Professional Documents
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Objectives:
• To provide the participants with the nature and objectives of
negotiation process in engineering fields.
• To train the participants on negotiation planning and
negotiation tactics.
• To enhance the participants experience by discussing some
real negotiation problems and how to deal with them.
Course Outline:
1. Negotiation overview 2
2. Negotiation management 21
3. Negotiation for selling & buying 39
4. Negotiation for salary 49
5. Conflict management 64
6. Negotiation for project managers 70
7. Negotiation case studies for project managers 104
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Negotiation Skills for Project Managers
Chapter 1: Negotiation Overview
Negotiation is
interaction between two or more parties
to achieve certain goals or targets, &
to overcome certain constrains or problems
Negotiation
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Negotiation Skills for Project Managers
Robert Estabrook: ‘He who has learned to disagree
without being disagreeable has discovered the most
valuable secret of a diplomat’.
PRINCIPLES OF NEGOTIATION:
• Even when two sides are far apart on major issues, there
are always things they can agree upon.
A Simple Example:
• Two agents: A and B
• Agent B wants to buy a bicycle from agent A
• Start:
agent A 150
agent B 50
• What next:
agent A ?
The Flinch
- Draw back at initial propoal
The Deadline
- Produce results
The Nibble
- Small “something extra” that is sought
The Concession
- Valuable to other, little or no value to you
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Negotiation Skills for Project Managers
?How
Team work: Individuals Team
Lose / Lose
(1) (2)
Individuals Targets
(3) (4)
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Negotiation Skills for Project Managers
NEEDS & WANTS:
WANTS
Responsive frequently an emotional response
Costly and are therefore often beyond
Negotiable reason.
Alpha Point
Logical
NEEDS
Who Negotiates?
Everyone!
Children when they ‘beg’ for something: sweets or late to bed
Friend, Wife, etc.
Owner, Contractor, etc.
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Negotiation Skills for Project Managers
What is the Aim of Negotiation?
NEGOTIATION CRITERIA:
• Issue must be negotiable
• Negotiators must be interested in both giving and taking
• Parties must trust each other and the negotiation process
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Negotiation Skills for Project Managers
Negotiating Orientation (structures):
implement solution(s)
follow up
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Negotiation Skills for Project Managers
Negotiating Styles:
Quick
Deliberate
Middle is compromise
Quick Style:
Negotiate in a hurry
Use when you won’t negotiate with
these people again
Get the best deal without regard to the
other side’s “win”
Deliberate Style:
Use when long term relationship
likely
Involves cooperation and relationship
building to reach agreement
Needs much prep, hard work
May move in fits and starts
Outcomes:
Realistic
Both sides satisfied, win/win situation
Usually results from deliberate style
Acceptable
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Negotiation Skills for Project Managers
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Negotiation Skills for Project Managers
Principles:
There are no rules
Establish an agenda
Everything is negotiable
Ask for a better deal
Be creative
Learn to say “NO” yourself
Versatile
Motivated
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Negotiation Skills for Project Managers
The Art of Negotiation:
o Identify your power
o Decide what you are willing to concede
o What are the consequences of disagreement
o What can you offer to allay the other party’s fear?
o Is the issue tied to others that you can make offers
based on?
o Can you bring others in on the negotiation?
o Think about tone and body language – remain
courteous!
Do Your Homework:
Know what you want
Know the negotiator
What’s the negotiator’s model?
What does the negotiator want?
Double Think:
What do you want? (think)
What does the negotiator want? (double think)
What does the negotiator think you want? (triple think)
Where’s the middle ground?
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Negotiation Skills for Project Managers
Build Trust:
Tell the truth
Respect confidences
Honor your commitments
Be clear
Be open
Be firm
External Listening:
Body language – yours and theirs
Non verbal messages:
Facial expressions
Voice inflections
Eye movement
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Negotiation Skills for Project Managers
LEAVE SOMETHING ON THE TABLE:
Once you've made an offer, if the other party doesn't accept it,
don't make another offer. Wait for a counteroffer. Don't lower
your own demands without getting them to lower theirs
TAKE A RISK:
Sometimes it's risky not to take a risk. The trial lawyer who says
he or she never lost a case settles too easily. Don't let yourself be
bluffed by artificial deadlines or "final offers." And don't run
bluffs, either. If you are called and you don't follow through, your
credibility is shot.
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Negotiation Skills for Project Managers
USE EXPERTS:
Don't let the other side force a deal. The more time you give
yourself, the more information you can gather about their true
needs.
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Negotiation Skills for Project Managers
BATNA: Realistic alternatives instead of strict limits.
This method consists of three steps in order to overcome
unrealistic and un-flexible limits:
Step (1): List everything you could do in case
you do not come to an agreement
Step (2): Explore your best options and try to improve
them
Step (3): Choose the best option.
Concessions:
Leave room for negotiation
Make the other party struggle for a concession on your
part
Do not make too many concessions, too fast if possible,
make the first most significant concession come from the
other party.
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Negotiation Skills for Project Managers
Impasses:
Pause
Honorable withdrawal
Change of place, person or proposal
Mediator
Respond to aggressions with facts
Avoid personality conflicts
Emphasize previous points of agreement
Move on to non conflicting issues
Setting It Up:
Agree on a benchmark job
Agree on proficiency / performance level
Job value
Salary range
Necessary performance
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Negotiation Skills for Project Managers
What is a Win?
Settlement range
What’s your bottom line?
Enjoy Yourself:
Negotiation is an art
Logical steps set the parameters
The art is in the deal
Have fun!
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Negotiation Skills for Project Managers
Personality Types:
1-
2-
3-
4-
5-
6-
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Negotiation Skills for Project Managers
Chapter 2: Negotiation Management
Through:
(1) Define the scope of work
(2) Define the targets, bottom lines, and constraints.
(3) Information collection, estimation & analysis.
(4) Brainstorming, planning and target plan.
(5) Consequence estimation and risk analysis.
