Project Management Bsc(Hons)

Negotiation

Joshua Jackson (33239469)

Word Count 2,197

How negotiation techniques might support the project manager in the delivery of projects

Joshua Jackson (33239469)

What is Negotiation?

Henry Kissinger (1969) defines negotiation as “a process of combining conflicting positions into a common position, under a decision rule of unanimity”, whereas other theorists have portrayed negotiations as events of diplomatic artistry, mechanical reflections of relative power, and weighted interactions between personality types or rational decision-making processes (Alfredson & Cungu, 2008). However, Davis et al (1993) summarise negotiation as “collective decision making” they also go on to state that “all major public policies are the outcome of a complex round of negotiation between interests, choices between values and competition between resources… there are no single ‘best’ options for any player in this game, for the ‘best’ outcome depends on what others do and what deals are possible.”

How does Negotiation apply to Project Management?

The APM Body of Knowledge (2006) advocates that negotiation can take place on both a formal and informal basis throughout a projects lifecycle. They also state that the Project Manager needs to be aware of their role in any negotiation and that a successful negotiation is one where the Project Manager understands and addresses the underlying motivation, wants and needs of all parties involved, and separates the different views from the people involved (APMBoK, 2006).

The people involved in a Project are labelled as Stakeholders; Freeman (1984) gives the most popular definition of a Stakeholder (Bryson, 2004). He defines a Stakeholder as “any group or individual who can affect or is affected by the achievement of the organisation’s objectives.” Clarkson (1995) goes on to further define a Stakeholder and suggests that every Stakeholder falls into one of the following two categories:

I. Voluntary stakeholders- Bear risk from a form of investment, either financial or human.

II. Involuntary stakeholders- Are placed at risk due to the organisations activities. They state there must be an element of risk to have a stake.

As mentioned above by Clarkson (1995) stakeholders are those that are put at some degree of risk by an organisation’s objectives. For this reason it is important for a project manager to identify all potential stakeholders as they have the ability to influence the direction of a project or organisation (Frooman, 1999). The APM Body of Knowledge (2006) states “Stakeholder identification requires consideration of who is involved in, affected by or can affect the project.” They recommend brainstorming sessions in order to identify all potential stakeholders on a project who can be both internal and external to the organisation/project (de Chernatony & Harris, 2000).

As a project environment may be complex and changing (Gilbert, 1983 cited in Karlsen, 2002) it is important to mesh project objectives with its stakeholders throughout the lifecycle as the project evolves. This is because as project conditions change so do the interdependencies of key systems, stakeholders and their objectives (Morris, 1994).

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Joshua Jackson (33239469)

As Jergeas et al (2000) suggest; it is the stakeholder that ultimately decides whether or not the project is successful. Karlsen (2002) goes on to say that some stakeholders have power because they control information and resources, whereas other stakeholders can actually decide whether a project is successful or not. For this reason a clear and concise definition of project success and failure may not be determined as stakeholders perceptions and values vary and can also change as the project evolves. Therefore, a project manager may find himself working towards goals unintended by stakeholders (Meredith and Mantel (2000) quoted in Karlsen (2002)).

How do Project Managers apply negotiation techniques in a project environment?

As well as other literature that has previously been discussed (Jergeas et al, 2000; Karlsen, 2002) the APM Body of Knowledge (2006) also supports the idea that stakeholders have a key part in defining the success criteria of projects. Therefore the importance of principle based negotiation at the very start of a project cannot be stressed adequately. O’Connell (2007) suggests that this is the stage to identify stakeholder “win-conditions” that are key to understanding the project’s constraints. There are many areas of project management that require negotiation between stakeholders, these areas are where stakeholders value perceptions switch.

Stakeholders aren’t only those put at risk by the project/organisation’s objectives (Clarkson, 1995), they also bring a degree of risk to the project. A project manager can take part in principle based negotiations throughout the course of the project with these stakeholders in order to mitigate the risk. This process of communicating with sakeholders to mitigate risk is “Stakeholder Management” (Maziol, 2009).

