Order from us for quality, customized work in due time of your choice.
Abstract
The paper discusses the stakeholders management as a whole with a point of view on cost and scope of construction projects. The introduction and literature review identify the stakeholders and divide them into internal and external stakeholders. Further the internal stakeholders are divided into promoters, contractors and other actors involved in the construction and design activities of a project. The external stakeholders were divided into high income and middle income households as well as the clients who order office and factory spaces constructions. In addition to these stakeholders one more category has been added, on the name of asset management firms.
These firms also can be termed as internal stakeholders as their activities affect the benefits of external stakeholders. As the external stakeholders want the quality output and even want to retain it for a long time, the new type of stakeholder on the name of asset management firm is necessary. The necessity of interactions, coordination which enhance the quality of output and maintenance of that had been reviewed and discussed in the paper.
Research Question: What is the need for cost budget estimation as well as decision-making on design in construction projects and their management from the perspective of stakeholders involvement and influence?
Background
The background of this topic is the changes that need to happen in project management of construction industry related to the commitment of stakeholders as well as their influence. The economic needs and scope are related to the outgrowth of market-based construction (Gerald Finkel: 1997). Hence, the search for dwellings and vying for comfort was the main reason for the development of construction industry in the past, it will be the same reason in the present and future.
According to Gerald Finkel (1997, 11) regarding dwellings; ventilation, illumination and structural support have challenged the historical predecessors in the construction industry and the way the internal stakeholders are responding to changes according to cost and scope as well as the influence of external stakeholders working on them is important to find out. The way the ever growing demands prompted the perspective of external stakeholders about the construction output and the manner the internal stakeholders responded to these views can be considered as the background of the topic.
The demands of the external stakeholders or buyers or the clients can be considered as challenges to internal stakeholders and that remains the theme of the topic as it affects the cost and scope of the projects and related with market demands. In the other aspect of construction, the projects that are intended to build a specialised structure for an office, industry or a factory comes to the fore, and the economic viability and stakeholders perspectives are more important.
In the construction of structures for industry, the stakeholders perspectives may vary for different projects. However, the diversity could be experienced a minimum if the construction projects are regarding dwellings as many of them will be constructed based on common demands from the customers and the latest technology available (Gerald Finkel: 1997, 11-12).1
Introduction
Aims and Objectives
To classify legitimate framework approaches regarding stakeholders expectations.
The research objectives are:
-
To identify the need for clear scope of work and achievable cost budget estimation and signify stakeholders commitment towards project goals.
-
To investigate the practice of Stakeholders management in construction projects.
-
To discuss the need for confined stakeholders priorities in terms of cost and scope and a void
-
To clarify the interlinked impacts between market demands & unclear objective
-
To highlight the unclear project expectations towards unrealistic project estimation.
To recommend good practice of framework findings.
Stakeholder (Producers Vs Constructors)
Producers in production process or Stakeholders in construction process are the individuals, groups or a project team of organizations who deal with project aspects and engaged along with other groups to achieve project requirements within project constraints. Concurrently, they are classified based on their interests and contributions such as business type, subject matter, domain knowledge and other technological knowledge (Robertson, 1999)2. Thus, discovering stakeholders needs conquered by understands the nature of stakeholders, the expected contribution from each stakeholder, level of involvement to the subject matter and how committed they are.
Figure 1 below shows a classified variety of stakeholders to the project entity who have a direct potential involvement to the project interface or indirect potential to the project success. The producers (inner circle) i.e. contractors, consultant, owner&etc who are allocated in project construction implementation and has direct relation to project delivery to obtain the satisfactory outcome.
Whereas the sponsors, influencers, consumers&etc considered as (indirect/secondary/external) stakeholder (outer circle) as they are not full time on the project. In fact, producers possess the ability to fulfill the primary need via interest/ power influence to the construction, therefore; contribute in project success. In contrary to the other secondary stakeholders, their influential affect to the project is at minimal impact level.
Nevertheless, the knowledge provided by the external/ secondary stakeholders can be interpreted as a feedback to enhance the vision of the prime concerns by the key stakeholders. Such interpretation to this subject matter, hence Robertson (1999)1 confirmed that in order to inspire a feedback, the constructor shall suggest a suitable mechanism that is appropriate for the specific stakeholder, in turn; this means entire understood to the individual stakeholder acknowledgement to the needed requirements to be provided by them, in addition to their acknowledgment to their required involvements time and value.