(6) Face to face discussion
(7) Motivation and direction
(8) Implementation
(9) Control & corrective Actions
(10) Learned lessons
(11) Close out report
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Negotiation Skills for Project Managers
The Negotiation Process:
Preparation- 1
Establishing- 2
Objectives
Control &- 5
Assessment
FACE-TO-FACE
Face-to-Face- 3
Discussion
DISCUSSIONS
Final- 4
Action
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Negotiation Skills for Project Managers
Negotiation Process: Preparation
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Negotiation Skills for Project Managers
Negotiation Process: Establishing
Objectives
Issues involved
Realistic, possible, worst
Examples:
“Lower than previous price”
“Good on-time delivery performance”
“Satisfactory technical assistance”
The buyer should develop three specific positions for each term and
condition being negotiated:
An Objective (target) Position
A Minimum Position
A Maximum Position
Delivery schedules
Quality levels
Mode of transportation
Payment terms
Discount provisions
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Negotiation Skills for Project Managers
F.O.B. point
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Negotiation Skills for Project Managers
Presentation:
Creative title
Keywords
Visuals
Fact Finding:
Initial Meeting
The Recess:
Buyers reassess relative strengths and weaknesses
Organize an agenda
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Negotiation Skills for Project Managers
Narrowing the Differences:
The “back and forth” process
choices
Adjourning
Hard bargaining
Hard Bargaining:
Normally, the last resort
“Take it or leave it”
Doesn’t work well if the approach to
purchasing is collaborative
Be careful with bluffing
Unless a one-time purchase is at stake, be careful
that the seller doesn’t feel abused or unfair treatment
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Negotiation Skills for Project Managers
Tactics:
Use
Walk out
Don’t use
Emotional outburst
Argue special case
Pretend ignorance
Play for time
Nibble and retreat
“You go first”
Bad environment
Defer to higher authority
Not willing to make any changes
Silence
Good guy/bad buy
Win-win
Individualistic or integrative - (e.g., individual vs.
team vs. group)
Making a deal or creating a relationship
Short-term goals or long-term goals
Creativity - develop different angles (offer
recuperator free for 1st year).
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Negotiation Skills for Project Managers
Principled Negotiation:
Separate the people from the problem
Focus on interests, not positions
Invent options for mutual gain
Insist on using objective criteria
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Negotiation Skills for Project Managers
Dealing with problem:
Avoid a strict mandate
Moderate the demands of your constituency
Keep persons whose expectations are too high outside the
negotiation process
Keep results vague or quite complicated so that criticism has
little basis
Exaggerate opponent’s concessions
ETHICAL:
Productive.
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Negotiation Skills for Project Managers
JOVIAL:
Productive.
Socially skilled, diplomatic. Tries to influence climate
positively. Flexible.
Less productive
Offers little resistance. Reluctant to take a stand,
ambivalent
Tendencies in conflict
Over-compromising. Gives in to preserve harmony and
good will
Other Party Doesn't Play:
Other party is more powerful
Other party won't use principled negotiation
Other party uses dirty tricks
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Negotiation Skills for Project Managers
Cartoon of the Day:
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Negotiation Skills for Project Managers
Customer-Oriented Development:
§ It is important to develop good relationships with customers
(I.e. clients) -- WHY?
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Negotiation Skills for Project Managers
Reasons for poor relationships:
Customer-Oriented Practices:
§ Planning:
• Select appropriate lifecycle model that gives customers
progress visibility, such as?
• Identify real customer (the boss?)
• Create a Win-Win project (Theory-W project
management)
• Mitigate the risks
§ Requirements Analysis:
• Gather the real requirements (essential) with customer-
oriented requirements practices
• Clients are more satisfied if they participate in
requirements specifications. Why?
• Use methods such as JAD
§ Design:
• Let customers change their minds occasionally
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Negotiation Skills for Project Managers
Construction:
• Use readable, modifiable coding practices so you can
change the software
• Use project-monitoring (mini-milestones) so customer
knows you are accomplishing tasks
• Lifecycle model that shows progress
Approaches to Recovery:
• Cut project size to fit time & effort planned
• Increase process productivity by focusing on short-term
improvements
• Slip schedule & proceed w/damage control
• Combination of all 3: Drop features, increase productivity &
slip schedule
• Get project under control & FINISH it!
o Problem NOT catching up BUT finishing project
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Negotiation Skills for Project Managers
Recovery Plan: First Steps
• Assess situation: how firm is deadline?
• Apply Theory-W analysis -- make winners out of everyone or
quit
• Mentally prepare yourself to fix the project
• Ask team what needs to be done
• Be realistic about what you can expect
o Don’t promise unrealistic new delivery dates
THEORY- W --??
** WHAT IS IT AND HOW DOES IT WORK?
** WHAT ARE THE BENEFITS?
Theory-W Benefits:
• Project objectives are clearer from beginning because each
stakeholder’s “win” conditions are identified up front.
• Better communication with customers
• Better requirements reduce rework
• Goal-setting produces better schedule expectations
• Minimizes feature creep
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Negotiation Skills for Project Managers
Theory-W: Everybody a Winner
• Separate people from the problem
• Focus on interests rather than positions
• Invent options for mutual gain
• Insist on objective criteria
• Set project up so everyone can win - if you cannot set it up,
then don’t do the project
Win-Win Steps:
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Negotiation Skills for Project Managers
When is Win-Win Appropriate?
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Negotiation Skills for Project Managers
Chapter 3: Negotiation for
Selling & Buying
Objectives of Negotiations:
To obtain the quality specified
To obtain a fair and reasonable price
To get the supplier to perform the contract on time
To exert some control over manor in which the contract is
carried out
To achieve maximum cooperation
To maintain relationships
To create a long-term relationship
When to Negotiate?
Sole source situation
Sellers market
New products
Inappropriate
When Risks and Costs cannot be accurately
predetermined
When the buyer is contracting for a portion of the
the item
When products of a specific supplier are desired to
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Negotiation Skills for Project Managers
NEGOTIATIONS WITH VENDORS:
Why negotiate?
• Negotiation is inevitable if librarians wish to provide a good
service to their users.
• Our political masters will not provide us with resources unless
we present a good case : that involves negotiation.
• The content our users need mainly comes from commercial
providers : they wish to make as high a profit as possible and
unless we are willing to pay the highest price we need to
negotiate.
• Even if we leave the face-to-face negotiation to other people,
we need to know enough to assess whether the best deal has been
achieved.
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Negotiation Skills for Project Managers
Before negotiation starts ……
• Know what you want. The lowest price? The most content?
