Lecture4-StakeholderTheory2011-02-07

7/31/2019 Lecture4-StakeholderTheory2011-02-07

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Wednesdays seminar

Live case in 3 parts. You can find the first part on thehomepage. Parts 2 and 3 will be handed out and discussedduring the day.

Assignment for Part 1:a) Prepare and send in, in advance, a (Power Point) presentation

addressing the assignment questions,

b) Write a 2000 word background explaining the reasoning behind the

answers in a) and send it in, in advance (Word)

Assignment for Part 2: Prepare and send in a presentationaddressing the assignment questions

Assignment for Part 3: Prepare and send in a presentationaddressing the assignment questions


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Bring one computer per team with you so

that you will be able to email your

presentations during the seminar


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Tentative schedule for Wednesday

Time Activity10.15-11.00 Introduction + Presentation and

discussion of Phase 1

11.00-13.30 Work with Phase 2 incl. lunch13.30-14.30 Presentation and discussion of Phase 2

14.30-16.00 Work with Phase 3

16.00-16.45 Presentation and discussion of Phase 3

16.45-17.00 Concluding comments


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A Stakeholder Perspective

A stakeholder is:

any group or individual who can affect or is

affected by the achievement of the organizationsobjectives. (Freeman)


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Stakeholder Theory what is a stake?

without the element of risk there is no stake.

A stake in this sense, is only something that can be

lost.

Voluntary vs. Involuntary risks


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Stakeholder Theory

The moral (and normative) perspective ofstakeholder theory argues that all stakeholders

have the right to be treated fairly by an

organization, and that issues ofstakeholder powerare not directly relevant.

The managerial branch of stakeholder theory

/attempts/ to explain when corporate

management will be likely to attend to the

expectations of particular (typically powerful)

stakeholders.


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Who are the stakeholders?

Government Employees

Business

Community

Consumers

Owners

Suppliers Partners


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A Typology of Stakeholder Attributes

Legitimacy: refers to the perceived validity

of the stakeholders claim to a

stakePower : refers to the ability or capacity

of a stakeholder to produce an

effectUrgency: refers to the degree to which the

stakeholders claim demands

immediate attention


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Stakeholder typology (Mitchell et al)


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Stakeholder mapping (Newcombe)


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The traditional project model

The clients perspective:

the front end is internalised by a large

organisation and managed using approaches that

emphasize project selection

the execution phase is managed using armslength contracts with executing firms

Source: Hobbs, B & Andersen, B (2001). Different alliancerelationships for project design and execution. IJPM, pp 465-469


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The traditional project model

The suppliers perspective:

Projects are supplied in response toinvitations to tender.

Projects are chosen on a competitive basis,where price is of overriding concern.

Source: Hobbs, B & Andersen, B (2001). Different alliancerelationships for project design and execution. IJPM, pp 465-469


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Phases in a project

Projectstart

Project

Phases beforethe official

project start

Sales Phase,Proposals

Sales Phase,Negotiating

MarketingPhase

Post-Project

(guarantee,

follow-up)

Traditional focus of Project Management


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Decision making in projects

Time

High

Low

Degree of knowledge

Effect on performance


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Gains to be made in early phases

Improving knowledge

Delaying decisions


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3 key stages of project development

Independent of any project Pre-tender

Tender preparation

Source: Cova & Hoskins (1997)


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A twin-track approach for earlystages in project development

Anticipating the competitive arena and the rules of

the game (deterministic approach)

Becoming actively involved in shaping the

competitive arena and the rules of the game

(constructivist approach)

Source: Cova, B & Hoskins, S (1997). A Twin-Track Networking Approach to Project

Marketing. European Management Journal. Vol. 15, No. 5, pp 546-556


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A Twin-Track Approach

Source: Cova, B & Hoskins, S (1997). A Twin-Track Networking Approach to ProjectMarketing. European Management Journal. Vol. 15, No. 5, pp 546-556


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External factors affecting strategy

The approach adopted by thecustomer

Norms of behaviour within theproject context

The contractors position within the

project hierarchy

Source: Cova & Hoskins (1997)


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Co-operating in Hybrids neither market nor organization

.the hybrid mode is characterized by semi-

strong incentives, an intermediate degree of

administrative apparatus, displays semi-strongadaptations of both kinds, and works out of a

semi-legalistic contract law regime.(Williamson 1991)

Market Hybrid Hierarchy


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Either or?

the selection and early development of

the project using a traditional approach

does not preclude the use of relationalapproaches during later phases.

Source: Hobbs & Andersen (2001)


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Basic problem in cooperative relationships

To achieve efficiency and effectiveness fromactivities which are carried out with no

common governance structure

Complicated by:

uncertainty

power and information asymmetries


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Problems in co-operation

problems experienced in agreeing appropriate division of labour

between client and contractor.

problems of being able to ensure continuity of personnel and

uninhibited team selection

lack of a dedicated project team structure added to the ambiguities and

conflicts

problem in managing internal interfaces with other significant groups

and stakeholders.