Stakeholder Management: Definition
To Begin with, Construction projects are dynamic association of specified aim and objectives. These aims are built up based on stakeholders perceptions and concerns. Each project consists of stakeholder who steer the context of work as per their requirements in a way it can be affecting others or affected by the various demands and interests of different stakeholders. Project management process dealt with this occurrence as whole measured entity.
The project stakeholders interests in the project are varies, and might be in a positive or negative impact. Freeman (1984), has defined Stakeholders can be characterized as individuals or organizations who involved in project or has interests affected by project execution or completion (Bourne &Walker, 2005; Kolltveit & Gronhaug, 2004; PMI, 2008).
Later, McElroy & Mills.2000) have defined project stakeholder is a person or group of people who have a mutual benefits & common interest either in the projects success or in the project operation. (Gibson, 2000)3 indicated that the complexity caused by the fact that a stakeholder is any individual or group with the power in negative or positive benefit ,thus; All projects research and thesiss have been assigned to understanding how to manage stakeholders effectively.
Subsequently, It has been noticed from previous studies that tackling stakeholder side of the stakeholder management has drawn less attention to the authors. Especially, in the way they behave and the way stakeholder influences the decision making of project management. In fact, the dynamic progression of the construction lifecycle has established the need for evolvement of Stakeholder management (Morris, 1982: 155).
Literature Review
Stakeholder Management process: Stakeholder Identification
The construction industry is different from manufacturing one in terms of the final products where the characteristics are differing in their nature. In construction industry, the final products may not have sequential order with a certain scope setup due to the inevitability of changes occurrence during the lifecycle phase of construction. Meanwhile, it should not be updated, progressively deliberated but steadily following the stakeholders expectations that been already taking into account at the early stage (Aaltonen & Kujala:2010).
If an individual or an industry house, which can be called as stakeholders in the construction project has given a contract to build house or a factory, they can give instructions as per their needs. However, the design cannot be decided on the day of awarding the contract and also depends not only on the available technology and economic constraints, but also on stakeholders influences as a topic of discussion and research.
In addition to that often in the construction industry, the final products of a construction project may not be built gradually with a certain prior decided design (Choong-Wan Koo et al: 2010)4 as a result of lack of exact defined and agreed scope of work considering the project stakeholders expectations. Furthermore, such unsteady progress of work might be reasoned by changes occurrence, due to either un buildable designs or unclear objectives, in addition to driven by conflict of interest, stakeholders influence (Aaltonen & Kujala:2010)
Correspondingly, Blois & Coninck (2008)5 have sorted project participants in different manner. Whereas they linked it with actors and stakeholders and at the same time differentiated between the two. The authors stated that stakeholders are beneficiaries and the actors are the ones who have specific stakes in the project. The stakeholders may or not involve in the project, and actors do, but Blois & Coninck (2008) focus on a combined view of the actor as a stakeholder and vice versa.
In this regard, the authors cite the research of Boland and Collopy (2004)6 which explained the construction process as a behaviour that operates to meet design intent (Blois & Coninck:2008). Hence, the authors define built environment as the amalgamation of organizational groups as well as development projects made active by dynamics of stakeholders.
The influence of stakeholders can be expressed relevant when they act collectively. In this context of dynamic organization of stakeholders, the presence of project organization should be an object that adjusts the behaviors of stakeholders within the construction project as it forms an entity of Stakeholder management. There is a chance to confine their freedom also, but that depends on the orientation of their behavior through the organization.
In this regard, Crozier and Friedberg (1977)7 who term the projects as the constructs of collective action that emphasizes the influence of stakeholders. Consequently, Aaltonen & Kujal: (2008), the stakeholders needs are translated to the project as potential influences resulted in effecting the decision making process.
Stakeholder management analysis: Stakeholder classification and Mapping
Typically, project stakeholders are classified as internal & external stakeholders. Following Winch (2004) definition; internal stakeholders have official relationship (contract) to the project entity to give support to the project. Furthermore, (Atkin & Skitmore, 2008) added that the direct influence to the project decision making emerged from the involvement of project stakeholders. In the same context Frooman (1999) show either resource providers for the project organization, or those who are reliant on the project organization. (Cleland, 1998) & (Cova & Salle, 2005) agreed on assigned different terminology for same group of stakeholders.
For example, internal stakeholders, primary stakeholders or business actors are all different faces for same coin. Equally, external stakeholders or secondary stakeholder involve in projects with non-contractual coalition, however; it may influence or influenced by the project Cova & Salle, 2005). Secondary stakeholders particularly engaged in moral & legitimate issues as they are known as non-business stakeholders (Cova & Salle, 2005).
