified stakeholders and expanding the list until all potential
stakeholders are included.
• Analyze the potential impact or support each stakeholder could generate, and classify them so as to
define an approach strategy. In large stakeholder communities, it is important to prioritize the
stakeholders to ensure the efficient use of effort to communicate and manage their expectations.
• Assess how key stakeholders are likely to react or respond in various situations, in order to plan how to
influence them to enhance their support and mitigate potential negative impacts.
There are multiple classification models used for stakeholders analysis, such as:
• Power/interest grid, grouping the stakeholders based on their level of authority (“power”) and their
level or concern (“interest”) regarding the project outcomes;
• Power/influence grid, grouping the stakeholders based on their level of authority (“power”) and their
Active involvement (“influence”) in the project;
• Influence/impact grid, grouping the stakeholders based on their active involvement (“influence”) in the
project and their ability to effect changes to the project’s planning or execution (“impact”); and
• Salience model, describing classes of stakeholders based on their power (ability to impose their will),
Urgency (need for immediate attention), and legitimacy (their involvement is appropriate).
Figure 6 presents an example of a power/interest grid with A-H representing the placement of generic
Stakeholders.

Figure 6 Example Power/Interest Grid with Stakeholders
3.1.2.2 Expert Judgment

To ensure comprehensive identification and listing of stakeholders, judgment and expertise should be
sought from groups or individuals with specialized training or subject matter expertise, such as:
• Senior management;
• Other units within the organization;
• Identified key stakeholders;
• Project managers who have worked on projects in the same area (directly or through lessons learned);
• Subject matter experts (SMEs) in the business or project area;
• Industry groups and consultants; and
• Professional and technical associations, regulatory bodies, and nongovernmental organizations (NGOs).
Expert judgment can be obtained through individual consultations (one-on-one meetings, interviews, etc.)
or through a panel format (focus groups, surveys, etc.).
3.1.2.3 Meetings
Profile analysis meetings are project meetings designed to develop an understanding of major project
Stakeholders, and they can be used to exchange and analyze information about roles, interests,
knowledge, and the overall position of each stakeholder facing the project.

3.1.3 Identify Stakeholders: Outputs

3.1.3.1 Stakeholder Register
The main output of the Identify Stakeholders process is the stakeholder register. This contains all details
related to the identified stakeholders including, but not limited to:
• Identification information. Name, organizational position, location, role in the project, contact
Information;
• Assessment information. Major requirements, main expectations, potential influence in the project,
Phase in the life cycle with the most interest; and
• Stakeholder classification. Internal/external, supporter/neutral/resistor, etc.
The stakeholder register should be consulted and updated on a regular basis, as stakeholders may
change—or new ones identified—throughout the life cycle of the project.
3.2 Plan Stakeholder Management
Plan Stakeholder Management is the process of developing appropriate management strategies to
effectively engage stakeholders throughout the project life cycle, based on the analysis of their needs,
interests, and potential impact on project success. The key benefit of this process is that it provides a
clear, actionable plan to interact with project stakeholders to support the project’s interests. The inputs,
tools and techniques, and outputs of this process are depicted in Figure 7. Figure 8 depicts the data flow
diagram of the process.
Figure 7 Plan Stakeholder Management: Inputs, Tools & Techniques, and Outputs

Figure 8 Plan Stakeholder Management Data Flow Diagram
Project manager to develop various ways to effectively engage stakeholders in the project, to manage
their expectations, and to ultimately achieving the project objectives. Stakeholder management is more
than improving communications and requires more than managing a team. Stakeholder management is
about creation and maintenance of relationships between the project team and stakeholders, with the aim
to satisfy their respective needs and requirements within project boundaries.
This process generates the stakeholder management plan, which contains detailed plans on how effective
Stakeholder management can be realized. As the project progresses, the membership of the stakeholder
community and required level of engagement may change, therefore, stakeholder management planning
is an iterative process that is reviewed on a regular basis by the project manager.
3.2.1 Plan Stakeholder Management: Inputs
3.2.1.1 Project Management Plan
Described in Section 4.2.3.1. (PMBOK 5th Edition) The information used for the development of the
stakeholder management plan includes, but is not limited to:
• Life cycle selected for the project and the processes that will be applied to each phase;
• Description of how work will be executed to accomplish the project objectives;
• Description of how human resources requirements will be met and how roles and responsibilities,
reporting relationships, and staffing management will be addressed and structured for the project
• Change management plan that documents how changes will be monitored and controlled; and
• Need and techniques for communication among stakeholders.

3.2.1.2 Stakeholder Register

Described in Section 13.1.3.1. The stakeholder register provides the information needed to plan
appropriate ways to engage project stakeholders.
3.2.1.3 Enterprise Environmental Factors
Described in Section 2.1.5. (PMBOK 5th Edition) All enterprise environmental factors are used as inputs
to this process, because the management of stakeholders should be adapted to the project environment.
Of these, organizational culture, structure, and political climate are of particular importance, because they
help in determining the best options to support a better adaptive process for managing stakeholders.
Described in Section 2.1.4. (PMBOK 5th Edition) All organizational process assets are used as inputs for
the Plan Stakeholder Management process. Of these, lessons learned database and historical information
are of particular importance, because they provide insights on previous stakeholder management plans
and their effectiveness. These can be used to plan the stakeholder management activities for the current
project.
3.2.2 Plan Stakeholder Management: Tools and Techniques
Based on the project objectives, the project manager should apply expert judgment to decide upon the
level of engagement required at each stage of the project from each stakeholder. For example, at the
beginning of a project, it may be necessary for senior stakeholders to be highly engaged in order to clear
away any obstacles to success. Once these have been successfully removed, it may be sufficient for senior
stakeholders to change their level of engagement from leading to supportive, and other stakeholders, such
as end users, may become more important.
In order to create the stakeholder management plan, judgment and expertise should be sought from groups
or individuals with specialized training or subject matter expertise or insight into the relationships within
the organization, such as:
• Project team members;
• Other units or individuals within the organization;
• Subject matter experts in business or project area;
• Professional and technical associations, regulatory bodies, and nongovernmental organization (NGOs).

Expert judgment can be obtained through individual consultations (one-on-one meetings, interviews, etc.)
or through a panel format (focus groups, surveys, etc.).
3.2.2.2 Meetings
Meetings should be held with experts and the project team to define the required engagement levels of
all stakeholders. This information can be used to prepare the stakeholder management plan.
3.2.2.3 Analytical Techniques
The current engagement level of all stakeholders needs to be compared to the planned engagement levels
Required for successful project completion. Stakeholder engagement throughout the life cycle of the
project is critical to project success.
The engagement level of the stakeholders can be classified as follows:
• Unaware. Unaware of project and potential impacts.
• Resistant. Aware of project and potential impacts and resistant to change.
• Neutral. Aware of project yet neither supportive nor resistant.
• Supportive. Aware of project and potential impacts and supportive to change.
• Leading. Aware of project and potential impacts and actively engaged in ensuring the project
is a success.
The current engagement can be documented using Stakeholders Engagement Assessment Matrix, as
shown in Figure 9, where C indicates the current engagement, and D indicates the desired engagement.
The project team needs to identify the desired engagement level for the current phase of the project, based
on available information.
The example in Figure 9 shows that stakeholder 3 is at the desired engagement level, while stakeholders
1 and 2 require further communications and additional actions to move them to the desired level of
engagement.
Figure 9 Stakeholders Engagement Assessment Matrix

Through this analytical process, gaps between the current and desired engagement levels can be
identified. Actions and communications required to close these gaps can be identified by the project team
using expert judgment.
3.2.3 Plan Stakeholder Management: Outputs
3.2.3.1 Stakeholder Management Plan
The stakeholder management plan is a component of the project management plan (Section
4.2.3.1(PMBOK 5th Edition)) and identifies the management strategies required to effectively engage
stakeholders. The stakeholder management plan can be formal or informal, highly detailed or broadly
framed, based on the needs of the project.
In addition to the data gathered in the stakeholder register, the stakeholder management plan often
provides:
• Desired and current engagement levels of key stakeholders;
• Scope and impact of change to stakeholders;
• Identified interrelationships and potential overlap between stakeholders;
• Stakeholder communication requirements for the current project phase;
• Information to be distributed to stakeholders, including language, format, content, and level of detail;
• Reason for the distribution of that information and the expected impact to stakeholder engagement;
• Time frame and frequency for the distribution of required information to stakeholders; and
• Method for updating and refining the stakeholder management plan as the project progresses and
Develops. Project managers should be aware of the sensitive nature of the stakeholder management plan
and take appropriate precautions. For example, information on stakeholders who are resistant to the
project can be potentially damaging, and due consideration should be given regarding the distribution of
such information. When updating the stakeholder management plan, the validity of underlying
assumptions should be reviewed to ensure continued accuracy and relevancy.
3.2.3.2 Project Documents Updates
Project documents that may be updated include, but are not limited to:
• Project schedule, and
• Stakeholder register.
3.3 Manage Stakeholder Engagement
Manage Stakeholder Engagement is the process of communicating and working with stakeholders to meet
their needs/expectations, address issues as they occur, and foster appropriate stakeholder engagement in
project activities throughout the project life cycle. The key benefit of this process is that it allows the
project manager to increase support and minimize resistance from stakeholders, significantly increasing

the chances to achieve project success. The inputs, tools and techniques, and outputs of this process are
depicted in Figure 10. Figure 11 depicts the data flow diagram of the process.
Figure 10 Manage Stakeholder Engagement: Inputs, Tools & Techniques, and Outputs
Figure 11 Manage Stakeholder Engagement Data Flow Diagram
Manage Stakeholder Engagement involves activities such as:

• Engaging stakeholders at appropriate project stages to obtain or confirm their continued commitment to
the success of the project;
• Managing stakeholder expectations through negotiation and communication, ensuring project goals are
achieved;
• Addressing potential concerns that have not yet become issues and anticipating future problems that
May be raised by stakeholders. Such concerns need to be identified and discussed as soon as possible
To assess associated project risks; and

• Clarifying and resolving issues that have been identified. Managing stakeholder engagement helps to
increase the probability of project success by ensuring that stakeholders clearly understand the project
goals, objectives, benefits, and risks.
This enables them to be active supporters of the project and to help guide activities and project decisions.
By anticipating people’s reactions to the project, proactive actions can be taken to win support or
minimize negative impacts. The ability of stakeholders to influence the project is typically highest during
the initial stages and gets progressively lower as the project progresses. The project manager is
responsible for engaging and managing the various stakeholders in a project and may call upon the project
sponsor to assist as needed. Active management of stakeholder involvement decreases the risk of the
project failing to meet its goals and objectives.
3.3.1 Manage Stakeholder Engagement: Inputs
3.3.1.1 Stakeholder Management Plan
Described in Section 13.2.3.1(PMBOK 5th Edition). The stakeholder management plan provides guidance
on how the various stakeholders can be best involved in the project. The stakeholder management plan
describes the methods and technologies used for stakeholder communication. This plan is used to
determine the level of interactions of various stakeholders and—together with other documents—helps
define a strategy for identifying and managing stakeholders throughout the project life cycle.
3.3.1.2 Communications Management Plan
Described in Section 10.1.3.1. (PMBOK 5th Edition) The communications management plan provides
guidance and information on managing stakeholder expectations. The information used includes, but is
not limited to:
• Stakeholder communications requirements;
• Information to be communicated, including language, format, content, and level of detail;
• Reason for distribution of information;
• Person or groups who will receive information and Escalation process.
3.3.1.3 Change Log
Described in Section 4.5.3.2. (PMBOK 5th Edition) A change log is used to document changes that occur
during a project. These changes—and their impact on the project in terms of time, cost, and risk—are
communicated to the appropriate stakeholders.
Described in Section 2.1.4. (PMBOK 5th Edition) The organizational process assets that can influence the
Manage Stakeholder
Engagement process include, but are not limited to:

• Organizational communication requirements,

• Issue management procedures,
• Change control procedures, and
• Historical information about previous projects.
3.3.2 Manage Stakeholder Engagement: Tools and Techniques
3.3.2.1 Communication Methods
Described in Section 10.1.2.4. (PMBOK 5th Edition) The methods of communication identified for each
stakeholder in the communications management plan are utilized during stakeholder engagement
management. Based on the stakeholders’ communication requirements, the project manager decides how,
when, and which of these communication methods are to be used in the project.
3.3.2.2 Interpersonal Skills
The project manager applies interpersonal skills to manage stakeholders’ expectations. For example:
• Building trust,
• Resolving conflict,
• Active listening, and
• Overcoming resistance to change.
3.3.2.3 Management Skills
The project manager applies management skills to coordinate and harmonize the group toward
accomplishing the project objectives. For example:
• Facilitate consensus toward project objectives,
• Influence people to support the project,
• Negotiate agreements to satisfy the project needs, and
• Modify organizational behavior to accept the project outcomes.
3.3.3 Manage Stakeholder Engagement: Outputs
3.3.3.1 Issue Log
Managing stakeholder engagement may result in the development of an issue log. This log is updated as
new issues are identified and current issues are resolved.
3.3.3.2 Change Requests
Managing stakeholder engagement may result in a change request to the product or the project. It may
also include corrective or preventive actions to the project itself or to the interaction with the impacted
stakeholders, as appropriate.

3.3.3.3 Project Management Plan Updates

Elements of the project management plan that may be updated include, but are not limited to, the
stakeholder management plan. This plan is updated when new or changed stakeholders requirements are
identified. For example, some communications may no longer be necessary, an ineffective
communication method may be replaced by another method, or a new communication requirement may
be identified. It is also updated as a result of addressing concerns and resolving issues. For example, it
may be determined that a stakeholder has additional informational needs.
Project documents that may be updated include, but are not limited to, the stakeholder register. This is
updated as information on stakeholders change, when new stakeholders are identified, or if registered
stakeholders are no longer involved in or impacted by the project, or other updates for specific
stakeholders are required.
3.3.3.5 Organizational Process Assets Updates
The organizational process assets that may be updated include, but are not limited to:
• Stakeholder notifications. Information may be provided to stakeholders about resolved issues, approved
changes, and general project status.
• Project reports. Formal and informal project reports describe project status and include lessons learned,
issue logs, project closure reports, and outputs from other Knowledge Areas (Sections 4-12).
• Project presentations. Information formally or informally provided by the project team to any or all
Project stakeholders.
• Project records. Project records include correspondence, memos, meeting minutes, and other
Documents describing the project.
• Feedback from stakeholders. Information received from stakeholders concerning project operations
Can be distributed and used to modify or improve future performance of the project.
• Lessons learned documentation. Documentation includes the root cause analysis of issues faced,
reasoning behind the corrective action chosen, and other types of lessons learned about stakeholder
management. Lessons learned are documented and distributed, and become part of the historical database
for both the project and the performing organization.
3.4 Control Stakeholder Engagement
Control Stakeholder Engagement is the process of monitoring overall project stakeholder relationships
and adjusting strategies and plans for engaging stakeholders. The key benefit of this process is that it will
maintain or increase the efficiency and effectiveness of stakeholder engagement activities as the project

evolves and its environment changes. The inputs, tools and techniques, and outputs of this process are
depicted in Figure 12. Figure 13 depicts the data flow diagram of the process
Figure 12 Control Stakeholder Engagement: Inputs, Tools & Techniques, and Outputs
Figure 13 Control Stakeholder Engagement: Data Flow Diagram
Stakeholder engagement activities are included in the stakeholder management plan and are executed
during the life cycle of the project. Stakeholder engagement should be continuously controlled.
3.4.1 Control Stakeholder Engagement: Inputs
3.4.1.1 Project Management Plan
Described in Section 4.2.3.1. (PMBOK 5th Edition)The project management plan is used to develop the
stakeholder management plan, as described in Section 3.1.3.1 the information used to Control Stakeholder
Engagement includes, but is not limited to:
• The life cycle selected for the project and the processes that will be applied to each phase;
• How work will be executed to accomplish the project objectives;
• How human resources requirements will be met, how roles and responsibilities, reporting relationships,
And staffing management will be addressed and structured for the project;
• A change management plan that documents how changes will be monitored and controlled; and
• Needs and techniques for communication among stakeholders.

3.4.1.2 Issue Log
Described in Section 3.3.3.1. The issue log is updated as new issues are identified and current issues are
resolved.
3.4.1.3 Work Performance Data
Described in Section 4.3.3.2 (PMBOK 5th Edition). The work performance data are the primary
observations and measurements identified during activities being performed to carry out the project work.
Various measurements on project activities and deliverables are collected during various controlling
processes. Data are often viewed as the lowest level of abstraction from which information is derived by
other processes.
Examples of work performance data include reported percentage of work completed, technical
performance measures, start and finish dates of schedule activities, number of change requests, number
of defects, actual costs, actual durations etc.
3.4.1.4 Project Documents
Multiple project documents originating from initiation, planning, execution, or control processes may be
used as supporting inputs for controlling stakeholder engagement. These include, but are not limited to:
• Project schedule,
• Stakeholder register,
• Issue log,
• Change log, and
• Project communications.
3.4.2 Control Stakeholder Engagement: Tools and Techniques
3.4.2.1 Information Management Systems
An information management system provides a standard tool for the project manager to capture, store,
And distribute information to stakeholders about the project cost, schedule progress, and performance. It
also allows the project manager to consolidate reports from several systems and facilitate report
distribution to the project stakeholders. Examples of distribution formats may include table reporting,
spreadsheet analysis, and presentations. Graphical capabilities can be used to create visual representations
of project performance information.
To ensure comprehensive identification and listing of new stakeholders, reassessment of current
stakeholders can be performed. Input should be sought from groups or individuals with specialized
training or subject matter expertise, such as:

• Other units or individuals within the organization;
• Subject matter experts in the business or project area;
• Professional and technical associations, regulatory bodies, and nongovernmental organizations.
Expert judgment can be obtained through individual consultations (such as one-on-one meetings or
interviews) or through a panel format (such as focus groups or surveys).
3.4.2.3 Meetings
Status review meetings are used to exchange and analyze information about stakeholder engagement.
3.4.3 Control Stakeholder Engagement: Outputs
3.4.3.1 Work Performance Information
The work performance information is the performance data collected from various controlling processes,
Analyzed in context, and integrated based on relationships across areas. Thus work performance data
have been transformed into work performance information. Data per se are not used in the decision-
making process, because the meaning may be misinterpreted. Information, however, is correlated and
contextualized and provides a sound foundation for project decisions.
Work performance information is circulated through communication processes. Examples of
performance information are status of deliverables, implementation status for change requests, and
forecasted estimates to complete.
3.4.3.2 Change Requests
Analysis of project performance and interactions with stakeholders often generates change requests.
These change requests are processed through the Perform Integrated Change Control process (Section
4.5) as follows:
• Recommended corrective actions include changes that bring the expected future performance of the
Project in line with the project management plan; and
• Recommended preventive actions can reduce the probability of incurring future negative project
Performance.
3.4.3.3 Project Management Plan Updates
As stakeholders engage with the project the overall effectiveness of the stakeholder management strategy
can be evaluated. As needed changes in approach or strategy are identified, affected sections of the project

management plan may need to be updated to reflect these changes. Elements of the project management
plan that may be updated include, but are not limited to the
• Change management plan, • Requirements management plan,
• Communications management plan, • Risk management plan,
• Cost management plan, • Schedule management plan,
• Human resource management plan, • Scope management plan, and
• Procurement management plan, • Stakeholder management plan.
• Quality management plan,
Project documents that may be updated include, but are not limited to:
• Stakeholder register. This is updated as information on stakeholders change, when new stakeholders
Are identified, or if registered stakeholders are no longer involved in or impacted by the project, or other
Updates for specific stakeholders are required.
• Issue log. This is updated as new issues are identified and current issues are resolved
3.4.3.5 Organizational Process Assets Updates
The organizational process assets, which may be updated include, but are not limited to:
• Stakeholder notifications. Information may be provided to stakeholders about resolved issues,
approved changes, and general project status.
• Project reports. Formal and informal project reports describe project status and include lessons learned,
issue logs, project closure reports, and outputs from other Knowledge Areas (Sections 4-12).
• Project presentations. Information formally or informally provided by the project team to any or all
Project stakeholders.
• Project records. Project records include correspondence, memos, meeting minutes, and other
documents describing the project.
• Feedback from stakeholders. Information received from stakeholders concerning project operations
Can be distributed and used to modify or improve future performance of the project.
• Lessons learned documentation. Documentation includes the root cause analysis of issues faced,
reasoning behind the corrective action chosen, and other types of lessons learned about stakeholder
management. Lessons learned are documented and distributed so that they become part of the historical
database for both the project and the performing organization.

