Actors and Factors, by
Robert Youker
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Actors and Factors, by |
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Analyzing the Project Context: Actors and Factors
Robert Youker, Consultant, The World Bank
This material is used with permission of the World Bank Institute. For additional information on all 12 modules of the resource kit for instructors and practitioners on CD ROM entitled, Managing the Implementation of Development Projects, please contact John Didier at World Bank Institute.
Introduction
This presentation from the World Bank Institute describes on type of risk analysis
for those risks in the external environment. Presentations such as these are
used to promote a better understanding of project management and all aspects
of the discipline. Project management, as a rapidly maturing discipline, includes
many more facets than Time, Cost, and Performance/Quality. Every reader will
gain professionally from the information presented here.
"Actors and Factors" is an interesting title to describe stakeholders and their interests in projects. Bob Youker, a long-time promoter of project management with more years of experience than he will admit to makes this valuable contribution to our education. Lew Ireland — Editor
Visual 1-Title Slide
Ex post evaluations of development projects conducted by the World Bank and other development agencies reveal that many of the problems on development projects are the result of actors and factors that reside in the external environment and that are outside the direct control of the project manager. In developing countries, for example, such problems include shortages of materials, such as cement, or the slow release of funds by ministries of finance.
Effective project managers constantly scan the external environment to determine which actors and factors can affect their projects. They are alert to potential risks and develop plans to mitigate problems that might interfere with the project's success.
In this module, we introduce a process for identifying relevant actors and factors and for managing their effects on a project. In developing this process, we will apply a systems approach to analyzing the project and its context.
Visual 2-Instructional Objectives
At the end of this module, you should be able to
Visual 3-A Project as a System
Projects may be viewed as systems existing within larger systems (context or environment). The systems model is a useful conceptual tool for planning and managing projects because it makes project dependencies and the relationships between inputs and outputs relatively clear.
As a system, a project consists of inputs, such as labor, goods, and equipment; outputs, which are the project's deliverables and outcomes (effects that result from the project); and the processes that transform the inputs into outputs. Every system has a boundary that separates the system from its surrounding environment (context). Inputs enter the system from the outside environment across the system boundary. Similarly outputs cross the system's boundary when they leave the system and enter the environment.
Visual 4-The Project as a System within a System
The environment, itself, can be thought of as a series of systems. For example, most projects reside within a parent organization, which is in itself a system. The parent organization has inputs, outputs, processes, and an outer boundary that separates it from a broader environment. This broader environment, in turn, may be a larger corporation, another government ministry, or society itself.
A development project receives inputs from both the parent organization and from the environment (or broader systems) that surround the parent. While some of the project's outputs, such as progress reports or new skills that personnel acquire, may stay within the parent organization, most of the project's outputs will go out into the broader environment to benefit customers (beneficiaries).Visual 5-Actors and Factors as Inputs and Outputs
A simplified illustration of this for a school construction project is shown in the visual. We will use this example throughout the module.
First let's look at inputs. Supplies, labor, and funding are inputs that the project obtains from the external environment. Facilities and accounting services are inputs that the parent organization provides. Price stability, dry weather, and civil harmony are factors in the general environment that may affect the project. Now let's look at outputs. The project provides its parent organization with reports that are a kind of output, but the project's most important outputs go into the general environment. These are the new school (the project's deliverable) and the benefits that are derived from it (the project's hierarchy of objectives), such as improved instruction, a better trained workforce, and improved economic growth.Visual 6-Actors (Stakeholders) and Factors as Inputs and Outputs
How does this relate to actors and factors, which is the topic of this module? The answer is simple. Both inputs and outputs involve actors and factors. Actors are people, organizations, or institutions in the environment that can influence the project or are influenced by it.
On the input side, actors are people or institutions that could affect the project. For example, a local cement plant is a potentially important actor for the school project if a large amount of locally procured cement is needed for the school's construction.