Source: Bresnen, M & Marshall, N (2002). The engineering or evolution of co-operation? A

tale of two partnering projects. International Journal of Project Management. Vol. 20, pp

497-505


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The 7 pillars of partnering

S

TRATEGY

INTEGRATI

ON

F

EEDBACK

MEMBERSH

IP

EQUITY

BE

NCHMAR

KS

PROJE

CTPROC

ESSES

Source: Bennet, J & Jayes, S (1995). Trusting the team


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Strategy

Source: Bresnen, M (2007). Deconstructing partnering in project-based

organisation. IJPM, pp 365-374

the need to generate commitment

the need to maintain continuity

the need to rationalise (i.e. standardise) processes

the need to concentrate on improvement efforts

the need to give freedom to individuals and encourage them tolive with ambiguity

the need to understand who the client is and effectively make acase for partnering


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Membership

Source: Bresnen, M (2007). Deconstructing partnering in project-basedorganisation. IJPM, pp 365-374

the need for a careful and intense selection process a balance between single sourcing and being locked-in to the

relationship

structuring membership and workload to encourage repeat

business being open

creating certainty for clients

selecting project core teams developing partnering skills

reviewing membership


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Equity


alternative funding arrangements sharing savings and other benefits fairly

maintaining commitment to long term development of therelationship

agreeing ownership of innovations

looking after key people

project incentives based on realistic costs, prices and fair

distribution open book accounts

benchmarks for demonstrating fair value for money


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Integration


developing trust continuity and building long term cooperation

integration at various levels (both external and internal)

getting rid of internal conflict

joint IT strategies

supporting/rewarding integrating behaviour

competence of people


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What do we know about TRUST?

Different people behave differently

These differences can to a certain extent be traced to their

personality traits

Culture may matter

Over time, levels of trust can increase or decrease

Incentives matter

Already knowing each other helps

Belonging to the same group helps

Seemingly unrelated, personal experiences play a role


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Benchmarks


the need for simple, robust, and widely-understoodbenchmarks

to generate quick wins

agreeing how to measure improvements and what

improvements to measure use both objective and subjective measures

benchmark project and firm performance

involve workers overcome resistance to value engineering


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Feedback


process improvement based on process standardisation robust systems of feedback, based on measurable targets

walking the job

final workshop

telling senior management


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Practical lessons from partnering

success in achieving project objectives can mask important

difficulties

there is clearly no one strategy or template for successful partnering

partnering is a dynamic and iterative process

one needs to consider the relationship between the project team and

wider structural attributes of the organisations concerned.

partnering by itself does not necessarily solve some of the problems

that it is set up to cope with.

Source: Bresnen, M & Marshall, N (2002). The engineering or evolution of co-operation? A

tale of two partnering projects. International Journal of Project Management. Vol. 20, pp497-505


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What is PPP (public-private partnership)?

In general, the term refers to forms of cooperationbetween public authorities and the world of business

which aim to ensure the funding, construction,

renovation, management or maintenance of aninfrastructure or the provision of a service.

(European Commission)


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PPP development within the EU

Source: PwC


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Reasons for PPP

Realisation of investments that otherwise would not havebeen implemented (Without PFI, we wouldn't have had a

new hospital.)

Cash flow issues

Handling of uncertainty and risk

EfficiencyOne clear advantage in PFI projects, according to the NAO, is that they

are usually built on time and on budget a marked improvement on

previous experience. (The Economist, 2004-01-08)


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Cash Flow

Traditional profile PPP


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Distribution of risk (example)

Traditional project PPP project

Client Entrepreneur Client Project company

Financing Financing

Planning Planning

Permits Permits

Organization Organization

Construction Construction

Operation/Maint. Operation/Maint.

Traffic Traffic


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Enhancing lives through partnership

Allocation of risk

Public sector

# PupilsPermits

Changes in require-ments from authori-ties

Private sector

AccessibilityFunction

QualityPrice and timeDefectsLife cycle mainte-nance

Shared

VandalismInsurance

Building Schools for the Future, Bristol


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Main categories of PPP

Source: Kwak et al (2009). Towards a comprehensive understanding of public private

partnerships for infrastructural development. California Management Review. Winter


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Main categories of PPP

Source: Kwak et al (2009). Towards a comprehensive understanding of public private

partnerships for infrastructural development. California Management Review. Winter


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Multi-party partnering

Source: PwC

SPV = Special

Purpose Vehicle


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Relationship setup a practical example

The SPV


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Problems for PPPs

Cost for procurement process

Procurement timeAverage period: 34 months

Competition

Before 2003: 85% of all projects attracted more than 3 companies

2006: 67% of all projects attracted more than 3 companies

Lecture4-StakeholderTheory2011-02-07

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