Copyright 2009 John Wiley & Sons, Inc.

Chapter 4

Negotiation and the Management of Conflict

The Nature of Negotiation

The process through which two or more parties seek an acceptable rate of exchange for items they own or control.

Parties to a negotiation often see themselves as opponents

“If they win, I lose” Project manager must avoid this on projects

as all stakeholders are interrelated

Principles of Negotiation

Negotiation skills are the biggest skills needed by project managers

Must negotiate to get the projectMust negotiate with line managers to

get the work doneMust negotiate to solve conflicts

Project Negotiation Must…

Must resolve conflict without major damage to project objectives

Must foster honesty between the negotiators

Since negotiators are not enemies, must seek a mutually-agreeable solution

Partnering, Chartering, and Change

1. Use of subcontractors

2. Use of input from two or more functional units

3. Management of change

Partnering

Project firm and subcontractors are at odds on a project

Project firm wants high quality and low cost

Subcontractors want high profits and maximum flexibility

Project Partnering

A method of transforming contractual relationships into a cohesive, cooperative project team with a single set of goals and established procedures for resolving disputes in a timely and effective manner.

Steps to Project Partnering

1. Project firm must commit to partnering

2. All parties must implement the process

3. Joint review when finished

Project Firm Commit to Partnering

Select subcontractors to includeJoint team-building exercisesProject charter

Four-Part Agreement

1. Joint evaluation of project progress

2. A method for resolving disagreements

3. Continuous improvement

4. Support from senior management

Joint Review

Setting this up requires a lot of negotiation

This negotiation cannot be adversarial in nature

It has worked well in some settings

Chartering

Project Charter - A written agreement that outlines the specifics of the project

Usually between all of the groups providing people or other resources to the project

Agreeing to a charter implies members will not make changes without consulting the others

Scope Change

The initial assessment was wrongProject team learns more about the

projectChange is mandatedClient ask for changes

Changes Imply Changes

BudgetSchedulePerformancePriorities

Conflict and the Project Life Cycle

1. R&D

2. Market introduction

3. Growth

4. Maturity

5. Deterioration

6. Death

Project Life Cycle

1. Formulation

2. Buildup

3. Main program

4. Phase-out

1. Conceptualization

2. Planning

3. Execution

4. Termination

Sources of Conflict

1. Different goals and expectations

2. Uncertainty about authority

3. Interpersonal conflict

Project Formation

Conflict centers around the confusion of starting a new project– Many of the policies and procedures have not yet

been formed– The objectives of the project are not yet finalized

Conflict cannot be avoided at this phase In fact, much of this conflict is good conflict

Handling Project Formation Conflict

1. Technical objectives must be set

2. Senior management and line managers must commit to the project

3. The priority for the project must be set

4. Organizational structure of project must be established

Project Buildup

Conflicts tend to be technical in natureConflicts tend to be between project

manager and line managers

Main Program

Many conflicts are over schedulesSome tasks will be late and the

schedule will have to be adjusted or the time made up

The more complex the project, the more sources of conflict there are

There are also technical conflicts

Project Phase-Out

Deadlines are a major source of conflictTechnical problems are rarePersonality conflicts will be a big deal

due to time pressures

Project Negotiation Must…

Must resolve conflict without major damage to project objectives

Must foster honesty between the negotiators

Since negotiators are not enemies, must seek a mutually-agreeable solution

Principled Negotiations

1. Separate the people from the problem

2. Focus on interests, not positions

3. Before trying to reach agreement, invent options for mutual gain

4. Insist on using objective criteria