The Role of Power in Negotiation
Negotiations clarify the structure, requirements and other terms of the purchases so that mutual agreement can be reached prior to signing the contract. Final contract language reflects all agreements reached. Subjects covered should include responsibilities, authority to make changes, applicable terms and governing law, technical, and business management approaches, proprietary rights, contract financing, technical solutions, overall schedule, payments, and price. Negotiations conclude with a contract document that can be executed by both buyer and seller. The project manager may not be the lead negotiator on procurements. The project manager and other members of the project management team may be present during negotiations to provide
It is not just a matter of luck that some people are better at negotiating than others. Either through experience or training, good negotiators have learned to use an effective negotiating strategy.5 Take the example of Tina, the team leader, who was helping the engineers on an industrial team select their roles. Most of the roles were quickly settled, but two engineers wanted the design manager role. Al was an older engineer with a great deal of design background, and Jeanne was a newer engineer with high potential but not much experience. Although Al would most likely be the best design manager, Tina did not want to hurt Jeanne's feelings.
Table 16.1 demonstrates a typical allocation of risks under a traditional procurement, compared to that under a PF initiative. As a part of the initial screening carried out to see if PF is appropriate for the provision of a capability, during RFT preparation and documentation, and in the detailed preparation for contract negotiations, the public sector should prepare a risk allocation table similar to Table 16.1, but without the traditional risk allocation column, as a guide to formal negotiations. The risk allocation table should represent a reasonable starting position for negotiations, not an ambit claim.
If the above item (3) is likely to occur, a structure should be planned where an adequate cover is provided even if a deterioration factor appears, in consideration of measures to mitigate the possibility of deterioration in financial viability and influence at the time of occurrence (Risk protection plan), or plans to prepare against deterioration in financial viability (Contingency plan). As a result, risk allocation for the parties concerned is changed, and how to cover risks or set up mitigations measures (protection) are arranged through negotiations.
Communications between persons are carried out verbally and nonverbally. Verbal communications are in the form of oral and written messages. Oral communications can be carried out through dialogues, meetings, negotiations, presentations, or telephone conversations where the main part of the information is transmitted through vocal signals. Written communications can be realized through documents in the form of letters, instructions and orders, and regulations and statutes when one person transfers signals to another person in written form.
The complexity of the contract will determine how extensive the contract negotiations will be. Simple contracts may have predetermined, nonnegotiable elements that only require seller acceptance. Complex contracts may include any number of elements, including financing options, overall schedule, proprietary rights, service level agreements, technical aspects, and more. In either case, once agreement is reached and the negotiations are finished, the contract is signed by both buyer and seller and is executed. You might see the term fait accompli show up on the exam. Fait accompli tactics are used during contract negotiation when one party tries to convince the other party discussing a particular contract item that it is no longer an issue. It can be a distraction technique, when the party practicing fait accompli tactics is purposely trying to keep from negotiating an issue and claims the issue cannot be changed. For example, during negotiations the vendor tells you that the key...
Everything being said, I don't think I can provide enough emphasis on the political side of project management. Projects fail for all the reasons I've cited, but they also fail because of poor, or no, management support, competing management philosophies, personal career agendas, and lots of other related reasons that you may have seen, overheard from fellow colleagues, or even personally struggled through. Where are the tools to build project support Glossy communications just aren't enough. You need to run a project like a political campaign with lots of behind the scenes negotiations and arm twisting to ensure that the metrics by which success will be determined are achieved.
On almost every project, the potential for conflict arises at some point. This is a natural trend. The project manager should work proactively with all staff to avoid possible conflicts that may arise. In the event of a conflict, the project manager should be aware that talking can only resolve so much. For situations where conflict cannot be resolved through negotiations or arbitration, it is recommended that the identified individuals be separated or be removed from the project.
Effective problem solving requires negotiation and influencing skills. We all utilize negotiation skills in one form or another every day. For example, on a nightly basis I am asked, Honey, what do you want for dinner Then the negotiations begin, and the fried chicken versus swordfish discussion commences. Simply put, negotiating is working with others to come to an agreement.
A further important (but often neglected) aspect of ownership assessment timing is the time allowed for tenders and contract negotiations. In particular, bidding contractors ought to be given sufficient time to price for the uncertainty they will be expected to carry. This issue is discussed in more detail in Chapter 16.
