Understanding Enterprise Environmental Factors

PM Articles by Project Times. 

Critical elements in strategic project management

As project managers, we can’t control everything.  In every project there are factors beyond our control that can have both large and small effects on the outcome of a project. Market demands, consumer tastes, corporate culture, even the weather, are all factors that can make a difference between project success and project failure.  While these are things we can’t change, we still need to be aware of the elements within our operating environment and what they mean to the projects we manage.

Enterprise Environmental Factors

Enterprise Environmental Factors (EEF’s) are conditions, not under the immediate control of the project team, that influence, constrain, or direct the project, program, or portfolio (Project Management Institute, 2021).  These are things that are beyond the control of the project team, and often the organization in which the project is taking place, that can have effects on the outcome of the project.  Projects take place in settings that can have effects, both positive and negative, on them.  Those factors can exist both inside of the company initiating the project as well as outside of it.  An organization and project team need to identify and consider those factors in order to increase the chances of project success (Arif-Ud-Din, 2020).

Strategic management is the systematic analysis of the factors associated with the external and internal environments of an organization to provide the basis for maintaining optimum management practices  (Thompson, 2010).  It means understanding what is going on both inside and outside of an organization in order to make better plans and decisions about what to do.  Simply put, strategy is deciding what to do to achieve your goals given what’s going on in the environment around you.  Strategic project management means the same thing; making decisions about actions to take in order to achieve your project goals and objectives in consideration of the environment in which the project is taking place.

Just as in general business activities, the operating environment of a project includes both the internal and external environments.  The internal environment includes everything within the organization; organizational structure, procedures, company culture, and so on.  The external environment is the environment outside of the organization and includes everything from customer tastes to legal restrictions, even the physical environment.

In summary, EEF’s are environmental factors, both internal and external, outside of the control of a project team that can have both positive and negative impacts on project results.  The chances of successfully completing a project are increased by strategically considering EEF’s in managing a project.

Addressing EEF’s in Projects

Because every project has at least some EEF’s affecting the outcome, every project manager needs to deal with and address those factors in each project that they manage.  All of the major project management methodologies and approaches have their own prescribed steps for addressing environmental factors, but when looked at as a whole, most of them recommend taking the same three steps: 1) Identifying the factors, 2) assessing them, and 3) planning for them.  Based on experience and best practices, this is also the recommended approach to take in addressing the issue of EFF’s in managing projects.  The overall goal is to strive for having a clear understanding of the project environment in order to be better able to pursue, and achieve, the objectives of the project.

Step 1: Identifying Enterprise Environmental Factors

From formal and structured assessments to informal examinations, several different methods exist for identifying EEF’s for every project.  The depth and complexity of each method may vary, but the overall goal is still the same, which is to develop as complete of a listing as possible of potential factors in the project environment beyond the control of the project team which may have effects on the outcome of the project.

Here are a few examples of ways to identify EEF’s in projects

PMI List of EEF’s

The Project Management Institute takes a formal approach to identifying enterprise environmental factors.  The table below examines both internal and external factors to be examined as inputs into various project development and execution stages.

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SWOT Analysis

Performing a SWOT analysis is a good way to identify EEF’s in a project.  While it is not a categorical list, as provided by the PMI list mentioned above, it does force a project team to examine elements of both the internal and external project environments.  In doing so, a list of EEF’s emerges and can be identified.

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One advantage of using this tool to identify EEF’s is that SWOT analysis is very well known and understood by most people, which makes it much easier to conduct.

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PESTLE Analysis

A more rigorous, but still approachable and usable analysis, is PESTLE.  PESTLE is an acronym standing for six macroenvironmental factors to examine that can be used in performing an industry analysis.

P Political
E Economic
S Social
T Technological
L Legal
E Environmental

Just like SWOT, the dimensions of the PESTLE analysis are not a categorical list of environmental factors in itself, but performing the analysis also helps to identify the various EEF’s that will affect a project.

Other Methods

Several other structured methods for market and environmental analysis exist; too many to develop a definitive list.  For market analysis, Five Forces analysis can be useful.  If culture is playing a factor in an international project, cultural dimensions such as those from the Hofstedde Institute or the GLOBE project might be useful.

More important than the tool or framework used to evaluate the project or market environment is the ability to identify the factors and how they might affect the projects chances for success.

Step 2: Assess the Identified Factors

With the list of factors in hand, the next step in the process is to asses each one.  The depth of the assessment will strongly depend on the needs of the individual project, but the following list can help to provide a basis for assessment that can be built on as necessary.

Each factor should be identified as internal or external to the organization conducting the project.  This asks the question, are the factors affecting success coming from inside or outside.  Does the identified factor increase or decrease the chance of project success?  This means identifying it as positive or negative. A factor can also be rated as neutral if it is simply an item for consideration in managing the project without any inherent positive or negative direct effect.  Is the factor stable or changing?  Assessing the stability of the factor means to examine if it will remain constant or if it is likely to change during the course of the life of that particular project.  Finally, any additional comments on the impact that factor might have on the project should be noted.

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Step 3: Plan for the Factors and their Effects on the Project

Finally, based on the assessment of the identified factors, project managers are in a better position to plan for managing the project in consideration of those factors.  Negative factors can be mitigated as best as possible.  Positive factors can be potentially taken advantage of to increase the changes of project success.  Factors likely to change throughout the lifetime of the project can be scheduled for reassessment as needed.  Other impacts can also be considered as appropriate for each factor.

Developing a full understanding of a project environment and considering the potential impacts on project processes and outcomes is an important part of strategic project management.  Projects are unique, and so are the environments in which they operate.  Those environments are also likely to change as time goes on.  The ability to consider the project environment is a tool that every project manager should develop and be able to use.

