The Stakeholder
Management in Real
Estate
Milan, 23-26 June, 2010
Aldo Norsa, Professor of Building Technology, Iuav Venice
University (norsa@iuav.it)
Giuseppe Pedeliento, Ph.D. Candidate in Marketing and Business
Administration, Bergamo University (giuseppe.pedeliento@unibg.it)
Aim
We investigate which are the most relevant stakeholder
categories in the real estate business underlying the nature
of “project-based firms” as opposed to industrial and
manufacturing firms as well as merely service providing
firms.
2
Project based firms
Which are the main futures of project-based firms?
DUC (Discontinuity-Uniqueness-Complexity) model (Cova &
Ghauri, 1996; Mandják & Veres, 1998; Tikkanen, 1998).
(D)iscontinuity of demand for projects and of productive
process
(U)niqueness of each project in technical, financial and sociopolitical terms
(C)omplexity of each individual project in terms of the number
of actors involved throughout the supply process
3
Methodology
The identification of the main project stakeholders and the
relevance of each of these for the real estate companies is
done analyzing five interviews.
4
Stakeholders
The notion of stakeholder was coined in an internal
memorandum at the Stanford Research Institute in 1963
and means “those groups without whose support the
organization would cease to exist”.
In a famous article Freeman and Reed define stakeholders as
"those groups who have a stake in the action of the
corporation” (Freeman & Reed, 1983).
5
Project Stakeholders
Project stakeholders -> Individuals and organizations who are
actively involved in a project, or whose interests may be
positively or negatively affected as a result of project
execution or successful project completion. The project
management team must identify the stakeholders,
determine what their needs and expectations are, and then
manage and influence those expectations to ensure a
successful project (PMBOK – Project Management Body of
Knowledge, 2004)
6
Why Stakeholder
Management in Real Estate?
(1/3)
In real estate – and generally in construction – every
productive process has negative effects: every
construction project corresponds to a permanent
modification of the territory. “To build” means in a certain
sense “to harm” the territory.
7
Why Stakeholder
Management in Real Estate?
(2/3)
Ismodes (1997) -> scarce attention to stakeholders in a
construction project could generate:
a) conflicts with the local community
b) complicated decision-making process
c) time delays and cost overruns
d) negative publicity for the companies involved
8
Why Stakeholder
Management in Real Estate?
(3/3)
Cleland (1999) -> project stakeholder management process:
a) is essential for ensuring success in managing projects
b) requires a formal approach
c) should provide the project team with adequate intelligence
for the selection of realistic options in the management of
project stakeholders
d) needs information in order to be carried out
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Real Estate Stakeholder’s
Categories (1/2)
To identify the various interests involved we consider the
Cleland model (1999) fitted to the real estate specificity on
the basis of interviews to opinion leaders and top managers
starting from the Freeman and Reed (1983) definition of
stakeholders.
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Real Estate Stakeholder’s
Categories (2/2)
The stakeholder categories
identified are:
1) Shareholders
2) Employees
3) Clients
4) Suppliers
5) Financiers/creditors
6) Local and national
authorities
7) Social/political
organizations
8) Land owners
9) Environmentalists
10) Nearby residents
11) Media
11
Scoring the Real Estate
Stekeholder’s Categories
For each category we have asked the interviewees (top
managers) to assign a score from 1 to 7 in order to
understand which are the stakeholders of concern. For
each category we computed the mean square error in
order to measure the agreement of the interviewees on the
relevance of the specific stakeholder.
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Findings
Stakeholders
Company A Company B Company C Company D Company E Total Score
Shareholders
7
7
7
7
6
34
Employees
6
7
6
6
6
31
Financers/Creditors
5
6
7
5
5
28
Designers
4
3
5
3
4
19
Contractors
5
6
7
6
6
30
Social/Political Organization
7
7
7
7
7
35
Nearby Resident
5
6
6
5
6
28
National/Local Authorities
6
7
6
6
5
30
Nearby Owners
4
3
4
3
3
17
Environmentalists
4
4
5
3
6
22
Media
3
3
2
3
4
15
Total Score/Mean Value
56
59
62
54
58
289
Mean
6,8
6,2
5,6
3,8
6
7
5,6
6
3,4
4,4
3
5,25
MSE
0,5
0,5
0,95
0,95
0,5
0
0,5
0,81
0,5
1,29
0,81
0,66
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Conclusions (1/2)
There is a large consensus regarding the main categories of
stakeholders that must be considered and managed in the
real estate business.
All firms are concerned with social/political organizations.
Top managers tend to consider shareholders more relevant
than financers/creditors.
14
Conclusions (2/2)
Media, environmentalists and designers are not considered so
important by company managers. Instead, contractors are
considered more relevant.
All the companies’ top managers tend to consider all the
stakeholders relevant for their activity: we can state this
because the mean score is near to six in a scale whose
maximum is seven.
15
Limitations
The number of firms we considered is not enough to state
conclusions that could be deemed valid in general.
We should have considered other categories of stakeholders
that are less relevant but that could have strong influence.
We do not investigate why those stakeholders are important
for the companies and how they affect their activity. Real
estate could be a good “school case” for the study of the so
called “stakeholder engagement”.
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The Stakeholder
Management in Real
Estate
Milan, 23-26 June, 2010
Aldo Norsa, Professor of Building Technology, Iuav Venice
University (norsa@iuav.it)
Giuseppe Pedeliento, Ph.D. Candidate in Marketing and Business
Administration, Bergamo University (giuseppe.pedeliento@unibg.it)