Figure 4-2-12 below shows that evaluation of financial viability also has the possibility of exerting influence on the framework of the overall project and negotiations of conditions for risk allocation. (2) Preparation of cover or cushion against the occurrence of certain factors change of conditions through negotiations, change of risk allocation
IT should understand the business and remain plugged in. Things change hourly during and after negotiations. Keeping up to date with the business can happen through formal status meetings or through informal talks with the project lead and sponsors. The business area should direct and lead the negotiations. While it is the responsibility of IT is to benefit the business, there are other ways to provide necessary input to the business area.
If workarounds as mentioned above do not function effectively and a conflict has occurred, negotiations should be made with other party based on the contract. Contracts specify clauses on penalty, cancellation, waiver, force majeure, and, in the case of international projects, regulations for applicable laws and place for arbitration. Project managers should be familiar with these aspects of the contract. If necessary, the lawyer in charge of the project should attend negotiation meetings or all negotiations should be entrusted the lawyer.
Whether or not the contract provides for the vendor's payments to be tied in to its performance criteria, it is essential for the performance report results to be communicated regularly and systematically to the client's management. The contractor should be thanked for meeting or exceeding set standards, and must be reminded of situations where the results criteria have not been met. If the performance is less than satisfactory a few times and the vendor is not brought to account, the contractor will not be motivated to hit the target. Thus, it is important to let the vendor know that the client is aware of the deficiencies and expects them to take corrective measures. Careful records of the deficiency and copies of the reminder notices are important to keep, so that if the situation becomes a larger issue, the historical facts are documented for reference in discussions and negotiations about corrective action. The client has one advantage in its pressures to the contractor to meet...
Fait accompli is a tactic used during contract negotiations where one party convinces the other that the particular issue is no longer relevant or cannot be changed. 19. B. Procurement negotiations, a tool and technique of Conduct Procurements, can become its own process with inputs and outputs for large or complex projects.
The concept of risk allocation is determined through negotiations among stakeholders and is confirmed in the form of a contract. A means to determine the allocation of risk concerning a project is a contract and various contractual rights and obligations held by the project company serve as security on the loan contract.
It should be emphasised that our recommendation to select financial return as the variable to be optimised only holds for the final stage of the Open Design process. At intermediate stages, in particular to facilitate negotiations among crucial stakeholders, other variables are chosen in the objective function to show the effect thereof to stakeholders. They then can better decide on possible concessions regarding the constraints assigned to them. This will be elaborated in Section 7.2, Multiple Objectives.
The integration of projects into a corporate portfolio has implications for corporate ethics and accountability. As the recent Enron case indicates, the source of Enron's problems in accountability and abuse of reporting accounting were grounded in part in the lack of an integrated project accounting system. Enron was a classic multiproject corporate environment. As such, top management had direct and continuous contact with the many natural gas project investments and projects in the company in fact, they created many of these projects in their negotiations with their many potential customers, for instance, utilities, manufacturing plants, communities, and the like. Some top managers were paid bonuses based on profits attributable to individual projects they generated.
The business case should be routinely updated to reflect any change to the project, should new risks be identified. It is true that much time is spent on the business case, but this ensures proper planning and coordination. Therefore, the business case gives a clear picture of what is to be delivered. At the start of a project, the product specification is drawn up, which reduces the risk of delivering the wrong product. Although the PRINCE2 methodology does not directly deal with social or soft management skills, such as negotiations, presentation techniques, coaching, or leadership, it is necessary for a project manager to possess these skills to
Everything in life is negotiable, and in slow times for the suppliers, negotiations can be favorable for you. If you are offered a good deal, or you just plain negotiated the deal of a lifetime, get it in writing as fast as you can and get the job done. You'll look good for negotiating a good contract, look better when your project is running like a precision clock, and look great when you bring the project in on time and under budget. That is the plan, isn't it
This procedure is, by nature, iterative and unsatisfactory in the sense that not all stakeholders are treated equally. Only a few have to give in. Where should we draw the line for crucial stakeholders' At three, four or five The higher their number, the more complicated the negotiations will be. We therefore recommend asking each stakeholder to specify three values instead of one for the constraint assigned to the stakeholder A sensitively analysis can be made to establish which constraints are crucial. In this way, a lot more insight can be obtained before going into negotiations to change crucial constraints than in the case of an analysis based on single values.
How would you recommend that CCC approach the negotiations for the software development vendor contract 4. The CCC procurement team should approach the software development negotiations by making sure they have a well-managed approach. Since the work itself is not well defined CCC wants to create a good relationship with the vendor for possible joint selling of the product, the negotiation should be a forum to create the good relationship and mutually beneficial agreements. CCC might ensure that meetings and statuses are required in the contract administration to help systemize the communication that needs to take place be' the companies.
