Running head: PROCUREMENT AND STAKEHOLDER MANAGEMENT

Executing Procurement and Stakeholder Management

and Its Evolving Impact in Project Management over the Next 5 Years.
John Slater
PROJ-605-14816 : Adv PM Practices & Professional Exam Prep
Dr. Hurel Johnson
June 4, 2016

Running head: PROCUREMENT AND STAKEHOLDER MANAGEMENT

2

Table of Contents

Abstract...4
Part 1: Executing Procurement and Stakeholder Management...6
The Project Manager (PM)..6
The Project Team Members.6
Executive Sponsorship.7
Business Analysts7
The Execution of Project Management7
The Project Management Body of Knowledge (PMBOK)...8
Executing the Procurement Plan..8
Executing Stakeholder Management...9
Stakeholder Impact on Project Success.10
Identify Project Stakeholders.11
Conduct a Stakeholder Analysis11
Manage Stakeholders.11
Part 2: Evolving Impact of Procurement and Stakeholder Management...13
The Future of Procurement13

Running head: PROCUREMENT AND STAKEHOLDER MANAGEMENT

3

Centralized Procurement13
Degrees of Centralization..14
Strategic Efficiency14
Procedural Efficiency, Control and Management.15
The Future of Stakeholder Management ..15
Stakeholder Mapping and Engagement.16
Prioritizing Key Stakeholders16
Developing Key Stakeholders17
Now and In the Future...17
References..19

Running head: PROCUREMENT AND STAKEHOLDER MANAGEMENT

4

Abstract
The success of a project is predicated on careful planning and effective collaboration
among the projects team members. During the project management process, resource allocation
and distribution are essential for just about every project as the associated reports and documents
that correspond to procurement help ensure that best value and budgetary decisions are made
throughout the project. It can be quite confusing, especially in larger or more complex projects
but with increasing knowledge over time, a project manager will have lessons learned and be
able to develop best practices of their own. They will also benefit from innovations in technology
as the ever changing landscape of capability continues to improve. As technology continues to
improve, procurement and stakeholder management will become more virtual and global. There
may be physical separation but technology removes the silo effect. Physical interactions between
buyers and sellers may decline but meetings and reviews with all team members and
stakeholders are able to be conducted across computer, tablet and smartphones platforms among
others. Virtual tours of facilities and computer imaging of project deliverables can be viewed by
everyone without the associated time and financial costs of travel. Buying, selling and
communicating will still drive the project but how we buy, sell and communicate will continue to
streamline, take less time and have more robust interaction between team and stakeholder.
Innovation and continuous improvements will drive the value chain by reducing time inputs and
instilling efficiencies all while enabling constant and instantaneous contact. Real time situational
awareness is no longer a vision, it is a reality.

Running head: PROCUREMENT AND STAKEHOLDER MANAGEMENT

5

Procurement is one area of project management that can help keep the project on budget
using strategic sourcing and best value pricing. Managing the stakeholder expectations is
paramount to project success and on time and on budget are the goals. Regular communication
with stakeholders is as important as communicating with the team itself since they are usually
the benefactors and have a vested interest in the outcome. Benchmark goals and rapid response
to emerging stakeholder concerns are necessary to project execution and help the workflow
execution by providing guidance and communications of careabouts associated with stakeholder
expectations.

Running head: PROCUREMENT AND STAKEHOLDER MANAGEMENT

6

PART 1: Executing Procurement and Stakeholder Management

The Project Manager (PM)
The project manager is the primary role in project management execution. They are the
leader of the team and have the primary responsibility for the successful completion of the
project. They ensure the project stays on time and on budget meeting deadlines for deliverables
and keeping the project profitable. They make sure there are ample resources and manage the
relationships with the contributing members as well as the stakeholders. Their duties are to
develop the project plan, manage the deliverables, recruit staff, lead and manage, establish
methodology and project schedule phases as well as task assignments. They also provide regular
updates to upper management and make sure stakeholders are informed of the progress. (PMI,
2012).
The Project Team Members
The team members actively work the phases and may be either on payroll or acting as a
consultant. They may work part time of full time depending on their role. The roles vary
depending on the project and the duties might be to contribute to project objectives, completing
deliverables, giving expert opinions or documenting processes.
The Project Sponsors
The sponsor is arguably the most import member of the project. They are the champion
stakeholder and very often are the senior leaders in the management team. They have the biggest
stake in the outcome of the project. They work closely with the PM and assist with legitimizing
the objects as well as contribute to high level planning. Throughout the project execution, the