On the output side, actors are people (or institutions) who have an interest, or stake, in the outputs that the project produces. For example, the students, teachers, and parents of the community to be served by the new school are people who will be affected by the project's success or failure. They form a potential constituency that the project manager should cultivate.Actors are people who have an interest in the outputs of the project. Consequently, they are often described as stakeholders. Stakeholders are people or organizations that have a stake or interest in a project. The word comes both from the field of gambling where someone holds the stake or bet and from the field of mining where prospectors stake out the four corners of a claim and their partners become stakeholders who have an interest in the claim.
Suppliers who provide goods, works, or services to the project are stakeholders because they receive income for the inputs they provide. People who benefit from the project's outputs are also stakeholders, as are people who may be adversely affected by the project. A simple way to think of stakeholders is in terms of people who care, or may potentially care, about the project because it touches their lives in some way, either positively or negatively. Stakeholder analysis is similar to the technique we are using, except that it is only used to identify stakeholders and not factors such as rainfall. Stakeholder management consists of studying what impact stakeholders may have on your project and developing plans to deal with possible problems or opportunities.
In most cases, stakeholder analysis is equivalent to actor analysis. However, this is not always the case because there can be actors who are not stakeholders in a direct sense. For example, the actions of policymakers who have no direct interest in a particular project may cause conditions in the environment to change dramatically, which may have (unintended) consequences for a particular project. For example, a general reduction in tariffs may make imported construction equipment more affordable. It may also result in price reductions by domestic producers of equipment. This may make it possible to shorten the construction schedule of the school, if the project manager can convince the contractor that it makes financial sense to purchase and deploy additional equipment on the school project.
Factors are events or circumstances in the environment, such as bad weather, inflation, or war, that can affect a project, or be made better or worse by a project, as in the case of illiteracy or pollution and other kinds of environmental degradation.
On the input side, factors include problems with infrastructure such as roads, shortages of needed materials (such as cement for the school), and unanticipated periods of rain (which may delay construction and increase costs).
On the output side, factors include the social, economic, political, and environmental effects that the project will produce. These often may be derived from the project's hierarchy of objectives, which module 1 explained. Defining the project's hierarchy of objectives should also have been carried out during the project's design phase to identify constituencies who might be adversely affected by the project. For example, the new school may decrease unemployment by providing new jobs for teachers and school staff. Over the longer term, it may increase the rate of literacy in the community, and it may influence the role of women in the community if girls are part of the student body.
While planning for implementation, and indeed throughout implementation, the project manager should proactively scan the project's environment to identify the actors and factors that need special attention. This includes looking for signs of change in actors and factors or looking for interactions among them. For example, the actions of central bankers (actors) may influence the rate of inflation (factor). This, in turn, may affect the cost of our school project, and, if we haven't planned adequately, it may cause us to exceed our budget. While it is natural for the project manager to want to focus on those actors and factors that relate to inputs, it is also important to consider those with an interest in the project's outputs.
As we discussed in module 3, many projects have failed operationally because constituencies had not been adequately consulted and prepared to accept the project during design and implementation or because management, during implementation, did not take into account changes that were occurring in the broader environment.
Visual 7-Five-Step Process for Environmental Analysis
Now let's look at these steps in more detail.
Visual 8-Step 1: Scan and Identity Relevant Actors and Factors in the Environment
Step 1. Scan the project environment to identify potential actors and factors.
Note: This is also sometimes called a context analysis.
Scanning refers to the exposure to and the perception of information. If project managers have more information available, their chances of identifying potentially important actors and factors in a project's environment are greater. The means of scanning can vary from an undirected, fortuitous, and subconscious observation to a purposeful, predetermined, and highly structured inspection and assessment. Naturally, we recommend the latter, a systematic and structured analysis of the environment, especially for large and far reaching projects.
We have developed three relatively simple tools that provide a useful structure for systematically scanning a project's environment for potentially relevant actors and factors.
