Project Negotiation

Introduction:
The favored technique for resolving conflict is negotiation.
• Wall (1985) defines negotiation as “ the process through
which two or more parties seek an acceptable rate of
exchange for items they own or control.”
• Cohen says that “Negotiation is a field of knowledge and
endeavor that focuses on gaining the favor of people from
whom we want things.”
• Pareto-optimal solution:
The general objective of negotiation is to find a solution
such that no party can be better off without making
another party worse off by the same amount or more.
• During the negotiation process, an ethical situation often
arises that is worth mentioning. The ethics of the situation
require that each party in the negotiation be honest with
each other, even in situations where it is clear there will
not be further work between the two.
Project Partnering:
It is a method of transforming contractual relationships
into a cohesive, cooperative project team with a single set
goals and established procedures for resolving in a timely
and effective manner.
Project Chartering:
A project chartering is simply a written agreement between
the project manager and senior management and the
functional managers who are committing resources and/or
people to the project. The various members of the
partnering team sign a commitment to:
• Meet design intent
• Complete contract without need for litigation
• Finish project on schedule:
- Timely resolution of issues
- Manage joint schedule
- Cost resolution of issues
• Keep cost growth to less than 2 percent.
Scope Change:
No matter how carefully a project is planned, it is almost
certain to be changed before completion. No matter how
carefully defined at the start, the scope of most projects is
subject to considerable uncertainty. There are three basic
issues:
• Some change results as planners erred in their choice
of the proper goal for the project.
• Other changes result because the client/user or project
team learns more about the nature of the project
deliverable or about the setting in which it is to be used.
• A third source of change is the mandate. This is a
change in the environment in which the project is
being conducted. As such, it cannot be controlled by
the Project Manager.
Categories of Conflict:
The conflicts fall into three fundamental different categories:
1. Groups working on the project may have different goals
 and expectations.
2. There is a considerable uncertainty about who has the
authority to make decisions.
3. There are interpersonal conflicts between people who are
parties-at-interest in the project. (refer the figure below)

Project Conflicts by Category and Parties-at-Interest

Categories of Conflicts
Parties-at-Interest Goals Authority Interpersonal

Project team Schedules Technical Personality

Priorities

Client Schedules Technical

Priorities

Functional and Schedules Technical Personality

senior Priorities Administrative
management Labor Cost
Project Formation:
 In the initial stage of the project life cycle, most of the
conflict centers around the inherent confusion of setting up
a project in the environment of matrix organization.
 Even the project’s technical objectives, not clearly defined
or established, are apt to be understood only in the most
general sense.
 Moving from this state of semi-chaos to the relatively
ordered world of the buildup stage is difficult. To make
this transition, four fundamental issues must be handled,
although not necessarily in the order presented here.
1. The technical objectives of the project must be specified
to a degree that will allow the detailed planning of the
buildup stage to be accomplished.
2. Commitment of resources to the project must be
forthcoming from senior management and from
functional managers.
3. The priority of the project, relative to the priorities of the
 parent organization’s other projects, must be set and
communicated.
4. The organizational structure of the project must be
established to an extent sufficient for the Work Before
Schedule (WBS) and a linear responsibility chart, or its
equivalent, to be prepared during the stage of the life
cycle
Some Requirements and Principles of Negotiation
• The word “negotiation” evokes many images. But as we
noted none of the usual images is strictly appropriate for the
project manager who must resolve the sorts of conflicts, we
have considered in the previous section.
• The key to understanding the nature of negotiation as it
applies to project management is the realization that few of
the conflicts arising in projects have to do with whether or
not a task will be undertaken or a deliverable produced.
• One requirement for the conflict reduction/resolution
methods used by the PM is that:
 they must allow the conflict to be settled without irreparable
harm to the project’s objectives.
• It is a requirement of all conflicting parties to seek solutions
to the conflict that not only satisfy the needs of other
parties to the conflicts, as well as the needs of the parent
organization. In the language of negotiation, this is called
a win-win solution.
• Fisher and Ury have developed a negotiation technique that
tends to maintain three requirements. They call it
“principled negotiation,” that is, win-win. The method is
straightforward; it is defined by four points
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.
• Fisher and Ury have had some success with their approach
“principled negotiation,” in the Harvard Negotiation Project
Summary:
 Negotiation within the firm should be directed at obtaining
the best outcome for the organization, not winning.
 There are three traditional categories of conflict:
goal-oriented, authority-based, and interpersonal.
 There are three traditional sources of conflict. They are the
project team itself, the client and functional and senior
management. We added the problem/discipline-orientation
of people working on the project.
 Critical issues to handle in the project formation stages are
delimiting technical objectives, getting management
commitment, setting the project’s relative priority, and
selecting the project organizational structure.
 The total level of conflicts is highest during the project
buildup stage.
 Scheduling and technical conflicts are most frequent and
serious buildup and main program stages, and scheduling
conflicts in particular during the phase-out stage.
 project negotiation requirements are that conflicts must be
settled without permanent damage, the methodology must
foster honesty, and the solution must satisfy both individuals’
and the organizations/s needs.
 One promising approach to meeting the requirements of
project negotiation is called principled negotiation.