Added benefits like training? How important is the content to your
users? At what point will you walk away from the negotiation?
• Know who you will be negotiating with. Is this a new market
for the company? Do they have any existing sales they may wish
to protect? Is the company looking for good publicity from your
purchase? Are the sales staff familiar with your situation?
• Choose the venue and the participants carefully. Use the “home
advantage” if at all possible. Do not allow a commercial supplier
the advantage of being your host. Always have a colleague with
you. You decide when to take meal-breaks.
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Negotiation Skills for Project Managers
After negotiations end …
• Send a letter or e-mail as quickly as possible summarising your
understanding of the agreement reached. It keeps you in control of
the situation if you are the first to write down what was agreed.
Solve any problems of misunderstanding before the lawyers start
drawing up a contract.
• Sign a legal contract as soon as possible. Do not give the
vendor time to back out of any favourable terms you have agreed.
(N.B. If the terms are not favourable, you should not be agreeing
to them!) Read the contract carefully.
Interests
Success
Performance or function
Details
Terms - conditions
Price
Liabilities
Delivery - dates
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Negotiation Skills for Project Managers
Negotiation For Selling & Buying:
Selling:
Sell benefits:
• Aim to ‘solve customer’s problems’ (not sell your product)
• Recognise the whole product offering not just the core benefits
(packaging; brand; image; colour; distribution)
• Recognise importance of relationships and relating to people
(one of your skills?)
Relationship Marketing:
• Use database / IT to personalise communication with customer
• Track usage, interest, and complaints
• Capture and build upon communication with prospective
customer
• Tailor offerings to customer profile
Buying:
• Don’t accept the first offer
• Determine a ‘package’ which recosts the product (i.e. support
services included)
• Know your requirements and what will solve your problem –
draw up a specification
• Use knowledge of competition’s offering to secure a lower
price
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Negotiation Skills for Project Managers
Closure:
• Ensure agreement / next meeting is secured
• Secure in writing / shake hands if appropriate
• Build a relationship for future supply / purchase
Spend 15 mins..
reducing a price by £500, you have effectively earned your
1- Preparation:
• Know the item or service
• Know the seller’s bargaining strength
• Know the buyer’s bargaining strength
• cost or price analysis
• Know the seller
2- Aspects to Negotiate:
• Price
• Quality
• Support
• Supply
• Transportation
• Duration
3- Negotiation:
Negotiation is a back and forth communication designed to
reach an agreement.
Soft
Hard
Principled
Efficient
Planning
Discussion
New Focus:
People
Interests
Options
Criteria
1- Focus on People:
Separate the people from the problem
Perceptions
Emotion
Communication
Perception:
o Put yourself in their shoes
o Don’t blame them for your problem
o Face saving
Emotion:
People often feel threatened
Allow the other side to let off steam
Don’t react to emotional outbursts
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Negotiation Skills for Project Managers
Communication:
Negotiators often not talking to each other
Listen actively
Build a working relationship
You are on the same team
face the problem - not the people
2- Focus on Interests:
Not positions
There are usually several ways to satisfy an interest
Behind opposing positions lie shared and compatible
interests as well as conflicting ones.
Interest Identification:
Ask “why”?
Ask “why not”?
Multiple interests
You must communicate your own interests
Look forward, not back
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Invent Options for Mutual Gain:
Watch out for:
premature judgement
searching for a single answer
The assumption of a fixed pie
thinking that solving their problem is their problem
Prescription:
Brainstorming
Broaden your options
Look for mutual gain
Make their decision easy
Give them an answer, not a problem
Objective Criteria:
Horse trading may miss the point entirely
Market value
Precedent
What a court would decide
Reciprocity
Review Session:
7:00 Sunday
Room 118
Bring your questions
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Negotiation Skills for Project Managers
Negotiator Behavior:
Willing to compromise
View issues independently
Explore twice as many options per issue
Make comments about common ground
Make less irritating comments
Give fewer reasons for arguments advanced
Congratulate counterpart on job well done
Tactics:
Low Ball
Honesty/Openness
Price Increase
High Ball
Best and Final Offer
Silence
Use of Power
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Negotiation Skills for Project Managers
Chapter 4: Negotiation for Salary
Timing is Everything
• When you have been praised for work you have just
completed.
• When major changes occur in your job responsibilities or
tasks.
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Negotiation Skills for Project Managers
1. Postpone the negotiation
• Bounce back the question to the interviewer.
• Stall elegantly.
• Use your sense of humor.
• Disarm your interviewer
high of a figure;
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Negotiation Skills for Project Managers
Sometimes the interviewer will try to
open negotiation by coming right out and
asking how much money you want to make.
Example:
I: How much do you want to earn?
Y: Oh, thank you for raising this issue. Before
answering you, I’d like to ask a question.
I: Please do.
Y: Do you have salary curves or indexes in your organization?
I: Yes, of course we do.
Y: Could you tell me, then, what sort of salary range you have in
mind for this job? This will make things easier and save us
time.
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Y: Do you think so?
I: Yes, you seem to be very interested in the money
aspect of this job.
Y: The job to be filled requires excellent negotiation
skills. I am demonstrating that I have those skills.
Later, when I work for you, I will fight and
negotiate just as firmly on your behalf.
Continued Principles:
• Avoid bluffing.
• You will be more efficient if you stick to the truth for several
reasons:
• The very fact that you use only true information makes you
feel more comfortable and secure, which make the interview
easier.
• Bluffing, lies, or exaggeration can hamper the
otherwise good negotiation tactics at your disposal.
• When checking is done after the interview, your integrity and
good faith are proven and you benefit.
Get It In Writing
Accepting a firm job offer together with a salary proposal can be
done either verbally or in writing. However, a confirmation in
writing is a must in the following four cases:
• If you have some sort of negative intuition or feeling about
your interviewer and have doubts about the value of his word;
• If the promises made to you seem too numerous or generous to
be given without something more being demanded of you
some time down the road;
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Negotiation Skills for Project Managers
• If the salary formula is complex (due to adjustment,
commissions, etc..), or if you think the salary has not been
stated clearly or not negotiated thoroughly;
• If the risk to you is great. Ex. If you must resign from a
present job to take a new job the risk is too large without
having a firm written proposal in your hand, signed by the
person for whom you will be working for.