The lack of a good relationship between the business and IT areas often figures prominently in the problems that arise when IT is left out of alliance negotiations. In the past, the data processing (DP) staff members were the only employees who knew anything about computers. The DP operation often featured a mainframe hidden in a basement corner. The computer performed batch operations, with viewing capabilities only during the day.
The exact figures set for the target and ceiling price, and the sharing ratio between the client and contractor will be influenced by the allocation of risk within the contract itself, who is best placed to manage the risks and the outcome of negotiations. For example, if the incentive fee contract allocates the great majority of risks to the contractor, it may be appropriate for the target and ceiling prices to be set quite high or for the sharing ratio for profit and loss to favour the contractor as a form of consideration for taking on that risk. The reverse might be the case if the contract allocates risks substantially to the customer. An example of risk-sharing in an incentive contract is discussed in Chapter 22.
Project managers, on the other hand, accept the charter as their marching orders, developing a scope statement and an estimate of resources that corresponds. Now it often comes to pass that the project manager discovers that the available investment comes up short of the resources estimated, given that the full scope is embraced. Negotiations begin, but in the final analysis there usually remains a gap between capability and capacity on the project side and the value imperatives on the business side. What to do The answer is take a risk. How much risk Only as much risk as is necessary to balance business needs and values on the one side with project abilities and needs on the other side. Who takes this risk The project manager the project manager is the ultimate risk manager. 141
The curves represent the Pareto set of solutions of the LP model. They can be used in negotiations among stakeholders. For instance, surrounding villages could agree on a tax charge to them to keep the occupancy of the airbase at a somewhat lower level than according to the economic constraint (average flying cost per flight movement) required by the government. A justifiable value for that constraint is the average cost per flight movement corresponding with an occupancy for which maintaining the airbase just remains the best option.
An advantage of this procedure is that stakeholder's negotiations are limited to feasible solutions. A disadvantage is that stakeholders cannot express their preferences a priori, because their willingness to make concessions depends on how much their concessions influence the feasibility of the project in combination with concessions from other stakeholders. Preference modelling does allow stakeholders to express their preferences a priori, but does not take into account feasibility due to constraints imposed by other stakeholders.
Table 2 exhibits the breakdown of elements, which explains the top five reasons resulting in failures. Apparently, the primary player in the scheme stage is the owner, but open to the contractor, who may make use of the place for dialogue, proposal and negotiations prior to contracting. However, complexity could neither be solved within the issue of definition (Loucopoulos and Karakostas, 1998), nor the scope sharing by parties.
You have run into a minor snag with the World To You (W2U) ISP. They have come back to you to state that they require an additional 200 per month to maintain a mirror site, though you specifically stated in your original negotiations with them that you required a mirror site and they included it in their original bid. You set up a meeting with them and take the bid with you to iron out the difficulty.
A common problem encountered with project scope is that the majority of initial client discussions and negotiations take place with the client and marketing executive and are carried out in isolation from the solution team. The ultimate goal of marketing executives is to market and sell solutions to clients, and when a solution is agreed upon, the client is left with the belief that it will get that specific solution. However, the technical details are left up to the solution team to resolve, and in many cases, the scope of the project changes. The project manager should work closely with the marketing manager and business analyst in order to negotiate the complete scope of work. Remember that if the scope is left untouched and uncontrolled, it is probable that your project will come in over budget and behind schedule
Most, if not all, contracts also specify where the arbitration or legal proceedings arising from a dispute will be administered. Typically, software vendors want disputes to be resolved in the vendor's home state, and you (the buyer) probably want them to be handled in yours. This can be an important point in contract negotiations because the available remedies and penalties under contract law can vary from state to state. Be sure that you can live with whatever jurisdiction you agree to use. Your employer or sponsor may have strict guidelines regarding these issues, and you should always be aware of their needs.
It should be noted that the three estimates asked from experts for risk assessment of the investment are of a different nature than the three values asked from stakeholders for the constraints in the LP calculations. The former give the range in which a variable, such as construction cost, must be expected. The latter determine the uncertainty related to stakeholder negotiations.
There are several arguments in favour of including more dwellings in the plan. In the current proposal, dwellings are only situated in those parts of the building complex (the two towers on top of the office block) where they do not have a direct view on the public areas. By situating dwellings high up in the air, they do not contribute to the safety of the area. Arguments to realise more dwellings in the building complex will especially be brought in by the parties Dutch railways and the municipality in the negotiations, because they are mostly concerned with the quality of the public areas. It could be worthwhile for the safety of the area to situate dwellings in the lower part of the complex, where they are nearer to the flow of passengers.