As matter of fact, Construction projects have always suffered from unsuccessful deliverable product and tremendous failure in attaining projects constraints during implementation of construction. Egan report, assures that construction too often fails to meet the needs of modern businesses that must be competitive in international markets, and rarely provides best value for clients and taxpayers.
Diverse factors are liable to change based on potential perceptions of stakeholders to choose suitable person on the suitable time and engage them in the right position. In return, Organization shall identify the participants needs and utilize them based on their involvement through project phases. Thus Robertson (1999) has emphasis on revealing stakeholders requirements, acknowledge their concerns, signify the role they anticipated to play and measure the level of involvement, as well as measure their commitment towards the project, in light of how may affect project performance and project deliverables.
A generic classification in construction, (Olander, 2006)8 Stakeholders ordinarily are clustered into three different categories in terms of their exposure to the project, whereas project contributors (land lord) as primary stakeholder and secondary stakeholders (the City committee, central authorities as well as tertiary levelled stakeholders (neighbours, local residents&etc).
(Robertson, 1999) has argued that the repetitive mistake that predominantly occurs in construction industry due to the limitation of involvements to the technical parties who construct the project. Whilst to get a successful construction project, the relevant stakeholder needs to engage in the process to exert the input required and acknowledge the concern raised by owner. Highlighting the fact needs to be clear and identified clearly prior to the construction to avoid hassles and cost implication.
Technically speaking, project might succeed in achieve the final deliverable product but not gratify the needs. Each party contribution shall be maintained to the designated limit of their significant role in which they complete in others deficiency. To minimize the above-mentioned negative aspects, stakeholder management is necessary and that can increase their influence also in the construction projects.
Previous project studies have give attention to the primary stakeholders as its concern with monetary issues and financial interests. Primary stakeholders linked to the contractual relationship and have direct impact to the project progress such as customers or suppliers or have direct legal authority over the project such as governmental organizations (adapted from Eesley & Lenox, 2006). So, these influences could negatively or positively impact to the project lifecycle.
Therefore, a good comprehending of the different stakeholders needs and diverse interest group; can avoid disputes and conflicts between them. Also; acknowledging the potential influence will harmonize project flow as its considered as serious challenges in project management IFC, 2007; Miller & Olleros, 2001; Winch & Bonke, 2002).
Mitchell, Agle, and Wood (1997) explained the salience framework and classified to the involvement of stakeholders to three dimensions:
-
Power/interest.
-
Legitimacy.
-
And urgency.
Stakeholders are sorted based on the contractual/non-contractual relation to the project. (Eesley & Lenox, 2006) assorted between primary and secondary stakeholders accordingly. The secondary stakeholders have non-contractual relation to the project. Hence, no direct influence over the project, whereas primary stakeholders have. For example, community groups, lobbyists, environmentalists and other non-governmental organizations are indirectly related to project. Yet they have influence over the project-minor in compare to the primary stakeholders (Clarkson, 1995).
Stakeholder Attributes and Level of Involvements: Power/interest
The diverse cascade of stakeholders in construction project form assorted range of perspectives and expectations based on specific potential of project stakeholders in construction projects. Doubtless, these amounts of perceptions stand out to escort and create the need for stakeholder and relationship management. Thus, Rowlinson & Cheung. (2008, 611)9 developed a perspective-based view in which it accepting essential diverse objectives of the project participants, while recognizing that there is a need to accept, manage and incorporate diversity into both project goals and the approach to project management all through appropriate project data analysis.
They also accentuate the fact that Management of stakeholders involved the concerned team members in course of action enabling stakeholders to identify trade off and achieve the desired objectives like social, environmental or economic through dynamic contribution in the project process. The aforementioned process is dependable upon the strength of relationship management. The diversity of stakeholders may results in assortment of interests, the diversity is a resulted of from the needs and requirements of stakeholders. Moreover, Aaltonen & Kujala (2010, 381)10 opined that project stakeholders are the essential elements of success of a project and they also assured the necessity of stakeholder management.
Projects consist of groups of stakeholders working together and interact to achieve their mutual interest. Yet, each has a sole entity and a specified objective. The difference of concerns of each group stakeholders might overlap in a sense of having a negative or positive impact to the other group. (Olander,2007)11 highlighted some of the negative way might significantly could have an effect on physical deterioration to the construction implementation. In contrary, he added that this difference could create a good atmosphere to understand different viewpoints and build relationships. As result, omit prediction and assumption.