Good Luck!!!!!!!!
Interdependence:
• Both parties need each other. A buyer cannot buy
unless someone else sells and vice versa; each is
dependent upon the other.
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Negotiation Skills for Project Managers
Standards for Evaluating Relationship Outcomes (SERO):
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Negotiation Skills for Project Managers
Example : SERO
• Gomaa has been employed by an organization for six
months and is making $31,000 per year.
• The average salary of Gomaa's college classmates
who were accepting new jobs was $30,000.
• Recently, the organization where Gomaa works was
downsized and Gomaa's job was eliminated.
• His boss offered him another job in the organization
at $28,000.
• Gomaa realizes that most other companies are not
currently hiring because it is not the end of the school year,
and he believes that it would be difficult to find a new job
for more than $25,000.
• Anticipated Outcome: The salary for the new job in
the organization is $28,000.
• Comparison Level (CL): The average starting salary
of Gomaa's classmates is $30,000.
• Comparison Level for Alternatives (CLalt): The
perceived salary of a readily available alternative job is
$25,000.
Principles of Negotiation?
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Negotiation Skills for Project Managers
• The greater the distance between 0 and CL, the greater
the attractiveness or unattractiveness of the relationship.
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Negotiation Skills for Project Managers
The Dilemma of Honest:
• Just how much of the truth should you tell the other
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Negotiation Skills for Project Managers
The Dilemma of Trust:
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Negotiation Skills for Project Managers
Search For An Optimal Solution:
• The search for an optimal solution through the processes of
giving information and making concessions is greatly
aided by trust and a belief that you're being treated
honestly and fairly.
Perceptions Of Outcomes:
• Attempts to change a party's estimation of the perceived
importance or value of something
Understanding History:
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Negotiation Skills for Project Managers
Cooperators and Competitors:
Competitors:
• Competitors believe that all negotiations are
competitive and that the world contains only competitors
because all the people they negotiate with compete (either
they were natural competitiors, or they were cooperators
who have adapted and compete rather than being taken
advantage of).
Cooperators:
• Cooperators understand that negotiations may be
cooperative or competitive and recognize that there are
both cooperators and competitors in the world.
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Negotiation Skills for Project Managers
Mythical Fixed Pie:
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Negotiation Skills for Project Managers
Chapter 5: Conflict Management
The objective is not to eliminate conflict but to learn
how to manage it so the destructive elements are controlled
while the more productive aspects are enjoyed.
Types of conflict
Relationship
Task
Process
Levels of Conflict:
• Intrapersonal or Intrapsychic – conflict occurs within
the individual. Souces of conflict can include ideas,
thoughts, emotions, values, predispositions, or drives that
are in conflict with each other.
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7. Magnified Differences; Minimized Similarities
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Negotiation Skills for Project Managers
Conflict Management:
n
A
b
o
u
t
O
t
h
e
r
’
s
O
u
t
c
o
m
e
s
Yielding Problem Solving
Compromising
Inaction Contending
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Negotiation Skills for Project Managers
• Inaction (avoiding) – show little interest or concern
in whether they attain their own outcomes, nor do they
show much concern about whether the other party obtains
his outcomes. Inaction is often synonymous with
withdrawal or passivity, the party prefers to retreat, be
silent, or do nothing
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Negotiation Skills for Project Managers
Chapter 6:
Negotiation Skills for Project
Engineers
Contract negotiation:
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Negotiation Skills for Project Managers
The contract negotiation process should be a period to clarify
and resolve issues identified during each phase of the selection
process.
1. Define requirements
2. Evaluate responses
4. Site visit
6. Contract negotiation
7. Agreement
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Negotiation Skills for Project Managers
Evaluating and resolving conflicting objectives:
1. Technical Proposal
– if OK then move onto
2. Budget (or Financial)
Technical Proposal:
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Negotiation Skills for Project Managers
General Capabilities:
Lastly,…
1. Strategic Assessment
2. Technical Assessment
3. Cost-benefit assessment
4. Risk Analysis
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Negotiation Skills for Project Managers
Contract evaluation matrix
Technical Proposal
Level Budget
K M G
Strategic x
Assessment
Technical x
Assessment
Cost-benefit x
assessment
Risk Analysis x
K - knowledge and experience in relevant fields – 50%
M - Managerial and financial capabilities – 20%
G - General capabilities – 30%
1- Strategic Assessment
• Objectives: support for corporate vision
• Information System (IS) Plan: legacy systems
• Organisation Structure: enhance of destroy?
• Management Information System (MIS)
• Personnel: manning levels and skill base
• Corporate Image: will it affect customer perceptions
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Negotiation Skills for Project Managers
2- Technical Assessment
3- Cost-benefit Analysis:
• Costs
– Development cost
– Setup cost
– Operational costs
• Benefits
– Direct benefits (reduction in salary bills)
– Indirect benefits (increased accuracy, increased
timeliness, more user friendly)
– Intangible benefits (Better customer and supplier
relationships, better information flows/problem solving)
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Negotiation Skills for Project Managers
• Cost-benefit Analysis
– If benefits > cost, that is good
– If benefits < cost – that is bad
• How do you measure intangible benefits?
4- Risk Analysis
• What is the likelihood that an event will result in the
project not meeting its objectives?
• A cost-benefit style of analysis can also be used to
quantify possible losses. “What if” analysis
• The difficulty is determining the likelihood of an event
occurring or accounting for an unpredictable set of
circumstances
Typical Risks:
• Lack of commitment on pricing.
• Implementation services bid are inadequate to
accomplish the implementation.
• All components (pieces of the system required to make
the software work as discussed) are not included in the bill of
materials.
• Little ability to escalate problems so that they have
appropriate attention.
• Inability to cleanly exit the contract if the solution does
not work appropriately or circumstances change.
• Payments do not incentivize the vendor to complete the
implementation in a thorough and timely manner.
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Negotiation Skills for Project Managers
Service level:
• Ask the question whether specific technologies are
suitable for the kind of service you wish to deliver.