If project abort or not is the issue in a project's deliver stage, a quite different approach to the SHAMPU focus phase is appropriate, akin to those discussed earlier in the design and conceive stage contexts. However, prevention is better than cure. In particular, if risk management was introduced back in the define or design stage, performance will be defined in terms of 'targets', 'expected values', and 'commitments'. Modification of product performance achievement may be possible and effective, but modification of performance criteria can also be addressed within a framework that facilitates trade-offs because it was used to establish commitments in the first place. In particular, client contractor negotiations may involve 'user groups' within the client organization in useful dialogues that go well beyond which 'commitments' to relax, considering where ambitious 'targets' might be approached or exceeded to capture opportunities. For example, it may not be possible to achieve a...
PSP training will help you to build the needed planning skills. Planning is the first step in the PSP for three reasons. First, without good plans you cannot effectively manage even modestly sized software projects. Second, planning is a skill that you can learn and improve with practice. Third, good planning skills will help you to do better software work. Later, on a team, the TSP shows you how to prepare for and handle the plan negotiations with management.
Next, the coach asked how long they thought the job would take. After all, he pointed out, in most negotiations, people don't usually accept the first bid. Management has made an initial nine-month bid. Now you should make a counteroffer. However, if you merely guess at a date, you won't be able to defend it. Then management will insist on their own nine-month guess. He told the team members that they must produce a plan that they could defend. If the plan was longer than nine months, they would know why and be able to defend it.
Legitimate change orders that have been initiated by the owner and the design team for scope change or for inconsistency in the drawings are the bane of every CM GC. As noted in Chapter 17, the process for dealing with change orders is extremely time consuming for the CM GC. Make sure that all requests for a change by the CM GC are in writing. Do not accept verbal requests. When submitting the cost for the change order, a description along with any drawings, sketches, and specifications should be provided. A detailed cost breakdown (see Chapter 17 for an example of a cost breakdown) must accompany the documents. It should be noted that all costs (direct and indirect) must be included (general conditions, bonding, fee, insurance, security, trucking). Disputes usually arise over the cost and schedule delays associated with a change request. That is why it is important to give as much detail as possible. As with the site conditions, it is imperative that if the change order creates a...
A rigid mass production system leads to a highly structured, centralized, and inflexible command and control management system. The management hierarchy in a mass production environment is generally several levels deep. Approvals for changes have to flow up and down this chain of command. Departmental boundaries, not process requirements, determine where processes initiate and terminate, resulting in processes being chopped into inefficient subprocesses. Examples of this phenomenon in most mass production environments include the processes of maintenance, quality, procurement, design and engineering, customer service, scheduling, and shipping and invoicing, all of which snake their way through department after department, in-basket after in-basket, paper queue after paper queue, until they are handed off to completion. While all of this is going on, orders, projects, purchases, and deliveries are expedited, requiring various search missions for paper, negotiations for priority, and...
As for the second agenda, he had been convinced that the prices of parts and components traditionally procured locally, mainly through Nissan's group companies , were too expensive for a European standard. He tried to make more efficient use of the market mechanism in the bidding awarding process. Hence, many existing suppliers in the Nissan group were either thrown out or fell to the similar positions with non-group companies with a relatively small number of exceptions, which made a great contrast with the cases of Toyota and Honda. He also changed in the contract negotiations with steel mills the long-term procurement share of steel, namely, increased the share for NNS and decreased that for JFE, the traditional main supplier to Nissan. Steel suppliers in an oligopolistic industrial structure in Japan decide the scale of their long-term equipment investment in due consideration to their commitments to their clients.
To ensure that willingness to bear risk is well founded, explicit consideration of risks allocated between the contracting parties is desirable, preferably at an early stage in negotiations or the tendering process. In particular, contractors ought to be given an adequate opportunity to price for risks they will be expected to carry. Unfortunately, the following scenario for a construction project is often typical.
Two parties are generally involved in a commitment negotiation. One party, the buyer, describes what is desired and tries to convince the other, the supplier, that the commitment is important and worthwhile but not that hard to meet. The supplier then responds with a proposal. If the proposal does not completely satisfy the buyer, the parties negotiate until they either agree or break off negotiations.
