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

Project Management: A Managerial Approach

Chapter 6 – Conflict and Negotiation

© 2006 John Wiley and Sons, Inc. 2

Overview

• Operational Definitions

• Negotiation

• Facilitating PM

• Partnering

• Conflict


The Nature of Negotiation - ConceptsConcepts• (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.


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


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


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


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


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


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


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


Sources of Conflicts: (2) CharteringChartering(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.


Sources of Conflicts: (3) Scope ChangeScope 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.


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


Parties at Interest

- Project team

- Client

- Functional Management

- Senior management


Types of Conflicts· Over schedules

· Over priorities

· Over labor

· Over tech. opinions

· Over procedures

· Over costs

· Over personality


Issues/Types of likely conflicts during a ProjectProject 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…)


Project Buildup Stage

• Project priorities

• Schedules

• Administrative procedures

• Technical issues (between the project & functional managers)

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



• 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

Issues/Types of likely conflicts during a Project Phase-out Stage (Implementation to Delivery Transition)


• 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.



PLC and Conflict Intensity


Project Conflict Categories


• 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.

Three main requirements of project 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

Principled Negotiation


Copyright 2006 John Wiley & Sons, Inc.

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

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