• Best effort
• Deterministic service
• Guaranteed Service
Milestone Service
Best Effort Deterministic Guaranteed
Response Time
Accuracy
Availability
Network Utilisation
Throughput
Efficiency
Latency
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Negotiation Skills for Project Managers
Negotiation Timeline for real project:
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Negotiation Skills for Project Managers
The Role of Contract Negotiation:
• System Planning
• System Selection
• Implementation
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Negotiation Skills for Project Managers
Developing a Negotiation Strategy:
• Identify negotiation team members (3–4).
• Determine the timing for inclusion of legal counsel.
• Review the contract and develop an issues list.
• Determine the priority of issues and areas for leverage.
• Develop a party line.
• Identify team member roles/responsibilities.
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Negotiation Skills for Project Managers
• Balanced Approach – open discussion of issues and
implications on both sides with a desire to develop a
workable solution for each party.
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Negotiation Skills for Project Managers
Contract Negotiation Process:
• Format.
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Negotiation Skills for Project Managers
Relationship between Owner and Contractor:
• Discuss the major contract terms and conditions that can and
should be negotiated.
Relationship Status
Owner Contractor
Lose Win
Bad & Short term Win Lose
Lose Lose
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Negotiation Skills for Project Managers
How to establish Good & Long term Relationship?
1- Information Analysis:
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Negotiation Skills for Project Managers
4- Move Beyond Positions:
5- External Listening
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Negotiation Skills for Project Managers
7- Negotiating a Raise or Promotion
8- Setting It Up
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Negotiation Skills for Project Managers
Negotiation Issues:
Negotiation may be developed for all of the following issues
1- Budget and payment conditions:
Types of materials
Material levels
Manpower limits and skills
Tools types and level
Equipment types and level
Subcontractors
6- Others conditions:
Mode of transportation
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Negotiation Skills for Project Managers
Warranty terms and conditions
Cooperation and relationships
Objectives of Negotiations:
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Negotiation Skills for Project Managers
PMIS - Negotiation Issues
# ID Form/report Responsibility
1 PSR Project scope & requirements
Project
2 WBS Work breakdown structure
Manager
3 PBP Project base price
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Negotiation Skills for Project Managers
Project Cost Parameters
• Total direct cost
Total Materials cost
Total Labor cost
Total Equipment cost
Total Sub-contract
• Total indirect cost (overhead)
Project (job or site) overhead (10 to 20 %)
Office (management) overhead (5 to 10 %)
Sales tax (3 to 6 %)
• Risk estimation (for critical activities and resources)
(up to 25%)
• Total cost = Direct cost + Indirect cost + Risk
estimation
• Profit (10 to 20 %) For normal projects
• Price = Total cost + Profit
• Markup = Office overhead + Profit = (15 to 30 %)
• Value Added = Price – External resources
= (I + E + O + P) – E
=I+O+P
• Margin factor = Total project value / Total direct
cost
1- Project information:
- Scope and requirements
- Location and Utilities
- HSE requirements
- Quality requirements
- Duration, etc.
2- Contractor information:
- Company strategy or policy
- Resource availability
- Available and unused capacity (work load)
- Overhead ratio
- Value added ratio
- Mob and De-Mob
- Contractor history (CV & Quality manual), etc.
3- Owner information:
- Owner strategy or policy
- Contract type
- Price measurement (LE or $)
- Payment condition (Cash flow)
- Bonus/ penalty
- Future projects
- Owner history, etc.
4- Market information:
- Competition level
- Relationships
- Environment conditions
- Limitations and constraints, etc.
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Negotiation Skills for Project Managers
Example: Project Cost & Price Analysis:
- Direct cost:
- Materials 10 E
- Equipment 20 I
- Manpower 10 I
- Subcontractor 5 E
===
- Total direct cost: 45
- Room overhead 20 I
- Office overhead 10 I
===
- Total cost 75 I+E
- Internal resource 60
- External resources 15
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Negotiation Skills for Project Managers
Payment Condition Parameters
•
•
•
•
•
•
•
•
•
•
•
•
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Negotiation Skills for Project Managers
KPI Parameters
1- Bill of Quantities:
2- Productivity:
Total Productivity %
Equipment Productivity %
Material Utilization %
Material Productivity %
Labor Productivity %
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Negotiation Skills for Project Managers
Negotiation Management For Project Engineers
Preparation- 1
2- Establishing
Objectives
5- Control &
Assessment
FACE-TO-FACE
3- Face-to-Face
Discussion
DISCUSSIONS
4- Final
Action
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Negotiation Skills for Project Managers
Negotiation Main Steps:
I- Preparation:
1- Introduction
2- Scope of work
3- Field and Topics of negotiation
4- Formation of negotiation team
II- Establishing Objectives:
5- Normal / Standard conditions
6- Requirements / Needs
7- Constraints / Problems
8- Information collection and analysis
9- Accepted limits
10- Strengths and weaknesses
11- Possible / Best solutions / Best objectives
12- Scenario and approach
III- Face-to-Face Discussion:
13- Principles / Bases of negotiation
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Negotiation Skills for Project Managers
Conviction Indicators:
عععععع ععععععع
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Negotiation Skills for Project Managers
الخبرة المؤهلت
)(1
تقديم نفسك
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Negotiation Skills for Project Managers
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Negotiation Skills for Project Managers
المساعدة والنصيحة حدود القبول
)(7
تبادل الخذ
والعطاء
العرض والطلب التنازل المنطقي
اختيار نوعية
السئلة )(8 التشجيع للهدف
التحفيز
والتوجيه
والتخويف التخويف من
توجيه النقاش
الخسائر
تنشيط الجمهور
وجذب النتباه العمل الجماعي
)(11
تبني
الغلبية
التركيز والتأكيد
التأثير النفعالي علي الهدف العام
حل المشكلت
وعدم إصطياد التواضع
)(12
الخطاء المحبة
والصداقة
التوافق الجتماعي المقابلت الودية
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Negotiation Skills for Project Managers
110
Negotiation Skills for Project Managers
تحليل الحالة المزاجية تحليل الراء
ومدي النسجام )(13 والفكار
تحليل وفهم
الخرين
تحليل طرق الخداع تحليل لغة الجسد
والكذب والكلمات والسلوك
الغراء والمودة
)(15 النواحي النسانية
مخاطبة
العقل
الباطن
النوحي الجتماعية النواحي الدينية
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Negotiation Skills for Project Managers
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Negotiation Skills for Project Managers
Chapter 6:
Negotiation Case Studies
for Project Engineers
Case #1:
Negotiation ِApproach for Salary Increased
مقدمة:
تم تعيين احدي المهندسين المتخصصين في مجال هندسة الصيانة علي •
عقد مشروع تابع لاحدي شركات الصيانة والمشاريع البترولية Xفي احدي
شركات البترول Y
وطبقا لشروط العقد تم تحديد مرتب شهري 2000جنيه ،بالضافة إلي •
نسب الحوافز المطبقة علي عاملين الموقع.