At the other end of the spectrum of matrix organization is the weak matrix, one more like the functional organization. A project might, for example, have only one full-time person, the PM. Rather than having an individual functional worker actually assigned to the project, the functional departments lend capacity to the project. The PM might require engineering assistance, special software, product testing, or any other service that would be provided by the relevant functional unit. For example, the PM of a project set up to create a new database for personnel might request that the basic design be done by the systems analysis group in the administrative division. The personnel job would then be added to the normal workload of the systems group. The priority given to the design might be assigned by senior management or might be the result of negotiations between the PM and the head of the systems group. In some cases, the systems group's charges for the job might also be subject to...
I need to update my plans.'' This level of communication creates a team. Team members are forced to understand interactions and negotiate solutions with other departments. You will find that members will say things like If I break this action into two stages, I can give you what you need in May, so you can have your deliverables available on time.'' If the Project Manager creates a schedule without team interaction these negotiations do not take place until there is a crisis. Schedules created using the interactive forum method tend to be extremely accurate.
Because of the increased overhead rate, Greyson maintained a minimum staff to prepare for contract negotiations and document preparation. To minimize costs, the directors of engineering and program management gave the Neptune program office the authority to make decisions for departments and divisions that were without representation in the program office. Top management had complete confidence in the program office personnel because of their past performances on other programs and years of experience. After lengthy consideration, Greyson decided to maintain its present position and retain the thirty-five Cameron employees by assigning them to in-house programs. The Neptune program office was still maintained for preparations to support contract negotiations, rescheduling of activities for a shorter program, and long-lead procurement. In May 1976, contract negotiations began between the Navy and Greyson. At the beginning of contract negotiations, the Navy stated the three key elements...
The decision about which of these courses of action to take, borrowing or de-scheduling, can be made by adopting the same logic used in Chapter 7 when we discussed the budget negotiations between subordinate and superior. The decision to borrow or deschedule depends on our estimate of the impact either action would have on the task under consideration, given its current state of completion. Figure 9-14 shows two different versions of the project or task life cycle discussed in Chapter 7. If the task is a Type 1, borrowing would minimize the damage to the task unless it is quite near completion and we are willing to accept the outcome in its current state, in which case we can deschedule. If the task is Type 2, borrowing is
Feeling resentful and disillusioned about people. This situation occurs most frequently in the project manager's dealings (i.e., negotiations) with the line managers. During the planning stage of a project, line managers often make promises concerning future resource commitments, but renege on their promises during execution. Disillusionment then occurs and can easily develop into serious conflict. Another potential source of these feelings is when line managers appear to be making decisions that are not in the best interest of the project.
An IdeaBridge client was in negotiations to sell their e-commerce company with a unique software application to a large Asian conglomerate that needed to use and integrate the IdeaBridge client's application in order to quickly establish a new market position. This project was a high-profile initiative, and it was vital that the solution technology be integrated, checked, marketed, promoted, and launched within a three-month period.
Who should be in the negotiations for each contract, and what might some general negotiation points be 5. Marcus, Sheila, and appropriate technical subject matter experts from CCC should be in in the negotiations for the three technical contracts. The marketing contract may need jus Marcus and Sheila involved, with a lawyer who is an expert in marketing contracts. In all c the procurement department of CCC and lawyers with particular industry expertise should involved.
In this process, the executives of each party are involved in the negotiations. The lawyers for each of the affected parties prepare briefs and summaries and then present these results to the executives. A neutral party selected by the executives' acts as a mediator between the disputed parties. The rationale here is that the final decision makers are presented with the facts. Hopefully, each executive understands the consequences of not resolving the issues.
The word expectations has probably been abused and misunderstood more than any other word in the project culture. To many project managers and systems analysts, expectations are simply those elements of the requirements that were not specified by the client. To others, expectations are the difference between what the client wants and what the client really needs. For the battle-hardened project manager, expectations are a wish list that begins a series of hard negotiations to reduce the expectations to minimum requirements. Finally, expectations are a hopelessly vague set of requirements that defy documentation.
The authors mention the importance of negotiating the quality, budgeting, and scheduling with the project's owner. Elements of every project and even every activity of life involve negotiation. Project managers always have to conduct negotiations in a project. What are some strategies for negotiating as a project manager
Scenario Vision is defined - users do not agree. Consensus cannot be reached. Negotiations break down and users retract their support from the project. Resources Affected All resources will be affected - if user support is withdrawn, there is no justification for the project and resources will also be withdrawn. If negotiations continue, this could cause financial loss and scheduling delays.
