Project Management: A Managerial Approach Chapter 6 – Conflict and Negotiation

© 2006 John Wiley and Sons, Inc. Overview Operational Definitions Negotiation Facilitating PM Partnering Conflict © 2006 John Wiley and Sons, Inc.

The Nature of Negotiation - Concepts (Goal) conflicts: Occur when an individual or group pursues goals different from those of other individuals or groups. Negotiation: The process through which two or more parties seek an acceptable rate of exchange for items they own or control. Objective of negotiation: To reduce or resolve conflict. “Reduce” means no further action against another party is contemplated. “Resolve” means all parties are satisfied to a point below the level of frustration. © 2006 John Wiley and Sons, Inc.

Facilitating the Integration of Activities Lateral Relations allow decisions to be made horizontally across lines of authority Because each area has its own goals, integrating activities of two or more units is certain to produce conflicts These conflicts may be resolved by negotiating a solution, if one exists, that produces gains (or minimizes losses) for all parties © 2006 John Wiley and Sons, Inc.

Negotiating a Resolution Approaching intraproject conflicts with a desire to win a victory over the other parties is inappropriate The project manager should remember that he will be negotiating with project stakeholders many times in the future The proper objective should be to optimize the outcome in terms of overall organizational goals © 2006 John Wiley and Sons, Inc.

Partnering, Chartering, and Change Three situations commonly arise during projects that require the highest level of negotiating skill the project manager can muster: The use of subcontractors The use of input from two or more functional units to design and develop the project’s mission The management of changes ordered in the project’s deliverables and/or priorities after the project is underway © 2006 John Wiley and Sons, Inc.

Sources of Conflicts: (1) Partnering In recent years there has been a steady growth in the frequency of outsourcing parts of projects There are many reasons for this trend: Avoidance of litigation Diversification of technical risk Avoidance of capital investment Reducing political risk on multinational projects Shortening the duration of the project Pooling of complimentary knowledge © 2006 John Wiley and Sons, Inc.

Sources of Conflicts: (1) Partnering Generally, relations between the organization carrying out a project and a subcontractor working on the project are at best characterized as adversarial Conflicting interests tend to lead both parties to work in an atmosphere of mutual suspicion and antagonism To reduce this conflict, a process for building partnered projects can be used © 2006 John Wiley and Sons, Inc.

Process for Building Partnered Projects 1. The parent firm must make a commitment to partnering, select subcontractors who will do the same, and develop a “charter” 2. Both parties must implement the partnering process with agreement on: Joint evaluation of the project’s progress A method for resolving problems or disagreements Acceptance of a goal for continuous improvement Support for the process of partnering from senior management of both parties 3. Both parties commit to a joint review of “project execution” when the project is completed © 2006 John Wiley and Sons, Inc.

Sources of Conflicts: (2) Chartering A project charter is a written agreement between the project manager, senior management, and the functional managers who are committing resources to the project. The charter also often includes the client. The charter may take many different forms Typically it details the project deliverables, often including the project’s schedule and budget Most projects do not have charters Which is one reason for observing that most projects are not completed on specification, on time, and on budget © 2006 John Wiley and Sons, Inc.

Sources of Conflicts: (2) Chartering (use of input from two or more functional units to carry out project’s mission) A written agreement between the PM, senior management and the functional departments for a commitment to i. meet design intent, ii. complete contract without need for litigation, iii. finish project on schedule, and iv. keep the cost growth to a percentage. © 2006 John Wiley and Sons, Inc.

Sources of Conflicts: (3) Scope Change Scope change (management of changes, after the project is underway) Sources for change: i. technological uncertainty, ii. change in the environment in which the project/product is to be used, and iii. other needs for change identified when the project is under way. © 2006 John Wiley and Sons, Inc.

Categories of Conflicts Goals: (Different goals & expectations) Groups working on the project may have different goals and expectations Authority There is considerable uncertainty about who has the authority to make decisions Interpersonal (conflicts) There are interpersonal conflicts between people who are parties-at-interest in the project © 2006 John Wiley and Sons, Inc.

© 2006 John Wiley and Sons, Inc. Parties at Interest - Project team - Client Functional Management Senior management © 2006 John Wiley and Sons, Inc.

© 2006 John Wiley and Sons, Inc. Types of Conflicts · Over schedules · Over priorities · Over labor · Over tech. opinions · Over procedures · Over costs · Over personality © 2006 John Wiley and Sons, Inc.

Issues/Types of likely conflicts during a Project Project Formation Stage Four fundamental issues: Technical objectives must be clear enough to allow detailed planning The breakdown structure The organizational structure of the project must be established to an extent sufficient for the action plan, WBS, responsibility chart, and network activity diagram to be prepared Top management support Commitment of resources to the project must be forthcoming from senior management and functional managers Project’s level of priority The priority of the project relative to the priorities of the parent organization’s other projects, must be set and communicated Organizational Structure (Who will do what…) © 2006 John Wiley and Sons, Inc.

Issues/Types of likely conflicts during a Project Project Buildup Stage Project priorities Schedules Administrative procedures Technical issues (between the project & functional managers) © 2006 John Wiley and Sons, Inc.

Issues/Types of likely conflicts during a Project Main Program Stage Schedules & resource redistribution (when something got delayed and additional resources are needed to catch up.) Perceived Competition for Scarce Resources © 2006 John Wiley and Sons, Inc.

© 2006 John Wiley and Sons, Inc. Issues/Types of likely conflicts during a Project Phase-out Stage (Implementation to Delivery Transition) Schedules and recovery from Schedule Slippage (to meet the due date) Personality clashes Resource distribution and Cost Overruns Lack of Documentation (Change Orders) Anxiety Potential for Litigation About Team Dissolution / What’s Next? Redistribution of Remaining Resources Rewards and Recognition © 2006 John Wiley and Sons, Inc.

Issues/Types of likely conflicts during a Project Figure 6.1 to see the intensity of each conflict type at different stages Table 6.1 to see project conflicts by categories and parties. If the above issues are not well defined or worked out, conflicts are more likely to occur, and with higher intensity. © 2006 John Wiley and Sons, Inc.

PLC and Conflict Intensity © 2006 John Wiley and Sons, Inc.

Project Conflict Categories © 2006 John Wiley and Sons, Inc.

Three main requirements of project negotiation Conflicts must be settled without irreparable harm to the project’s objectives The methods must foster honesty between negotiators The solution must satisfy not only the needs of the negotiating parties but also other parties to the conflict, including their parent organizations. © 2006 John Wiley and Sons, Inc.

Principled Negotiation A process of reaching agreement by following the four guidelines: Separate the people from the problem Focus on interests not positions Invent options for mutual gain Insist on using objective criteria © 2006 John Wiley and Sons, Inc.

© 2006 John Wiley and Sons, Inc. Copyright 2006 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in section 117 of the 1976 United States Copyright Act without express permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The Publisher assumes no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information herein. © 2006 John Wiley and Sons, Inc.