وبعد فترة ستة شهور من تنفيذ العقد ،وبالضافة إلي إحساس المهندس •
بأهميته في الموقع ،تبين لسيادته بان هناك بعض الزملء في نفس مستوي
الخبرة وسنة التخرج ونفس ظروف العمل والقامة ،ومع ذلك فان مرتبهم
يتراوح بين 2500إلي 3000جنيه شهريا.
وبناء علي ذلك ،اتفق الطرفين علي ميعاد محدد للتفاوض. •
المطلوب: •
-كيفية وضع منهجية متكاملة لدارة هذا التفاوض للوصول إلي أفضل حالة
للطرفين ).(Win / Win Approach
وما هي أسس التفاوض التي سوف يبني عليها هذا الحوار؟ -
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Negotiation Skills for Project Managers
مشروع تسليم مفتاح بقيمة مليون جنيه ومن ضمن بنوده توريد وتركيب
وتشطيب 1000متر مربع سراميك
ومن ضمن شروط العقد تأمين سراميك الغرف بسعر المتر المربع ل
يزيد عن 25جنيه وإمكانية توريد ذلك من قبل المالك ،وفي حالة توريدها
من قبل المالك تخصم من قيمة العقد.
وقد قام المالك بشراء وتوريد السراميك وكان سعر المتر 18جنيه.
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Negotiation Skills for Project Managers
Case #2:
Negotiation ِApproach for Salary Increased
مقدمة:
تم تعيين احدي المهندسين المتخصصين في مجال هندسة الصيانة علي •
عقد مشروع تابع لاحدي شركات الصيانة والمشاريع البترولية Xفي احدي
شركات البترول Y
وطبقا لشروط العقد تم تحديد مرتب شهري 2000جنيه ،بالضافة إلي •
نسب الحوافز المطبقة علي عاملين الموقع.
وبعد فترة ستة شهور من تنفيذ العقد ،عرضت الشركة المالكة Yعلي •
المهندس فرصة أفضل بمرتب شهري 4000جنيه.
وبناء علي ذلك ،اتفق الطرفين علي ميعاد محدد للتفاوض. •
المطلوب: •
-كيفية وضع منهجية متكاملة لدارة هذا التفاوض للوصول إلي أفضل حالة
للطرفين ).(Win / Win Approach
وما هي أسس التفاوض التي سوف يبني عليها هذا الحوار؟ -
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Negotiation Skills for Project Managers
Case #3:
Negotiation ِApproach for Car Rent
مقدمة:
المطلوب: •
-كيفية وضع منهجية متكاملة لدارة هذا التفاوض للوصول إلي أفضل حالة
للطرفين ).(Win / Win Approach
وما هي أسس التفاوض التي سوف يبني عليها هذا الحوار؟ -
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Negotiation Skills for Project Managers
Case #4:
Negotiation ِApproach
During Contract Implementation Phase
مقدمة:
تقوم احدي شركات الصيانة والمشاريع البترولية Xبتنفيذ عقد سنوي •
للعمرات Shutdownلعدد من خطوط النتاج trainsفي احدي شركات
البترول Y
وكانت من ضمن بنود العقد ما يلي: •
Contract information:
• Total price = 0.5 M$/train
• Total duration = 21 day/train
• Total manpower = 15 Engineers
وبعد فترة أربعة شهور من تنفيذ العقد ،قامت الشركة Xبتحليل •
معلومات ما تم من عمرات ،وتبين إمكانية ضغط )تقليل( Crashingفترة
عمرة الخط مع مراعاة دواعي HSEبالموقع ،وذلك بزيادة مختلف الموارد
)عمالة ،أدوات ،وخلفه(.
وقد قامت الشركة Xبتحليل خسائر توقف الخط يومي Down time •
cost rateفوجدت أن خسائر انتاج خط يوم ل تقل عن خمسة مليون دولر
يوميا
وترغب الشركة Xفي التفاوض مع الشركة Yفي كيفية تحفيز العمل •
وتدني فترة عمرة الخط إلي أدني حد ممكن ،وذلك بالتفاق علس نسبة تحفيز
لكل يوم توفير.
وبناء علي ذلك ،اتفق الطرفين علي ميعاد محدد للتفاوض. •
المطلوب: •
-كيفية وضع منهجية متكاملة لدارة هذا التفاوض للوصول إلي أفضل حالة
للطرفين ).(Win / Win Approach
وما هي أسس التفاوض التي سوف يبني عليها هذا الحوار؟ -
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Negotiation Skills for Project Managers
Negotiation Main Steps
1. Introduction:
XXX Oil Company & YYY Contractor
2. Scope of work:
Complete shutdown planning for train 01 at xx site.
6. Requirements / Needs:
Owner: Minimize the shutdown duration
Contractor: Maximize the bonus for each day saving
7. Constraints / Problems:
Owner: Downtime cost rate = 1 M$/day
Contractor: Manpower and Tools limitation
8. Available information:
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Negotiation Skills for Project Managers
9. Accepted limits:
Owner:
Downtime:
Contract limit = 21 day
Target limit = 14 day Maximum limit = 18 day
Bonus:
Maximum limit = 30,000 $/day
Contractor:
Labor:
Normal limit = 12 Maximum limit = 18 Engineer
Bonus:
Lower limit = 50,000 Maximum limit = 150,000 $/day
Contractor:
Strengths:
Weaknesses:
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Negotiation Skills for Project Managers
Policy xxx - Master plan - Manpower – Penalty/Bonus
rules
15. Performance Evaluation:
Global KPI:
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Negotiation Skills for Project Managers
Case #5:
Negotiation ِApproach
During Contract Implementation Phase
مقدمة:
تقوم احدي شركات الصيانة والمشاريع البترولية Xبتنفيذ عقد سنوي •
للعمرات Shutdownلعدد من خطوط النتاج trainsفي احدي شركات
البترول Y
وكانت من ضمن بنود العقد ما يلي: •
Contract information:
• Total price = 0.5 M$
• Total duration = 21 day
• Total manpower = 15 Engineers
وينص العقد ،أن في حالة تجاوز العملية 21يوم يتم خصم %1عن •
كل يوم بحد أقص %10من قيمة العملية.