Chapter 4 Stakeholders
In this chapter all the type of stakeholders and there roll in the project is describe. This chapter also
include the various project life cycle of the project and a generalized involvement of stakeholders in all
the phases.
Stakeholders are persons or groups that have, or claim to have, ownership, rights, or interests in a project
and its activities. Primary, or internal, stakeholders are those who are members of the project coalition or
who are providing finance and those who have a legal contractual relationship to the project. Secondary,
or external, stakeholders are defined as those who influence or affect, or are influenced or affected by,
the project, but are not normally engaged in transactions with the project and may not be essential to the
survival of the project (Cleland 1999, Calvert 1995 from Winch, Bonked 2002). The external stakeholders
have, however, a capacity to mobilize public opinion in favor of or in opposition to the purposes and
performance of the project (Cleland 1999)
The stakeholder now can be divided into four major part:-
1. External stakeholder
2. Internal Stakeholder
3. Positive Stakeholder
4. Negative Stakeholder
But mainly when we consider the stakeholder in a construction project then we only consider
stakeholder which have direct and indirect impact of stakeholder on the project then in that scenario we
have external stakeholder and internal stakeholder as shown in figure 14

Figure 14 Stakeholder in construction project (Cleland 1999)
4.1 Internal Stakeholder

Internal stakeholder are those who have direct impact on the project so broadly it can be divided into
following groups/Individuals
 Project owner
 The project management team
 Suppliers
 Customer
The definition of these subhead is described in the following pages in which the role of every group is
explained (Olander, 2003).

4.1.1 Project Owner

Is the most relevant stakeholder and the sponsor of the project? The project owner is the bearer of project
risks, and the one who will bear the consequences of a failed project. The project owner of a construction
project is in most cases the developer of a property and the initiator of the project, the client organization.
4.1.2 The Project Professional
The project professional is the instrument that the project owner has for implementing the project
according to the prerequisites and specifications delivered by the project owner. A well composed project
professional, with all relevant competences, is essential for the success of a project.
4.1.3 Suppliers/Contactors
The suppliers are the ones that deliver services and products to the project organization in construction
projects the contractor is one of the most relevant suppliers, because it is those who complete the
construction project on site, according to the specifications delivered by the project management team.
From the point-of-view of many external stakeholders, the contractor becomes the face of the project,
since it is in the construction phase that the consequences of a construction project becomes visible, and
when disturbances due to the construction occurs.
4.1.4 Customer
The customer is the basis for initiating a project. There must be a need and thus a customer for a project
to be successful. However, for construction projects the concept of customer is not as obvious as it would
appear. The definition of a customer is: the individual or organization that will use the product of the
project (PMI 2000). The customer is in this case equivalent to the end-user. For construction projects,
especially if they are public, the definition of customer as the end-user is relevant. In public construction
projects, the end-user often does not pay for the product of the project, other than by the taxes. In this
case, the public can be regarded as the customer of the project.
In private construction projects the customer concept is clearer, since the customer will pay for the
product of the project, for instance via the rent or the purchase of a house or apartment. In conclusion the
needs of the customer are relevant in a stakeholder management process, since the customer needs should
have priority over the needs of other stakeholders,
Table 1 Internal Stakeholders

Categories Individuals/Groups Objectives and roles

Client Private clients  Ensure the project will support the
organization’s strategy
 Ensure the organization’s resources

will be used economically and
effectively
 Learn skills, earn wages, work on the

frontline
 Link between the client and

consultants, ensure the project is
completed successfully in terms of
quality, time and cost
 Provide financial support maximize

return with minimized risk
 Purchase the construction product
Public clients
 Serve public interest based on the
organization’s strategic objectives
 Consume what is delivered in order to

satisfy functional and basic needs
 Allocates funds to the project
 Ensures that public funds will be used

properly
 Link between the client and the

consultants, ensure the project
completed successfully in terms of
quality, time and cost

Project professionals Architect  Develops the design of the

project; produces drawings and
specification; ensures that a
project is implemented within
cost and time, and according to
quality control
PMC  Advises client on financial and
budgetary matters; assists in
preparing tender documents examines
and reports upon tenders monitors
costs during construction and seeks to
understand valuation and
measurement assesses the legitimacy
of claims from contractors and
prepares final accounts
Structural engineer
 Designs all structural calculations and
elements; designs building structure;
ensures statutory compliance
Building service engineer
 Design electrical and mechanical
building services system such as
HVAC, Fire, Water, Electronics etc.

Contractors/suppliers Main contractor  Carries out and completes the work

designed by consultants to meet
time, cost and quality objectives;
supervises and manages operations
on site; sometimes assists in design;
coordinates and supervises all sub-
contract work, materials and
Sub-contractors suppliers
 Carry out work assigned by

Laborers
main contractors
 Finish tasks assigned, earn living,

Suppliers
learn skills
 Supply, install and commission the
hardware that constitutes the finished
building (e.g. materials suppliers,
equipment suppliers and
manufacturers)
Customer Owner  Future owner of the project, the

individual or organization that will
use the product of the project
User
 The end-user who does not pay for
the product of the project, other than
by the taxes
4.2 External Stakeholder

External stakeholder are those stakeholder which don’t have direct impact on the project. External
stakeholder never involve in the project directly but have a very strong influence on the project.

The external stakeholder of a project can be divided into following categories:-
4.2.1 External Public Parties

 Interests groups
 The Media
 Local and National Authorities
4.2.2 External Private Parties

 The public
 Trade and industries
4.2.1.1 Interests groups

Interest groups, or lobby groups, can act both locally and nationally as proponents or opponents to a
project. Interest groups can be formed in many different ways and have different powers to influence
project decisions. For each project, relevant interest groups need to be identified, and each group must be
managed separately.
4.2.1.2 The Media

The media cannot really be defined as a stakeholder, since they have no actual stake in the project.
However, the media can have a tremendous impact, both as a proponent and as an opponent, to influence
other stakeholders in the project decision process.
Furthermore, they can be used as a medium for stakeholders to influence other stakeholders. An example
can be an interest group that uses the media to affect the politicians in their decision to approve or reject
a project. The media can also be used by the project management team as a forum for information to other
stakeholders.
When we successfully identify the project stakeholder then we have to find out there need and
requirement which helps a project manager to deliver the project on time as well as during the pre-
planning phase if we had workout more on the stakeholder management
4.2.1.3 Local and National Authorities
This stakeholder group consists of civil servants and politicians. It is essential that politicians are taken
into consideration since they issue the final approvals for the implementation of project. Thus, they have
a major formal influence on project decisions.

The civil servants are, in a more informal sense, an equally relevant stakeholder as the politicians. The
civil servants provide the politicians with the base for their decisions, according to an interpretation of
the rules and regulations.
Thus, the civil servants have a possibility to influence project decisions, via their recommendations to
the politicians.
4.2.2.1 The Public

The public is a large and illusive stakeholder. The public can both benefit from a project and suffer its
negative consequences. We can take the example of a road project; the general public will benefit from
the project by the improvement of communications, but the residents in the vicinity will suffer the
consequences of a locally deteriorated environment.
Consequently, the public cannot be managed as a uniform stakeholder group must be divided in to
subgroups that can affect the project differently depending on how they are affected by the project.
4.2.2.2 Trade and Industry

Trade and industry are in many ways a stakeholder similar to the public, they can both benefit and suffer
the consequences of a project.
If we again take a road project, local trade and industry will profit by the improvement in communication,
but a new road may involve the closure of an existing road or its being used less frequently, with the
consequent loss of accessibility

Table 2 External Stakeholders
Categories Individuals/Groups Objectives and roles

External public Government authorities  Ensure that the project abides by laws
parties and regulations; may be indifferent to
any project so long as it complies with
codes (e.g. planning department,
electrical and mechanical services
department, transport department,
highways department, etc.)
Consultation bodies such as district board
 Ensure the local communities’
requirements will be reflected in the
project
Town planning board

 Ensures the project will be in line
with district planning
Labour union/employers’ association
 Influences the conduct of its members
(privilege protection function)
General public
 Participate in and contribute to the
government process of a society as a
whole
Media
 Influence project decisions (influence
company reputations)
Institutional Forces/Nationalized Industries
 Influence professional institutions upon
the activities of their members through
rules of conduct, education, conditions
of engagement and fee scales

External private Local residents/community  May fear a fall in amenity, therefore

parties against the project
Local landowners  Own land ensure that their interests

will not be hurt by the project
Archaeologists  Concerned about the loss of

important historical artefacts
Environmentalists/ conservationists  Wish to protect the environment
from destruction or pollution
Competitors
 Seek to gain competitive
advantage
Tourists
 Enjoy the scene
Others
 Their connection to the project is not
immediately clear, but their operation
and support may be vital to the
project success

Chapter 5 Stakeholder involvement in Project Life Cycle

In this chapter all type of stakeholder is described according to the project phase with the involvement of
the every stakeholder in that particular phase is discussed accordingly.
5.1 Phase Of construction Project and stakeholder involvement according the phase:-
 Prefeasibility Phase
 Feasibility Phase
 Planning Phase
 Execution Phase
 Closing Phase
5.1.1 Prefeasibility Phase

The feasibility study is the beginning of the project, and it examines if the project is applicable and
feasible for the customers. At this stage, the idea for the project is explored and elaborated, in order to
find out the nature and scale as accurately as possible. The customer should, in addition, evaluate if the
nature and possible execution of the project are familiar to them and to the suppliers, or if they are
exceptionally complex with a lot of uncertain issues. If the nature of the project seems to be familiar in
every way, it will probably be easier and more natural to use traditional project delivery methods instead
of RPDM (Relational project delivery methods). On the other hand, if the customer finds that the project
will be special and multidimensional in some way, which would most likely require the deep involvement
of multiple stakeholders and the utilization of their competence as a means of maximizing value creation,
then using RPDM is recommended. At this point, the customers should write down their own purposes
and objectives for the RPDM project, such as: the ultimate purpose of the project, the kind of benefits
that using RPDM is expected to achieve, and the constraints that need to be taken into account. In addition
to the customer’s purposes, RPDM’s general purposes are
(i) To increase collaboration between the stakeholders, especially between the customer and the
design and construction teams;
(ii) To make the plans for the different project phases within the integrated team;
(iii) To manage the project as networks of commitments;
(iv) To optimize the end result, not the pieces;
(v) To focus on continuous improvement by linking learning into every action.
According to the Dynamism of stakeholders power in construction projects published in 2008 by School
of Engineering and the Built Environment, University of Wolver Hampton, UK they said that Client,
Architects, Landowner and PMC (Project management consultant) are the most important stakeholders
to be involved during the prefeasibility phase whereas Contractor, Consultants are the least important
during the pre-construction stage.
5.1.2 Feasibility Phase

The feasibility study is the beginning of the project, and it examines if the project is applicable and
feasible for the customers. At this stage, the idea for the project is explored and elaborated, in order to
find out the nature and scale as accurately as possible. The customer should, in addition, evaluate if the
nature and possible execution of the project are familiar to them and to the suppliers, or if they are
exceptionally complex with a lot of uncertain issues. If the nature of the project seems to be familiar in
every way, it will probably be easier and more natural to use traditional project delivery methods instead
of RPDM.
According to the Dynamism of stakeholders power in construction projects published in 2008 by School
of Engineering and the Built Environment, University of Wolver Hampton, UK they said that Client,
Architects and Project managers are the most important stakeholders to be involved during the pre-
construction phase, local resident, Government Authorities, Land Owners, Constitutional bodies,
Competitor, whereas Contractor, Consultants are the least important during the feasibility phase
5.1.3 Planning Phase

In the planning phase it is necessary to count the impact of the project on the nearby stakeholder and the
decision making body i.e. client team and the project management team have to decide the path of the
project which give the least negative impact on the surroundings.
5.1.4 Initiation Phase

The initiation stage concentrates on evaluating the project’s feasibility from the perspective of the
different stakeholders. Therefore, it is crucial that the customer identifies and analyzes the possible project
stakeholders who can have a positive impact on the project’s value creation and who can bring some
special competencies to the project. Naturally, those who can impose constraints must be identified as
well. Usually, RPDM projects contain lots of contingencies compared with traditional projects.
Decisions are made concerning who is going to carry out the project, who the stakeholders to be involved
are, and whether the project has an adequate base of support among those who are involved. In addition,
questions are asked about the positions, interests, influence, interrelations, networks, and other
characteristics of the stakeholders, with reference to their past and present positions but also their future
potential. In the initiation stage, the project stakeholders enter a temporary relationship with each other,

and thus, it is extremely important for all stakeholders to emphasize the effort and engagement required
for successful project completion. Typically, in the initiation stage, misunderstandings arise because the
involved stakeholders have different expectations and alternatives. However, it is important to work out
these disputes in order to avoid complications later in the project.
5.1.4.1 Negotiating an Agreement.

Once the preferred proponent has been selected, the customer and proponent start negotiating an
agreement. However, the negotiations are not about the agreement’s language, but about finding the
alignment of the stakeholders’ (proponents’) interests. Therefore, finding common interests is the first
step in collaborative negotiation. The exchange of the agreement’s language comes second. If the
agreement’s language is exchanged first, it can divert attention away from the project’s fundamental
issues. The negotiation process contains two sections. It begins with defining what outcomes and
objectives the stakeholders want to achieve and any constraints lying behind those objectives. Then, the
processes and rules needed to achieve those objectives must be determined. The processes may include
building information modeling (BIM) and lean tools, such as Big Room, Last Planner, set-based design,
standardized work, and target value design
The common rules are
(i) speak freely and express your thoughts,
(ii) listen to other people and respect their opinions,
(iii) encourage towards innovativeness,
(iv) commend when deserved,
(v) challenge yourself and others,
(vi) Accept the consequences of your actions.
5.1.4.2 Finalizing the Agreement.

The agreement structure is tightly bonded to the project objectives, which are concretized through a
commercial framework and terms. The commercial framework culminates in the target cost estimate and
risk/reward share arrangements. Typically, the customer bears 50% of the risk/reward, and the other 50%
is distributed among the other formal stakeholders (contractors and designers).
The common terms in RPDMs are
(i) the team has a mutual focus and objectives; everyone wins or loses together;
(ii) collective responsibility for performance; pain/gain sharing;
(iii) decisions are made “best for the project”;

(iv) a “no-blame” culture; reduced liability exposure;

(v) open-book accounting and transactions;
(vi) Joint project control.
Despite the type of the agreement (bilateral or multiparty), usually, the customer, general contractor, and
main designer form the project core group that has the final responsibility for the project and its decisions.
However, there are plenty of other stakeholders in the project as well. In RPDM, they can be involved
and incorporated into the agreement in order to energize and spur them on. According to Ashcraft there
are two methods for incorporating stakeholders: a sub agreement and a joining agreement. In a joining
agreement, the key subcontractors and consultants execute an agreement that amends the RPDM
agreement to add them as parties. The risk/reward provisions are amended with each added party to reflect
the amount of compensation the added party has placed at risk. In a sub agreement, the key RPDM terms
flow through the prime agreement (designer or contractor) into the sub agreement (subcontractor or
consultant). The risk/reward compensation is a portion of the risk/reward compensation of its respective
prime. Usually, the subcontractors and consultants have no voting rights at the project management level.
However, their opinions are listened to and considered as per the common rules of the RPDM. After the
agreement has been signed, the project proceeds to the development phase. The development phase now
contains different levels of designs and more accurate budgeting and scheduling.
In the phase of the project the governing stakeholders will be the client, Project management team, and
the architect team, PMC, and the other supplier, Local and National Authorities are also become
important.
5.1.5 Execution Phase

In this phase the involvement of suppliers become the major part for the project and the important
stakeholder for that time are the
1) Contractor
2) Architect
3) Project Management team
4) Labour
These stakeholder are the most active stakeholder during this time and they involve actively in the project
which effect the project most.
The involvement of each and every stakeholder will be different in the different type of project.

The different type of project can be

1) Residential Building Project
2) Commercial Project
3) Infrastructure Project
5.1.6 Closing/Handover Phase
The closing stage of a project comprises all the final processes needed to close out a project and deliver
final products and reports to the stakeholders. This stage ensures that all documents and deliverables are
organized and handed over to the relevant stakeholders. Also, any remaining contractual obligations,
payments, vendor evaluations, etc.… is done during the project closing stage. In addition any lessons
learnt during the project must be documented during this stage for future reference
The involvement of stakeholders in this stage is important because of the quality assurance and the
satisfaction of the stakeholder.
The main stakeholders to be involved in this phase are Customer, Client, and PMC.
5.2 Stakeholders Role and Responsibility in Construction Projects

Following are the key stakeholders that are involved in construction projects.
5.2.1 CUSTOMER/CLIENT: Basically customer maybe the project owner or the user client.
5.2.1.1 The Project Owner is the person who:
- Stands to win or lose the most in terms of the outcome of the project
- Accepts full authority for the project
- Accepts accountability for the performance of the project (and who wants to do the project)
- Provides resources.
5.2.1.1.1 Roles and responsibilities
- Gives guidance on the overarching vision and strategy in terms of the project.
- Ensures that the project objectives remain aligned with corporate and business needs.
- Identifies the project manager.
- Supervises the processes, procedures, budget and monitoring.
- Reacts pro-actively on potential risks and issues.
- Ensures that the project has the required resources.
- Helps to eliminate conflicts of resources.
- Manages the benefits of the project (after completion of the project).

5.2.1.2 User Client is the person who will use and be benefitted from the project or the change
brought about by the project.
- Has a strong influence on the objectives of the project.
- Has a strong influence on how success of the project will be measured
- Has an influence on the timing of certain actions or tasks.
5.2.1.3 Needs of Customer/Client

The basic needs of customers are as follows:
a) Friendliness: Friendliness is the most basic of all customer’s needs, usually associated with being
greeted graciously and with warmth and be acknowledged and welcomed by the project
participants. A customer shouldn’t feel they are an intrusion on the project site or on the project
progress.
b) Understanding and Empathy: Customers need to feel that the project team understands and
appreciates their vision and circumstances without criticism or judgment. Customers have simple
expectations that the service providers who serve them can put themselves in their shoes and
understanding what it is they came to them for in the first place.
c) Fairness: Customers need to feel they are being treated fairly. Customers get very annoyed and
defensive when they feel they are subject to any class distinctions.
d) Control: Control represents the customers’ need to feel they have an impact on the way things
turn out. The service provider’s ability to meet this need for the customer comes from their own
willingness to say “yes” much more than to say “no.” Customers do not care about policies and
rules; they want to deal directly with the service provider with all the reasoning.
e) Options and alternatives: Customers need to feel that other avenues are available to getting what
they want to accomplish and they want the service provider to know about what all new
alternatives they come about. They get pretty upset when they feel they have spun their wheels
getting something done, and the service provider knew all along a better way, but never made the
suggestion.

f) Information: Customers wants and needs to be educated and informed about all the work that
has been done and are in progress not leaving anything out. They do not want to waste precious
time doing homework on their own but look to be informed frequently by the builders.
5.2.1.4 Expectations of Customer/Client

a) Completion on Time: Customers/Clients expect the project to be completed on the schedule
timeline. Any delay on the project completion apart from the extension time if any is not tolerated
by the customer.
b) Quality of work: Clients not only expect that the project must be completed on time but also
with desired quality of work put into it. For the completion of project on time, the contractors
should not compromise with the quality of the work and must provide the required quality of
work.
c) On Budget: Clients expect the project to be carried out on the contractually agreed budget and
also that the estimated cost are in accordance with his requirements and billed out correctly.
d) Safe: Clients expect that the project to be carried out with the correct construction technique and
result in no or minimal defects.
e) Flexibility: Customers often make special requests during construction. They may ask to make
changes in their selections long after the materials have been ordered. Or, they may ask to change
the design of some part etc. Balancing the tight schedules of work production against the desire
to please the client is bigger of a challenge but must be fulfilled up to the extent possible.
5.2.1.5 Management of Customer/Client

Customer/Client are the one of the biggest stakeholder which will get involved in every part of the project
weather it can be a prefeasibility stage or a hand over stage so to address this stakeholder is the biggest
priority of the Architect as well as the PMC.
Customer/Client is the governing body of the project which always want the best product so it always
worried about the time as well as the cost of the project.
PMC & Architect always address this stakeholder and most priority should be given to this stakeholder.
5.2.2 PROJECT MANAGEMENT TEAM: Project management team consists of the project manager
and the project consultant.
5.2.2.1 The Project Manager is the person responsible for managing the project right from the
planning of the project to the closing of the project.