In stiff competition, the contractor is likely to accept the desired requirements of the owner over his own capability. Landscape is the new methodology to see the sharing view by way of simulation gaming (Deguchi, 2004). In the R&D world of manufacturing and assembly, the three-dimensional CAD is already an essential tool in the concurrent-type engineering of complicated hardware like aircraft assembly and the new design of cars. Regardless of hardware and software, the owner's view is essential to see to risks and to make a balanced assessment for control. Figure 1 is the general outlook of an assessment process to clarify the grey zone in so-called failure . Unless there is critical failure of technology, it shows channels whereby settlements could be reached between the parties by negotiations in the business world. In fact, success or failure varies by the positions and roles in subjective evaluation. The owner has to make maximum effort for recovery of investment, while the...
Contract negotiations take place after the vendor has been selected. This is true even in a bid situation. The seller and the buyer negotiate over the specific terms and conditions of the contract and can even adjust the pricing. Care must be taken here lest the unsuccessful bidders protest the adjustments and force a rebid of the contract.
Competitive dialogue Pre-bid negotiations initiated by a promoter who, not having defined his project requirements in any detail, invites outline proposals from contractors for a design and build project as part of the pre-qualification stage for prospective bidders. Criticisms of the procedure are that the promoter gets useful advice on design alternatives without paying a proper design fee for same, and that the promoter may choose the best design submitted by one contractor but use another contractor to execute it.
Binational projects are products of hard political processes that involve long and difficult negotiations. In most cases each side has a different perception about the adopted solution, and during the project phase each side may try to win back some of the points initially lost at the negotiating table. The final diplomatic agreements are lengthy texts that are usually rich in political rhetoric and poor in operational and technical considerations. This sets the stage for conflict during the implementation phase of the project. The need for strong communications management becomes immediately evident in such a setting. An additional complicating factor is the fact that diplomatic documents contain writing between the lines and are consequently not easily decipherable by project managers and engineers.
A better approach is to partition each milestone into smaller pieces. Commonly referred to as inch-pebbles, these bits and pieces afford better control of the unknowns and easier monitoring of progress. The sum of many small estimates is more reliable than one large estimate and is also harder to shave down during scheduling negotiations.
The functional manager, however, may have only fifteen people available for immediate reassignment, with the remainder to be either transferred from other programs or hired from outside the company. The same situation occurs during activity termination. Will project engineering still require twenty-two people in August 1984, or can some of these people begin being phased to other programs, say, as early as June 1984 This question, specifically addressed to support and administrative tasks projects, must be answered prior to contract negotiations. Figure 14-9 indicates the types of problems that can occur. Curve A shows the manpower requirements for a given department after time-smoothing. Curve B represents the modification to the time-phase curve to account for reasonable program manning and demanning rates. The difference between these two curves (i.e., the shaded area) therefore reflects the amount of money the contractor may have to forfeit owing to...
In Open Design problems, as in nearly all architectural and urban design problems, not only the quantities of and the preferences for the resources to be allocated play a role, but also the location of the resources in the architectural and urban space. A lot has been studied and written in the domain of architectural design methods about this spatial dimension of architectural and urban resources. In this chapter we will explain mathematical techniques and tools for negotiations on the spatial dimension of resources. We will do this within, and as an extension of, the mathematical framework for Open Design negotiations on quantities and preferences. Since the techniques and tools of this chapter are an extension of the basic Open Design tool, the linear programming model with negotiable constraints, we will start with the general LP model from Chapter 1 and extend this numerical tool step by step with a geometrical component.
Weighting systems assign numerical weights to evaluation criteria and then multiply them by the weights of each criteria factor to come up with total scores for each vendor. This technique provides a way to quantify the data and assist in keeping personal biases to a minimum. Weighting systems are useful when you have multiple vendors to choose from because they allow you to rank the proposals to determine the sequence of negotiations.
The need for contract negotiation usually represents customer acceptance of the technical solution, and also indicates the customer's desire to achieve an adjusted price for the proposed effort. The contract negotiation process can be simple or complex, as is appropriate to the level of the proposed project effort and business importance to both the customer (buyer) and the relevant organization (seller). Some basic steps for conducting contract negotiations from the seller's perspective are presented below, and the Plan the contract negotiation. Less-formal contract negotiations, usually one-on-one discussions with the customer, generally require less preparation but the authorized latitude to adjust proposal offers must be known by an authorized negotiator. Conversely, more-formal and more-complex contract negotiations warrant additional preparation, usually by a small team of experienced negotiators, ideally including the project manager and possibly the PMO. The following are a...
As mentioned above, averting conflict or resolving an issue that has already occurred is always accompanied by negotiation. The essence of negotiation lies in asserting one's interests, bargaining with the other party, and persuading the other into accepting one's position. However, being too aggressive can trigger resentment, and even if agreement is made, may leave friction. Therefore, perfect negotiation is where both parties have a common goal and reach agreement, and end negotiations favourably.