كما نص العقد علي أن تكون مسئولية توفير قطع الغيار ومستلزمات •
الصيانة علي الشركة المالكة ،Yوفي حالة توقف عملية الصيانة بسبب عدم
توفر قطع الغيار ومستلزمات الصيانة يتم صرف %40من قيمة العملية ،مع
الحتفاظ الكامل بالهيكل التنظيمي للعمالة والدوات اللزمة لجراء عمليات
الصيانة .ثم يتم صرف باقي قيمة العملية بعد وصل جميع قطع الفيار اللزمة
وتنفيذ العملية المطلوبة.
وبعد فترة أربعة شهور من تنفيذ العقد ،تأخرت قطع الغيار اللزمة •
لعمرة أحدي المعدات لمدة تتجاوز الشهرين ،ولم تصل بعد ولم يتم تحديد
موعد قاطع لتوفيرها.
مع العلم بان متوسط زمن توريد قطع الغيار المعتاد كان ل يتجاوز مدة •
أربعة أسابيع.
وترغب الشركة Xفي التفاوض من الشركة Yفي كيفية تحفيز العمل •
وتعويض الخسائر المترتبة علي ذلك.
وبناء علي ذلك ،اتفق الطرفين علي ميعاد محدد للتفاوض. •
المطلوب: •
-كيفية وضع منهجية متكاملة لدارة هذا التفاوض للوصول إلي أفضل حالة
للطرفين ).(Win / Win Approach
وما هي أسس التفاوض التي سوف يبني عليها هذا الحوار؟ -
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Negotiation Skills for Project Managers
Case #6:
Negotiation ِApproach
Between Maintenance and Safety managers
مقدمة:
تقوم احدي شركات الصيانة والمشاريع البترولية Xبتنفيذ عقد سنوي •
لصيانة لمعدات احدي شركات البترول Y
وبدراسة وتحليل انتاجية العمالة ،لحظ مدير الصيانة التابع للشركة X •
أن انتاجية العامل منخفضة جدا اذ يتراوح معامل النتفاع Utilization
factorما بين 25الي ،% 35وبتحليل هذا النسب تبين أن من أهم العوامل
التي أدت لذلك هي الوقت المستغرق في تصاريح العمل Work permits
ويرغب مدير الصيانة التابع للشركة Xفي التفاوض مع مدير السلمة •
التابع للشركة Yفي كيفية تقليل الوقت المستغرق في تصاريح العمل ،مع
مراعاة كافة نواحي ومتطلبات HSE
وبناء علي ذلك ،اتفق الطرفين علي ميعاد محدد للتفاوض. •
المطلوب: •
-كيفية وضع منهجية متكاملة لدارة هذا التفاوض للوصول إلي أفضل حالة
للطرفين ).(Win / Win Approach
وما هي أسس التفاوض التي سوف يبني عليها هذا الحوار؟ -
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Negotiation Skills for Project Managers
Case #7:
Project: Gas pipe line 120 Km
مقدمة:
تم اجراء عقد Aبين احدي شركات الصيانة والمشاريع البترولية X •
مع احدي شركات البترول ، Yوينص العقد Aعلي اجراء انشاء خط غاز
بطول 120كم من أسيوط الي سوهاج ،ويتم استلم الخط خلل ستة شهور
من تاريخ توقيع العقد ،وتم توقيع غرامة تأخير %2عن كل اسبوع بحد
أقصي .%15
وبعد بدء المشروع لحظ مدير المشروع صعوبة النتهاء من المشروع •
في الوقت الحدد ،1/7/2006
وبناء علي ذلك ،اتفق الطراف علي ميعاد محدد للتفاوض. •
المطلوب: •
-كيفية وضع منهجية متكاملة لدارة هذا التفاوض للوصول إلي أفضل حالة
للطرفين ).(Win / Win Approach
وما هي أسس التفاوض التي سوف يبني عليها هذا الحوار؟ -
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Scope of Work:
Gas Pipe Line 120 Km
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Negotiation Skills for Project Managers
Case #8:
Negotiation ِApproach for Direct Contract
مقدمة:
تم اجراء عقد Aبين احدي شركات الصيانة والمشاريع البترولية X •
مع احدي شركات البترول ، Yوينص العقد Aعلي اجراء انشاء خط غاز
بطول 120كم من أسيوط الي سوهاج ،ويتم استلم الخط خلل ستة شهور
من تاريخ توقيع العقد ،وتم توقيع غرامة تأخير %2عن كل اسبوع بحد
أقصي .%15
وبعد بدء المشروع لوحظ تأخر المورد عن التوريد لمدة شهر بسبب •
خلفه مع الشركة علي المستحقات المالية القديمة.
وبناء علي ذلك ،اتفق الطراف علي ميعاد محدد للتفاوض. •
المطلوب: •
-كيفية وضع منهجية متكاملة لدارة هذا التفاوض للوصول إلي أفضل حالة
للطرفين ).(Win / Win Approach
وما هي أسس التفاوض التي سوف يبني عليها هذا الحوار؟ -
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Negotiation Skills for Project Managers
Case #9:
مقدمة:
تم اجراء عقد بين احدي شركات المقاولت Xمع احدي الهيئات •
الحكومية Yلمدة عام ويجدد لمدة ثلثة سنوات متتالية بنفس السعار المتفق
عليها ،أن لم يخطر أحد الطرفين برغبته في فسخ العقد قبل إنتهاء العقد بوقت
كافي شهرين علي القل.
وكانت من ضمن بنود العقد ،ثبات السعار خلل فترة المشروع. •
وبعد مرور ثمانية أشهر من بدء المشروع لوحظ زيادة أسعار المواد •
بنسبة أكثر من ، %40كما زادت أجور العاملين بنسبة أكثر من ،%20مما
يعني أن قيمة العقد أصبحت غير مناسبة للمقاول.
