Stakeholder engagement is key to achieving ‘good change’ in international development projects

The Association of Project Management (APM) defines stakeholders as ”the organisations or the people who have an interest or role in the project, programme or portfolio, or are impacted by it” (APM, 2012, p.243). In international development projects supporting private sector development, the key stakeholders include the funding donor agency, state institutions (responsible ministries and agencies) and private enterprises. Stakeholders play a key role in defining a project’s “vision of a better society (‘well-being for all’)” and in influencing the direction of the development process (Chambers cited in Thomas, 2000, p. 23).

I would argue that the predictive project management approach, as the preferred management choice in donor agency projects, influences stakeholder classification. In order to accommodate powerful donor agencies’ preference for control and predictability, stakeholders who share the same inclinations, such as local state institutions get elevated and treated as primary rather than secondary stakeholders.

stakeholder classification 1

In Private Sector Development (PSD) projects, this means that state institutions become ‘end-users’ (Dix et al cited in Open University, 2014, p. 21). As primary stakeholders, the state institutions influence the project’s focus, away from company level interventions to elaboration of policies, legislation, strategies and institution-building. In turn, the role of enterprises in project governance is significantly reduced, which has a negative impact on project outcomes. Project communication moves away from enterprises towards state institutions and donor agencies, and communication often becomes reporting.

From this mix-up of stakeholders it follows that stakeholders may review project outcomes very differently. While some stakeholders see predictable ‘outcomes’, others see the wrong things being delivered. Where some see planned targets met, others see no real improvements in the situation.

Involving a wide variety of stakeholders in project design, implementation and evaluation means nursing a partnership for development where local stakeholders’ are engaged, their capacities and sense of local ownership are strengthened. In such a scenario we are no longer just to giving aid, but “doing things with people not for them” (Robinson, Hewitt and Harriss, 2000, p. 12). Unfortunately, in my project management experience, we are not only doing it for them, we are often doing it for the wrong people.

In my opinion, donor funded PSD projects are low on complexity, novelty and technology due to low and distorted stakeholder participation. Broader stakeholder participation would require the project manager to relate to multiple worldviews and engage in a situation, which local stakeholders may characterize as complex and uncertain. Such as situation is conducive to neither blueprint solutions nor the predictive project management approach. Yet donor agencies continuously frame the situation as stable and predictable in order to fit their own standardised methods and plans, rather than making the project management approach more agile to better suit the complex situation.

By engaging local stakeholders in a systemic inquiry, exploring and making sense of the situation together, identifying common interests and defining project interventions that are ‘systematically desirable and culturally feasible’, the project manager may find context-based answers to the ‘what’ and ‘how’ questions in development (Ison, 2010, p. 248).

Unfortunately, the predictive project management approach does not call for an on-going process of stakeholder-driven inquiry. The project targets are pre-determined and ‘locked in’ the log frame. Also, the donor’s project life cycle is often too short for time-consuming stakeholder participation.

In analysing the inter-relationships among stakeholders, I focus on four elements – Classification, Governance, Communication and Evaluation.

1. Analysis, identification and classification

In PSD projects there are three key stakeholders – enterprises, state institutions and donor agency. Stakeholders have their own interests, and their relative power dictate to what extent they can materialise these interests. I use the Mendelow’s matrix to map the power-interest dynamics:

power & interest

(Adaptation of Mendelow’s matrix, The Open University, 2014, p.23)

The donor is the project sponsor and the project’s most powerful stakeholder. The state institutions draw their power from the authority to approve project outputs. The interests of both are limited to project outcomes. The enterprises have a high interest in projects as their inputs may contribute to improvements in company performance, outputs and profits.

Without any demanding ‘key players’, the project manager only needs to keep enterprises informed about activities, and state institutions/donors satisfied with project progress. Again, the power and interest dynamics support the predictive project management approach. For real improvements to occur, state institutions and enterprises must become ‘key players’, must assume a higher degree of project ownership and responsibility and better influence the project goals.

2. Project governance

The APM defines ways how good governance is demonstrated, including ““ensuring that stakeholders are engaged at a level that reflects their importance to the organisation and in a way that fosters trust” (The Open University, 2014, p.16). Placing the enterprises outside of the project governance body has the opposite effect. The enterprises are disengaged from the project organization, their importance as drivers of change is not respected and the general distrust between public institutions and enterprises is reinforced.

PSC graph 1

(Adapted from ISO 21500 in The Open University, 2014, p. 20)

In line with ISO 21500 the role of the Project Steering Committee (PSC) is to contribute “to the project by providing senior level guidance to the project” (The Open University, 2014, p.21). In PSD projects, this will only occur when enterprises are on the PSC, supplying the project manager with up-to-date market and enterprise information, upon which demand-driven interventions are designed. In turn, project impact on PSD will increase.

3. Communication

Communication means exchange of information. However, in my experience, donor and state institutions influence communication, transforming information exchange with enterprises into one-way dissemination.