Running head: PROCUREMENT AND STAKEHOLDER MANAGEMENT

7

project sponsor may also help resolve conflict, provide obstacle removal and ultimately sign off
on approvals to move to the next phase. The duties include making key business decisions,
budget approval, resource availability, and goal communication throughout the process.
(Harrington & Nelson, 2013)
Executive Sponsorship
The executive sponsor is most often a very high ranking member of the management
team and carries the ultimate decision making authority. They give final approval on all phases
and deliverables as well as any changes in scope. They are the ones that approve funding and any
necessary increases of changes in funding. (PMI, 2014)
Business Analysts
Business analysts define the needs and recommend solutions and they make sure the
objectives solve the problems. They look for ways to enhance performance and help add value to
the organization. They are the ones that maximize the value of the deliverables by assisting in
defining the project, gathering and documenting requirements along with deliverable
verification. The also offer test solutions that aid in the validation of the project objectives.
The Execution of Project Management
Project management is the execution of scope, schedule and budget and involves many
processes and resources to achieve the objective of a viable deliverable. The scope defines the
details, the schedule defines the timeline and the budget defines the value of financial
contribution. The budget must not only include enough resources to cover any contingencies but
also establishes a guideline to avoid cost overruns and erode profit.

Running head: PROCUREMENT AND STAKEHOLDER MANAGEMENT

8

The Project Management Body of Knowledge (PMBOK)

The current standard of project management is The Project Management Body of Knowledge
Guide from the Project Management Institute. It outlines the five process groups needed to
execute a project. They are:

Initiating
Planning
Executing
Monitoring and Controlling
Closing

Executing the Procurement Plan

The project procurement process is followed during the execution process and once we
have made it through initiation and planning and the team is in place, its time to execute. The
stakeholders have expectations and during the execution phase, there most likely is a need to
purchase products and services. This is where the procurement management plan comes in.
There is usually a defined set of guidelines as well as policies that govern procurement, all of
which are integrated with the procurement plan. These guidelines provide the basis of approach
for soliciting and contracting and it is important that the project manager has a fundamental
understanding of the policies. The procurement management process is the formal method for the
acquisition of goods and/or services from outside entities. It entails managing the ordering,
receiving, quality review and final approval in addition to relationship management ensuring
stellar customer service. The process provides the basis for ensuring materials or services are

Running head: PROCUREMENT AND STAKEHOLDER MANAGEMENT

9

acquired in due time at the right quality level within the confines of the budget. It also provides
appropriate procedures used to maintain supplier relationships. Performance reviews and issue
resolution are also important aspects of the procurement management process which aids in the
enhancement of personnel and mitigates problems. The process is usually managed by specific
procurement and sub contract functions and is overseen by the PM. The importance of a robust
procurement plan cannot be understated as it helps confirm that suppliers are compliant to the
statement of work and are meeting the requirements. The process is only deemed complete when
the execution process is finishes just before closure. (Rowlinson, 1999).
Executing Stakeholder Management
The process of communicating and working with the expectations of stakeholders is
referred to as managing stakeholder engagement. This is where issues are addressed and keeps
the stakeholder informed throughout the project life cycle. It seeks to influence and manage the
expectations of stakeholders. The desire of stakeholder management is to increase support and
decrease resistance, provide realistic expectations, address issues and provide proactive
communication.
Figure 19-1 shows the inputs, tools and techniques, and outputs for the Manage Stakeholder
Engagement process.