Project Stakeholder Register and Organizational Chart: Useful tools for project stakeholder management

PM Articles by Project Times. 

Projects come in all sizes, and in most cases larger projects come with more potential complications.  This is also true when projects involve multiple individuals and organizations.  Successfully managing a project often means dealing with stakeholders beyond your immediate project team.  Stakeholders are key to the success of any project, so identifying and managing stakeholders is a critical element of project management (Kissflow Project, 2021).

Project Stakeholders

Projects frequently involve different groups, individuals, and organizations who may affect, be affected by, or perceive itself to be affected by a decision, activity, or outcome of a project.  These are known as project stakeholders (Project Management Institute, 2021). Project stakeholders can be broadly classified into two categories: Internal Stakeholders and External Stakeholders

Internal stakeholders generally include anyone within the organization conducting a project.  It starts with the internal members of the project team, the project manager, and the project sponsor.  The concept can also be expanded to include other individuals and within the organization or company, such as other teams and departments.  Internal stakeholders are usually the easiest to identify because they are immediately known and often familiar.

External stakeholders include anyone affected by the project, its processes, or deliverables and outside of the organization conducting the project. These include external project clients, end-users of product outputs, suppliers, contractors, the government, and sometimes even members of the community where the project is taking place.  The complete list of external stakeholders can be more challenging to identify as they can be new to each and every project.  And of course, no complete list of stakeholders or stakeholder groups exists for each project!

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Stakeholders, both internal and external, need to be identified.  A project team should have access to information regarding their roles, responsibilities, and capabilities regarding the project. Stakeholder contact information is also essential to coordinate communication throughout the project and therefore it needs to be available to the core project team.

In addition to knowing who the project stakeholders are, a project team should know how they are organized and structured within the project environment.  This is why using a project stakeholder register and organizational chart right from the very start can help to get a clear picture of the project organization and to manage communications throughout the project lifecycle.

The Tools

While project stakeholder management is its own knowledge area and functional discipline, knowing how to use two stakeholder management tools will help to organize stakeholder management for projects of all sizes: the stakeholder register and the project organizational chart.

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The Stakeholder Register

A stakeholder register is a document including the identification, assessment, and classification of project stakeholders (Project Management Institute, 2021). It is a list of the stakeholders involved in a project and the “need to know” information about them, kept accessible to members of the core project team.

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The first step in creating a project stakeholder register is to identify the stakeholders involved in a project.  Start with the internal stakeholders, and then move on to the external stakeholders.  Think about who is involved with the project both directly and indirectly.  Who might be affected by the project, its execution, and its outcome?  What individuals or organizations have authority over different aspects of the project?

Next, determine what information is needed from each stakeholder and start collecting it.  This starts with each individual’s name, position, role in the project, and contact information.  For organizations and departments, it should include the individual contact person from that stakeholder group.  Finally, any other relevant information or details pertaining to that stakeholder or stakeholder group that might be relevant to the specific project at hand.

Finally, compile the register.  This can be done in any format the project team chooses to use.  A simple spread sheet can serve the purpose, or something more organized like a contact management function in Microsoft Outlook or Google Contacts.  Many project management software programs include a resources sheet just for this purpose with customizable fields to organize the details on each stakeholder based on their importance to the project.  The most important criteria for the selection of a system to use is that it is accessible to the core members of the project team as they need to use it.

Project Organizational Chart

A project organizational chart is a document that graphically depicts the project team members and their interrelationships for a specific project (Project Management Institute, 2021). It is a visual representation of the stakeholder register indicating how various stakeholders are positioned within the project.  A projects organization structure is usually fairly obvious for small projects, but the importance of knowing and understanding the structure becomes more significant as projects grow in size and number of stakeholders.  Understanding the organization of the project stakeholders helps in defining relationships, allocating responsibilities, authority, and tasks (San Cristóbal, 2018).

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The project organizational chart can be as simple as a tree diagram or a bubble chart.  More important than its design is its function and purpose, which is to understand the relationships among and between project stakeholders and to communicate this information at a glance.

Best Practices

With the tools in place, following a few best practices in creating a stakeholder register and a project organizational chart will help in coordinating project stakeholder management.

  1. Consider Frequent Project Stakeholders
  2. Start Early
  3. Involve Others
  4. Stress Test

Consider Frequent Project Stakeholders

In many organizations, project work is the normal mode of operations.  If your organization frequently works with projects, then there is a good chance that many of the project stakeholders, both internal and external, will be the same across multiple projects.  Having a list of stakeholders and their contact details ready to go will save time in creating a project register for each project once stakeholders are identified.

Start Early

The process of identifying stakeholders ideally starts once an organization selects and approves a project.  By doing so, they can be kept involved,  contacted, and consulted as necessary throughout the following stages of project development (Kissflow Project, 2021).

Involve Others

When considering details about individual stakeholders roles, responsibilities, and capabilities, it can be valuable to involve the individual stakeholders themselves, where practical, in collecting these details.  This allows for a more complete collection of information and to gain a different perspective.

Stress Testing

Once the stakeholder register and project organizational chart are completed, share them as appropriate with other project stakeholders and members of your organization.  As with the process of involving others, it helps to gain a different perspective on the information compiled.  Additional feedback will help to improve the accuracy, and therefore the usability, of both tools.

Understanding the needs, structure, and expectations of project stakeholders can be a critically important aspect of achieving project success.  Knowing the basics of project stakeholder management, as well as how to create and use a stakeholder register and project organizational chart, will go a long way toward successful stakeholder management in all types of projects.