- Identify the project’s stakeholders
a) Obtain the buy in of key stakeholders
b) Manage the relationship with the stakeholder or client (in collaboration with the
project owner)
- Guide and manage the project team
a) Select the core team in collaboration with the project owner
b) Determine the role and responsibilities of each team member and obtain agreement
c) Provide regular, informal feedback to each team member
d) Formally review each team member’s performance, as agreed with the team
member
e) Arrange team building sessions
f) Acknowledge and reward performance and expectations exceeded.
- Manage the project
a) Define the project
b) Identify and manage the risks
c) Manage the communication plan
d) Allocate and obtain resources
e) Monitor project progress
f) Report on project progress
g) Solve problems that interfere with project progress
h) Identify changes to the scope of the project (change management)
i) Control costs
j) Deliver project deliverables achieving the expected quality standards.
5.2.2.2 Project Consultants are professional advisors with experience who are hired to perform a
specific project or are sometimes contracted to assess the current effectiveness of the management team
of a specific company or other organization.
- To assist the client in maximizing the use of skills and abilities currently present in the team, while
identifying other abilities and talents that would help to enhance the effectiveness of the managers.
- In some cases, management consultants may be called in when there is a need for a temporary
expansion of the existing management team and it would not be feasible to hire a permanent
employee.

5.2.2.3 Needs of Project Management Team

a) Co-operation: The project manager requires all the project participants to co-operate with each
other and work together with mutual understands and not be an obstacle for one another.
b) Reporting: The project manager requires the project participants to report daily the work on site
and report any mishaps at the earliest.
c) Control: The project manager requires the project participants to do their work as scheduled and
as directed. The project manager looks after all the details of the work and takes the control of
work progress upon him and let no work go astray but be done under observation and under
controlled environment.
d) Honesty: The project manager requires the project participants to be honest about their work and
also maintain it with each other for a smooth execution of the project.
e) Communication: The project manager requires the project participants to keep a good
communication flow with each other and also a good communication is required with the client
as well to know his/her opinion on the progress of the work.
5.2.2.4 Expectations of Project Management Team

a) Safety: Health and safety procedures are with no incidents carried out and the strategies for
managing any project risk are at place.
b) Time: The project manager expects each phase of the work to be completed on time on the whole
project to be completed on scheduled timeline. Also sufficient time must be allowed for tender.
c) Quality: Quality of work with every detail is much expected and no compromise should be made
with quality for the project to complete on time.
d) Cost/Payment: Payment must be made regularly as per contractual agreement and changes is
price shall be fairly introduced. And also the cost estimations are per the requirement.
5.2.2.5 Management of Project Management Team
Client is the only person who can have command on the PMC and PMC is the most powerful stakeholder
with respect to the work and execution carried out for the project. PMC is fully responsible for all kind
of work happening and going to happen on site.
PMC team is responsible for maintaining quality and finishing work on time which can be achieve only
by organizing meeting frequently to know the actual condition of the project and rectify the problem as
soon as possible. Addressing potential concerns that have not yet become issues and anticipating future
problems that may be raised by stakeholders

5.2.3 PROJECT TEAM MEMBERS: Project team members are the groups that perform the work in
the project. Project team can be basically divided into Design team, Structure/Engineering team and
Implementation team.
5.2.3.1 Design Team includes the Architect, Designers and the Surveyors.
Architect/Designer
- The Architects responsibility is to interpret and develop the Clients brief during the various
stages of the project.
- The Architect will define the Client’s requirements, identifying constraints, advise in terms of
feasibility studies and option appraisals, arrange site investigations, establish the preferred
solution, advise on sustainability, manage health and safety issues, develop the design, obtain
Client sign off of the design at appropriate stages, advise on materials selection, provide space
planning services, advise on furniture/equipment selection, prepare construction drawings and
specifications, etc. and with due respect to the client’s brief, prepare a design which meets all
the clients requirements, including budget and timescale.
- The Architect acts as the leader of the rest of the Design Team and co-ordinates their specialist
input with their own.
- The Architect will prepare and lodge the Planning Application and Building Warrants in co-
ordination with the rest of the Team.
- During the works on site, the Architect will assist the Clerk of Works in monitoring quality
on site.
- At handover the Architect will assist in ensuring that the works are complete and that the
client’s needs have been met, and will continue their involvement through the Defects
Liability period, and the final resolution of defects.
Quantity Surveyor
- The Quantity Surveyors (QS) roles are primarily in connection with providing cost advice to the
Client throughout all stages of the project.
- During the pre-contract stage, the QS will assist the PM in providing advice on procurement routes
for the main contractor, preparing the tender documentation, receiving and analyzing tenders and
preparing the tender report for the Client and recommendations for approval.

- The QS will prepare the contract documentation on behalf of the Client. Where the client has a
procurement department it is essential the QS liaise with procurement throughout the procurement
process.
- During the contract period the QS monitors the project spend, providing regular reports to the
Client, and will receive monthly valuations from the Main Contractor and will check these, before
authorizing the Architect to approve payment in the form of an Architect’s Certificate.
- The QS will also assist with negotiations with the Contractor if any variations (changes) occur
during the project, which have a financial impact.
- Following completion of the Construction Works, the QS will liaise with the Contractor in
agreeing the Final Account. It is normal for this to take up to 12 months after completion, but this
could take longer if the project is complex and there were many variations during the project.
5.2.3.1.2 Needs of Design Team

a) Client Interpretation: The design team needs the client to open up all that he/she wants and vision
about. His/her requirements and the purpose it will serve all so forth.
b) Communication: The design team needs a good communication flow with the project participants.
c) Budget: Budget is a major constraint for the designers to design a project. All the designing and
concept eventually revolve around the budget limit.
d) Reporting: The design team needs frequent reports of the work status and progress, if the work is
being delivered as desired and in accurate detail as per the design.
5.2.3.1.3 Expectations of Design Team
a) Time: The design team expects the project to be carried out in the estimated time frame.
b) Quality in design: The design team expects the project participants to deliver the required quality
in the design and do justice to the design.
c) Environment and safety: The designers are very conscious about the environmental impacts
during and after the completion of the project. Utmost care should be taken to avoid any mishap
during construction and also impact of environment should be taken into consideration while
building.

5.2.3.2 Structure/Engineering team includes Civil, Electrical and Mechanical Engineers

Services Engineer (Mechanical and Electrical Services)
- Has the responsibility to design and specify all the mechanical and electrical services for the
building, in due regard to the clients requirements and to minimize long term building running
costs.
- The Services Engineer will co-ordinate their works with that of the Architect and the Structural
Engineer, and will provide appropriate cost advice to the QS as required to allow cost planning
and monitoring.
- They provide the appropriate advice to the Client in order to allow them to make the best decisions
in terms of sustainability, energy use, lifecycle costs and relevant “Green Issues”
Structural Engineer
- The Structural Engineer (SE) has the responsibility to design the structure of the building,
including drainage installation.
- The SE must ensure that their design co-ordinates with that of the Architect and the Services
Engineer.
- The SE will advise the Client on the most appropriate form of structure for the building, and will
provide cost advice to the QS in relation to all aspects of the building structure.
5.2.3.2.2 Needs of Engineering Team

a) Proper Design: The engineering team requires a proper and functional design from the designers
with proper space planning and service planning.
b) Client’s objective: The engineering teams needs to understand the client’s objectives and
requirements, what all services does he/she want, up to what extend and how.
c) Communication: The engineering team requires a good communication flow with all the project
participants for a good project delivery.
5.2.3.2.3 Expectations of Engineering Team
a) Quality in supply: Engineers expect the manufactures and the suppliers to provide them
quality materials and resources.
b) Time: Engineers expect the work to be completed on the scheduled time frame so that no clash
in work takes place.

c) Cost: The cost of items should be fairly price and any changes in the price during construction
shall be fairly introduced. Also cost estimation must be per the requirement.
d) Safety: Safety and precaution during construction is highly recommended and expected.
5.2.3.3 Implementation team includes the Main contractor and the sub-contractor.

The Main Contractor
- The Main Contractor’s duties are to deliver the project to the Client’s requirements- that is to the
brief, budget and to programmer.
- The Main Contractor will subcontract various parts of the construction works, and will be
responsible for their performance, and will co-ordinate the work of all the subcontractors
accordingly.
- They are also responsible for Health and Safety on site and ensuring that all persons on site are
aware of their responsibilities.
The Subcontractors
- Deliver their selected work packages, in co-ordination with the Main Contractor and other
subcontractors particularly in the case of Electrical and Mechanical subcontractors whose work is
generally inter-related.
5.2.3.3.2 Needs of Implementation Team

a) Sufficient time for tender: The contractors require sufficient time for tendering for
formulating their work, estimation and strategies.
b) Project detail: The contractors require sufficient project design details and information to
carry out the work as per the needs and requirements of the client.
c) Trust: The contractors require the client and the others to trust in their ability to deliver the
project as per their expectations.
d) Communication: A good, open and friendly communication flow is required by the
implementing team to carry out their work successfully.
e) Payment: Payments should be made on time as per the contractual agreement.

5.2.3.3.3 Expectations of Implementation Team

a) Quality in supply: The contractors expect the manufactures and the suppliers to provide them
quality materials and resources.
b) Health & Safety: Safety and precaution during construction is highly recommended and expected.
c) Time: To meet the time dead line is most anticipated.
5.2.4 SUPPLIERS: As the name suggests, suppliers are groups that provide all the materials and services
needed for building projects. The term ‘supplier’ encompasses a very diverse range of roles, duties, and
skills. As such, their responsibilities vary from project to project. The best suppliers are reliable and
efficient, and as a result, they have great relationships with their clients.
5.2.4.1 Roles and responsibilities

- Responsibility of providing goods and/or services to the Client as per the requirement and to their
timescale and budget.
- They can also supply, and sometimes recommend the machinery needed for a project.
- While many construction companies do have machinery and tools on hand, they often use
suppliers for projects that require more innovative materials.
- Some suppliers stock recycled materials, which is convenient for those building companies that
have environmental criteria to meet.
- In terms of services, suppliers can offer delivery, the cutting and dressing of wood, and the
sharpening of tools.
5.5.5 REGULATORY BODIES/GOVERNMENT: These bodies serve as principal source for

standards, regulations, policy, programs and assistance to the construction industry, and the general public
with respect to occupational safety and health.
Firms supply the central government with a large part of its income. They can influence their decision,
though, especially if they are large and powerful.

5.2.6 PRESSURE GROUPS/INFLUENCERS: Pressure groups may be stakeholders if they are

affected directly or indirectly by the actions of a firm. They can influence positively or negatively during
the course of the project. Local communities, for instance, may form a pressure group to prevent a form
from expanding its premises or even setting up in the first place.

CHAPTER 6 Stakeholder Management in Real Estate Industry

6.1 INTRODUCTION
In this chapter all type of stakeholder involve in Real Estate project are covered, the involvement of every
stakeholder will be different which will be discussed in detail in this chapter.
Most of the stakeholders in this kind of project have limited but efficient influence on the project.
In a real estate project the end user have a strong hand after the competition of the project rather than any
of the stakeholder involved during the construction or before the construction.
But during the construction the project team as well as the financial supporter like banks and other
company which supply fund to the project have a very strong hand.
6.2 Stakeholder in real estate
In real estate and generally in construction every productive process has negative effects: every
construction project corresponds to a permanent modification of the territory. “To build” means in a
certain sense “to harm” the territory.
To identify the various interests involved fitted to the real estate specificity on the basis of interviews to
opinion leaders and top managers starting from the Freeman and Reed (1983) included in Cleveland
1990 gives the definition of stakeholders in real estate.
The stakeholder categories identified are:
1) Shareholders 7) Social/political organizations
2) Employees 8) Land owners
3) Customer 9) Environmentalists
4) Suppliers 10) Nearby residents
5) Financiers/creditors 11) Media
6) Local and National authorities
The key point need to be follow in a real estate to keep all the stakeholder satisfy are:-
 Customer Satisfaction
 Quality
o Customer Focus
o Leadership
o Involvement of people

o Process approach
o System approach to management
o Continual improvement
o Factual approach to decision making
o Mutually beneficial supplier relationships
 Managing Conflicts
6.3 Customer Satisfaction

Customer satisfaction and customer orientation have become an essential competitive advantage in all
areas of production. In general, the significance of customer satisfaction is emphasized in markets where
competition is intense. Companies use customer satisfaction measurements in developing, monitoring,
and evaluating product and service offerings as well as motivating and compensating employees.
Customer satisfaction is a function of perceived quality and disconfirmation – the extent to which
perceived quality fails to match repurchase expectations. Customers compare the perceived performance
of a product (service, goods) with some performance standard. Customers are satisfied when the
perceived performance is greater than the standard (positively disconfirmed), whereas dissatisfaction
occurs when the performance falls short of the standard (negatively disconfirmed). Additionally, there is
an extensive difference between the loyalty of merely satisfied customers and those who are completely
satisfied. Customers who are just satisfied find it easy to switch suppliers when a better offer comes along.
As a result, the significance of customer satisfaction is emphasized in markets where competition is
intense.
Customer satisfaction is one of the key elements in total quality management (TQM), an approach that
emphasizes overall satisfaction through the continuous improvement of products. Construction
companies are adopting TQM to improve their performance. Understanding the customer’s requirements
is essential in ensuring customer satisfaction, and the demand for the construction product must be viewed
in relation to the intended use of the facility.
6.4 ADVANTAGES OF CUSTOMER SATISFACTION

Most of the potential aims or targets on business markets or working sectors could be achievable with
following the customer satisfaction processes. Some of the advantages or benefits of customer satisfaction
for the companies or firms working in certain business sectors are:
Obtaining competitive advantage in the market place

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 Boosting effect upon market share

 Improving the profitability
 Increasing repeated sales
 Increasing word-of-mouth recommendation
 Measuring national competitiveness
 Increasing impact in brand loyalty which has positive impacts on business
 Preventing customers to make negative comments and switch the provider
 Measuring market performance of the organization
These benefits clearly explain why customer satisfaction is crucially essential on markets. Nonetheless
wrong applications of customer satisfaction concept, most probably lead hazardous results on firms.
6.5. DISADVANTAGES OF CONSUMER DISSATISFACTION
While having a huge benefits of the consumer satisfaction, weak studies on customer habits or customer
needs may lead to some unsatisfactory results which are:
 Negative word of mouth complaints
 Reduction of market shares and reduction in profitability
 Possible divestment from industry
 Bad comments and switching the provider
6.5.1 Reasons of customer dissatisfaction in construction sector
Some potential reasons of dissatisfaction in construction sector are:
The possibility of clients stated requirements not sufficiently addressing their real needs.
 Inadequate research into client needs and satisfaction.
 Unable to fully grasp the issue of client satisfaction largely because of the absence or unawareness
of a mechanism for satisfaction evaluation.
 Inherent poor service
 Out of date solutions like the service once well accepted may not meet customer expectations
 Due to market competition
 Increase in technology
 Change in the customer tastes

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6.6 QUALITY MANAGEMENT PRINCIPLES: ISO 9000

To lead and operate an organization successfully, it is necessary to direct and control it in a systematic
and transparent manner. Success can result from implementing and maintaining a management system
that is designed to continually improve performance while addressing the needs of all interested parties.
Managing an organization encompasses quality management amongst other management disciplines.
Eight quality management principles have been identified that can be used by top management in order
to lead the organization towards improved performance.
6.6.1 Principle 1- Customer Focus
Organizations depend on their customers and therefore should understand current and future customer
needs, should meet customer requirements and strive to exceed customer expectations.
Key benefits:
Increased revenue and market share obtained through flexible and fast responses to market opportunities
Increased effectiveness in the use of the organization’s resources to enhance customer satisfaction
Improved customer loyalty leading to repeat business.
Applying the principle of customer focus typically leads to:
 Researching and understanding customer needs and expectations
 Ensuring that the objectives of the organization are linked to customer needs and expectations
 Communicating customer needs and expectations throughout the organization
 Measuring customer satisfaction and acting on the results
 Systematically managing customer relationships
 Ensuring a balanced approach between satisfying customers and other interested parties (such as
owners, employees, suppliers, financiers, local communities and society as a whole).
6.6.2 Principle 2- Leadership
Leaders establish unity of purpose and direction of the organization. They should create and maintain
the internal environment in which people can become fully involved in achieving the organization's
objectives.
Key benefits:
 People will understand and be motivated towards the organization’s goals and objectives
 Activities are evaluated, aligned and implemented in a unified way
 Miscommunication between levels of an organization will be minimized.

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Applying the principle of leadership typically leads to:

 Considering the needs of all interested parties including customers, owners, employees, suppliers,
financiers, local communities and society as a whole
 Establishing a clear vision of the organization’s future
 Setting challenging goals and targets
 Creating and sustaining shared values, fairness and ethical role models at all levels of the
organization
 Establishing trust and eliminating fear
 Providing people with the required resources, training and freedom to act with responsibility and
accountability
 Inspiring, encouraging and recognizing people’s contributions.
6.6.3 Principle 3- Involvement of people
People at all levels are the essence of an organization and their full involvement enables their abilities to
be used for the organization's benefit.
Key benefits:
 Motivated, committed and involved people within the organization
 Innovation and creativity in furthering the organization’s objectives
 People being accountable for their own performance
 People eager to participate in and contribute to continual improvement.
Applying the principle of involvement of people typically leads to:
 People understanding the importance of their contribution and role in the organization
 People identifying constraints to their performance
 People accepting ownership of problems and their responsibility for solving them
 People evaluating their performance against their personal goals and objectives
 People actively seeking opportunities to enhance their competence, knowledge and experience
 People freely sharing knowledge and experience
 People openly discussing problems and issues.
6.6.4 Principle 4- Process approach
A desired result is achieved more efficiently when activities and related resources are managed as a
process.

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Key benefits:
 Lower costs and shorter cycle times through effective use of resources
 Improved, consistent and predictable results
 Focused and prioritized improvement opportunities.
Applying the principle of process approach typically leads to:

 Systematically defining the activities necessary to obtain a desired result
 Establishing clear responsibility and accountability for managing key activities
 Analyzing and measuring of the capability of key activities
 Identifying the interfaces of key activities within and between the functions of the organization
 Focusing on the factors – such as resources, methods, and materials – that will improve key
activities of the organization
 Evaluating risks, consequences and impacts of activities on customers, suppliers and other
interested parties.
6.6.5 Principle 5- System approach to management
Identifying, understanding and managing interrelated processes as a system, contributes to the
organization's effectiveness and efficiency in achieving its objectives.
Key benefits:
 Integration and alignment of the processes that will best achieve the desired results
 Ability to focus effort on the key processes
 Providing confidence to interested parties as to the consistency, effectiveness and efficiency of
the organization.
Applying the principle of system approach to management typically leads to:
 Structuring a system to achieve the organization’s objectives in the most effective and efficient
way
 Understanding the interdependencies between the processes of the system
 Structured approaches that harmonize and integrate processes
 Providing a better understanding of the roles and responsibilities necessary for achieving common
objectives and thereby reducing cross-functional barriers
 Understanding organizational capabilities and establishing resource constraints prior to action

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 Targeting and defining how specific activities within a system should operate
 Continually improving the system through measurement and evaluation.
6.6.6 Principle 6- Continual improvement

Continual improvement of the organization's overall performance should be a permanent objective of the
organization.
Key benefit:
 Performance advantage through improved organizational capabilities
 Alignment of improvement activities at all levels to an organization’s strategic intent
 Flexibility to react quickly to opportunities.
Applying the principle of continual improvement typically leads to:
 Employing a consistent organization-wide approach to continual improvement of the
organization’s performance
 Providing people with training in the methods and tools of continual improvement
 Making continual improvement of products, processes and systems an objective for every
individual in the organization
 Establishing goals to guide, and measures to track, continual improvement
 Recognizing and acknowledging improvements.
6.6.7 Principle 7- Factual approach to decision making
Effective decisions are based on the analysis of data and information.
Key benefits:
 Informed decisions
 An increased ability to demonstrate the effectiveness of past decisions through reference to factual
records
 Increased ability to review, challenge and change opinions and decisions.
Applying the principle of factual approach to decision making typically leads to:
 Ensuring that data and information are sufficiently accurate and reliable
 Making data accessible to those who need it
 Analyzing data and information using valid methods

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 Making decisions and taking action based on factual analysis, balanced with experience and
intuition.
6.6.8 Principle 8- Mutually beneficial supplier relationships

An organization and its suppliers are interdependent and a mutually beneficial relationship enhances the
ability of both to create value.
Key benefits:
 Increased ability to create value for both parties
 Flexibility and speed of joint responses to changing market or customer needs and expectations
 Optimization of costs and resources.
Applying the principles of mutually beneficial supplier relationships typically leads to:
 Establishing relationships that balance short-term gains with long-term considerations
 Pooling of expertise and resources with partners
 Identifying and selecting key suppliers
 Clear and open communication
 Sharing information and future plans
 Establishing joint development and improvement activities
 Inspiring, encouraging and recognizing improvements and achievements by suppliers.
6.7 QUALITY MANAGEMENT SYSTEM

The quality management system approach encourages organizations to analyze customer requirements,
define the processes that contribute to the achievement of a product which is acceptable to the customer,
and keep these processes under control. A quality management system can provide the framework for
continual improvement to increase the probability of enhancing customer satisfaction and the satisfaction
of other interested parties. It provides confidence to the organization and its customers that it is able to
provide products that consistently fulfill requirements.
6.7.1 Quality management systems approach
An approach to developing and implementing a quality management system consists of several steps
including the following:
 Determining the needs and expectations of customers and other interested parties.
 Establishing the quality policy and quality objectives of the organization.