Running head: PROCUREMENT AND STAKEHOLDER MANAGEMENT

10

Figure 19-1 Manage Stakeholder Engagement: Inputs, Tools and Techniques, Outputs
Source: PMBOK GuideFifth Edition
The successful management of stakeholders helps mitigate scope creep, ensures project
alignment, provides risk tolerance levels and helps avoid delays. It illustrates organizational
influence and is key to a successful project.
Stakeholder Impact on Project Success
Top reasons for success include enablement of clear business communication. User
involvement is the number one reason for project success which is supported by quality
relationships and the management of expectations. Executive support is another highly ranked
need as visible sponsorship toward the core values leads the way and guides the team. The ability
of the project manager to motivate the team around a common purpose is another important
element and the effective use of the environment, infrastructure and facilities all lend support.
The stakeholder provides for these needs and has an expectation that the deliverable will be on
time and on budget. Defining the stakeholders and what the project needs from them is as
important as a defined scope of work.

Running head: PROCUREMENT AND STAKEHOLDER MANAGEMENT

11

Identify Project Stakeholders

A stakeholder is actively involved in the project and they will be affected by the outcome
of the project. This could be a positive or negative reaction depending on the outcome but you
should expect them to wield influence. Who are these people? The project charter should include
a section that lists the functional areas which in turn uncovers some of the stakeholders.
Essentially, anyone that contributes to the project is a stakeholder and they could be internal or
external. Anyone that is affected by the project is also considered a stakeholder. If you are
involved in the process and/or affected by the outcome, you are a stakeholder. The key project
sponsor is a good place to start when trying to identify the stakeholders and key participants are
also a valuable resource. Once there is a good list, its time to analyze it.
Conduct a Stakeholder Analysis
The stakeholder list might be very large so there are three key steps to analysis. You need
to determine the potential impact of the stakeholders, so first identify the relevant information;
interest, role, authority, needs and expectations. The second step is identification of impact or
support of the stakeholder. It could be as simple as low or high, major or minor. The final step is
to assess the likely reaction to scenarios as either highly sensitive to low sensitivity. A thorough
analysis will prove indispensable to the PM.
Manage Stakeholders
Now the stakeholders are identified and analyzed, its time to manage them. There may
be great variance in interest, expectations or influence but it will all impact the project. The PM
needs to leverage their knowledge to create a cohesive group excited to work toward a common

Running head: PROCUREMENT AND STAKEHOLDER MANAGEMENT

12

goal. Careful attention needs to be given to missed deadlines, scope creep, conflicts, churn or
other trouble indicators as they could be clues to competing priorities, a focus failure or faltering
commitment. Communication and information sharing coupled with a structured governance
should keep everyone on the same page and engaged.
Planning is essential and special tools and tactics help get the job done when it comes to
managing stakeholders. James T. Brown (2008) describes some effective tactics in his book, The
Handbook of Program Management. Its provides a useful toolkit for the variety of stakeholders
you will encounter. He stresses how you need to demonstrate competence, create a buffer from
the team, be an advocate for those who cannot, ensure traceability (agreements, request and
decisions, etc), have a structure for engagement, show lost time, delegate authority, and use
informal settings to access busy stakeholders. These eight methods are not one size fits all, but
they should be used with varying degrees on any type of stakeholder associated with the project.
He goes on to encourage the cultivation of ideal stakeholders and publically reward them. The
PM should illustrate a stakeholders proactive nature and how they make themselves available,
accountable, interested and motivated. It doesnt matter who it is, the sponsor or the quiet and
shy teammate that rarely speaks up. (Brown, 2008).
A satisfied stakeholder is the ultimate success. A satisfied stakeholder will achieve their
objective, get what they need, find value in the results and leave with a positive experience. That
is the main goal of any project and should be the main objective of a project manager.

Running head: PROCUREMENT AND STAKEHOLDER MANAGEMENT

13

Part 2: Evolving Impact of Procurement and Stakeholder Management

The Future of Procurement
As technology continues to improve, it is getting easier to do business. It is truly a global
market with almost boundless resources. Faxes have replaced emails and computing is now done
in a cloud. Big, bulky systems are now hand held and you can video conference with your
business partner on the other side of the planet in real time. This new global commerce capability
increases the resource base and opens the door to faster and more efficient innovations. The
enables us to do more, better and faster. Centralizing procurement for mass consumables coupled
with major industry providers becoming integrators has created viable opportunities for sub-tier
manufacturing. These sub-tier vendors are corralled through strategic sourcing as demand for
cost savings and increased capability provides the platform to engage diversity and continuing
innovation. Each new development is ready to be modernized as soon as it is released and the
process keeps going.
Centralized Procurement
There is a current trend that is making contracting much easier and that is by centralizing
procurement. A dedicated team of acquisition specialists have a significant advantage as they
work strategic sourcing and follow market trends. The manager of an individual project is much
less likely to be aware of market nuances and unless they are cross-functionally trained, cannot
be expected to understand a dynamic marketplace. The specialist is more efficient and able to
reduce common activity duplication across multiple projects and spend. They are also at an
advantage in a competitive procurement as they know competing suppliers and can bundle
multiple project buys for economy of scale purchasing. Senior management is better positioned

