Getting everyone on the same page (and keeping them there) is one of the great joys of construction project management. There are a ton of different people and groups involved in seeing a construction project through to the end and each plays an important part in making sure things run smoothly from start to finish.
By understanding the role of each of the key players in a project and what is important to them, we can get a handle on how to best manage a successful construction project. In this article, we’ll break down the different stakeholders in a construction project and how they each contribute to the project goals.
Direct vs. Indirect Stakeholders
You’ll typically deal with two categories of stakeholders throughout the lifecyle of the construction project — direct and indirect stakeholders.
Direct Stakeholders – These are internal stakeholders that are directly involved in the project and are typically associated with a project team. They include groups like: owners, construction managers, contractors, architects, designers, consultants, suppliers, subcontractors, and procurement teams.
Indirect Stakeholders – These stakeholders are external parties that are impacted by the construction process and can include groups like: local residents, government bodies, and public utility companies.
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An Overview of Construction Project Stakeholders
Each stakeholder plays a critical role in achieving the project objectives and project outcomes. They are the team members that ensure a successful project and they must work well with each other throughout the project’s duration. Let’s walk through what the key stakeholders are responsible for and how they work with others on the team throughout the project lifecycle.
Owners/clients: As the primary stakeholder in a construction project, owners initiate and eventually green light the project. At the onset, the owner is responsible for providing an overview of the project’s objectives and the baseline for the scope and budget. Depending on their level of involvement, they will either be the decision-making body that approves and signs off on contracts, payments, etc., or they will hire a third-party construction manager to oversee the project.
Risk Managers: As the name suggests, risk managers are hired to inform ownership of any threats to the construction project. This could range from legal, financial, environmental, reputational (in terms of branding and/or standing in the community), and other risks that can have a negative impact on the project outcome. Risk managers are used during each phase of a construction project from the bidding stage through project completion in an effort to mitigate risks to all parties. Check out our full guide on risk management for construction.
Capital Funding: While some projects are funded directly by the owner, there are other projects that require lending or outside investment. If the owner chooses to fund the project from outside resources, there are two noteworthy impacts on the project. First, regardless of if the financiers are lenders or outside investors, approval of the overarching budget is a protracted process. One of approvals and paperwork that delays schedule and impacts you as a contractor in regards to design changes. Instead of having one level of review (either the CM or owner) approving your cost for the prescribed change, it is imperative to ask the source of funding for a project so you understand the payment and approval process.
Construction Manager (CM): When the owner chooses to hire a construction manager, this role will oversee the day-to-day operations of the project and is responsible for setting the project team up for success. They are directly involved with other stakeholders (contractors, architects, engineers, consultants, etc.) and are the guardians of the project’s budget, schedule, and allocation of resources. CMs are involved in the pricing of the project, ensuring effective communication throughout the job and eventually turning everything over to the owner.
Architects and Engineers: Responsible for taking the owner’s idea from vision to practicality, the architects and engineers design the project. Along with following the owner’s guidelines for the scope, they make sure the project complies with regulations and codes so the drawings can be permitted and bid on by contractors. They work with the CM or contractor during the construction portion of the project and assist with reviewing submittals, RFIs and issue design changes that come from the owner or CM.
Consultants: Along with architects and engineers, consultants are part of the design team and assist with the preparation of drawings. From acoustical engineers, audio/visual consultants and more, these consultants are hired to help with specific tasks that fall outside the purview of the architects and engineers. Hired either by the CM or under the umbrella of the architect, these consultants provide expert insight on constructability.
General Contractors: Following the vision, feasibility, design and initial creation of a budget, general contractors are responsible for executing the project plans on the construction site. They are hired for the building of the project, managing labor, materials, schedule and coordination of all activities. Contractors either self-perform the project or hire subcontractors to complete certain parts of the project scope they do not have in-house.
Subcontractors: Contracted through the general contractor, subcontractors focus on a specific trade (i.e. electrical, plumbing, framing, etc.) and are hired for deliverables within that trade. Detailed in the construction documents, the subcontractor will work hand-in-hand with the general contractor to ensure that their scope is encapsulated in the budget and the appropriate duration of time is coordinated in the project timeline.
Procurement: Usually contractors or subcontractors have a procurement division which assists with the ordering and scheduling delivery of materials, but sometimes this is outsourced to specialists. Whether under the guidance of the CM or the contractor, procurement is vital as it drives the schedule. Lead times and dates that materials are needed on site are coordinated between the procurement team and the contractor to make sure that the project stays on schedule.
Regulatory Bodies: After the architects, engineers and consultants meet to put ideas to paper, they submit drawings to the relevant regulatory bodies. These authorities make sure that the project complies with local laws, regulations and building codes and give the approval to begin construction. Throughout construction, they will also conduct inspections and sign off on the project’s completion so the structure can be occupied.
General Public: Although they are not directly involved with the project, the general public is also a type of external stakeholder. The project’s scope determines the involvement of local residents and the impact it has on their daily lives (from traffic disruptions, noise, hours of work, change of use, etc.). From attending town hall meetings, city hall review, homeowners association approvals to other disruptions, it’s critical to keep the public informed of the project’s scope whether they are the eventual end users or just affected by the construction process.
The Importance of Construction Project Stakeholders
For the successful delivery of a construction project, each stakeholder needs to perform their role diligently and coordinate with the contractor, or the CM if there is one. Effective communication and collaboration will ensure that the project is delivered on time, within budget, and up to the owner’s standards.
For your part, make sure to diligently review and scope out the construction documents to provide a bid and timeline to the CM or owner. The weight of the project’s success rests largely on your shoulders as you’ll be responsible for managing the construction of the project and making sure the work is done well.
And, as always, good communication is key to ensuring a smooth project delivery process in the construction industry. So, honing your skills in stakeholder management will only increase your efficiency on a project and ultimately create more reliable profit for your construction company.