Visual 9-Scan the Environment in Terms of Inputs and Outputs
The first tool is the simple model of a project as a system that we have already discussed. This tool is used to help a project manager think about inputs, outputs, and general environmental conditions when scanning the environment. Specifically, when using it, you should ask yourself questions such as these:
The second scanning tool is a model of the environment as geographical or political units, such as local, state (province), national, regional, and world. For each level (local, state, national, and so forth), ask yourself the following questions:Visual 10-Scan the Environment Geo/politically
- Who can affect (or be affected by) the project?
- What factors can affect the project (or be affected by it)
Visual 11-Scan the Project Environment by Sector
The third scanning tool is the most complex. It takes a sectoral view of the environment and divides it into the following six sectors:
As with the other tools, this sectoral analysis helps in systematically scanning the environment to identify potentially relevant actors and factors in each sector. The three scanning tools can be used independently or, as we suggest, in combination to help systematize your environmental scan. The goal is to produce a comprehensive list of potentially important actors and factors. Because each tool provides a different perspective on the environment, using all three will ensure thoroughness.
Visual 12-Step 2: Screen Actors and Factors
Step 2. Evaluate the actors and factors in terms of dependency, risk, and power. Once you have a relatively comprehensive list of potentially important actors and factors, you need to decide which are most important or influential. Presumably, you have so many potential candidates on your list at this time that it is not reasonable to deal with all of them simultaneously. Consequently, you must prioritize. The screening activity that we will now describe is one way of deciding which actors and factors need prompt attention.
Visual 13-Identifying Problem Actors and Factors
This screening process uses a matrix or grid, such as the one in the visual, to evaluate each actor or factor in terms of project dependency, risk, and power. When we have completed our analysis, we will have a grid that looks something like the abbreviated one shown in the visual. In step 3, we will analyze the patterns of high, medium, and low ratings to identify the problem actors and factors that require active management.
Visual 14-Estimate the Degree of Dependency
Dependency refers to how important an actor or factor is to the successful completion of a project. Dependency can range from high to low. For example, if our school construction project needs a great deal of cement and if there is only one source of cement in the country, then the project is totally dependent on that source (that is, we rate the dependency as high). On the other hand, if we do not need a great deal of cement or if it can be readily obtained from numerous sources of equal reliability and quality, our dependency on that particular source is low (that is, low dependency).
*** How would you rate the dependency of the project on good weather if you knew that roads frequently washed out in the area where the school was being built? If the construction crew had to use those roads daily to get people, equipment, and supplies to the construction site, a relatively high dependency would exist. If the project were relatively self-contained so that the conditions of the roads were not important, the dependency on good weather might be low (assuming rain did not influence some other aspect of the project). ***
Visual 15-Evaluate Degree of Risk
Risk is the likelihood that something will go wrong and hinder the project in a significant way. Each high or medium dependency actor or factor should be evaluated in terms of risk. Low dependency actors and factors can generally be eliminated from this point on. Sometimes, statistical information can be used to estimate risk. For example, the project manager for the school construction project might be able to get help from the weather bureau in estimating how much rainfall to expect during the period when the school is to be built. The weather bureau may also tell the project manager how risky this estimate is or how likely it is that the weather bureau is wrong.
If the weather bureau is very confident that less than four inches of rain will fall from May through August (because this has happened every year except one for the last 50 years), then the project manager would probably evaluate the risk as being low. Of course, this could be the year for El Nino. In which case, the risk might be high because weather conditions during an El Nino year are abnormal and somewhat unpredictable.
If statistical information is not available, risk must be estimated more subjectively. Sometimes, managers consult with experts who have worked on equivalent projects. This can yield useful advice, but it may be out of date or not germane to a specific situation. The most fruitful strategy is to analyze and derive estimates of risk from equivalent projects, either those that are still in process or those that have been recently completed. For example, by talking to the project manager of another construction project, you might learn that the one and only cement plant tends to have difficulty meeting delivery dates and, because demand is so great, is constantly raising its prices. Under such circumstances, a high-risk rating seems justifiable.