Running head: PROCUREMENT AND STAKEHOLDER MANAGEMENT

14

to control terms and conditions and ensure best practices are being followed. Signing authority
may be easily limited and the legal and financial commitments are more easily managed.
Separating the buying from the project also helps reduce bias and favoritism and helps
mitigate unethical procurement. The process is separated from the technical requirements and
especially in government contracting, there is more control over requirements in federal
acquisition which is very specialized. Centralized procurement staff can familiarize themselves
with the requirements and make sure that proposals and post award audits are compliant. A
project manager or team member may not be familiar with the federal requirements which could
put the bottom line at risk. A progressive acquisition process will require a project to convince
the organization of any advantage if they want to sole source or source select a supplier. It
increases the potential for cost and risk reduction. (Changefirst, 2014).
Degrees of Centralization
Centralized procurement is in reference to a centralized or center-led organizational
structure. In a centralized structure, the purchasing department creates policies as well as the
standard operation procedures for the entire enterprise. It handles the purchasing duties and
procurement activities for the whole organization, including any business units or divisions, from
the corporate headquarters. A center-led procurement department also establishes policies and
procedures but the daily purchasing duties are left to the business unit or division.
Strategic Efficiency
A centralized purchasing structure is better aligned with long term business goals and
objectives. It is perceived as a more important entity since its run by corporate and not just a

Running head: PROCUREMENT AND STAKEHOLDER MANAGEMENT

15

project in a business unit. This gives a strategic efficiency due to perceptions of greater
importance. Centralized purchasing is more visible within the company and long term strategic
planning is more readily achieved. Financial success links to business goals when procurement
initiatives are incorporated and procedures become more efficient.
Procedural Efficiency, Control and Management
Elimination of redundancy and duplication of effort is a procedural efficiency afforded by
centralized procurement. Resource and information sharing across the enterprise provides
opportunities for volume discounts and reduced logistics costs. It enables improved relationship
management with the supply chain while reducing confusion and helping establish consistent
points of contact. Greater internal control and top down information flow helps standardize
policies and procedures and makes decision making easier. There are authorized decision makers
and outlines for vendor selection with limits on spend and a centralized policy also helps address
ethical concerns like receiving business gifts or conflicts of interest. It also helps control
confidentiality and proprietary information. A centralized procurement team is better positioned
to communicate to stakeholders on the status of supply chain activities.
The Future of Stakeholder Management
Stakeholder management is a dynamic process and over the next few years,
communicating will be more virtual than ever. Stakeholders are more intimately involved than
ever and the future of stakeholder management will rely on effective mapping led by change
agents. The changes are upon us and we need to develop and build stakeholder commitment to
the change. Building a stakeholder map and maintaining it over the life of a project is the first

Running head: PROCUREMENT AND STAKEHOLDER MANAGEMENT

16

step. Prioritization is the next step where commitment and influence levels are scrutinized. The
final step is the development of key stakeholders.

Stakeholder Mapping and Engagement

The relationship between stakeholders and the politics of the project should be
graphically represented. To develop an effective map, the political structure should be drawn
which will illustrate critical implementation relationships. It will also expose any commitment or
influence gaps. It is a best practice to start with the most junior associate and work your way up
the organization. Now more than ever, we need to identify poor communication and influence
shortfalls and inadequate commitment. There needs to be opportunity for multiple opinions,
evaluation of these views and the recommendations for improvements must be very clear. The
map is dynamic and needs to be updated as the project evolves. This is a living document that
should engage project members and stakeholders so they can work together and become a
network of change. Building the stakeholder map is an interactive exercise and is best
accomplished in a workshop setting or at least let by a subject matter expert. Care must be taken
to avoid it looking like an organizational chart. We need to know the critical players in the
network, who has influence and who can make decisions. We also need to verify gaps in the
process or a lacking leadership presence. Key relationships need to be mapped and the aim is to
develop robust relationships while not leaving anything to chance. Engagement and
communication are keys to stakeholder management. (Harrington & Nelson, 2013)
Prioritizing Key Stakeholders