Legitimacy
The Moral and legitimate claims are often emphasized in connection with secondary stakeholders, as the firm is significantly responsible for their well-being, or they hold a moral or legal claim on the firm (Langtry, 1994) or persons or groups with legitimate interests in procedural and/or substantive aspects of corporate activity (Donaldson & Preston, 1995).
The factor of sustenance of the business and the chances of getting permissions from the government for the future constructions depends on the benefits or the satisfaction of the local communities. If the construction activities are putting the local communities at risk, the internal stakeholders in construction industry may not find it sustainable the business opportunities of construction.
Hence, Oladiran (2009) opines that minimization of incidence of construction waste in the area of construction can satisfy the local communities as their environment will be less affected. As a result, the innovative methods and approaches that reduce the waste in construction activities should also be part of the strategies that are necessary for satisfying one of the stakeholders; local communities. Hence, by avoiding the improper use of materials in the construction as well as finishing activities the waste can be minimized and thus the local environment will not be disturbed thus satisfying the residents in that area (Oladiran: 2009).12
Urgency
The urgency aspect regarding stakeholders arises when the construction has been delayed and external stakeholders are forced to talk with the actors and internal stakeholders. As the work has not been done according to the schedule the issue of urgency matter and this is more risk prone if the external stakeholders were the customers who ordered an office place or a factory construction. Though one cannot rule out the issue of urgency due to delays in housing projects also, the intensity of it will be more when the external stakeholders order a construction regarding an office or a factory.
Local Communities as Stakeholders
The above activity can be termed as community driven development of construction industry and Glen n A. Bowen (2005) explains that the infrastructure projects taken up by the governments can enhance the influence of stakeholders as they focus on mitigating the problems of the locals by identifying their problems and priorities. The builder or the contractor who takes up these projects have to identify the problems and priorities of the locals to decide the nature of the output.
Having a clear idea about the construction output will give clarity about the construction activities and helps in allocating budget to various activities accurately thus minimizing the cost deviation during the construction. This in turn increases the scope of the project from economic perspective. The internal stakeholders should have commitment to motivate and mobilise the buyers, so that they are convinced that the constructions can address their issues and can help them to have a better life.
Thus this is also another aspect of increasing influence of local communities, as well as clarity on cost of the construction activities. This could be used in the context of stakeholders investments from the governments on infrastructure as well as housing for local communities. Hence, the governments attempts to solve the problems of the local communities in particular areas encourage the construction industry and they also influence the scope of the construction activities and increase the market due to the availability of new projects.
The internal stakeholders should take care so that the needs and necessities of the local communities can be met with the construction projects sponsored by the government to increase the scope for the future projects by avoiding do the work twice. Hence, this is a form of enhancing the influence of a certain type of stakeholders who normally cannot influence the construction industry regarding cost and scope, as government funds the projects only if they are according to the needs and necessities of the local communities. For example, civil society organisations in Caribbean countries like Jamaica have been playing roles that are more definitive in programs to promote social development and improve living standards (Glenn A. Bowen: 2005).
As nongovernmental and community based organizations also work on the funds from the government regarding construction projects, they have to plan and construct as per the needs of the stakeholders; local communities. Thus the funds that are available for governments which are used to construct infrastructure and housing projects for the people who have least influence on construction industry also are able to find that their aspirations have been heard and their influence increased, though involvement will be at minimum level (Glenn A. Bowen: 2005).13
Managing stakeholders Expectations & need
Scope of work can be understood as formal mirror image to the stakeholders needs, wishes and expectations. Therefore, the stakeholders role is essential to the project success from the onset all through till final close out of the project. A deviations in the project assumptions in regard of agreed scope of work will consequently lead to additional requirements, delay and/or additional cost (Katrin Fishcher, Katja Leidel, Alexander Riemann & Hans Wilhelm Alfen: 2010, 275)14 Furthermore, it might disturb the involvement of stakeholders as some of them may not have enough knowledge about the above aspects and thus may influence the people who are executing the project. Thus; (Olander and Landin, 2005) have stressed on how significant is to comprehend stakeholders recurring requirements that led to substantial influences to the construction projects.
Technical issue may rise frequently during construction. To some extent, it hinders the influence of certain stakeholders as the problems resulting from improper completion will only be known to stakeholders after they happen. Hence, the responsibility of a contractor, engineers, architect for the technical implementation in the construction project can enhance the involvement as well as an influence of stakeholders (Katrin Fishcher, Katja Leidel, Alexander Riemann & Hans Wilhelm Alfen: 2010, 260-275).