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 Determining the processes and responsibilities necessary to attain the quality objectives.
 Determining and providing the resources necessary to attain the quality objectives.
 Establishing methods to measure the effectiveness and efficiency of each process.
 Applying these measures to determine the effectiveness and efficiency of each process.
 Determining means of preventing nonconformities and eliminating their causes.
 Establishing and applying a process for continual improvement of the quality management
system.
6.7.2 Construction Quality System
Construction quality system consists of:
 Quality products used in construction of buildings are certified by the manufacturer. Do not use
products without certification.
 Technical approvals for new products and processes determining fitness for use, conditions of
production, transportation, storage, commissioning and maintenance of their work.
 Verification projects, works and construction projects and expertise. Projects required by
specialists check project verifiers accredited (other than those who were drafted). Implementation
is verified by masters of specialized investors and technical expertise and construction projects
shall be authorized only by technical experts.
 Construction Management and Quality Assurance is an obligation incumbent all the factors
involved in the design, implementation and operation of buildings and materializes in a system
specific to each factor.
 Licensing and accreditation of laboratories for analysis and test construction is required by law.
 Construction activity aims to ensure metrology, calibration, verifying and maintaining the
working order of the instruments and controls needed.
 The reception building is intended as documentation certifying their achievement of performance
and construction in the technical data falling construction completion and operation. It is made by
careful investor and owner surrenders in charge to complete the day.
 Behavior in operation and assistance while in the technical fall. Interventions (restoration,
enhancement, transformation, expansion, and repair) are only based on a project approved by the
building's original designer or a technical expert care.

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 Post utilization construction refers to the act of decommissioning, removal and demolition of
building, reconditioning and reuse of recoverable items and products and waste recycling to
ensure environmental protection law.
 State control of construction quality is exercised by State Construction Inspection, Public Works,
Urbanism and Planning seeking uniform application of legal provisions on construction quality
throughout the country. Construction of quality components only construction management and
quality assurance falls entirely in the manufacturer’s care.
6.7.3 Duties and responsibilities of stakeholders to the objective of building on quality assurance
Investor
 Sets the quality to be achieved in design and execution;
 Obtain approvals and law.
 Masters of the implementation by specialty or consultants.
 Resolve nonconformities, defects in service, design deficiencies.
 Ensure completion of the work and reception at the end of warranty.
 Aims to compile a technical construction and owner surrenders.
 Proposed construction expertise to carry out interventions.
Designer
 States
 By project
 Category of constructions
 Ensure the projects and details of implementation
 The quality of construction
 Projects have specialists certified auditors
 Established by the investor and resolves conflicts raised
 Prepare specifications
 Technical instructions for execution
 Operation
 Maintenance

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 Repair and monitoring performance over time

 Determine stages of completion, participating in their quality control
 Eliminates quality defects in design
 Participate in the technical preparation of construction and acceptance of work performed.
Contractor
 Notify the investor of the project inconsistencies
 Begin construction only for construction projects audited and approved
 The system achieves its quality management and quality assurance in construction
 Convene the stakeholders to verify the physical state set
 Closure of the designer resolved based solutions
 Notify the construction state inspectorate on technical accidents during construction
 Fixes its own expense, defects of execution
 Restore the land used to organize the site to its original state
 Establishes responsibilities for quality failure.
Building owners
 Made timely maintenance and repairs according to the technical manual
 Make and keep, to date, the technical construction
 Implement changes to the building only on verified and approved projects
 Post utilization out work for stage.
Administrators and the users:

 Construction using operating instructions
 Maintenance and repair works are under contract
 Follow the behavior in service
 Notify the state construction inspection on technical accidents recorded.

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6.8 Conflict management in Real Estate

6.8.1 INTRODUCTION
Conflicts may arise between individuals, between groups of individuals and between organizations. A
common definition of conflict is a process that begins whenever an individual or a group feels negatively
affected by another individual or group. In other words, people are in conflict anytime one’s actions
obstruct or by any means, make other’s performance, less efficient.
Individual conflicts exist in all human relations and those within the construction activity are no
exception. Due to the great diversity of people involved in construction projects and to the enormous
variety of situations emerging from the construction process, individual conflicts in this activity deserve
particular attention.
In general, construction stakeholders aim at preventing disputes because of their possible harsh
consequences. Some people will fiercely try to avoid conflicts because of the fear that conflict escalation
will lead to unpredictable effects or retaliation. But there are also people who may benefit from disputes
in terms of financial advantages, identity, status or power. For those people, a dispute may be viewed as
an opportunity to engage diverse opinions and ideas from people holding different perspectives on the
conflict issue.
6.8.2 TYPES OF CONFLICTS IN THE CONSTRUCTION ACTIVITY
Conflicts vary in terms of their legal, political and institutional framework, economic constrains and
pressures, people’s culture, social structure, stakeholder interests, technical knowledge, environment and
history just to name a few influencing factors.
Conflicts may involve two parties or several parties for the same reason or for a diversity of reasons.
Figure 8.1 shows the conflict logics between a set of m parties (individuals, institutions, etc.) from one
side and a set of n opponents from the other side split into m x n conflicts between each pair of parties.

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Figure 15 Splitting conflicts among several parties into a set of conflicts between two parties.
Conflicts may also be categorized in respect of the typology in:

 Open conflicts, when it is everyone’s knowledge.
 Hidden conflicts, when it is known of some people only.
 Latent conflicts, when the conflict comes to the surface if, and only if, something changes the
status quo.
6.8.3 CONSTRUCTION STAKEHOLDERS AND POTENTIAL CONFLICTS
Project stakeholders are persons, groups or organizations having any interest in the project and who may
influence the project planning, design, implementation and future use. Although all projects have its set
of different stakeholders, some common classification of stakeholders may be established:
Key stakeholders like the project owner, suppliers, performing organizations, the project management
team and others depending on the project.
Internal stakeholders, directly participating in the project.
External stakeholders comprehending people affected by the project, interested parties and statutory
authorities.

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6.8.3.1 External Stakeholders’ Conflicts

6.8.3.1.1 Real estate owners
These are people affected by land acquisition for implementing the project. The intensity of conflicts
involving real estate owners depends on whether the project is private or public, and if it is implemented
in an urban area or in a rural area.
In a private project, real estate owners may be normally included in the ‘keep satisfied’ group, because
the development of the project depends on the successful negotiations with land owners.
In the case of a public project, the project promoter may get the land either by common agreement with
the land owners or through an expropriation process. In either case, both parties aim to reach fair and
timely compensation for the land but the perception of each party on the meaning of this may prompt a
conflicting situation. The former approach is more straightforward than the second; therefore some
reduction on conflict intensity may be achieved if this option is invoked by one party while negotiating a
common agreement with the other party. This strategy particularly applies to buildings or parcels of land
that do not directly affect the home or the livelihood of people, in which case other aspects than money
and time may prevail. Sometimes, only by finding an alternative home with equivalent location or
alternative farming with similar conditions (such as access and water) contributes for decreasing conflict
intensity with families affected. But obviously, this will also depend on the solvency of people concerned.
6.8.3.1.2 Public in general
Public in general may be affected by the project and because of that may be considered an external
stakeholder. Any project has positive and negative externalities mostly coming about during the
construction and the utilization stages.
Some of these externalities are environmental impacts and may be related to the construction stage, to the
utilization stage or to both of them. In some countries, it is mandatory to develop an EIA (Environment
Impact Assessment) for large projects like roads, bridges and shopping malls. The EIA often addresses
the utilization stage of those projects and sometimes the construction phase as well if the site is expected
to create significant impacts. One of the steps of the EIA is the public consultation process, where an
accurate identification of stakeholders and the presentation of their concerns and expectations should be
considered.
Although in a smaller scale, the construction stage of any project may cause relevant environmental
impacts, for example dust, mud, ruined accesses, long traffic deviations, noise, risk of injury while
crossing the site, damages to private property, etc.

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Externalities should always be considered before construction commences and preferably at the pre-
design stage where all the negative and positive impacts of possible solutions should be addressed and
compared.
6.8.3.1.3 Local trade and industry
Local trade and industry are usually considered independent stakeholders from the general public because
they may be affected by different project externalities. Trade and industry are businesses of several kinds
(small manufacturing activities, restaurants, shops, etc.) that may be positively or negatively affected by
the project. For example, they may possibly benefit from a new infrastructure project (improved
communications) or loose clients to a new shopping mall (reduced attractiveness).
Building up the project may have similar impacts. For example, local restaurants may possibly gain new
clients (working on or visiting the site) or loose used to be clients (because of traffic deviation). In order
to properly manage these potential conflicts, negotiated solutions with trade and industry representatives
must be found, for instance through the betterment of local facilities or by compensating expected profit
decrease.
6.8.3.1.4 Environmentalists
Like other Non-Governmental Organizations, environmentalists have the power to influence project
decisions, as their aim is to alert the public opinion to the negative project consequences to the
environment. Conflicts can arise if the project management team neglects or detracts their views with
poor structured arguments. For a project where the EIA is not compulsory but for which environmental
impacts are claimed, it is adequate to conduct a consultation process to the active environmentalists and
to negotiate alternative project solutions although not compromising the main objectives of the project.
6.8.3.1.5 Local and national authorities
These are very important stakeholders because they have the power to influence project decisions by
issuing final approvals on the project. These stakeholders are ruled by civil servants and politicians
(mayor, minister, secretary of state, directors, etc.), therefore project conformance with rules and
regulations partially depends on their interpretation on those rules and regulations and on the directives
they must comply with in order to sustain strategic political decisions.
Conflict avoidance with these stakeholders is decisive for the project success, and may be achieved by
maintaining informal contacts with them in all stages of project development.

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6.8.3.1.6 Media
According to some authors, media may not actually be considered a stakeholder as they have no stake in
the project. However, media can have a decisive power and capability of influencing other stakeholders
in the project decision process. Furthermore, it is common that some stakeholders use the media for
influencing other stakeholders’ decisions on the project (for example, politicians or national authorities
relevant to the project approval or rejection). Taking into account the power of media, conflicts should
be avoided through the implementation of adequate communication.
6.8.3.1.7 Political organizations and interest groups
Especially for large public projects, it is crucial that the main political parties converge on the project
aims, the main technical solutions and the sources of funding. In recent years, interest groups have taken
the lead in some projects but political organizations still hold significant power to influence decisions on
projects holding regional and national relevance.
Interest groups are also called lobby groups and may act both locally and nationally as proponents or
opponents to a project. Interest groups can be formed in many different ways and have different power
to influence project decisions. Normally, they act in the pre-construction phase of the project, with the
aim of conducting the process to fit their interests of location, dimension, accessibility or user facilities.
Conflicts arise when the decisions are opposite to the interests of the above stakeholders. They may then
attempt to use their power and political influence, to discredit the decision and eventually change it
according to their interests.
As for large private projects, the support from political parties and interest groups may avoid strategic
opposition to the necessary approvals during the design and pre-construction phase.
On the contrary, their opposition may lead to major difficulties for conducting the project, cause delays
and possibly lead to the project abortion.
One particular way of reducing conflicts with these stakeholders is to carefully sustain the decisions with
sound technical background, to present them truly and clearly and to personally interact with the relevant
actors in order to better explain them.
6.8.3.1.8 Social and professional organizations
Trade unions are examples of social organizations that may have some influence on the project. They
may act as supporters during the feasibility phase of the project, help during the design phase and
influence political decisions during the pre-construction phase (trade associations, for example). But they

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may also act as project opponents during the construction stage if site impacts are significant or site
conditions are not acceptable for workers (trade unions, for example).
Conflicts arising due to poor work conditions on site, low wages and excessive extra-working hours can
be avoided or minimized if the project management team keeps regular meetings with worker
representatives in order to understand their concerns and explain the decisions that affect workers’ salary
and safety conditions.
6.8.3.2 Internal Stakeholders’ Conflicts

6.8.3.2.1 Project owner
The owner is the most relevant project stakeholder and is mostly affected by the project success.
Accordingly, the owner is expected to develop all the necessary efforts to avoid project conflicts or, at
least, to minimize them to a controllable level, by using adequate conflict management techniques. The
owner may also play the role of sponsor, promoter and client for the other project stakeholders.
Conflicts may start at the owner organization. Especially in public entities, some internal opposition to a
particular project may arise, due to either resource dispute or conflicting approaches on investment
priorities between different sectors. These conflicts should be adequately managed by using sound
decision criteria, adequate diffusion of needs and expected benefits for end-users and previous alternative
solutions under scrutiny.
6.8.3.2.2 Costumers and end-users
The ultimate reason to launch a construction project obviously depends on the needs of these stakeholders
(either assigned or not, either directly or indirectly), thus evidencing their importance.
For private investments (houses, offices, stores), needs are usually evaluated through market research
techniques. The costumer is the end-user of the facility and who directly pays for it (either by purchase
or rental in its multiple forms). Accordingly, end-users’ needs should be properly identified during the
conception and the design phase, in order to avoid conflicts during construction, due to mistaking their
expectations.
6.8.3.2.3 Financiers and creditors
Financing institutions need to ensure the return of investment and adequate profitability if the funds are
private, and the achievement of the project goals of scope, time, cost and quality, if the funds are public.
If project costs escalate, incomes may reduce or the project profitability may be at risk, therefore
financiers may stop capital allocation or creditors may claim for the payment of debts, therefore

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endangering the project conclusion. This evidences their importance as project stakeholders. Adequately
managing internal conflicts implicates accurate and permanent monitoring of the project’s cash flow, as
well as the use of risk analysis techniques in order to ensure alternative solutions if, for instance, the
planned revenues are not achievable.
6.8.3.2.4 Designers, suppliers, contractors and subcontractors
This group of stakeholders contributes with products and services to the implementation of the project.
Before construction begins, the designer is the most important stakeholder, while afterwards the
contractor becomes the most relevant. Depending on the type of delivery, procurement process,
distribution of risk chosen by the project owner and the type of contract arrangement (traditional, cost
plus, construction management, etc.), conflicts may be more or less manageable and more or less
contained.
Conflicts between the contractor and the client frequently arise from different site conditions, change
orders, delays, suspension of works, defective contract documents, among others. Normally, conflict
resolution procedures are disposed in contractual documents, and, depending on different legal systems,
they ought to include direct negotiation, mediation, adjudication boards, dispute review boards, etc. The
main measures to avoid conflicts must be implemented in the design and the pre-construction stages, as
they are focused on improving the quality of contract documents and include, for instance, geotechnical
baseline reports, constructability reviews and partnering approaches.
6.8.3.2.5 Employees
Employees of any stakeholder organization can obstacle the project success, if they are not sufficiently
motivated by the project, or if they have any kind of conflict within their employer (salary, promotions,
work conditions, etc.). This type of conflicts often arise, through strikes, organized meetings or written
claims to the board of directors, and should be tackled by the Human Resources Department of the
organization concerned.
6.8.3.2.6 Project management team
The project management team is the instrument used by the project owner to achieve the project goals
and objectives. In order to meet all the specifications and requirements established for the project, the
team should hold sufficient empowerment and embrace all necessary competences.
Conflicts frequently emerge from different views and perspectives on the assignment of responsibilities
and emergent relationships. These should be properly established prior to the beginning of the project,
through responsibility matrixes and adequate communication channels.

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6.8.4 CONFLICT MANAGEMENT

The actual goal of conflict management is not to avoid conflicts, but to develop the skills and methods to
help conflicting people, groups or organizations in conflict, to express their differences and solve their
problems in a collaborative and constructive way. Therefore, it is essential that conflicting stakeholders
are fully involved in the resolution process as a way of developing effective methods for dealing with
their differences. Moreover, disputes may result in litigation which instead of being fair and equitable,
may not be the best solution for all conflicting parties. Avoiding this outbreak is one of the most decisive
reasons for implementing conflict management techniques.
International literature essentially deals with conflicts in construction under the following approaches:
 By analyzing conflicts between the client and the contractor usually by adequately managing
construction claims;
 By identifying possible conflicts with external stakeholders (this being an undesirable
phenomenon to be reduced and ideally eliminated from the construction process) through
understanding and mitigating their underlying causes.
The assessment of conflict between stakeholders in construction projects depends on four essential
factors:
 The type/power, characterization and relationships of the stakeholders (internal, external,
authority/public/contractor);
 The stage of the construction project cycle (pre-contractual, execution, exploration);
 The type, nature and stage of the conflict (behavior, data, needs, values, latent, potential,
processes, etc.);
 The legal and institutional context of the project (public, private, environmental, transportation,
developmental, etc.).
The success of conflict management depends on the adequate interaction of the above factors through
seven basic steps (see Figure 16):
 Identification of the threat, type, stage and dimensions of conflict
 Identification of underlying facts, perceptions, social needs and cause effect relationships
 Identification of all stakeholders, their interests, powers, fears and needs

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 Involvement of all recognized parties in the management process

 Identification of suitable conflict management resolution strategy and choice of guideline
 Application of chosen resolution strategy and guidelines
 Measuring the success of conflict management.
One of the most important phases of this process is the stakeholder analysis. This is used to identify,
assess the importance and anticipate the influence (either positive or negative), that each stakeholder will
have on the project. The results of this analysis are used to develop strategies for supporting effective
conflict management procedures, by minimizing possible conflicts and reducing obstacles to its
successful implementation.
Figure 16 Conflict management phases

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6.8.5 RESOLUTION OF DISPUTES FOR INTERNAL STAKEHOLDERS
Parties to a dispute must first decide whether to seek resolution to a conflict through a nonconsensual
process, like litigation or arbitration, or through more collaborative means like direct negotiation or
conflict prevention techniques.
Once the decision has been taken, the parties must choose which approach to employ, since there is no
methodology that will be effective in all cases, and indeed more than one may be used.
6.8.5.1 Abandonment
Dispute resolution generally assumes that some pathway will be followed towards a settlement or
acceptable decision. However, during the process, one party may possibly decide to discontinue with the
dispute. Although they may not be considered dispute resolution techniques, avoidance or abandonment
by one party are possible dispute actions and are quite frequent in construction. Reasons for this are
diverse, including low expectations on positive results, lack of funds to pursue, commercial reasons, lack
of assertiveness or passivity.
6.8.5.2 Negotiation
Negotiation is possibly the most common and inexpensive form of dispute resolution in construction,
whereby the control of the dispute process remains within the parties involved. In order to achieve a good
negotiated settlement for a conflict, four characteristics should be met: fairness, efficiency, wisdom and
stability.
With the implementation of these types of measures, conflict resolution probably drives from win–lose
situations to win–gain solutions, where all participants try to find new ways to reach their goals, and, at
the same time, meet the goals of the opponents. In this process, parties may act by their own as in direct
negotiation or may introduce an advisor or a facilitator.
6.8.5.3 Mediation and conciliation

Mediation may be viewed as a negotiation process between disputing parties carried out with the help of
a neutral and independent third party. It is essentially an informal process by which parties seek assistance
from an independent consultant for solving their dispute. Therefore, the fundamental role of the mediator
is to facilitate the decision making of the parties involved in the dispute. This is achieved by impartially

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advising and consulting them, helping the parties to understand their own and their opponent’s position
better, exploring alternative solutions and so forth. Accordingly, the mediator may act not just as an
advisor but as a manager of the dispute process.
Conciliation has been used quite interchangeably with mediation but tends to mean a more proactive
attitude in some instances. In practice, the process of mediation or conciliation may be more facilitative
or more evaluative depending on whether the consultant merely tries to aid communications between
parties or if he or she comments on the subject matter and makes recommendations towards the outcome.
6.8.5.4 Expert assessment

Expert assessment or determination is a process by which parties in a dispute commonly agree on asking
a third party to decide a particular issue. Unlike mediation which is a nonbinding process, at least until
some agreement may be reached, expert determination implies mutual acceptance of the expert decision.
The use of this form of dispute resolution is very common in construction.
Unlike the mediator who need not be an expert (which in fact, may bias the mediator’s view), the expert
is by definition a specialist on the issue to deal with. Selecting and contracting the expert therefore
assumes a paramount importance. Firstly, the subject of the expertise should be clearly and precisely
expressed. Secondly, the costs and the schedule of the work to be performed should be established.
Thirdly, the expert decision should be accepted to be the final and binding by all parties involved, unless
one party further decides to challenge it through arbitration or litigation.
6.8.5.5 Adjudication
Adjudication may be defined as a process where a neutral third party gives a decision on some issue
which is binding on the parties in dispute, unless or until revised in arbitration or litigation. Under
traditional arbitration, the disputing parties must agree on the adjudicator who will thereafter act
empowered by that agreement but unlike in mediation, the arbitrator’s decision does not require the
cooperation of the parties. The difference for expert determination is that the adjudicator may investigate
the circumstances of the dispute and more freely interrelate with the parties than the expert tends to do.
6.8.5.6 Arbitration
Arbitration is a formal dispute resolution procedure subject to statutory controls, whereby disputes are
solved by a private arbitrator selected by common agreement, or by a private tribunal, normally made up

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of three arbitrators, one appointed by each party and the third by common agreement. Arbitrators must
have appropriate qualifications, minimum work experience and act impartially. During the arbitration
process, arbitrators can call witnesses, require expert opinions and call the parties to testify, as well as
other formal courtroom procedures.
Arbitration is voluntary, but once accepted by the disputing parties, the final decision is binding, unless
a break of procedures, fraud or conflict of interest can be proved, in which case the decision may be
revised by a court of law. Accordingly, the final decision may be enforced by the courts if necessary.
Nonetheless, there are arbitration systems where the decision can be submitted to a court of appeal.
6.8.5.7 Litigation
If no agreement is achieved between conflicting parties to use any of the previous systems for resolving
their disputes, then they can apply to the courts of law. Litigation is the current name for disputes dealt
with in the courts of law.
The procedure followed by the courts starts with the claimant issuing a case and the claim particulars.
Then the defendant is given the opportunity to admit the claim, defend from the claim particulars or
merely acknowledge receipt of the claim form. The defendant may also decide to make a counterclaim.
The legal system of each country follows a specific litigation track but it is not unusual that different
tracks are adopted according to the nature of the claim and to the financial amount claimed.
The next step is the trail whereby the court of law will decide the merit of the case, in terms of legal
evidence, sustained facts and quantum evaluation...
The complexity of some construction disputes often requires courts to contract experts for case
assessment. Usually, a commission of three experts is appointed, one by each side and the third designated
by the courts. The report of this commission is then added to the process but in most countries it is not
binding. Once starting their functions, the experts must act neutral and professionally but their role has
been criticized for supporting their client’s position rather than providing an independent opinion. For
this reason, many reports are not unanimous and do not give confidence to the court’s decision.
6.8.6 RESOLUTION OF DISPUTES FOR EXTERNAL STAKEHOLDERS

Applicable procedures for dispute resolution involving external stakeholders are much less structured
than above and the risk of dispute escalation to litigation is much higher.