Running head: PROCUREMENT AND STAKEHOLDER MANAGEMENT

17

The project team is responsible for ensuring stakeholders are clearly identified and
assigned to a specific role. There should be a personal and specific plan created to help develop
their commitment. It is important to realize the power to help or hinder change a stakeholder has
when giving them a priority level. Their predisposition is also important so an influence and
commitment matrix should be developed. This will help with action planning and will facilitate
the discussion on the best method for managing the stakeholder. Grouping stakeholders with
targeted actions is the best approach as opposed to grouping individually.
Developing Key Stakeholders
Stakeholder identification is important but developing them so they fulfill their functional
role is the logical next step. The development should be based on the teams identification of the
stakeholder and their influence. Referring to the map and consequently the matrix is the best
approach. Impact and readiness assessments are also valuable tools for building actions for
individuals and groups. Every stakeholder should be treated as a change agent and the
stakeholder management plan must have an end goal of changing behaviors or habits.
Now and In the Future
The future of procurement and stakeholder management lies in technology and
communication coupled with the ability to adapt and change. The status quo is a moving target
and project management is a dynamic discipline. Diverse workforces are becoming the norm and
people from all walks of life and genders are integral parts of the process. The greatest mentors
are not like you and you could learn a great deal about how to navigate the current landscape by
engaging with someone outside your industry or role. As project management advances, the
overall objective is the same but the path to success is very different. Procurement is becoming

Running head: PROCUREMENT AND STAKEHOLDER MANAGEMENT

18

centralized, increasing efficiency and eliminating bias, while stakeholder management requires a
celebration of diversity, mutual respect and an ability to change. The tools are ever improving as
technology enables commerce to enter an era of global interaction. Procurement is becoming a
specialty and stakeholders could potentially come from many diverse cultures. One of the
greatest benefits of diversity is innovation as different cultures and mentalities have different
perspectives which can lead to out of the box thinking and solutions. As we continue into the 21st
century, projects will continue to emerge but the management will be more virtual and the team
more diverse. We will truly be able to do more with less. The tools will continue to evolve and
efficiencies will increase productivity, strategies will become more centric and techniques have
entered a vanguard era.

Running head: PROCUREMENT AND STAKEHOLDER MANAGEMENT

19

References:
Brown, J. T. (2008). The handbook of program management: How to facilitate project success
with optimal program management. New York: McGraw-Hill
Changefirst. (2014). The power of data: Understanding change legacy & tracking risks.
Retrieved from http://www.changefirst.com/research-series.
Harrington, H. J., & Nelson, D. (2013). The sponsor as the face of organizational change.
Retrieved from

http://www.pmi.org/~/media/PDF/Knowledge

%20Center/Change_Mgmt_whitepaper_v4. ashx.
Miller, D. (2002). Successful change leaders: What makes them? What do they do that is
different? Journal of Change Management, 2(4), 359368.
Institute, P. M. (2015). A Guide to the Project Management Body of Knowledge (PMBOK
Guide) (PMBOK Guide). Project Management Institute.
Institute, P. M. (2012). PMI lexicon of project management terms, version 2.0. Retrieved from
http://www.pmi.org/PMBOK-Guid Developing Key Stakeholderse-

and-

standards/~/media/Registered/PMI_Lexicon.ashx.
Institute, P. M. (2014). Pulse of the profession in-depth report: Executive

sponsor

engagementTop driver of project and program success. Retrieved from

http://www.pmi.org/~/media/PDF/Knowledge%20Center/PMI-Pulse-Executive-SponsorEngagement.ashx.
Rowlinson, S. (1999) Selection criteria. In: S. Rowlinson and P. Mcdermott (eds) Procurement
Systems A Guide to Best Practice in Construction. E & FN Spon, pp. 276299.

Running head: PROCUREMENT AND STAKEHOLDER MANAGEMENT

20