Problems can occur when negotiations stretch over a period of time, if each party does not wait for the other to respond before taking the next action. Since many agreements move forward before the paperwork has been completed, there is considerable possibility for disagreements or misunderstandings to occur. If one party provides service or delivers the product before the contract is complete, or if both parties independently start to mark up the contract, in order to save time, there is obvious potential for misunderstanding. C. Wink of the Eye Rule In this case the court chooses one point in time during the negotiations and declares the conditions in this document to be the contract.
6 This is where negotiations become complex. If Fred doesn't believe you're willing to use your options, he will see your BANTA differently. He may tell you so ( You won't let me sit here and die, will you ). Negotiations become complex when people bluff, lie about their interests, or lack trust in the other party. In less ridiculous situations, things tend to normalize as BANTAs are executed. If a business really can get a better deal, eventually they will. If they can't, they'll give in.
Negotiating for the type of contract is a two-way street. The contractor desires a certain type of contract to reduce risk. The client desires a certain type of contract to reduce costs. Often the client and contractor disagree. It is not uncommon in industry for prospective projects to be canceled because of lack of funds, disagreements in contract negotiations, or changing of priorities.
The key tools and techniques in this area are Negotiation and Virtual Teams. Negotiation is always required for sought-after resources within an organization. PMs frequently refer to their negotiation tactics with line managers for key resources as ''horse trading'' (facetiously, of course). If the project is high visibility, this in turn can give key resources visibility to upper management, and the possibility of promotion or a generous bonus can play into the negotiations.
Checklists are quick to use, and they provide useful guides for areas in which the organization has a depth of experience, particularly for projects that are standard or routine in nature. Sometimes these take the form of standard procedures that have a similar effect. For example, many organizations have checklists for such frequent activities as tendering or contract negotiations, designed to avoid or minimize the risks in those activities. Often, the checklists are part of the organization's quality assurance procedures and documentation.
However, since the procurement work starting from an inquiry for estimation, negotiations on selecting suppliers, contract, urging, inspection, delivery instruction, receipt of delivered goods, through to inspection and payment, has a great share of the project work, the use of EC results enables the work related to procurement in a project to be reduced, leading to the reduction of a great deal of cost.
In fact, a person was selected and trained to operate it who had had no previous welding experience. The reason was quite simply that management knew that experienced welders would find it difficult, if not impossible, to ignore their own training and years of experience and operate the machine accordingly. Training of a new person to the necessary proficiency to operate the robot required about six months, although the robot could be operated adequately with one month's training. On the other hand, training of a manual welder to perform simple seam welding required about five to six weeks. Training a welder to interpret engineering drawings and competently assemble a variety of pieces required about one year. The existing work force of manual welders were promised during negotiations that only new work would be given to the robots.
By March 1993, Federal Express, Airborne Express, and UPS (reluctantly) had agreed to house operations at DIA after the city pledged to build facilities for them at the south end of the airport. Negotiations were also underway with Emery Worldwide and Burlington Air Express. The belly carriers, Continental and United, had already signed on.
For a 2-year project, for example, inflationary factors would have to be considered, such as availability of material and associated price increases and labor contract negotiations. Commodity prices are continuing to increase due to world demand for various materials. The price of oil affects every component of the construction industry. Thus, the price of oil has to be continuously watched when preparing costs for a project.
There are many problems when IT is not involved from the outset of negotiations through finalization. When IT does not understand the entire strategy, it cannot provide the most effective, right-sized solutions. For example, if the alliance is already proven, and needs to be set for a long-term relationship, IT should invest considerable time so things are done correctly from the beginning. However, if the alliance is merely to be tested before the requirements are known, IT should invest less time, and the technology processes should be set up more quickly.
The development team has a road map and the agency project team has tools to assess and evaluate the software during every phase of the development. During the requirements phase, the agency's needs and wants are analyzed, and the technological methods and techniques for meeting the needs are determined and documented. There are formal presentations, weeks of scheduled reviews, negotiations, and compromise in order to stay within budget. In the end, there is a great ceremonial meeting where acceptance by the agency is given to proceed with the development of the system.