Visual 16-Power: Ability to Make Something Occur
Power is the ability to make something that you want occur. From an organizational perspective, we can think of three degrees (types) of power relations:
- High
- Medium Low (or none)
This framework is based on "A Power Framework for Project Management." (William E. Smith. 1989. Washington D.C.: The Economic Development Institute.) The article is included as an optional reading in this module.
- High power implies control. It is the ability to make something happen at will, for example, to give an order and have it carried out. Situations where a project manager has high power over an actor or factor are limited.
- Medium power is less than control; it is equivalent to influence. With medium power, there is no guarantee that what you want to have happen will in fact happen. Persuasion, cajoling, and compromise may be required, and, even then, you still may not get what you want. Most project managers must depend on influence strategies to keep their projects progressing.
- Low (or no) power relationships are those where your wishes and actions are virtually irrelevant because they have no consequences for the actors (or factors) involved. Smith refers to these in terms of appreciation because a project manager can (a) appreciate that there may be consequences that will affect the project and (b) use this knowledge to develop contingency plans. These three power relationships can be depicted as concentric circles, with control at the center and appreciation on the periphery, as shown in the visual.
Visual 17-Power: The ability to get someone to do something one wants done
Let's return to our example of the school construction project and its need for cement. We know that there is only one factory, that business is booming, and that there is considerable risk that the plant may not meet our delivery schedule. What is our power position relative to the supplier?
We certainly do not control the plant. Unless we establish our own cement company or purchase the supplier's company, control is not a realistic option. What degree of influence do we have over the plant? The answer probably depends on how much business we (or our parent organization) is already doing with the plant (relative to its other customers) and how much future business we will be able to give him (relative to other customers ).
The more important that we are as a customer means we are likely to have more influence. Of course, if the supplier's son were to marry our daughter, we would also expect our influence to increase. Unfortunately, at the present, we are not a major customer of the cement plant, and we do not have any children. While our proposed purchase of cement is a sizable one, it is still a relatively small percentage of the factory's estimated future sales. Therefore, let's rate our influence as low.
Visual 18-Step 3: Identify Problem Actors and Factors
Step 3. Identify key actors and factors and potential problem areas (or opportunities). Once you have evaluated dependency, risk, and power for your list of potential problem actors and factors, you are ready to identify those requiring active management. We call these problem actors and factors. You can identify them by looking at the patterns of high, medium, and low rankings. Usually, the following patterns signify that the actor or factor requires special attention:
- High or medium dependency
- High or medium risk
- Medium to low power (you will normally have low power over most factors).
Should the cement plant for our school construction project be designated a key actor? The answer is yes because the plant has a high/high/low pattern. We are highly dependent upon the plant, which is our only potential source; there is a high risk of something going wrong because the cement is in short supply; and we have low power over the plant. This is truly a worst-case scenario. As a project manager, we would be wise to try to improve our power situation over the plant or to find another way of reducing our risk or dependency, which is the topic for the next step.
Right now, we are only identifying which actors and factors are going to require special attention. In general, whenever a project has a high or medium dependency on an actor or factor, the project manager will want to pay special attention. However, when there also is a medium or high risk of something going wrong and a medium-to-low power relationship, the project manager will want to take whatever steps are possible to reduce the risk and to increase the power relationship. When this is not possible, the project manager can try reducing the dependency of the project on the actor or factor
Visual 19-Step 4: Develop Strategies and Act
Step 4. Develop Strategies and act. Once the problem actors and factors are identified, the project manager should decide how each is to be managed. In general, the project manager will seek to strengthen the project by pursuing these interrelated strategies:
- Reduce dependency.
- Reduce risk.
- Increase power, for example, gain more influence or get control.
Ways of reducing dependency would include getting permission to import cement or stockpiling cement. Another way would be to get permission to modify the design of the school so that it requires less cement. Rather than looking only at problem actors and factors, it is also useful to look at positive actors and factors, such as close relations you may have with the Ministry of Finance. As we mentioned earlier it is also important to look for possible interactions among the various actors and factors which could increase either the positive or negative impact on the project.