This approach to communication fits well with the predictive project management’s emphasis on control and reporting, rather than on open dialogue among stakeholders. In my experience, enterprises are mainly passive receivers of project news. This would dramatically change if the enterprises where ‘key players’ in the project. Then, project managers would need to, in line with PMI directives, develop and implement a detailed stakeholder communication plan, to address directly the “needs and requirements” of each stakeholder to manage and control communication (The Open University, 2014, p. 29).

4. Evaluation of project outcomes

APM states that “quality management is a discipline for ensuring that outputs, benefits and the processes by which they are delivered, meet stakeholder requirements”. The project quality plan calls for the project manager to “agree with the project sponsor and other stakeholders” on objectives of the quality plan (The Open University, 2014, p. 68). This means that donors and state institutions should invite the enterprises to define the quality standards in a PSD project. However, in my experience the quality management system is designed to ensure that the outputs, benefits and delivery processes meet the requirements of donors and state institutions and not necessarily the enterprises.

In relation to the Post-Project Review (PPR), McLeod et al highlight that understanding stakeholders’ views can “yield rewards for the organisation in improved contribution to organisational knowledge” (cited in The Open University, 2014, p. 48). Among the three stakeholders, private enterprises see learning differently. Failures are accepted as something natural and are channelled through an internal learning process, creating an empirical base for improvements.

Donor agencies and state institutions do not act in a competitive market, which in turn shapes their worldviews and understanding of the causes of social change (Hyatt and Kaplan, 2006, p. 170). Moreover, public organisations’ fear of their failures being exposed to the outside world locks them “out of learning”, incapable of reflecting on own mistakes (Pinder, 2007, p. 12). The donors, through the predictive project management approach, impose a performance measurement system on project management that focuses on accountability, rather than on learning and performance improvements (Hailey and Sorgenfrei, 2004, p. 4).


In analysing my project management experience, I conclude that the main source of the chronic failure to deliver more competitive local companies, economic growth and employment (‘good change’) is a mutually reinforcing cycle of prioritizing the ‘wrong’ stakeholders, who in turn defend the predictive project management approach because it favours them and limits the influence of other stakeholders (i.e. enterprises in PSD).

Conclusion graph 3_2

The predictive project management approach is “linear-rational, plan-driven” and predictable, turning monitoring and control into a simple comparison between project expectations and achievements (The Open University, 2014, p. 9). This approach is typically found in engineering projects where framing a situation is fairly one-dimensional and technical. Still, donor agencies insist on applying the same management approach in PSD projects in local socio-economic contexts, which are inherently more complex and uncertain.

Rather than modifying the project management approach to be more adaptive, “change-driven” and responsive to multiple local stakeholders’ worldviews, the donor agencies and supportive local state institutions use their power to influence the classification of stakeholders (The Open University, 2014, p. 9). In turn, they use their influence to tailor project governance, communication and evaluation to reinforce their own power and to suit the predictive project management approach, which they themselves benefit from.


My core recommendation is for similar PSD projects in the future to be more agile. Until now, the predictive project management approach is simply not delivering on donor agencies’ promise of ‘good change’. A more adaptive approach allows project managers to be more flexible in the design of project interventions, rather than sticking to old blueprint solutions. The agile approach emphasis ‘consultation’ with stakeholders throughout the project cycle (planning, implementation, monitoring), which indicates that stakeholders’ worldviews and opinions are important and possess opportunities. Finally, the agile approach highlights the importance of ‘rapid iterations’, repeating a process, as a means of achieving real improvements in the situation (The Open University, 2014, p. 15).

Adaptive approach’s advantages (The Open University, 2014, p.16) In my project management experience
Turn unpredictability of requirements into a positive opportunity. Accepting complexity and uncertainty in the situation opens up for development solutions anchored in local contexts.
Recognise and manage changing needs of sponsors or customers by working closely with them. This means a more inclusive project governance structure, in which customers, i.e. enterprises are members of the PSC.
Reduce bureaucracy by planning in smaller stages, as requirements are determined. By conducting regular consultations with stakeholders their needs are picked up earlier, and corrective actions taken faster.
Improve the chances of success for particular types of project. Freeing private sector from predictive management approach’s plans and controls means it can deliver tangible improvements.

The desired end result to be achieved by integrating components of the agile project management approach is to deliver real improvements in the situation of project’s end-users (primary stakeholders), meaning improvements in enterprises’ performance resulting in higher turn-over and employment (‘good change’).

However attractive the benefits of a more agile project management approach may seem, it constitutes a direct challenge to the proponents of the predictive project management approach. To argue for a more adaptive approach is to argue for a fundamental shift in power away from external donor agencies towards more local ownership and responsibility in the development process. There is a balance to be struck here between ensuring that taxpayers’ money is spent wisely (good governance, transparency) and giving local stakeholders the authority to shape project design and implementation in ways they believe will generate ‘good change’.


About Jakob Modéer

22 years of corporate and international investor experience as well as private sector development project management, consultancy in private sector policy and business advisory services, and direct consultancy to companies in South East Europe (and now a blogger on socio-economic issues)
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