Certain financial contracts could negatively affect the planned project profits, which would result in a project coming in at a loss to the company. There are also some financial contracts that could be beneficial if project performance is achieved. This section describes the risks associated with each of the major types of financial contracts that I have often seen used on IT projects. Basically there are two main contract models to consider firm fixed price (FFP) and cost plus (CP) (also more commonly known as a time and materials contract). The CP model has a few variations that are applied depending on client negotiations, but all have been used. I shall not go into great detail about all the types of contracts that are available for a project manager to consider and understand, but I will highlight those that I believe are useful (see Figure 5.9).
Month per task are converted to dollars after multiplication by the appropriate labor rates. The labor rates are generally known with certainty over a twelve-month period, but from then on are only estimates. How can a company predict salary structures five years hence If the company underestimates the salary structure, increased costs and decreased profits will occur. If the salary structure is overestimated, the company may not be competitive if the project is government funded, then the salary structure becomes an item under contract negotiations.
Since 1968, Effective Negotiating has been the standard for negotiating strategies and techniques. In his Effective Negotiating seminar, Dr. Chester L. Karrass states They get what they want by negotiating better deals for both parties. 5 This is the basis for win-win negotiations.
Schedules typify another area where established groups may have to accommodate the newly formed project organization by adjusting their own operations. Most project managers attest that this adjustment is highly susceptible to conflict, even under ideal conditions, since it may involve a reorientation of present operating patterns and local priorities in support departments. These same departments might be fully committed to other projects. For similar reasons, negotiations over support personnel and other resources can be an important source of conflict in the project formation stage. Thus, effective planning and negotiation over these issues at the beginning of a project appear important. Disagreements over project priorities, schedules, and administrative procedures continue as important determinants of conflict. Some of these sources of conflict appear as an extension from the previous program phase. Additional conflicts surface during negotiations with other groups in the buildup...
Among other lessons, I learned from Hillel that diligence wins battles. If you make it clear that you are dead serious and will fight to the end about a particular issue, you force more possibilities to arise. People will question their assumptions if you hold on to yours long enough. You push people to consider things they haven't considered, and often that's where the answer lies. Even in disagreements or negotiations, if you know you're right, and keep pushing hard, people will often give in. Sometimes, they'll give in just to get you to leave them alone. Being pushy, provided you're not offensive, can be an effective technique all on its own.
In practice, it is customary to evaluate investment projects based on the net present value criterion. The maximum net present value of a time-constrained investment project can, e.g., be computed by using the steepest descent method for convexifiable objective functions discussed in Chapter 3. In literature, however, it is commonly accepted that often the discount rate to be applied (i.e., the required rate of return) cannot be determined with sufficient accuracy. Moreover, the project deadline may be subject to negotiations between the investor and his customers. In Section 6.4 we show how using the steepest descent approach, the project net present value can be represented as a function of the discount rate and project deadline. On the basis of this function, investment projects with uncertain discount rate can be evaluated for a variable project deadline.
Clearly, each step in this process must be accompanied by negotiation, and just as clearly, the negotiations must be nonadversarial. The entire concept is firmly rooted in the assumption of mutual trust between the partners and this assumption, too, requires nonadversarial negotiation. Finally, the article focuses on partnering when the partners are members of different organizations. We think the issue is no less relevant when the partners are from different divisions or departments of the same parent organization. Identical assumptions hold, identical steps must be taken, and interparty agreements must be reached for partnering to succeed. (Also see (3 .)
Once a project is in the execution phase some of the work of the project will be done in the functional departments. This means that the project manager must have good negotiating skills. The project manager must also be able to negotiate with the functional manager to arrange assignment of people to the project.
The major difficulty that project managers have is that the project team is not their line responsibility. Team members are assigned based on their expertise but report to other managers, which means that the project manager will have to exercise the best leadership skills and diplomacy to get the job done. The key is in the project planning activities that schedule resources to windows of time. It is here that the resource manager makes the commitment of people resources. Honoring that commitment within the time allotted reduces the incidence of problems. If the project manager remembers to keep the resource managers involved and aware of all project changes, negotiations will proceed better when circumstances warrant.
Sooner or later, the job of the project manager reduces to his or her ability to interact successfully with another individual. In the course of the project, the project manager will interact with the team, other project managers, business managers, functional managers, senior managers, the customer, outside contractors, and suppliers. These interactions will challenge all of the project manager's interpersonal skills as they relate to such areas as negotiations, conflict resolution, and problem resolution.
Always wanted to get a better deal but didn't have the needed negotiation skills? Here are some of the best negotiation theories. The ability to negotiate is a skill which everyone should have. With the ability to negotiate you can take charge of your life, your finances and your destiny. If you feel that others are simply born with the skill to negotiate, you should know that everyone can learn this wonderful skill.