Visual 20-Use Linkages to Increase Influence
In general, there are two ways of increasing influence: formal and informal linkages. Linkages are connections or interactions that we have with an actor or factor. In module 3, we discussed specific techniques for increasing power. These can be used with either type of linkage. Formal linkages are based on formalized or legal relationships, such as organizations, hierarchies, coordinating committees, and contracts. They also involve ownership or authority relationships, such as when one company purchases another or one department is merged with another. Informal linkages are informal ways of relating.
They depend on interpersonal relationships rather than authority and formal organization relationships. They include meetings, plans, teams, and other inclusive activities intended to promote a sense of participation and ownership. Let's see how the project manager might use these two types of linkages in the school construction project. Formal linkage. The project manager for the school project could try to buy the cement plant.
The owner of the plant would then report to the project manager. This would give the project manager considerable power over the cement plant and would greatly increase the likelihood that the project gets the cement it needs. However, it is probably not a very practical solution. Informal linkage. The project manager takes the owner of the cement plant to lunch at a nice restaurant and explains how important the project is to the community. The project manager also joins a charity steering committee that the plant owner belongs to as a way of establishing a personal relationship with the cement plant owner. The project manager hopes that these contacts with the cement plant owner will induce the owner to make on-time deliveries of the needed cement. In trying to increase one's influence with an actor, it is important to understand the actor's objectives and to try to help them achieve their objectives.
For example, imagine that the project manager learns that the cement plant owner wants to expand his plant but is having trouble getting financing from a local bank. The project manager may be able to increase his influence with the owner by talking to the local banker (process linkage). Better yet, the project manager could get the project's parent organization to sign a long-term contract with the cement plant owner (structural linkage). The owner could take this to the bank to get a loan to buy a new cement kiln. The company would then supply the required cement pursuant to the long-term contract.
Visual 21-Agriculture Project: Actors and Factors Grid
Let's summarize this process of analyzing the environment with an example of an irrigation project. Our project is highly dependent on the Ministry of Finance to release local funds, and there is a high risk that funds will not be released based on the recent history of other projects. We have very low power over the ministry, so this is a high problem area. We are also highly dependent on rainfall.
Because we will be building a storage dam, though, our risk is low, and because it is an irrigation project, our degree of power is high. The degree of problem is therefore low.
Visual 22-Step 5: Continuously Scan
Step 5. The last step is to repeat this process continuously. Because the environment is constantly changing, environmental scanning cannot be a one-time activity. The project manager must scan the environment repeatedly, update the list of key actors and factors, and revise and act on strategies to manage them. In this lecture, you have learned that many problems arise in the project's external environment. We have presented a systems framework for thinking about this environment, describing a project in terms of inputs, outputs, processes, and a boundary. The inputs, outputs, and the environment itself can be analyzed in terms of actors and factors. The purpose of an environmental scan is to identify the actors and factors that are relevant to a project and to develop ways of managing these actors and factors, or the consequences they produce.
Visual 23-Worksheet 1: Sector Analysis
We introduced a five-step process for environmental scanning. The first step is to scan the environment using the three tools described, which will help you do the scan systematically.
Visual 24-Worksheet 2: Actors and Factors Grid
The second step is to evaluate potentially relevant actors and factors on three dimensions, dependency, risk, and power. The third step involves identifying key actors and factors and ways of managing them or making contingency plans. Attached to this lecture are three worksheets for doing this.
Visual 25-Worksheet 3: Managing Problem Actors and Factors
Special attention must be given to those actors or factors with the following pattern: high dependency, high risk, and low power. The fourth step is to develop specific tactics for dealing with each key actor and factor. In general, the project manager will seek to find ways to decrease dependency, to reduce risk, and to increase power. This often involves the use of formal and informal linkages and the techniques introduced in module 3. The last step is to scan the environment continuously during implementation and to revise plans and actions to accommodate changes in the environment.
(end) Thanks to Robert Youker and the World Bank for allowing asapm to post this module.
asapm is the USA member of IPMA; your asapm membership also makes you an IPMA member! ©2009 asapm |
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