According to Fisher and Ury (1991) the first step in the process of project negotiation is to focus on interests and not positions. This type of negotiation is known as principle based negotiation where the parties involved are more likely to come to an integrative agreement (Thompson & Hastie, 1990). This type of negotiation is effective at the start of a project in the concept and definition phases where it is important to dig into the assumptions and root causes of user requirements as early as possible. If you do this, you may be able to negotiate a different approach that will make the project run more smoothly while also giving the stakeholders a better result, this type of result has been referred to an integrative agreement or “Win-Win” (Thompson & Hastie, 1990).

There is great importance in understanding the true problem that your project is trying to address and doing a great job at the scope definition. If you just implement the solution the client asked for without knowing much about the problem you are trying to address, you have limited bargaining power when it comes to the budget. The project manager cannot attempt to add any more value to the project if you do not know the benefits that are trying to be achieved (Thompson & Hastie, 1990).

Once an integrative agreement has been grasped, there is more mutual benefit to be gained and therefore more value in the project, this means the stakeholder providing resource may be more willing to allocate more to your project. You can then invent more options for your mutual gain. Fisher and Ury (1991) believe that “skill at inventing options is one of the most

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Joshua Jackson (33239469)

useful assets a negotiator can have.” It is necessary to discuss as many options as possible in order to make sure that all options are taken into consideration and that both sides benefit. Therefore, before making a decision, make sure that as many options as possible were discussed before a decision was made. An example of this in a project context is maybe moving a member of staff that is currently undervalued in their functional role to a more suited position.

Another area of project management that negotiation techniques may support the project manager is that of scheduling. Instead of just scheduling tasks in an order that best suits the project manager communication between stakeholders may reveal that prioritising some tasks may result in certain stakeholders benefiting, and therefore will increase the value within the project. This sort of approach to scheduling will then help the project manager to achieve an “integrative” final schedule (Thompson & Hastie, 1990). This type of negotiation technique can also be applied at a strategic level when dealing with programme and portfolio management. The benefits that are attributed at the project level in order to justify a project can also be looked at in terms of the realisation of these benefits and co-ordinated at a programme level. Just as scheduling tasks can be negotiated to add more value to the project, the co-ordination of projects can be negotiated in order to add value to the programme (Heathcoate, 2012).

Sometimes two or more parties can’t come to an integrative decision and may have a disagreement. In this situation the negotiation often becomes positional, this kind of negotiation is not very beneficial for the project manager as it can sour the relationship with the party involved, and will not be successful if the other party has greater leverage, for example a negotiation with the client or sponsor. In this situation the project manager should try to adapt to a more problem solving approach i.e. interest based negotiation.

When interests are different Fisher and Ury (1991) recommends that the project manager should use an objective criteria to resolve any conflict. Both sides should agree over the criteria that best fits their situation. If you do not succeed in reaching an agreement, you can try to find a good principle based procedure like the one shown below in figure 1.0.

Figure 1.0

(Source: (Waetzig, 2012)

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Define objective criteria

Develop

your

BATNA

Create options for mutual gain

Focus on interests

not positions

Separate the people from the problem

Joshua Jackson (33239469)

Figure 1.0 depicts the pieces of an effective problem solving approach to negotiation. It illustrates how separating the people from the problem, focusing on interests not positions, defining objective criteria and creating options for mutual gain and developing your BATNA helps you complete a successful negotiation. BATNA is the term coined by Fisher and Ury (1981) and it stands for best alternative to a negotiated agreement. BATNAs are critical to negotiation because you cannot make a wise decision about whether to accept a negotiated agreement unless you know what your alternatives are. Your BATNA is “the only standard which can protect you both from accepting terms that are too unfavourable and from rejecting terms it would be in your interest to accept” (Fisher & Ury, 1991).

Project managers will also have to engage in negotiations when procuring certain materials or contracts on a project. This is a more commercial style of negotiation and requires careful preparation which includes realistic evaluation of the other party’s position and claims as well as their own. In lots of cases each party over evaluates its own position, and there is very little evaluation of the other party’s claims. Considering the other party’s claims as unjustified and rejecting them without objective analysis can have a very adverse effect on both the negotiation and the relationship between both parties (Spiess & Felding, 2008).