Engagement at early stage
The topic of citizen participation in the public sector decision making process can be termed more relevant regarding the engagement of stakeholders in construction projects. The engagement of stakeholders, can be made at the stage of budgetary decision making as they are the people who have to afford the cost of utilizing the services or in the context of buying the constructions. In this regard, Domonic A. Bearfield & Melvin J. Dubnick. (2009) state that the examination of citizen participation is necessary to understand the incidents driven by the need to deal with pragmatic concerns of lawsuits that stall or completely halt the development of large scale projects(Domonic A. Bearfield & Melvin J. Dubnick: 2009).
Regarding the above-mentioned participation, Dominic & Dubnick (2009) seek a bridge between participation of stakeholders and budgeting process so that it can play an important role in deciding the processes of engineering in construction. The authors are with the opinion that different internal stakeholders take different decision regarding participation of stakeholders and hence it is important to have a policy of engage the stakeholders in the initial stages of construction activity so that their objections can be minimized at the later stage (Domonic A. Bearfield & Melvin J. Dubnick: 2009)15
Stakeholder Communication/ Communication management
Communication, as tool of information transfer, plays a major role to assist with implementation process. As per Waston et al (2002)16, the communication is the chain link between stakeholders to structure their perceptions in right way and not to conquer their demands in which it wont affect negatively stakeholders expectations, thus; impede the construction process.
All that, falls within the context of mismanagement of the stakeholders; abandon their concerns often result in deviating from the scope of work and repeating the job again and again time waste. Yet Stakeholders might be puzzle and lost their aim of work during the construction due to different reasons. To illustrate that some occurs due unclear vision of the stakeholder (inexperience investor) to the subject matter, changes due political reasons recession.Here, the project management team has to help in confine the stakeholders needs and recognize their interest to avoid the hassle.
As the stakeholders are the ones who are affected due to the negative effects of the risk, the inherent communication and excellent documentation can increase the influence of stakeholders as they can present their views about the final output of the construction project.
Continue stakeholder analysis throughout lifecycle
The early engagement of stakeholders resulted in communication system with them and that results in continuance of stakeholder analysis throughout the life cycle of the construction project. This engagement is a necessity as per the saying no formal organization is an island (Larry F. Lamb & Kathy Brittain Mckee: 2005). As per that suggestion, one should understand that the production as well as construction activity depend on the stakeholders and the lack of communication with them may result in wrong output that would not deliver the results.
To continue the stakeholder analysis throughout the lifecycle, can be termed as integrally bound to the health of an organisation(Larry F. Lamb & Kathy Brittain Mckee: 2005) and in the case of construction project, it helps in making the output as per the aspirations of stakeholders. The analysis of stakeholders throughout the construction project also helps in reducing the delays in construction process. If the analysis and the management of internal stakeholders has been done, it helps in avoiding the obstructions in day-to-day construction activities as the engineers, supervisors could manage the workers required.
This is also important to have a continuous supply of monetary resources from promoters and contractors. This type of relationship between internal stakeholders like promoters, contractors and designers and external stakeholders like customers of the housing projects or the buyers of office and factory spaces help in mutually beneficial relationships depending on the balanced flow of information from promoters to buyers through contractors (Larry F. Lamb & Kathy Brittain Mckee: 2005).17
Methodology
Introduction
The methodology used in this paper is the qualitative analysis as the topic suits to that. As the research has to analyze and discuss is about the stakeholders influence and involvement in construction projects the qualitative analysis helps to find out the stakeholder behavior and the responses of the actors in the construction project. This depends on the relationship as well as communication between internal stakeholders and builders or contractors.
The communication between builders or contractors and external stakeholders is also necessary as this helps in deciding the nature of output. Hence, the cost scope correlation with a mix of influence of stakeholders in construction projects is necessary and hence qualitative analysis as well as discussion has been employed by taking information and results from authenticated researches on construction industry in different countries all over the world.
For example, the analysis of structural problems in Republic of Korea by Jin Ho Yoon & Byung Goo Kang (2002, 210) revealed that mix of regulation and deregulation of construction industry in the country has shown results. Hence, analysing such a situation that inherently explains the correlation between cost and scope along with influence of different stakeholders from promoters to external buyers, from local communities to labour in the project can be understood (Jin Ho Yoon & Byung Goo Kang: 2
Order from us for quality, customized work in due time of your choice.