وبناء علي ذلك ،اتفق الطراف علي ميعاد محدد للتفاوض. •
المطلوب: •
-كيفية وضع منهجية متكاملة لدارة هذا التفاوض للوصول إلي أفضل حالة
للطرفين ).(Win / Win Approach
وما هي أسس التفاوض التي سوف يبني عليها هذا الحوار؟ -
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Negotiation Skills for Project Managers
Case #10:
مقدمة:
تم اجراء عقد بين احدي شركات المقاولت Xمع احدي الهيئات •
الحكومية Yلمدة عام ويجدد لمدة ثلثة سنوات متتالية بنفس السعار المتفق
عليها ،أن لم يخطر أحد الطرفين برغبته في فسخ العقد قبل إنتهاء العقد بوقت
كافي شهرين علي القل.
وبعد مرور ثمانية أشهر من بدء المشروع ،عقدت الهيئة مع مقاول •
أخر Yعقد لتطوير هذه الميادين ،مما أدي الي التأثير علي بنود العقد الخاص
بالمقاول .X
وبناء علي ذلك ،اتفق الطراف علي ميعاد محدد للتفاوض. •
المطلوب: •
-كيفية وضع منهجية متكاملة لدارة هذا التفاوض للوصول إلي أفضل حالة
للطرفين ).(Win / Win Approach
وما هي أسس التفاوض التي سوف يبني عليها هذا الحوار؟ -
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Negotiation Skills for Project Managers
Case #11:
مقدمة:
تم اجراء عقد بين احدي شركات المقاولت Xمع احدي الهيئات Y •
لنشاء محطة قوي كهربائية بطاقة 10MWبعقد قيمته 25مليون جنيه وفترة
تصميم وتوريد وانشاء لمدة عام تبدأ من تاريخ توقيع العقد واستلم الدفعة
المقدمة ،Down payment 20%وتم توقيع غرامة تأخير %5عن كل
شهر بحد أقصي .%15
وبناء علي ذلك ،اتفق الطراف علي ميعاد محدد للتفاوض. •
المطلوب: •
-كيفية وضع منهجية متكاملة لدارة هذا التفاوض للوصول إلي أفضل حالة
للطرفين ).(Win / Win Approach
وما هي أسس التفاوض التي سوف يبني عليها هذا الحوار؟ -
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Negotiation Skills for Project Managers
Case #12:
مقدمة:
تقوم احدي شركات الصيانة والمشاريع البترولية Xبتنفيذ عقد سنوي •
لصيانة لمعدات احدي شركات البترول Yفي إحدي مواقع الشركة
وفي مرات عديدة ،يتم التصال بين رئيس القطاع بالمكتب الرئيسي •
للشركة Xفي القاهرة مع مختلف مهندسي الموقع مباشرة دون الرجوع الي
مدير الموقع المباشر ،مما أدي الي تضارب القرارت في كثير من الحوال
بالضافة الي ضعف العملية الدارية بالموقع
وبناء علي ذلك ،اتفق الطرفين علي ميعاد محدد للتفاوض. •
المطلوب: •
-كيفية وضع منهجية متكاملة لدارة هذا التفاوض للوصول إلي أفضل حالة
للطرفين ).(Win / Win Approach
وما هي أسس التفاوض التي سوف يبني عليها هذا الحوار؟ -
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Negotiation Skills for Project Managers
Case #13: Select the best method:
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Negotiation Skills for Project Managers
Case #14: Select the best payment terms:
Budget planning for annual project
Work package A B C D E
Predecessors - - - A C
Duration (week) 16 10 12 16 40
Budget $M 80 70 96 80 200
• Total Budget = $ 526 M
• Annual Cash Flow:
Owner: 526/6 = 87.67
Month 0 3 6 9 12 13
$M 88 88 88 88 88 86
Contractor:
Month 0 3 6 9 12 13
$M 150 125 100 75 50 26
What are the bases of negotiation?
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Negotiation Skills for Project Managers
Case #15: Select the best schedule:
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Negotiation Skills for Project Managers
Case #16: Select the best offer:
Scope of Work:
• Number of users = 20
• Distance 500 km
• Speed ≥ 1 Mega/sec
• Availability ≥ 99.9 %
• Drop ≤ 15 min/year
Offers:
Offer 1 – UTB cable – 1 $/m
Offer 2 – Fibber cable – 5 $/m
Offer 3 – Wireless – 5000 $
Offer 4 – Phone lines + 2 Modems – 3000 $
Offer 5 – Main satellite at AUC – 2000 *2 = 4000 $
What? …………………………….…………………….
Why? …………………………….…………………….
How? ……………………..…….…………………….
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Negotiation Skills for Project Managers
Case #17: Select the best offer:
Scope of Work:
• Case Study of Commonwealth Gov Tender
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Negotiation Skills for Project Managers
• Some common anxieties that evaluation should relieve
– Will it work?
– Will it meet the design criteria?
– How much is it going to cost?
Or
Or
What? …………………………….…………………….
Why? …………………………….…………………….
How? ……………………..…….…………………….
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Negotiation Skills for Project Managers
Case #18: KPI:
Target Performance:
Item Unit Value
Work Schedule:
Excavation m3 3000
Concrete m3 1500
F-Concrete m3 1000
Budget Cost:
Excavation LE/m3 5
Concrete LE/m3 100
F-Concrete LE/m3 800
Critical equipment:
Excavator m3/day 200
Concrete pump m3/day 100
Critical materials:
Cement for concrete kg/m3 250
Cement for F-concrete kg/m3 350
Actual Performance:
Item unit Value
Work Performed:
Excavation m3 4000
Concrete m3 2000
F-Concrete m3 800
Actual Cost:
Excavation LE 16,000
Concrete LE 180,000
F-Concrete LE 600,000
Critical materials:
Available Cement ton 800
Used Cement ton 800
What are the bases of negotiation?
Which KPI would you choose?
• Policy 1 – What? …………………… Why? .……………
• Policy 2 – What? …………………… Why? .……………
• Policy 3 – What? …………………… Why? .……………
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Negotiation Skills for Project Managers