In conclusion it is the job of the project manager to effectively communicate with stakeholders throughout the course of the project and to focus on their interests rather than their position in order to add value to the project and invent options for mutual gain. If the project manager does not effectively negotiate the project “Win Conditions” and gain good knowledge of stakeholder’s values then the project manager could be working towards values unintended by the key stakeholders and be destined for failure.

Through adapting a principle based approach to negotiation the project manager is able to add value for all the parties involved in the negotiation and therefore creates more leverage and bargaining power for himself. This can be done by using an objective criterion to evaluate options, separating the people from the problem and knowing all potential alternatives (developing your BATNA). By following these steps you are more likely to reach a “win-win” situation and not only achieve the desired interest for both parties, but further your relationship with your stakeholders as well. To increase the chance of success with project stakeholder negotiations, don’t get emotionally involved with your opponent and “yield to principle not pressure” (Fisher & Ury, 1991).

To answer the question “How might negotiation techniques support the project manager in the delivery of projects?” the literature suggests a principle based approach throughout the project is more favourable as it adds the most value to stakeholders and strengthens their relationships with the project manager. Through effective communication and negotiation the project manager is able to manage Stakeholders values and therefore mitigate the risk that they bring to the project.

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Joshua Jackson (33239469)

BibliographyAlfredson, T., & Cungu, A. (2008). Negotiation Theory and Practice: A Review of the Literature. Food

and Agriculture Organization of the United Nations, FAO, Module 179.

Association for Project Management. (2006). APM Body of Knowledge 5th Edition. High Wycombe: Association for Project Management.

Bryson, J. M. (2004). What to do when stakeholders matter. Stakeholder identification and analysis techniques. Public Management Review, 6(1), 21-53.

Clarkson, M. B. (1995). A stakeholderframework for analysing and evaluating corporate social performance. Academy of Management Review, 20(1), 92-116.

Davis, G., Wanna, J., Warhurst, J., & Weller, P. (1993). Public Policy in Australia. Sydney: Allen & Unwin.

de Chernatony, L., & Harris, F. (2000). Developing Corporate Brands Through Considering Internal and External Stakeholders. Corporate Reputation Review, 3(3), 268-274.

Fisher, R., & Ury, W. (1981). Getting to Yes: Negotiating Agreement Without Giving In. New York: Penguin Books.

Fisher, R., & Ury, W. (1991). Getting to yes: negotiating agreement without giving in. New York: Penguin Books.

Freeman, E. R. (1984). Strategic Management:A Stakeholder Approach. Boston: Pitman.

Frooman, J. (1999). Stakeholder Influence Strategies. The Academy of Management Review, 24(2), 191-205.

Gilbert, G. P. (1983). The Project Environment. Journal of Project Management, 83-87.

Heathcoate, J. (Performer). (2012, March 08). Leeds Metropolitan University, Leeds, West Yorkshire, England.

Jergeas, G. F., Williamson, E., Skulmoski, G. J., & Thomas, J. L. (2000). Stakeholder Management on Construction Projects. AACE International Transaction, 12.1-12.5.

Karlsen, J. T. (2002). Project Stakeholder Management. Engineering Management Journal, 14(4), 19-24.

Kissinger, H. (1969). Nuclear Weapons and Foreign Policy. New York: W.W. Norton.

Management, A. f. (2006). APM Body of Knowledge 5th Edition. Association for Project Management.

Maziol, S. (2009). Risk Management: Protect and Maximize Stakeholder Value. An Oracle Governance, Risk, and Compliance, 1-12.

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Meredith, J. R., Mantel, S. J., & Jr. (2000). Project Management: A managerial approach. New York: John Wiley & Sons.

Morris, P. W. (1994). The Management of Projects. London: Thomas Telford.

Spiess, W., & Felding, F. (2008). Conflict Prevention in Project Management: Strategies, Methods, Checklists and Case Studies. Berlin: Springer-Verlag.

Thompson, L., & Hastie, R. (1990). Social Perception in Negotiation. Organizational Behaviour and Human Decision Processes, 47, 98-123.

Waetzig, E. Z. (n.d.). Change Matrix. Retrieved March 10, 2012, from videocast.nih.gov/ppt/ADR_Waetzig.ppt

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