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6.8.6.1 Dialoguing
Stakeholder dialogue is based on the principle that people affected by decisions ought to have an effective
participation in the decision-making process. This should be done at an early stage when all the options
for the construction project are still possible, and the opinions of participants can influence the outcome.
This means the earlier stages of the design phase.
The effectiveness of dialoguing increases as stakeholders are prepared to accept changing their views if
adequately convicted. Moreover, dialoguing encourages people to step down from positional argument
with win/lose outcomes and focus on cooperative and creative problem solving by working together in a
consensual process, using the body of knowledge and ideas that each stakeholder brings up. Best practice
includes the promotion of workshops, workgroups, seminars, study circles, open houses and so forth.
The outputs of the dialoguing process are often well informed and technically acceptable solutions
acknowledged as the best possible options by the majority of the stakeholders.
More importantly, the process tends to generate active support for the project and improved relationships
within the community.
6.8.6.2 Negotiation
Most of what has been said about negotiation between internal stakeholders is applicable with some
adaptation to conflicts involving external stakeholders as well.
The following lists a set of good practices and tactics that may help to maintain conflict situations under
control, either for general interactions or for construction industry specific interactions:
 Foresee issues: undertake conflict analysis and mapping
 Evaluate the extend of stakeholders’ participation in the final solution (there are different cultural
backgrounds)
 Keep players involved and processes transparent and clear
 Maintain the stakeholders enthusiastic and capability in participation
 Ensure that institutions have legitimacy, are trustable and inspire confidence
 Assure that stakeholders are aware of conflict boundaries (rights, roles, responsibilities,
legitimacy)

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 Adopt appropriate leadership styles

 Structure organization to avoid conflict
 Address conflict causes, diagnoses and implement corrections
 Promote meetings (workshops, seminars)
 Negotiate, mediate, and arbitrate
 Enforce truth
 Expand group boundaries
 Guide communications between disputants
 Set up formalized appeal systems
 Act as decision makers
 Offer incentives
 Enforce cooperative problem-solving attitude between disputants
 Recognize women as stakeholders and peacemakers
 Address implications for youth and children
 Conduct relevant stakeholder analysis and conflict perceptions
 Build and maintain effective partnerships
 Recognize the primacy of local people
 Widen and deepen dialogue
 Recognize the potential and the limits of external influence
 Be transparent and communicate intentions
 Act in timely flexible ways and think long term
 Respect cultural diversity
 Recognize and act only so far as legitimacy allows and remains impartial
 Be accountable
 Enable institutional learning
 Use creative, incentive-driven approaches for construction engagement
 Act on lessons about the need for coordinated, coherent action and policy

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6.8.6.3 Not in my backyard

One of the most common conflicts within external stakeholders is related to the location of new public
facilities that local communities and residents do not want close to their homes.
This is called the NIMBY (not in my backyard) syndrome. The symptoms of the syndrome are group
actions, sometimes vigorous, by local communities to stop the implementation of the controversial project
affecting their livings or the environment (industrial facilities, dams, waste treatment and so on). The
question is how to solve this conflict, when even though the proposed construction meets all economic,
legal and environmental requirements, is still not accepted by the public. Figure 17 summarizes a set of
proposed guidelines to help solve this Conflict.
Action Explanation
Representatives of all affected groups should be
invited to participate and assist each stage of the
decision process. All those affected should have
Institute a broad-based a chance to review the criteria for site selection.
participatory process Groups with different points-of-view should
have a chance to criticize the recommendation
of facility proponents and the analyses upon
which their proposals are based. A joint fact-
finding process should be used so that all
stakeholders can play a role in specifying the
information about risks, costs and benefits that
they need in order to make informed decisions.
Achieve agreement The sitting process must begin with an
that the status quo is agreement that the facility is needed. The
unacceptable relevant stakeholders need to understand the
consequences of doing nothing.
Seek consensus A serious attempt should be made to involve all
the relevant stakeholders to address their values:
concerns, potential needs and wants.
Differences can be addressed by searching for

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new ways of framing questions or different

ways of packaging trade-offs.
Work to develop trust Lack of trust is perhaps the most important
barrier to reaching consensus. Those attempting
to site a facility must recognize potential
sources of mistrust, including lack of support
for the project, previous negative experiences
and suspicions towards the government and
other institutions. One way to establish trust is
to admit past mistakes and avoid exaggerated
claims and promises that cannot be fulfilled.
Choose the solution Problems must be addressed with a design and
that best addresses solution of the facility that stakeholders can
the problem agree is appropriate. A comprehensive list of
alternative approaches and their long- and short-
term implication, including the option of taking
no action, should be made public in non-
technical language. The choice of alternatives
and technology should be based on input from
the residents of the community who may well
know more about the problem ‘on the ground’
than many experts.
Guarantee that No community should be asked to compromise
stringent safety its basic health or safety so that a facility can be
standards will be met built. Preventive measures for reducing the
hazard should be encouraged and the proposed
facility must meet all health, safety and
environmental standards, Interested parties
should also have an opportunity to specify any
additional standards that could be met through
mitigation, such as changes in the design of the

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facility, substitute technologies, operational

modifications and training of operators.
Monitoring and control procedures involving
the host community are important in
minimizing risks and maintaining standards.
Fully address all When impacts cannot be prevented or mitigated
negative aspects of to the satisfaction of the affected parties, various
the facility forms of compensation, specified by the
stakeholders involved, can be negotiated. These
agreements may include property value
guarantees, creation of equivalent habitats when
loss is unavoidable, and the offer of service
when impact occurs.
Make the host The applicant should put a package of benefits
community better off together so that the host community feels that it
is better off with the facility than without it.
Use contingent Some concerns about the management of
agreements facilities can be resolved by specifying
contingent agreements that spell out what will
be done in case of accidents, interruption of
services, changes in standards or the emergence
of new scientific information about risks and
impacts, and provide means of guaranteeing that
contingent promises will be met at no cost to
those likely to be adversely affected.
Seek acceptable sites Encourage communities to volunteer sites
through a volunteer indicating that it is not an irreversible
process commitment and that there are potential benefit
packages that come with the facility.
Consider a competitive Assuming that multiple, acceptable volunteer
sitting process sites are found, the sponsors of the facility

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should consider a competitive process of site

selection.
Work for geographic It is inappropriate to locate too many noxious
fairness facilities in a single locale even if a community
is willing to accept them.
Set realistic timetables It is appropriate and helpful to set and enforce
realistic deadlines. However, a good process
allows all parties adequate time to consider the
full range of options and weigh technical
evidence as it is gathered. Opponents have
administrative and legal means of slowing; even
halting, sitting processes that they feel have
excluded them. It may be necessary to ‘go
slowly in order to go fast’.
Keep multiple options It is never a good idea to have only one possible
open at all times site even at the final stage of the process.
Negotiations regarding possible incentive
packages are more likely to produce reasonable
results if a facility sponsor does not feel ‘held
hostage’ by the only possible site.
Figure 17 Guidelines to help solve the NIMBY syndrome
Case Study Cosmos Builders Case in Gurgaon

Background of the Project case: - In this case Cosmos Builders and Promoters asked to fix the unit and
correct the changes made from agreement or pay a fine. Inspite of having all the sufficient funds the
builder was not able to give promised output as per contract where it don’t have any problem with the
funds but the quality get poor because of lack in management and the need and requirements of the
stakeholders was not taken care in consideration which leads to mismanagement and as a result we got
poor quality of work

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The internal stakeholders involved in this project are :-
 Owner
 Civil Contractor
 Structural Contractor
 Electrical Contractor
 Labor Contractor
 PMC
 Builder/Financer
 Promoters
The external stakeholders involved in this project are:-
 HUDA
 Other Government Agencies
 Land owner
 Nearby resident
The need/requirement of the stakeholder as stated in earlier chapter was not taken into consideration due
to which the failure of the project occur which can be avoided by applying the stakeholder management
theory but before that we must see the reasons by which this project fails.
REASONS FOR FAILURE OF THE PROJECT

 Social needs of the family were not considered in the design. Client and his expert did not see the
need to involve the wives (users) and therefore their needs and views were not heard or considered
in the design.
 The Client was incapable of interpreting drawings. He could not see in advance shortfalls of the
design.
 The Client was not aware of the cost implications associated with duration of construction just as
he was unwilling to disclose his income and expenditure schedule concerning the realization of
the project.
 Reluctance to engage competent consultants in running building projects for purposes of saving
cost was the real danger, Clients ends up paying more and in many cases fail to complete their
projects.

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 Professional fees were generally higher than what they were willing to pay as they always claim
that professional rates are exorbitant. The negotiations concerning professional fees for
Architects, Quantity Surveyors (QS) and Engineers take a lot of time and the token amount,
oftentimes agreed upon is inadequate. This directly affects extent of the design work, quality and
extent of detailing and also overall project cost.
 Changes to the buildings by the client without proper consultations with the architect. Such
changes end up escalating the project cost and later become good reasons for frustration.
 The Quantity Surveyors were engaged at the stage when the design was almost complete. The
quantities and estimates were therefore not aiming at reducing or optimizing the project cost but
rather at establishing the cost of a finished project.
 No room was given to the QS to propose alternative materials or methods that would help in
lowering the project cost
 Structural Engineers were given peanut amount of time by the Architect they inadequately
devoted the needed time on the design and use rules of thumb in deriving sizes and profiles of
subsequent structural components resulting in over-design and cost reduction was not taken as an
issue of significance.
 Lack of coordination of the stakeholders but the project manager.
 Disputes between various stakeholders lead to abandonment of the project by some stakeholder
as they had little attachment with the project and therefore avoided arbitration and chose to take
options that lead to abandonment of the construction work.
Based on the factors observed on the site the court order contractor to pay the compensation to the client
and all these can be avoid if the owner of the project have taken necessary action during the project
execution and fulfill all the need of the stakeholder.
Internal Stakeholder Role, Responsibility & Conflict in this project are
Stakeholder Role Responsibility Reason of Failure
Stand to win/lose, Accept full Quality of project is not as

Owner Ensures that the project has
authority, provide resource per contract
the required resources
Construct the structure Quality of work must be No funding is done on time

Civil Contractor
properly attained and lack of resources

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Checking the workmanship Workmanship is poor on

Structure Consultant Design of the building is safe
attained at site site
Provide the appropriate Check the safety and Lack of Funds for good
Electrical Contractor
material stated quality of work purchase
Quality of work done by

Delay in payment to supply
Labor Contractor Provide labor to project labor must be as per
more labor on time
standard
No such management
PMC Manage the project Ensure the quality
carried out
Provide sufficient funds on

Builder/Financer To finance the project N/A
time
Now if we apply the stakeholder management theory then the conflict can be avoided which results the
success of the project
Stakeholder Management
If in the early stage of the project stakeholder management was applied in this project then all the defaults
in the project can be avoided easily.
Although having sufficient funds available with the financier this problem occur just because the need
and the requirements of the stakeholder was not fulfilled which can be avoided by using the stakeholder
technique described in the PMBOK.
The approach which can avoid all the conflict occur after the completion of the project are as follow:-
 Identifying Stakeholders
 Planning Stakeholder Management
 Managing Stakeholder Engagement
 Controlling Stakeholder Engagement

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Identifying the stakeholders
project success. The key benefit of this process is that it allows the project manager to identify the
appropriate focus for each stakeholder or group of stakeholders.
In this stage all the stakeholders must be identified and listed well which was absent in this case. Listing
of stakeholder can be done in this step so that the final product will be a Stakeholder register, If they
had followed this step then the final product at this stage will be
Stakeholder
Owner
Civil Contractor
Structure Consultant
Labor Contractor
PMC
Financer
Planning Stakeholder Management
or phase.

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In this stage the planning of all the stakeholder can be done by using project management plan,
stakeholder register to find out stakeholder management plan and project document updates by expert
judgement meetings and analytical techniques. However in this case no proper management was done by
which the project manager can have a hold on this planning.
This can be attained if PMC have taken responsibility to maintain the process accordingly.
And the quantification of the stakeholder is done on the basis of Power matrix shown in figure no 18.
Figure 18 Power Matrix
Managing Stakeholder Engagement
the chances to achieve project success.
Where in this project this was become a critical case and inspite of having all the sufficient funds the
project was not up to the mark because the need/expectations of all the stakeholders was not fulfilled.

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This situation can totally be avoided if the project manager had taken good care of need/expectation of
all the stakeholders
Stakeholder Need Expectation
Friendliness, Understanding,
Owner Quality of work, safe, on
Fairness, Control, Information
budget, flexibility
Client interpretation, Time, Quality,

Civil Contractor
communication, reporting Environment friendly



standard
Cooperation, reporting,
Safety, time, quality,
PMC control, honesty,
payment
Communication

Builder/Financer To finance the project
time
Controlling Stakeholder Engagement
evolves and its environment changes.

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In this project, Project manager supposed to track the overall process but due to the lack of staff with in
the project manager them it was difficult for project manager to track the project and this problem arise
because PMC was not paid well for appropriate staff on site.
Conclusion
If the stakeholder management was used in appropriate way then the scenario would be different and the
conflict arise after the completion of the project can be avoided because they are not lacking with fund
but they were lack of coordination and management in this project and if the stakeholder management
was carried out stage wise according to Power matrix then we can easily neglect this problem. Following
figures shows how the ranking should be done according to power matrix.
Feasibility Stage Planning Stage
Initiation Stage Execution Stage

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Stakeholder
Stakeholder Reason of Failure Expectation
Management Process
Quality of project is not as

Owner Needs should be taken care
Quality of work, safe, on
per contract during each phase
budget, flexibility
No funding is done on time Need should be taken care

Civil Contractor Time, Quality,
and proper checking of
and lack of resources Environment friendly
work at time is required
Workmanship is poor on Updating every issue

Structure Consultant Time, Quality,
during planning and
site Environment friendly
construction stage
Lack of Funds for good Funding and Evaluation on

Electrical Contractor Time, Quality,
every Phase
purchase Environment friendly
Delay in payment to supply Quality of work done by Strict evaluation and

Labor Contractor labor must be as per funding must be on time
more labor on time
standard
No such management Must be inform all the time

PMC Safety, time, quality,
for every reason
carried out payment
Must be aware of every

Builder/Financer N/A Provide sufficient funds on
cashflow and ontime
time
payment is required

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Chapter 7 Stakeholder Management in Infrastructure Project

In an infrastructure project several government as well as private body is involved which have different
policies regarding the land allotment, project execution etc. which will be covered phase wise.
In most of the projects like road development, dams, metro people who are using it are not the biggest
stakeholder the person who give his land for the development of that project become one of the strongest
stakeholder and many policies are involve in this to handover and takeover the land which will be
discussed in this chapter.
The main key point on which the infrastructure project based are:-
1. Approvals
2. Funding
3. Clearance
4. Site characteristics
In an infrastructure project the main objective is to give service to the public they are not built to make a
large profit but recovery of the investment is need to be done by these project.
The stakeholder involve in this type of the project are those who want to give the service to the public
and also want to reduce the disturbance to the local people and give service to improve the condition for
which that project is proposed.
The stakeholder involved in this type of projects are:-
1. Internal Stakeholder
 Demand Side
 Client
 Client’s Employees
 Client’s Customer
 Client Tenant
 Client Supplier
 Supply Side
 Architect
 Engineers
 Principal Contractor
 Trade Contractor
 Material Supplier

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2. External Stakeholder
 Private
 Local Resident
 Local Landowner
 Environmentalist
 Conservationist
 Professional Association
 Interested Parties
 Media
 Public
 Regulatory Agency
 Local Government
 National Government
 Public Agencies
Management of stakeholder in an Infrastructure must be done by stage wise which will reduce the risk of
the project and it is also important to identify and attend the need of the stakeholder stage wise. In the
following report the stages are considers for maintaining the arrangement of stakeholders are:
1. Inspection Stage
2. Feasibility Stage
3. Strategy Stage
4. Pre-Construction Stage
5. Construction Stage
6. Engineering and Commission Stage
7. Completion, handover and occupation stage
8. Post-completion review/ project close-out report stage
7.1 INCEPTION STAGE
Large scale projects are usually complex, requiring significant management skills, coordination of a wide
range of people with different expertise and ensuring completion within the parameters of time, value and
necessary specifications.

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The inception stage of any construction and development project requires the client to make some
important decision that a potential project represents the best way of meeting a defined need.
In assessing the need for construction, key questions should include:
 Why is the project needed?
 How best can the need be fulfilled?
 What benefits are expected as a result of the project?
 What are the investment/funding options?
 What risks related to the development can be foreseen at this stage?
7.1.1 Client’s Objective
The main objective at this stage for the client is to make the decision to invest in a construction or
development project. Clients should have a business case prepared (capital expenditure programme)
involving careful analysis of their business, organization, present facilities and future needs. Experienced
clients may have the necessary expertise to prepare their business cases in-house. Less experienced clients
may need help. Many project managers are able to contribute to this process. This process will result in
a project-specific statement of need. The client’s objective will be to obtain a totally functional facility,
which satisfies this need and must not be confused with the project objectives, which will be developed
later from the statement of need.
A sound business case prepared at this stage will:
 be driven by needs
 be based on sound information and reasonable estimation
 be aware of associated risks
 have flexibility
 maximize the scope of obtaining best value from resources
 utilize previous experiences.
7.1.2 Client’s Internal Team
Project sponsor: typically a senior person in the client’s organization, acting as the focal point for key
decisions about progress and variations. The project sponsor has to possess the skills to lead and manage
the client role, have the authority to make day-to-day decisions and have access to people who are making
key decisions.

