PPPs are about changing the way a public service is delivered. This creates uncertainly for end users and uncertainty for the workers providing the public service. PPPs disrupt the (often comfortable) status quo.
People need to be respected, consulted, and heard—especially in times of uncertainty and change. Managing stakeholders (i.e. consulting, involving, respecting, and communicating with affected people) is critical to the success of all projects, particularly high profile, large, complex projects, as PPPs often are.
PPP projects often fail because of poor stakeholder management.
Successful stakeholder management starts with the early identification of stakeholders and the deliberate implementation of tailored strategies for each group. Analysis should be done early in the project cycle – after project identification, but well before the formal transaction development process begins.
The first step is to identify all stakeholders: this is done by identifying project risks and determining the associated stakeholders. Every project risk has a corresponding group of stakeholders. For example:
- Land acquisition risk: land owners; informal settlers; human rights NGOs, displaced businesses, etc.
- Construction risk: unions, communities adversely affected by noise, traffic, etc.
- Private sector management of public utility risk: staff at the utility fearful of retrenchment; labor unions; utility's management fearful of loss of power and perks; end users fearful of higher tariffs (or alternatively end users demanding better service – ally); political opponents looking to leverage PPP to undermine current government (or alternatively, political allies hoping to improve government services), etc.
Once stakeholders are identified, they need to be analyzed along three areas:
- Power: Do they have the power to help or hinder project closure or implementation (power can be coercive, financial, material, political, etc.)?
Example: A high ranking politician with strong ties to local business owners who fear a loss of business as a result of a new waste management PPP is able to use his influence to calm their fears and help the client close the PPP.
- Legitimacy: How are their actions and causes perceived in terms of justness, desirability, or appropriateness?
Example: Informal settlers have built their community for decades next to a port and will have to be relocated for an expansion of the existing infrastructure. This will also mean losing access to their fishing grounds and convenient access to ad hoc employment from the current port operators. A local human rights organization takes up their case and through extensive media exposure is able to undermine the confidence of the government who pull out of the deal.
- Urgency: How high is their level of interest in the project and how demanding are they in terms of their requirements.
Example: A local environmental NGO is concerned a proposed run-of-river hydro project will cause extensive damage to the local habitat and begins emailing the high level officials of the internationals financial institution who is advising the project, seeking weekly updates on the project, including access to environmental and social impact assessments.
Based on these factors, a strategy to implement through the life cycle of the project can be developed. It is important to note that this initial assessment and strategy must be iterative. The three variables can and will change and can pose very different risks to a project over time and strategies need to adapt accordingly.