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Client’s advisor: the project sponsor can appoint an independent client advisor (also referred to as
construction advisor or project advisor) who will provide professional advice in determining the necessity
of construction and means of procurement, if necessary. If the client does not have the necessary skills
in-house, an external consultant should be appointed. If advice is taken from a consultant or a contractor,
those organizations have a vested interest not only in confirming the client’s need, but also in selling their
services and products.
The client advisor should understand the objectives and requirements of the client, but should not have a
vested interest in any of the project options beyond the provision of expert advice to clients. He or she
should not form part of any team and instead provide advice directly to the client. Other areas where the
client may seek independent advice include: chartered accounting, tax and legal aspects, market research,
town planning, chartered surveying and investment banking.
Project manager
Project manager will need to have experience and necessary skills and competencies to manage all aspects
of a project from inception to occupation. This role may be fulfilled by a member of the client’s
organization or by an external appointment. The project manager, both acting on behalf of, and
representing the client has the duty of providing a cost-effective and independent service, selecting,
correlating, integrating and managing different disciplines and expertise, to satisfy the objectives and
provisions of the project brief from inception to completion. The service provided must be to the client’s
satisfaction, safeguard his interests at all times, and, where possible, give consideration to the needs of
the eventual user of the facility.
To ensure professional, competent management co-ordination, monitoring and controlling of the
project right from the inception stage, and its satisfactory completion in accordance with the brief, it is
advisable to appoint the project manager at a very early stage, possibly at the inception. However,
depending on the nature and type of project and the client’s in-house expertise, the project manager can
be appointed at a later stage, at the feasibility or perhaps at the beginning of the strategy stage.
7.2 FEASIBILITY STAGE

At this stage, the client will commission feasibility studies and establish that the project is both deliverable
and financially viable. The client should instruct the project manager at this stage that his or her input
will be made alongside the reports and views of various consultants.

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Feasibility study reports should include:

 Scope of investigation including establishing service objectives and financial objectives.
 Studies on requirements and risks.
 Public consultation (if applicable).
 Geo-technical study (if applicable).
 Environmental impact assessment.
 Health and safety study.
 Legal/statutory/planning requirements or constraints.
 Estimates of capital and operating costs (demolition costs, if applicable).
 Assessment of potential funding.
 Potential site assessments (if applicable).
It is at this stage that the end value or outputs of the development must be assessed. Accurate and well-
informed assessments of revenue streams and prospective capital values must be made with the expert
help of specialist consultants and valuers. If the proposed project does not pass these tests, then changes
will have to be made.
7.2.1 Client’s objectives

The objectives for the client at this stage include specifying project objectives, outlining possible options
and selecting the most suitable option through value and risk assessment. Establishing the project
execution plan for the selected option should be the key output at this stage.
The client may ask the project manager to engage and brief the various specialists for the feasibility
studies, co-ordinate the information, assess the various options and report conclusions and
recommendations to the client. The feasibility report should include a ‘risk assessment’ for each option
and will usually also determine the contractual procurement route to be adopted and a draft master
schedule applicable to each. The client may also require comparative ‘life-cycle costings to be included
for each option.
7.2.2 Outline Project Brief

For most clients a construction project is necessary to satisfy their business objectives. The client’s
objectives are usually formulated by the organization’s board or policymaking body (the investment

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decision maker) and may include certain constraints– usually related to time, cost, performance and
location.
The project manager should be provided with or assist in preparing a clear statement of the client’s
objectives and any known constraints. This is the initial outline project brief to which the project manager
will then work. The project manager’s task is to work under the client’s direction to help establish a route
which will best meet the client’s objectives within the constraints that are set. The client the project
manager will discuss the available options and initiate feasibility studies to determine the one to be
adopted.
A typical template of an outline project brief is shown
PROJECT TITLE
PROJECT REF
CUSTOMER:
PROJECT SPONSOR:
PROJECT MANAGER:
GOAL
THIS NEEDS TO BE SPECIFIC AND INCLUDE THE JUSTIFICATION FOR THE
PROJECT
It should spell out: what will be done and by when;
OBJECTIVES
It is essential these cover the OUTCOMES expected of the project and that preferably they are:
Specific – i.e. clear and relevant
Measurable – i.e. so it is feasible to see when it is happening
Achievable / agreed to – helpful to use positive language and that others ‘buy-in’ to the
objectives
Realistic – this depends on three factors: resources / time / outcome or aim
Time bound – have a time limit

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APPROACH
The project plan should include the key milestones for the review, i.e. set a target date for
agreeing the project brief and target dates for completing key stages of the project.
SCOPE
THIS SETS THE PROJECT BOUNDARIES AND IT CAN BE USEFUL TO ADD WHAT IS
NOT COVERED.
It can be a useful reference point if the project changes in due course
CONSTRAINTS
Could add ‘start’ date and ‘end’ dates here
It is particularly important in the context of best value, to identify here genuine constraints
rather than customer preconceived ideas about the solution
DEPENDENCIES
This identifies factors outside the control of the project manager, and may include:
_ Supply of information
_ Decisions being taken at the right time
_ Other supporting projects
RESOURCE REQUIREMENTS
Include estimate of project days and costs
AGREED
Signature: Date:
Project Manager:
Project Sponsor :
Figure 19 Outline project brief template

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7.2.3 Site selection and acquisition

Site selection and acquisition is an important stage in the project cycle in the situation where the client
does not own the site to be developed. It should be effected as early as possible and, ideally, in parallel
with the feasibility study. The work is carried out by a specialist consultant and monitored by the project
manager.
The objectives are to ensure that the requirements for the site are defined in terms of the facility to be
constructed, that the selected site meets these requirements and that it is acquired within the constraints
of the project schedule and with minimal risk to the client.
To achieve these objectives the following tasks need to be carried out:

 Preparing a statement of objectives/requirements for the site and facility/ buildings and agreeing
this with the client.
 Preparing a specification for site selection and criteria for evaluating sites based on the
objectives/requirements.
 Establishing the outline funding arrangements.
 Determining responsibilities within the project team (client/project manager/ commercial estate
agent).
 Appointing/briefing members of the team and developing a schedule for site selection and
acquisition; monitoring and controlling progress against the schedule.
 Site searches and collecting data on sites, including local planning requirements, for evaluation
against established criteria.
 Evaluating sites against criteria and producing a short list of three or four; agreeing weightings
with the client.
 Establishing initial outline designs and developing costs.
 Discussing short-listed sites with relevant planning authorities.
 Obtaining advice on approximate open-market value of short-listed sites.
 Selecting the site from a short list.
 Appointing agents for price negotiation and separate agents for independent valuation.
 Appointing solicitors as appropriate.
 Determining specific financial arrangements.

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 Exchanging contracts for site acquisition once terms are agreed, conditional upon relevant
matters, e.g. ground investigation, planning consent.
7.2.4 Detailed project brief

The formulation of the detailed brief for the project is an interactive process involving most members of
the design team and appropriate representatives of the client organization. It is for the project manager to
manage the process, resolving conflicts, obtaining client’s decisions, recording the brief and obtaining
the client’s approval.
If earlier work has been done, the project brief may refer to the document(s) containing useful
information, such as the outline project brief, rather than include copies of them.
Contents of a Detailed Project Brief
The following is a suggested list of contents, which should be tailored to the requirements
and environment of each project.
 Background
 Project definition, explaining what the project needs to achieve. It will contain:
1. Project objectives
2. Project scope
3. Outline project deliverables and/or desired outcomes
4. Any exclusions
5. Constraints
6. Interfaces
 Outline business case
1. A description of how this project supports business strategy, plans or schedules
2. The reason for selection of this solution
 Customer’s quality expectations
 Acceptance criteria

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Figure 20 Content of a Detailed Project Brief
Within the detailed project brief, the assembly of the detailed design brief will normally be the
responsibility of the lead design consultant along with the project manager and, where appropriate, the
client.
The project manager will monitor the assembly of the detailed design brief to ensure compliance with the
outline project brief, the project budget and the master schedule.
Depending on the procurement method adopted and the master schedule, the assembly of the detailed
design brief may occur in parallel with other activities, such as the development of the final scheme design
and site preparation.
The project manager will monitor the progress of the assembly of the detailed design brief and notify the
client of the effects on cost, time, quality, function and financial viability of any changes from the outline
design brief. The detailed design brief, or such part of it that has not been deferred, having been tested
against these criteria, should be presented to the client as a formal document for his approval. The lead
design consultant and the project manager should normally make the presentation jointly.
7.2.5 Scheme design
Once approved by the client, the detailed design brief becomes the control document for the design and
will be issued by the project manager to all members of the design team. The project manager, with the
approval of the client, will instruct the design team to complete the scheme design.
In order to make informed decisions on deliverability of a project and also its financial availability, it will
be necessary to instruct the architect (the cost consultant and other experts as appropriate) to prepare site
layouts, floor plans, elevations and other drawings in sufficient detail for the cost consultant to prepare
preliminary cost plans. The project manager will monitor the completion of the scheme design, arrange
for cost checks benchmarking against the cost plan and obtain confirmation that the design meets the
detailed design brief and all external constraints.

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7.2.6 Project execution plan (PEP)

The PEP is the core document for the management of a project. It is a statement of policies and procedures
defined by the project sponsor, although usually developed by the project manager for the project
sponsor’s approval. It sets out in a structured format the project scope, objectives and relative priorities.
This is a live document that enforces discipline and planning with a wider circulation than the project
design team. It forms a basis for:
 Sign off by the client body at the end of the feasibility and strategy phases.
 A prospectus for funding.
 An information and ‘catch up’ document for prospective contractors.
Contents of a Project execution plan (PEP)

A typical PEP might cover the items listed below, although some may appear under a number
of headings with a cross-reference system employed to avoid duplication:
 Project definition and brief.
 Statement of objective.
 The business plan with costs, revenues and cash flow projections including
borrowings interest and tax calculations.
 Market predictions and assumptions in respect of revenue and returns.
 Functional and aesthetic brief.
 Client management and limits of authority including the project manager.
 Financial procedures and delegated authority to place orders.
 Development strategy and procurement route.
 Risk assessment.
 Schedule and phasing.
 The scope content of each consultant appointment.
 Reconciled scheme design and budget.
 Detailed design.
 Package design and tendering.
 Construction.
 Commissioning and handover.

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 Operation.
 Safety and environmental issues, such as the construction design and management
regulations.
 Quality assurance.
 Post-project evaluation.
Figure 21 Typical content of a Project Execution Plan
The PEP will change as a project progresses through its design and construction stages. It should be a
dynamic document regularly updated and referred to as a communication tool, as well as a control
reference.
7.3 STRATEGY STAGE

At this stage, the project manager performs several principal activities which may include all, or most of
the following:
 Reviewing, and in some cases developing, the detail project brief with the client and any existing
members of the project team to ascertain that the client’s objectives will be met.
 Establishing, in consultation with the client and other consultants, a project management structure
and the participants’ roles and responsibilities, including access to client and related
communication routes, and decision required’ points
 Ensuring, in liaison with the client, the planning supervisor, design consultants and the principal
contractor when appointed, that appropriate arrangements have been made to meet the
requirements of the Construction Regulations..
 Establishing that ‘value management’ is applied effectively from the earliest stages of the
preparation of the design brief until the design is complete.
 Advising the client on the recruitment and appointment of additional consultants and design team
members, i.e.
o preparation of appropriate definition of roles and responsibilities
o preparation and issue of selection/tender documentation
o evaluation, reporting and making recommendations

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o assisting the client in the preparation of agreements and in selection and

appointment.
 Putting in place procedures for managing risk as a continuous project activity.
 Selection, or development, and agreement of the most appropriate form of contract relative to the
project objectives and the parameters of cost, time, quality, function and financial viability.
 Making the client aware of relevant statutory submissions and other consultations that may be
required in the delivery of the project.

The main aims for the client at this stage include setting up the project organization, establishing the
procurement strategy and commissioning/occupation issues through identifying project targets, assessing
and managing risks and establishing the project plan.
7.3.2 Project organization and control

A project management organization structure sets out unambiguously and in detail how the parties to the
project are to perform their functions in relation to each other in contributing to the overall scheme. This
should be recorded in the project handbook. It also identifies arrangements and procedures for monitoring
and controlling the relevant administrative details. It is updated as circumstances dictate during the
lifetime of the project, and should allow project objectives and success criteria to be communicated and
agreed by all concerned and promote effective teamwork.
Procedures covering the relationships and arrangements for monitoring, control and administration of the
project should be developed, with the assistance of parties involved, for all stages of the project and cover
time, costs, quality and reporting/ decision-making arrangements. The organization structure should
clearly identify the involvement and obligations of the client and their organizational backup.
7.3.3 Project planning

The project master schedule should be developed and agreed with the client and the consultants
concerned, and detailed schedules for each stage of the project should be prepared as soon as the necessary
parameters are established. While preparing the master schedule necessary allowances should be
incorporated to provide for potential delays (including possible impact on initial revenue generation) in

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activities such as applying and obtaining statutory approvals, external consultations and enquiries, legal
and funding negotiations and any other thirdparty agreements.
It is the project manager’s responsibility to monitor the progress of the project against the master and
stage schedule, identify risks to progress and to initiate necessary action to rectify potential or actual non-
compliance.
7.3.4 Cost planning

A budget study is undertaken to determine the total costs and returns expected from the project. A cost
plan is prepared to include all construction costs, and all other items of project cost including professional
fees and contingency.
The objective of the cost plan is to allocate the budget to the main elements of the project to provide a
basis for cost control. The terms budget and cost plan are often regarded as synonymous. However, the
difference is that the budget is the limit of expenditure defined for the project, whereas the cost plan is
the definition of what the money will be spent on and when. The cost plan should, therefore, include the
best possible estimate of the cash flow for the project and should also set targets for the future running
costs of the facility. The cost plan should cover all stages of the project and will be the essential reference
against which the project costs are managed.
The cost plan provides the basis for a cash flow plan, based upon the master schedule. When the cost
plan is in place it serves as the reference point for the monitoring and control of costs throughout a project.
The list which follows should be used as an aid in setting up detailed cost control procedures for all stages
of a project.
7.3.5 Cost control
The objective of cost control is to manage the delivery of the project within the approved budget. Regular
cost reporting will facilitate, at all times, the best possible estimate of:
 established project cost to date
 anticipated final cost of the project
 future cash flow.
In addition cost reporting may include assessments of:

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 ongoing risks to costs

 costs in the use of the completed facility
 potential savings.
Effective cost control is effectively achieved when the whole of the project team has the correct attitude
to cost control, i.e. one which will enable fulfillment of the client’s objectives.
Effective cost control will require the following actions to be taken:

 Establishing that all decisions taken during design and construction are based on a forecast of the
cost implications of the alternatives being considered, and that no decisions are taken whose cost
implications would cause the total budget to be exceeded.
 Encouraging the project team to design within the cost plan, at all stages, and adopt the
variation/change and design development control procedures for the project. It is generally
acknowledged that 80% of cost is determined by design and 20% by construction
 Regularly updating and reissuing the cost plan and variation orders causing any alterations to the
brief.
 As part of risk management, reviewing contingency and risk allowances at intervals and reporting
the assessments are essential.
 Arranging that the contractor is given the correct information at the correct time in order to
minimize claims. Any anticipated or expected claims should be reported to the client and included
in the regular cost reports.
 Contingency money based on a thorough evaluation of the risks is available to pay for events
which are unforeseen and unforeseeable. It should not be used to cover changes in the
specification or in the client’s requirements or for variations resulting from errors or omissions.
Should the consultants consider that there is no alternative but to exceed the budget, a written
request to the client must be submitted with the correct authorization. This must include the
following:
o details of variations leading to the request
o confirmation that the variations are essential
o confirmation that compensating savings are not possible without having an
unacceptable effect on the quality or function of the completed project

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 Submitting regular, up-to-date and accurate cost reports to keep the client well informed of the
current budgetary and cost situation.
 Establishing that all parties are clear about the meaning of each entry in the cost report. No data
should be incorrectly entered into the budget report or any incorrect deductions made from it.
 Ensuring that the project costs are always reported back against the original approved budget.
 Plotting actual expenditure against predicted to give an indication of the project’s progress.
8.3.6 Procurement
The various procurement options available reflect fundamental differences in the allocation of risk and
responsibility to match the characteristics of different projects, therefore selection of the procurement
option must be given strategic consideration.
The project manager should advise on the relative benefits and disadvantages of each option, related to
the particular circumstances of the project, for the benefit of the client. The final choice of procurement
method should be made on the basis of the characteristics of the project, the client and his requirements.
The selection of method should be made when consideration is being given to the appointment of design
and other specialist consultants because each option can have a different impact on the terms of
appointment of the members of the project team.
The various procurement methods which may be pursued can be broadly classified under four headings:
 traditional
 design and build
 management contracting
 construction management.
Traditional: The contractor builds to a defined scope of work for a fixed price lump sum regardless of
costs. The client, however, remains responsible for the design and the performance of consultants under
the building contract. The client appoints a design team, including a quantity surveyor responsible for
financial and contractual advice. A building contractor is appointed, usually after a tender process, and
usually based on one of the standard forms of contract, to carry out the construction. The tender process

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can be based on complete design information or partial design information plus provisional guidance if
an early construction start is required.
Design and build: The client appoints a building contractor, usually on a standard form of contract to
provide the completed building to agreed cost and schedule. The contractor is responsible for design and
construction as defined in formal documentation known as the client’s requirements. The appointment
may be made after a tendering process incorporating variations on the method, or through negotiation.
The client may appoint a consultant to oversee matters on his behalf. This arrangement transfers
maximum risk to the contractor and generally has a good reputation for controlling schedule and the
client’s cost. The design, however, will be the most commercial response that a contractor can produce
to satisfy the contract conditions.
The design and build contractor may be appointed when part of the design has been completed, and in
these circumstances, the appointments of the design team may be formally passed on to the design and
build contractor.
Management contracting: The client appoints a design team with responsibilities as in the traditional
method and augmented by a management contractor whose expertise and advice is available throughout
the design development and procurement processes. Specialist works subcontractors, who are contracted
to the management contractor on terms approved by the contract administrator who may be the architect,
the quantity surveyor or the project manager, carry out the construction. The appointments of the
management contractor and the trade subcontractors are usually made on standard contract forms. The
management contractor is reimbursed all their own costs and paid a percentage on project costs in the
form of a guaranteed profit or fee.
Construction management: Construction management requires that the specialist works contractors are
contracted to the client directly, involving the construction manager as a member of the project team
acting as an agent and not a principal, to concentrate on the organization and management of the
construction operations. The project team, including the construction manager, is responsible for all
financial administration associated with the works. The construction manager is paid an agreed fee to
cover the costs of its staff and overheads. This is generally considered to be the least adversarial form of
contract and is often invoked when design needs to run in parallel with construction.

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7.4 PRE-CONSTRUCTION STAGE
Pre-construction involves establishing the detailed design, the preparation of tender documents and the
tendering process. However, the precise sequence of activities will depend very much on the choice of
procurement system, and the type and form of contract selected.
It is worth noting at this stage, that we are moving into an ever-increasing legislative environment, with
greater controls in the form of statutory requirements, national and European legislation and guidelines,
demand for greater sustainability and growing restrictions on disposal of unused material, to name but a
few.
Therefore, by the start of this pre-construction stage, a significant number of key activities will have been
addressed and action taken. These include the following:
 The client’s project brief detailing the project objectives will have been established and the
associated scheme design fundamentally completed.
 A suitable site and the scope of any treatment required will have been identified and made
available.
 Environmental and energy audits will have been undertaken.
 Risk register prepared incorporating data from risk analysis.
 Surveys to cover: geology, topography, hazardous materials, landfill and recycling will have been
carried out.
 Obligatory reports concerning sustainability, disability discrimination, etc., will have been
prepared and approved by the appropriate authorities.
 Statutory authorities, public bodies and utilities will have been approached for information
regarding all mains services, highways and related infrastructure items, which are likely to
influence site development.
 A master project schedule will have been prepared.
 A cost plan will have been prepared.
 A cost allowance will have been allocated to cover on-site development including enabling works,
infrastructure, buildings, fitting-out and equipment.
 The planning authorities will have been contacted regarding the planning status of the site, which
has been deemed acceptable for the intended purpose.

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 The project team will have been appointed together with their associated consultants. This team
will include the client, the project manager and, as soon as possible, representatives from the
main contractor and associated key subcontractors/work packages.
 The project execution plan drafted during the feasibility stage may be enhanced during this stage.
It is a live document which governs the strategy, organization, control procedures, respective
responsibilities for the project and much more.
The pre-construction stage is about final preparation for the construction stage, the success of which will
depend, to a great extent, on the amount of planning and preparation that has taken place during this and
earlier stages.
At this stage the client expects to finalize the project brief with the project team, identify and agree the
solution that gives optimum value, and to ensure a detailed design which can be efficiently delivered with
predictability of cost, time and quality.
7.4.2 Design management
The project manager will need to form a meeting of the design team and any other consultants/advisers
to review all aspects of the project to date. Relevant information should be circulated in advance. The
object of the meeting will be to formulate a design management plan. The plan should at cover:
 who does what by when
 the size and format of drawing types
 schedules of drawings to be produced by each discipline/specialist
 relationships of interdependent CAD (computer-aided design) systems
 transfer of data by information technology
 estimates of staff hours to be spent by designers on each element or drawing
 initiating procedures for design changes

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The project manager, as a basis for monitoring and controlling the design process, will use the agreed
design management plan. While the project manager may convene a meeting of the design team,
responsibility for the co-ordination and integration of the work of other consultant and specialists lies
with the design team leader.
7.4.3 Tender action
The procurement schedule will indicate the time allowed for short listing suitable contractors or works
packages. This schedule will also show activities such as tender interviews, tendering and selection. It
will then lead to a design schedule which defines scope, release dates, approval periods, cost checking
and consolidation into tender documentation.
These activities may include the following:

 Checking that the various tender documents are produced at appropriate times, including those
for enabling works (e.g. demolition, site clearance, access and hoarding) and ensuring that they
contain any special terms required by the client.
 Checking, in liaison with other project team members, that all subcontract terms are compatible
with the main contract terms, paying particular regard to contractor-designed elements and
confirming that appropriate warranties are secured.
 Receiving reports on tenders, together with method statements.
 Initiating action if tenders are outside budget.
 Ensuring that the client understands the nature and terms of the construction contract, particularly
those in relation to possession and payment terms, and that possession of the site can be given to
the contractor on the date set out in the tender.
 Arranging for formal signing and exchange of contracts.
7.4.4 Pre-start meeting
The pre-start meeting with contractors and consultants (project team) is held to establish proper working
arrangements, roles and responsibilities, and lines of communication, and to agree procedures to be
followed throughout the contract (project on site). If bonds are required they must be provided before

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possession of site is granted. The ‘principal contractor’s’ health and safety plan must be in place before
work starts on-site
Agenda items at pre-start meeting
Introduction
 Introduce the representatives who will regularly attend progress meetings and clarify their roles
and responsibilities. The client, contractor and consultants may wish to introduce themselves.
 Briefly describe the project and its priorities and objectives, and any separate contract that may
be relevant.
 Indicate any specialists appointed by the client, e.g. for quality control, commissioning, for this
contract.
Contract
 Describe the position with regard to preparation and signature of documents
 Hand over any outstanding production information, including nomination instructions, variation
instructions.
 Request that insurance documents be available for inspection immediately, remind the contractor
to check specialist subcontractors’ indemnities.
 Confirm the existence, status and use of the information release schedule, if used.
Contractor’s matters
 Check that the contractor’s master schedule is in the form required and that it satisfactorily
accommodates the specialist subcontractors.
 Review in detail the particular provisions in the contract concerning site access, organization,
facilities, restrictions, services, etc., to ensure that no queries remain outstanding. Ensure the
contractor has a copy of any conditions placed on the client in respect of the planning consent.
 Quality control is the contractor’s responsibility. Remind the contractor of the contractual duty
to supervise standards and quality of work during the execution of the works.
 The contractor must also provide for competent testing and commissioning of services as set out
in the contract documents, and should be reminded that the time allocated for commissioning is
not a contingency period for the main contract works.
 The contractor must obtain the architect’s written consent before subletting any work.

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Resident engineer/ architect/clerk of works’ matters

 Clarify that architect’s inspections are periodic visits to meet the contractor’s supervisory staff,
plus spot visits. Explain the supportive nature of the various roles and the need for co-operation
to enable them to carry out their duties.
 Remind the contractor that the resident staff must be provided with adequate facilities and access,
together with information about site staff, equipment and operations.
 Confirm procedures for checking quality control, e.g. through:
o design and methodology
o sample material to be submitted
o samples of workmanship to be submitted prior to work commencing
o test procedures set out in the bills of quantities
o adequate protection and storage
o visits to suppliers’/manufacturers’ works.
Consultant’s matters
 Emphasize that consultants will liaise with specialist subcontractors only through the contractor.
Instructions are to be issued only by the architect/ contract administrator. The contractor is
responsible for managing and coordinating specialist subcontractors.
 Establish working arrangements for specialists’ drawings and data for evaluation (especially
services) to suitable timetables. Aim to agree procedures which will speed up the process; this
sector of work frequently causes serious delay or disruption.
Quantity surveyor’s matters
 Agree procedures for valuations; these may have to meet particular dates set by the client to ensure
that certificates can be honoured.
 Clarify:
o that dayworks will only be accepted on written instructions
o that daywork sheets are required within a stated number of days from work being carried
out
o tax procedure concerning VAT and ‘contractor’ status

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o that the contractor should only order from drawings and specifications, not the bills of
quantities.
Communications and procedures
 The supply and flow of information will depend on a schedule being established at the start and
will proceed smoothly if:
o there is regular monitoring of the information schedules
o the design team responds quickly to queries
o technical queries are raised with the clerk of works (if appointed) in the first instance
o policy queries are directed to the architect/contract administrator
o discrepancies are referred to the architect/contract administrator for resolution.
 On receiving instructions, the contractor should check for discrepancies with existing documents;
check that documents being used are current.
 Information to or from specialist subcontractors or suppliers must be via the contractor.
 All information issued by the design team is to be via the appropriate forms, certificates,
notifications, etc. The contractor should be encouraged to use standard formats and classifications.
 Clarify that no instructions from the client or consultants can be accepted by the contractor or
any subcontractor; only empowered written instructions by the architect/contract administrator
are valid and all oral instructions must be confirmed in writing.
 Procedures for notices, applications or claims of any kind are to be strictly in accordance with the
terms of the contract; all such events should be raised immediately the relevant conditions occur
or become evident.
7.5 CONSTRUCTION STAGE
The construction stage commences as soon as the contractor is in charge of the site. It involves the
implementation of the design plans envisaged by the architect/ designer and engineer. Here, the contractor
deploys the pre-planned schedules and resources and ensures adequate delivery of the project within
proposed budget plans. The construction stage involves making use of various resources ranging from
equipment, materials, finance and human resources. At this stage, the different organizations and
professionals get involved, including subcontractors, specialist contractors, labour & material suppliers,

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consultants, etc. working towards a common and shared goal. Given that this stage entails the actual
physical construction of the project, this stage requires the participation of the entire project team.

At this stage the client should aim to ensure the safe completion of the construction/ development within
the targets set at previous stages.
7.5.2 Roles of project team members in this stage
Although the precise contractual obligations of the project participants vary with the procurement option
adopted, the project participants must carry out certain essential fundamental functions.
Client
Usually a client would have a relatively nominal direct involvement in the construction works; their chief
interest would be:
 to satisfy themselves that the contractor(s) were performing in accordance with the contract
 to make sure they are meeting their obligations for payments to the consultants and the
contractor(s).
Project manager
The project manager has a role which is principally that of monitoring the performance of the main
contractor and the progress of the works, and involves the following activities (some of which may have
been accomplished in the preconstruction stage):
 Ensuring contract documents are prepared and issued to the contractor.
 Ensuring the contracts are signed.
 Arranging the handover of the site from the client to the contractor.
 Reviewing contractor’s construction schedule and method statements.
 Ensuring procedures are in place and being followed.
 Ensuring site meetings are held and documented.
 Monitoring construction cash flow.
 Reviewing progress with contractor.
 Monitoring performance of contractor.
 Ensuring the health and safety file is being maintained.

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 Ensuring design information required by contractor is supplied by consultants.

 Establishing control systems for time, cost and quality.
 Ensuring site inspections are taking place.
 Confirming insurance cover on the works.
 Managing project cost plan.
 Ensuring client meets contractual obligations (i.e. payments).
 Reporting to client.
 Managing introduction of changes.
 Ensuring statutory approvals are being obtained.
 Ensuring all relevant legal documents are in place.
 Establishing mechanisms for dealing with any claims.
 Anticipating and resolving potential problems before they develop.
Design team The design consultants are responsible for:

 providing production information (i.e. details of building components)
 approving working drawings being provided by specialist contractors
 responding to site queries raised by contractors
 inspecting the works to ensure compliance with the drawings and specification
 inspecting the works to ensure an acceptable quality standard has been achieved.
The structural engineer will have a general duty of care to ensure the erection of the structural frame is
proceeding in a safe manner.
Most building contracts refer to a contract administrator, usually the design team leader or the project
manager, who is the formal point of contact between the project team and the contractor, and who has a
contractual obligation in relation to the issuing of formal instructions to the contractor; these include:
o issuing design information
o issuing variations
 instructions on standards of work and working methods
 arbitrating on contractual issues
 issuing interim payment and other certificates
 issuing practical completion certificate.

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Quantity surveyor
The quantity surveyor has a duty to:
 measure the value of work executed by the main contractor
 agree monthly valuations with the main contractor
 agree the final account with the main contractor.
The quantity surveyor has a separate responsibility to the client, usually through the project manager, for
reporting on the overall financial aspects of the project.
Main/principal management contractor

The main/principal management contractor has responsibility for:
 mobilizing all labour, subcontractors, materials, equipment and plant in order to execute the
construction works in accordance with the contract documents
 ensuring the works are carried out in a safe manner
 indemnifying those working on the site and members of the public against the consequences of
any injury resulting from the works.
Construction manager
A client may decide on a construction management route, directly employing a construction manager as
a consultant acting as an agent and not a principal, with expertise in the procurement and supervision of
construction. In this arrangement the construction manager’s role is:
 to determine how the construction works should best be split into packages
 to produce detailed construction schedules
 to determine when packages need to be procured
 to manage the procurement process
 to manage the overall site facilities:
o access
o storage
o welfare
 to supervise the package contractor’s execution of the works.

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Subcontractors and suppliers

Subcontractors have specialist expertise, usually trade related (e.g. mechanical or electrical installations,
lift installation, joinery, demolition), for the supply and installation of an element of the total works.
Subcontractors may be either nominated or named by the consultants or selected and appointed directly
by the main contractor, known as domestic subcontractors. If nominated, the client carries some risk in
respect of the subcontractor’s performance.
Suppliers provide certain materials, components or equipment for others to install Labour-only
subcontractors provide only labour to carry out the installation of materials, components or equipment
provided by the main contractor (e.g. carpenters, bricklayers and plasterers).
Due to their specialist knowledge, subcontractors have an increasing design responsibility for the detailed
design related to their installations (may include fixing details, fabrication details, co-ordination with
other installations).
7.6 ENGINEERING SERVICES COMMISSIONING STAGE
Engineering commissioning is a very important part of the construction process and must be addressed
and considered very early within the project. The following are suggested activities that must be
considered well before this stage:
 Decide the most appropriate time within the project to appoint the commissioning contractor and
the role/scope of work.
 Where appropriate, appoint a commissioning contractor to review the design drawings and
working drawings to ensure commission ability.
 Ensure consultants clearly identify testing and commissioning requirements.
 Ensure consultants/client identify performance/environmental testing requirements.
 Ensure that the project schedule includes sufficient time to undertake the specified
commissioning, and in particular, the additional time required for any performance/
environmental testing and statutory testing to authorities.
 Clearly identify the method of presenting, recording and electronically storing ‘as installed’
information.

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 Although not strictly part of engineering commissioning, ensure that the requirement for specialist
maintenance contracts for equipment is carefully considered prior to awarding tenders for such
equipment.
At this stage the client should be satisfied that the engineering installation has been installed correctly, in
a safe manner, and that it performs to the requirements of the design.
The project manager’s objective is to ensure that the commissioning of the separate systems is properly
planned and executed, so that the installation as a whole is fully operational at handover without delay to
the schedule and that any fine tuning necessary after handover is carried out in liaison with the client/user.
7.6.2 Commissioning generally
Commissioning is carried out in four or sometimes five distinct parts:

(a) static testing of engineering services,
(b) dynamic testing of engineering services,
(c) performance testing of engineering services (not always undertaken),
(d) undertaking statutory tests for various authorities, and
(e) client commissioning.
The first four items, engineering services testing, commissioning, performance testing and statutory tests,
are part of the construction design and installation phases of the project. Client commissioning is an
activity predominantly carried out by the client’s personnel assisted, where required, by the consultants.
7.6.3 Procurement of commissioning services
Smaller projects
There are many ways to procure the commissioning specialist. On smaller projects, via the main
contractor, the mechanical and electrical subcontractors are most likely to be responsible for the testing
and commissioning of their installation. Electrical contractors will normally use in-house resources,
except where specialist items of equipment require the manufacturer to assist with their testing.

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Mechanical contractors will usually appoint a commissioning specialist to work on their behalf. Again,
where specialist items of equipment are installed, the mechanical contractor will request the manufacturer
to assist with its testing where appropriate. However,
it should be noted that often these commissioning specialists are no more than balancing engineers. This
is fine for simple installations, but where more complicated systems are involved or specific
commissioning and performance tests are required, their management and execution may not be adequate.
Careful specification of the requirements within the design documentation is required when tendering the
installation work. This is all too often ignored or given insufficient time and effort which inevitably
creates problems later in the construction process.
Larger projects
On larger projects the method of procuring the commissioning specialist can take many forms. In
traditional forms of contract it can again be via the main contractor/services contractor, however, in
construction management or similar forms of contract, a specialist commissioning contractor is often
appointed. This commissioning contractor normally fulfils one of two roles: the role of managing the
testing and commissioning process (the actual work being done by the installation contractors as detailed
for small projects above), or the role of undertaking the commissioning work. In this latter role, the point
of delineation for testing/ commissioning between the installation contractor and the commissioning
contractor is usually at the end of static testing and the start of dynamic testing.
7.6.4 Role of the commissioning contractor
Below are some of the activities that can be included within the scope of work for the commissioning
contractor:
 Review the design drawings near the end of design to ensure familiarity with the design intent
and to add their expertise in to the commission ability of a scheme.
 Ensure that the testing and commissioning are correctly specified in the tender documentation.
 Review the services contractors’ working drawings for commission ability.
 Set up the testing and commissioning documentation to create consistency between the various
contractors.

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 Define the method, media type, style and content of the ‘as installed’ information to create
consistency between the various contractors.
 Manage the specialist equipment manufacturers’ tests.
 Liaise with building control and other organizations for witnessing of relevant statutory tests
(including insurers’ tests).
All of these functions are often given insufficient thought on projects, so if they are not to form part of
the commissioning contractor’s brief, then it should be recognized that some other part of the project
team should undertake this work.
7.6.5 Differences between testing and commissioning
Testing
During the services installation various tests will be undertaken known as ‘static testing’. This testing is
normally undertaken to prove the quality and workmanship of the installation. Such work is undertaken
before a certificate is issued to ‘liven’ services whether electrically or otherwise. Examples of such are:
 pressure testing ductwork and pipework
 undertaking resistance checks on cabling.
Commissioning (Derek Walker)

On completion of the static testing, dynamic testing commences, this being the commissioning.
Commissioning is undertaken to prove that the systems operate and perform to the design intent and
specification. This work is extensive and normally commences by issuing a certificate permitting the
installation to be made ‘live’, i.e. electrical power on. After initial tests of phase rotation on the electrical
installation and checking fan/pump rotation (in the correct direction), the more recognised commissioning
activities of balancing, volume testing, load bank testing,
etc., begin.

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7.7 COMPLETION, HANDOVER AND OCCUPATION STAGE
Completion and handover are very much interlinked. This is the final stage of work executed by the
contractors and consultants prior to acceptance of the facility by the client. They are carried out under the
continued co-ordination and supervision of the project manager, in close working relationship with the
consultants. The project manager maintains required liaison between and acts on behalf of the parties
concerned (e.g. client/user). Occupation organized by the client’s occupation coordinator is usually
preceded by an accommodation schedule of works which can consume anything up to 3% of the
construction budget. These works may or may not involve the design consultants and may be managed
by the project manager or by the client’s accommodation manager.
At this stage the client’s aims include agreeing to a handover plan and schedule and client/supplier
responsibilities, especially in terms of criteria for acceptance, provision of necessary project
documentation, and defects liability, commissioning arrangements, and any instructions as to future
occupation. The client is also to agree and implement the handover method and agree a defect rectification
plan if necessary and transfer of documentation. Also an initial post-occupancy review may be undertaken
at this stage to highlight any immediate issues for rectification.
7.7.2 Project management actions

This stage marks the end of the main construction works, and involves the project manager in a number
of activities to terminate the construction contract successfully.
 Ensuring the contract administrator has inspected the works and, if appropriate, has issued the
Certificate of Practical Completion. Attached to the Certificate should be a list of outstanding
snags and exclusions together with a statement of the time-scale for their final completion. The
project manager needs to ensure completion of these final items does not cause disruption to the
client’s use of the end product.
 Issue of the Certificate of Practical Completion marks a transfer of responsibility for the end
product from the contractor to the client. The project manager needs to ensure the client is
prepared for the insurance and security implications of this change of responsibility.

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 Following issue of the Certificate of Practical Completion, the project manager should ensure the
final account process for the completed works is concluded with the contractor as rapidly as
possible. The final account is a reconciliation of the tendered works and the scope of the works
finally instructed, and takes account of variations to the contract issued during the course of the
project. While assessment of the cost and time implications of these contractual entitlements is
initially made by the contract administrator, in the event of the contractor being unhappy at the
proposed settlement, the project manager will be called to arbitrate.
 The final account process involves consideration of claims for additional money and time made
outside of the contract. The project manager, who will make a recommendation to the client for
any award will consider these claims for consequential loss.
 At practical completion a number of significant documents are handed over from the contractor
to the client. The project manager needs, on behalf of the client, to ensure firstly, that these
documents are available and secondly, that they are to the necessary quality:
o the project’s health and safety file
o ‘as built’ drawings together with all relevant specifications, etc.
o operating and maintenance manual, consisting of details of maintenance schedules,
operating instructions, manufacturer’s details
o warranties and guarantees from suppliers
o copies of statutory authority approvals and consents
o test and commissioning documentation.
7.7.3 Actions by consultants
Consultants should carry out the following actions:

 Inspect, as appropriate, the work for which they have design responsibility and report to the design
team leader, with copy to the project manager, on progress and compliance with contract
provisions, highlighting any corrective action to be taken.
 Inspect work at the practical completion stage, produce the outstanding work schedule and sign
off, certifying, subject to completion of works listed in the schedule. As a general rule, a certificate
of practical completion should not be issued if there are incomplete or defective works
outstanding.

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 Modern air-conditioned facilities and control systems require a range of external temperatures and
full occupation to test their adequacy and stability i.e. summer and winter working. Certificates
of Practical Completion should therefore be qualified and inevitably some final commissioning
will take place to services after occupation but before the issue of a Final Certificate.
7.7.4 Client commissioning and occupation
Having accepted the constructed structure from the contractor at practical completion, the client finally
has to prepare the facilities ready for occupation. This stage of the project life-cycle comprises three major
groups of tasks: client accommodation works, operational commissioning and migration.
In order to allow as much time as possible for the client organization to develop their detailed
requirements, or to reflect their latest business ‘shape’, it is common for the client to organize a further
project to carry out accommodation works. It is likely the project manager will be involved to manage
the project team established to carry out these works. Often this team will be separate from the main
project team and will comprise personnel with greater experience of operating in a finished project
environment.
7.7.5 Operational commissioning
The principles of client commissioning and occupation should be determined at the feasibility and
strategy stage. Client commissioning (as with occupation, which usually follows on as a continuous
process) is an activity predominantly carried out by the client’s personnel, assisted by the consultants as
required.
The objective of client commissioning is to ensure that the facility is equipped and operating as planned
and to the initial concept of the business plan established for the brief. This entails the formation, under
the supervision of the client’s occupation co-ordinator, of an operating team early in the project so that
requirements can be built into the contract specifications. Ideally, the operating team is formed in time to
participate in the design process.
7.7.6 Client occupation (Jing Yang1)

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Occupation should follow a very carefully planned logistical schedule managed by the incoming user of
the facility following completion of construction. This can be put under the control of the project manager
or can be headed by an appointed occupation co-ordinator.
Unlike many other project management activities, occupation involves employees themselves and is
impacted by the style of management and culture of the user’s organization. Consequently, well-executed
planning with their involvement in the process can result in better management/employee relations,
bringing a greater feeling of participation and commitment to the workforce.
It is normal to produce an operational policy document in the planning stages which is a blueprint for
implementation of the business plan. In particular it sets out services which will be kept in-house and
those services which will be contracted out and how they will be procured.
The arrangements for occupation and migration from one facility to another will, on many projects, be
predetermined by space-planning exercises carried out in the initial design stages by the design team or
space-planning consultant.
7.8 POST-COMPLETION REVIEW/ PROJECT CLOSE-OUT REPORT STAGE
The objective of this stage is to make a thorough assessment of all elements of the project and to draw
out or feedback, for the benefit of the client, the project management practice concerned and other team
members, any lessons and conclusions for application to future projects, i.e. what could have been done
differently to mutual advantage. This review/report is good practice but should not be regarded as
mandatory and may not be required by all clients. It is worth involving the design consultants if only to
check that the client is getting maximum use out of the facilities provided and in particular that operational
costs are at an optimum level.

The client’s aims at the closing stage of a project should include:
 to measure performance of all aspects of the project and ensure that the value of the knowledge
gained can be carried forward to future projects
 to undertake an initial assessment of the new facility – so as to establish its fitness for purpose
and satisfaction of requirements.

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7.8.2 Post-Completion Review

The typical review is likely to consist of the following elements.
Project audit
 Brief description of the objective of the project.
 Summary of any amendments to the original project requirements and their reasons.
 Brief comment on project form of contract and other contractual/agreement provisions. Were they
appropriate?
 Organization structure, its effectiveness and adequacy of expertise/skills available.
 Master schedule – project milestones and key activities highlighting planned versus actual
achievements.
 Unusual developments and difficulties encountered and their solutions.
 Brief summary of any strengths, weaknesses and lessons learnt, with an overview of how
effectively the project was executed with respect to the designated requirements of:
o Cost
o planning and scheduling
o technical competency
o quality
o safety, health and environmental aspects.
 Indication of any improvements which could be made in future projects.
Cost and time study

 Effectiveness of:
o cost and budgetary controls
o claims procedures.
 Authorized and final cost.
 Planned against actual costs (e.g. S-curves) and analysis of original and final budget.
 Impact of claims.
 Maintenance of necessary records to enable the financial close of the project.
 Identification of time extensions and cost differentials resulting from amendments to original
requirements and/or other factors.

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 Brief analysis of original and final schedules, including stipulated and actual completion date;
reasons for any variations.
Human resources aspects

 Communication channels and reporting relationships
 Industrial relations problems, if any.
 General assessment and comments on staff welfare, morale and motivation.
Performance study
 Planning and scheduling activities.
 Were procedures correct and controls effective?
 Staff hours summary:
 Identification of activities performed in a satisfactory manner and those deemed to have been
unsatisfactory.
 Performance rating (confidential) of the consultants and contractors, for future use
Project feedback
The project feedback form should include:
 brief description of the project
 outline of the project team
 form of contract and value
 feedback on contract (suitability, administration, incentives, etc.)
 technical design
 construction methodology
 comments on the technical solution chosen
 any technical lessons to be learnt
 form of consultant appointments
 comments on consultant appointments
 project schedule
 comments on project schedule
 cost plan

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 comments on cost control

 change management system
 values of changes
 major source(s) of changes/variations
 overall risk management performance
 overall financial performance
 communication issues
 organisational issues
 comments on client’s role/decision-making process
 comments on overall project management including any specific issues
 close-out report.
It has to be remembered that the purpose of project feedback is not only to express what went wrong and
why, but also to observe what has been achieved well, and if (and how) that can be improved in future
projects, i.e. continuous improvement.
Case Study Delhi’s Signature Bridge needs environmental clearance

Project: Signature Bridge, New Delhi
Project Background: - In this case the Delhi government miss to take the approval from the Environment
Clearance board for the project due to which the assumption goes wrong just because they missed taking
approval the whole project suffer and the cost of the project increased.
We have discussed in the report that to carry out any infrastructure project we must go stage wise and all
the work, permission should be take accordingly but in this case the client forget to take some necessary
approval from the environment department and in the later stage as small involvement of a local activist
the cost of the project get doubled.
The process by which it get affect Due to the influence of an external stakeholder i.e. a local activist
Vikrant Tongad approached National Green Tribunal (NGT)’s and file its compliance because of that the
total policies of construction got changed. NGT order to conduct a study with all new parameter which involve
Delhi Tourism and Transportation Development Corporation (DTTDC) to prepare an Environmental Impact
Assessment (EIA) for the proposed “Signature Bridge” over Yamuna River. The Union Ministry of
Environment and Forests (MoEF), welcomed the order and support his compliance.

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This case shows that we should never ignore any of the stakeholder no matter how much big or small it is.
Just because of the interruption of Vikrant in this project increase the project cost dramatically previous
estimated cost of the project was of Rs 887 crore, the bridge may end up costing Rs 1,800 crore.The eight-
lane bridge is 600 metres downstream of the existing bridge and will connect Outer Ring Road on the western
bank with Wazirabad Road on the eastern bank of the Yamuna.
The bridge is proposed to replace the existing Wazirabad bridge, which reportedly cannot bear traffic load
anymore. The proposed asymmetric cable-stayed bridge is 675 metres long, with a built-up area of 156,000
square meters. Now the estimated time of completion is June of 2016.
Stakeholder Role Responsibility Impact
Government To give the clearance to To ensure no harmful Delay in the project
Authority the project effect of the project. but results are
(NGT, DTTDC, acceptable
SEIAA)
Local Activist To aware the effect of project To make sure the authority Delay in project &
(Vikrant Tongad) on environment will his work correctly Project cost
increased
Stakeholder Management
If in the early stage of the project stakeholder management was applied in this project then all the defaults
in the project can be avoided easily. Although it was a public project but they miss to take permission
from environmental clearance.
Identifying the stakeholders
project success.
The key benefit of this process is that it allows the project manager to identify the appropriate focus for
each stakeholder or group of stakeholders. The inputs, tools and techniques, and outputs of this process.

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In this stage all the stakeholders must be identified and listed well which was absent in this case. Listing
of stakeholder can be done in this step so that the final product will be a Stakeholder register, If they
had followed this step then the final product at this stage will be
Stakeholder
Owner
Civil Contractor
Labor Contractor
PMC
Financer
Government
Authorities
Planning Stakeholder Management
or phase.
In this stage the planning of all the stakeholder can be done by using project management plan,
stakeholder register to find out stakeholder management plan and project document updates by expert

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judgement meetings and analytical techniques. However in this case no proper management was done by
which the project manager can have a hold on this planning.
This can be attained if PMC have taken responsibility to maintain the process accordingly
Figure 22 Power Matrix
Managing Stakeholder Engagement
the chances to achieve project success.

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Where in this project this was become a critical case and inspite of having all the sufficient funds the
project was not up to the mark because the need/expectations of all the stakeholders was not fulfilled.
This situation can totally be avoided if the project manager had taken good care of need/expectation of
all the stakeholders
Stakeholder Need Expectation
Friendliness, Understanding,
Owner Quality of work, safe, on
Fairness, Control, Information
budget, flexibility

Civil Contractor



standard
PMC control, honesty,
payment
Communication

Financer To finance the project
time
Government Friendliness, Understanding,

Follow all laws
Authorities Fairness, Control, Information

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Controlling Stakeholder Engagement
evolves and its environment changes.
In this project, Project manager supposed to track the overall process but due to the lack of consideration
and negligence of laws made difficult for project manager to track the project and this problem arise
because neglecting the social and environment issues related to this project.
Conclusion
If all the factors was taken into consideration and all the clearance was taken according to the planning
then this problem will never arise. The most important stage of the project is planning stage and if all the
factor was considered in this stage then we can avoid such types of problems.
Stakeholder
Stakeholder Expectation Management Process
Owner Quality of work, safe, on Needs should be taken care

during each phase
budget, flexibility
Time, Quality, Need should be taken care
Civil Contractor and proper checking of
Environment friendly
work at time is required
Time, Quality, Updating every issue

Structure Consultant during planning and
construction stage
Time, Quality, Funding and Evaluation on

Electrical Contractor every Phase
Quality of work done by Strict evaluation and

funding must be on time
Labor Contractor labor must be as per
standard

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Safety, time, quality, Must be inform all the time

PMC for every reason
payment
Provide sufficient funds on Must be aware of every

Financer cashflow and ontime
time
payment is required
Government All the clearance must be

Follow all laws planned appropriately stage
Authorities
wise
Their needs must be

Local Groups Project will be profitable account in the preliminary
stage
Case Study 2
(IMPLEMETATION OF STAKHOLDER MANAGEMENT TECHNIQUE IN PROJECT)
In this case study it is shown that how stakeholder management can avoid any kind problem by
adopting the stakeholder management in any project.
Project: Theological College, Australia
Background: T College is a unique tertiary institution that provides a diverse range of high-quality
academic and extra-curricular programs for talented students from across Australia and around the world.
The project is the construction of a new building to provide new classrooms and facilities for the college’s
theological school. The project is relatively small with the contract price of AU$2 million, and the
construction stage is the focus of this case study description.
The project manager, who was also a T College employee for more than ten years, had direct
responsibility for buildings, grounds and infrastructure projects in the campus. He reported to the Director
of Finance & Administration, the chief financial officer who was also a member of the senior management
team in the college. The financier/sponsor of this project was a large private company that finances
ecclesiastical projects.
Since this project was small and the project manager and the Director of Finance & Administration had
extensive experiences in campus development, the stakeholders and their interests were identified during
a meeting with the project manager and the Director of Finance & Administration, and stakeholder
profiles and the stakeholders interests were developed during that meeting. The project manager and the
Director of Finance & Administration were then asked to prioritize all the stakeholders using their

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knowledge of all the stakeholders identified and their experience in managing relationships in this
environment.
Identification of Stakeholders
 Client Group
o Project Sponsor
o Director of Finance & Administration
o Director of Theological College
o Students, staffs, wardens
 Project Professionals
o Project Manager
o Architect
o Quantity Surveyor
o Structural Engineer
o Services Engineer
o Other Consultants
 Contractors/Suppliers
o Main contractor
o Sub Contractor
o Laborers
o Suppliers
 External Parties
o Govt. Authorities
o City Council
o Parents and representatives

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Stakeholder Power/Interest Grid
Figure 23: Stakeholder Power/Interest Grid
1. Key player stakeholders (high levels of power and interest)

o Client group
o Project Professionals
o Contractors/Suppliers
2. Keep-satisfied stakeholders (high level of power but low level of interest):
o Govt. Authorities
3. Keep-informed stakeholders (high level of interest but low level of power):

o City Council
4. Minimal-effort stakeholders (low levels of interest and power):
o Parents & Representatives
This power/Interest grid was done for each phase of the project prioritizing the stakeholders on each phase
and managing the engagement of different stakeholders.

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CONCLUSION
By implementing these management techniques, the project manager and the Director of Finance &
Administration were able to identify the stakeholders and their priority of engagement in different
stages of the project. The result of which was a satisfied project delivery of all the stakeholders with
minimal problems and conflicts and an overall successful project.

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Chapter 8 Summery and Conclusion

The aim of stakeholder management is to maximize the benefits that can be derived from stakeholders
while minimizing the possible downsides that can arise by associating with them. Stakes are dynamic and
thus must be monitored. Stakeholders also have dynamic levels of power and urgency. Stakes and
stakeholders must be tracked at all times. The scope of the subject matter is large and the intention of this
seminar is to acknowledge the importance of stakeholder management and the implementation of it in
construction.
Every stakeholder is equally important but the order of importance to address need will change according
to the stage of the project and following prioritization of stakeholder is done stage wise.
Preconstruction Stage
 Client, User
 PMC, Architect
 Local landowners
 Local Resident
 Competitors
 Consultant
 Contractors
 Government Authorities
 Building Service Engineer
 Archaeologists
 Environmentalists/ conservationists
 Tourists
 Others
During Construction Stage
 Client, User
 PMC, Architect
 Consultant
 Contractors

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 Local Resident
 Archaeologists
 Competitors
 Tourists
 Others
Post Construction Stage
 Client, User
 Competitors
 PMC, Architect
 Local Resident
 Contractors
 Consultant
 Archaeologists
 Tourists
 Others
The Roles, Responsibility & Expectation of these stakeholders are :-

Stakeholders Need Responsibility Expectation
Friendliness,
Ensures that the project
Owner Understanding, Fairness, Quality of work, safe, on
has the required
Control, Information budget, flexibility
resources
Client interpretation, Quality of work must be Time, Quality,

Civil Contractor
communication, reporting attained Environment friendly

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Checking the
Structure Consultant workmanship attained at
site
Client interpretation, Check the safety and Time, Quality,

communication, reporting quality of work Environment friendly
Quality of work done by Quality of work done by

Labor Contractor Provide labor to project labor must be as per labor must be as per
standard standard
PMC control, honesty, Ensure the quality
payment
Communication
Provide sufficient funds Provide sufficient funds

Financer To finance the project
on time on time
Friendliness, Make sure no law was

Government Authorities Understanding, Fairness, broken. Follow all laws
Control, Information
Development without Positivity toward

Local Groups Project will be profitable
harming nature project and welcome it.
Local Landowners Development Welcome the project Increase the value of the
property
Local Residents Development Welcome the project Increase the security in
the area
Advantages of stakeholder management in construction indusrty:
Some of the gains and advantages of stakeholder management include:

 Environment where individuals can work together efficiently & effectively
 Mutual benefits for the entire project team
 Better alignment of the client & contracting bodies

145
 Better management of complaint & response system

 Consistency in techniques and procedures
 Fewer defects in delivery & future processes
 Improved transition into the different project stages
 Better decision-making strategies due to open & vast ideas
 Opportunity to learn from own and others’ mistakes
 A greater value in project delivery
 Less generation of wastes
 Safer working conditions
 On time delivery of projects
 Having a good public and local community image.
Disadvantages of stakeholder management in construction indusrty:
Some of these detriments include:

 Conflicts with the local community
 ComContractorsplicated decision-making processes
 Time delays and associated cost overruns while assessing and responding to claims
 Negative publicity for the companies involved
 Difficulty in prioritizing and thus responding to stakeholders’ claims
 Increased fragmentation of the stakeholders
 Delay in project delivery
 Increased defects and poor quality
 Information flow deficiencies
Stakeholder management in construction is under-researched and offers a huge research potential. There
are lots of attributes to be studied.
Stakeholder management is about managing diverse stakes. It is a worthwhile endeavor that can yield
several tangible and intangible benefits to individuals and organizations. In contrast failure to manage
stakeholders can impact negatively on individuals and organizations. It is thus worthwhile, to practice
stakeholder management proactively. Firms should be able to identify their stakeholders and nurture and
sustain relationships with these. The aim is to optimize by maximizing the benefits while minimizing the

146
downsides. Several tactics for engaging stakeholders have been discussed in this seminar which
individuals and organizations will find useful.
Bibliography
Arun A. Elias, Robert Y. Cavana and Laurie S. Jackson Stakeholder Analysis for an R & D Project Management
Byung-GYOO, M. M. (n.d.). An Investigation on the Stakeholders of Construction Projects in Dubai and Adjacent
Regions . The University of Nottingham, Malaysia Campus.
Derek Walker, A. S. (n.d.). Influence, Stakeholder Mapping and Visualization.
Eden, F. A. (2010). Strategic Management of Stakeholders: Theory and Practice.
Jepsen, P. E. (2013). Project Stakeholder Management.
Jing Yang1, G. Q. (n.d.). Exploring Critical Success Factors For Stakeholder Management In Construction Projects.
Jing Yanga, G. Q. (2010). Stakeholder management in construction: An empirical study to address reserch gaps
in previous studies.
Kathie York Manage Stakeholder Expectations: “Hyperfix” Project

Kirsi Aaltonen, Stakeholder Management In International Projects
Moradi, S. M. (2011). Construction project success analysis from stakeholders' theory perspective.
Olander, S. (2003). External Stakeholder Management in the Construction Process.
Sawalhi, D. N. (2013). Investigating the Stakeholder Management in Construction Projects in Gaza strip.
Steve Rowlinson, Tas Yong Koh and Martin Morgan Tuuli A Cultural Perspective on Stakeholder Management
In The Hong Kong Construction Industry
PUBLISHED WORKS
 Stakeholders’ Requirements Analysis For A Demanddriven Construction Industry By Jilin Ye,

Tarek M. Hassan, Chris D. Carter, Lidewij Kemp
 The Stakeholder Strategy: Profiting From Collaborative Business Relationships By Ann Svendsen
 Stakeholder theory in perspective by Salma DAMAK-AYADI and Yvon PESQUEUX
 Convergent Stakeholder Theory by Thomas M. Jones and Andrew C. Wicks
 Stakeholder Theory of the Modern Corporation By R. Edward Freeman
 Stakeholder Engagement Handbook By IFC

147
 Evaluation of stakeholder influence in the implementation of construction projects By Stefan

Olander *, Anne Landin
 Introducitng a Stakeholder Management Methodology In EU By Dr. Lynda Broune and Mr.
Stephen Casperczyk
 PMBOK 5th Edition
 External Stakeholder Management in the Construction Process By Stefan Olander
WEBSITES
http://www.academia.edu/172847/Issues_and_Strategies_in_Stakeholder_Management
http://www.markedbyteachers.com/university-degree/engineering/members-of-the-design-team-and-their-
job-roles-in-a-construction-project.html
http://www.cfm.va.gov/til/bim/BIMGuide/roles.htm
http://www.sun.ac.za/projektus/rolspelers/eindgebruikersE.htm

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Stakeholder Management in Construction I

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STAKEHOLDER MANAGEMENT IN

PROJECT SEMINAR REPORT - II

GIRISH KUMAR SINGH

DEPARTMENT OF BUILDING ENGINEERING AND MANAGEMENT

SCHOOL OF PLANNING AND ARCHITECTURE

NEW DELHI – 110002

Certified that the seminar titled “Stakeholder Management In Construction Industry”

Prof. (Dr). V. Thiruvengadam Prof. (Dr). V. K. Paul

Seminar Guide Head of the Department

Girish Kumar Singh

Chapter 2 Literature Review

Chapter 3 Management of Stakeholders

Chapter 5 Chapter 5 Stakeholder involvement in Project Life Cycle

Chapter 6 Stakeholder Management in Real Estate Industry

Chapter 8 the Analytic Hierarchy Process For Ranking Stakeholders

Stakeholder management is a critical component to the successful delivery of any project,

External Stakeholder Management in the Construction Process (Olander, 2003) ............................................ 10

PROJECT STAKEHOLDER MANAGEMENT ............................................................................................................ 13

3.2.2.1 Expert Judgment ................................................................................................................................. 21

4.1 Internal Stakeholder ....................................................................................................................................... 2

Girish Kumar Singh SPA/NS/BEM/612

5.1.6 Closing/Handover Phase ........................................................................................................................ 15

6.1 INTRODUCTION ............................................................................................................................................. 26

Key benefits: ................................................................................................................................................... 66

7.1 INCEPTION STAGE ......................................................................................................................................... 98

7.1.2 Client’s Internal Team ............................................................................................................................ 99

Bibliography ................................................................................................................................................ 147

Girish Kumar Singh SPA/NS/BEM/612

Girish Kumar Singh SPA/NS/BEM/612

Figure 1The Relationship between Stakeholders and the Project (PMBOK)

Girish Kumar Singh SPA/NS/BEM/612

The stakeholder categories identified as:

3) Clients 8) Land owners

5) Financiers/creditors 10) nearby residents

6) Local and national authorities 11) Media

Figure 2Different Stake Holders

Girish Kumar Singh SPA/NS/BEM/612

Scope of the Study:

Girish Kumar Singh SPA/NS/BEM/612

 Study on stakeholder conflicts and its management

Girish Kumar Singh SPA/NS/BEM/612

Chapter 2 Literature Review

External Stakeholder Management in the Construction Process (Olander, 2003)

Girish Kumar Singh SPA/NS/BEM/612

Stakeholder management in construction: An empirical study to address research gaps in

Girish Kumar Singh SPA/NS/BEM/612

Girish Kumar Singh SPA/NS/BEM/612

Chapter 3 Management of Stakeholders

Girish Kumar Singh SPA/NS/BEM/612

Figure 3 Project Stakeholder Management Overview

3.1 Identify Stakeholders

Figure 4 Identify Stakeholders: Inputs, Tools & Techniques, and Outputs

Figure 5 Identify Stakeholders Data Flow Diagram

Girish Kumar Singh SPA/NS/BEM/612

Girish Kumar Singh SPA/NS/BEM/612

Figure 6 Example Power/Interest Grid with Stakeholders

3.1.2.2 Expert Judgment

Girish Kumar Singh SPA/NS/BEM/612

3.1.3 Identify Stakeholders: Outputs

Girish Kumar Singh SPA/NS/BEM/612

Figure 8 Plan Stakeholder Management Data Flow Diagram

Girish Kumar Singh SPA/NS/BEM/612

3.2.1.2 Stakeholder Register