Project Management Negotiation Abigail Butler

Assignment 1 C3190490

How Negotiation Techniques Might

Support the Project Manager in the
Delivery of Projects

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Contents

Chapter 1: Introduction.3

1.1 Introduction..3

1.2 Aim 3

Chapter 2: Negotiation Techniques..4

2.1 Positional Bargaining...4

2.2 Interest Based...5

Chapter 3: Applying Negotiation to Project Management...6

Chapter 4: Conclusion..10

Chapter 5: Bibliography..12

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1. Introduction

1.1 Aim

The aim of this paper is to discuss how:

Negotiation techniques may support the Project Manager in the delivery of projects, this
will be done by the objectives listed below.

Identifying whether negotiation is used within project management.

Different types of negotiation can be applied to many different project management

scenarios.

Identifying if negotiation contributes to the success of project delivery.

Identifying if benefits realisation can be confirmed using interest based negotiation.

Many sources Ury & Fisher (1992), Fells (1996), Maddux (1988) & Rayner,APM (2007) all
believed negotiation to be a dialogue between two or more parties trying to come to an
agreement, to enable an organisation to gain benefit. Negotiation can also be seen to be a
process that one may use to meet the needs and interests of the user when someone else
holds the control Maddux (1988). Murtoaro & Kujala (2007) stated that negotiation can also
be used to gain the buyer and seller specific perceptions, coming to a possible agreement.

The negotiation between different organisations usually occurs when one member has
something the other is wanting, having to bargain to get it Maddux (1988). Murtoaro &
Kujala (2007) agreed stating negotiations can be used after the initial settlement is
completed the organisations will then continue to create bargaining power. The client and
contractor can face difficulties when trying to come to an agreement, interest based
negotiation may be used to settle an argument of positional bargaining.

Many sources Fells (1996) & Ury & Fisher (1992) suggested that the key for success when
negotiating is the preparatory planning that will take place prior to the negotiation, thus
giving the negotiator scenarios of what the opposition may do and what they may be out for
the minimum point they will go to within the negotiation but also the target that they are
aiming for, thus then giving the negotiator flexibility.

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There are number of different negotiation techniques, two generic forms that will be
discussed within this paper are, Positional Bargaining based negotiation and Interest Based
negotiation.

2. Negotiation Techniques

2.1 Positional Bargaining Negotiation- Competitive

Katz & Pattarini (2008) stated that positional bargaining generally concentrates on
approaching a negotiation as a survival exercise, the negotiator must win there is no other
way of solving the issue. This approach does not involve asking any of the stakeholders from
the project what they would like. This approach totally relies on a salesman like approach to
negotiation. The positional bargaining approach usually generates the outcome of a
situation to be: win-lose lose-win or lose-lose. Positional bargaining does not allow both
user to feel as if they have both won an argument.

Ury & Fisher (1992) confirmed that when using the positional bargaining approach the
negotiator will aim to reach the highest chance that when the settlement is reached it will
be in their favour, this will be completed by creating a high position in which the negotiator
will not back down from. If the negotiator was to think about moving from the high position
they had created it would only be a slight gesture of good will to keep the negotiation going.
Whilst one side is trying to complete this approach, the opponent is also using the same
technique therefore making a settlement near impossible. Katz & Pattarini (2008) agreed by
explaining that this approach to be seen by some to just be arguing the way forward instead
of looking at what each stakeholder wants within the project, parties involved within this
approach can leave the negotiations feeling very angry and dissatisfied with the outcome.

Ury & Fisher (1992) highlighted that within positional bargaining the approach can be taken
for the negotiator to be hard or soft with the opposition. The soft side is to approach the
opposition as a partner, friendship and evaluating how this approach could advantage the
negotiator with business in the future with this client thus sometimes helps to create results
quicker than hard bargaining. The hard bargaining sees the opposition as the enemy making

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threats and taking the dominatory lead, although this can be seen as playing physiological
tricks with the opposition.

2.2 Interest Based Negotiation- Problem Focussed

Ury & Fisher (1992) described interests to be desires or concerns that the opposition may
have, if the negotiator was to look at the interests instead of the companys position, this
may enable the negotiator to develop a solution to the problem.

Katz & Pattarini (2008) explained that if a process is followed by implementing tools and
techniques interest based negotiations outcome can be highly satisfying to the user. The
interest of the project should be prioritised, all other possibilities to the project analysed
and a negotiation of the contract confirmed. Ury & Fisher (1992) agreed that within interest
based negotiation the problem should be separated from the people to analyse what each
party is wanting.

Ury & Fisher (1992) discussed the basics of negotiation to be two partials, not just about the
conflict in positional bargaining but there may also conflict that may arise from what the
stakeholder is wanting from the negotiation and what their interests may be. For every
interest that an organisation may have there may be several positions that fit.

Katz & Pattarini (2008) highlighted the interest-based negotiation approach to be a

challenge or problem for all stakeholders involved within the project to overcome, having an
emphasis on creating value. This approach allows the parties involved to think about what
they would like to achieve out of the situation and generally creates a win- win situation for
the project manager, viewing one another as partners continuing to add value to an
organisation by completing the intended benefits of a project. The approach is seen to be
understanding the stakeholders needs and interests within the project.

The project itself may be perceived as a problem, interest based negotiation is related to
problem solving offering a solution and a technique, Katz & Pattarini (2008). Negotiations
and projects can both be seen to be problems needing to be solved.

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3. Application of Negotiation to Project Management

The different techniques of negotiation found can be applied to project management by

establishing opportunities for negotiation in the delivery of a project, thus then being able
to analyse who the stakeholders are within the project. By analysing what power and
interest the stakeholders may have and what approach they may take, thus then making it
easier for the negotiator to come to a win- win solution. Within the concept phase of the
project the negotiator can communicate to all stakeholders using the interest based
approach to identify the key desires and interests of the project. The negotiator would look
at the concept phase and identify what the problem is, analyse, define the problem and
then looking at what can be done to eliminate the problem by using interest based
negotiation.

Concept Initiation Implementation Closure

Why the How the project will Change Control Lessons Learnt
project is be delivered: New issues to
needed Contract Strategy mitigate

Risks

Heathcote (Lecture, 23 Feb 12) suggested that when the benefits from the project have
been realised by the negotiator it helps to identify the interests of the organisation, if the
benefits are clear from the start it would be easier to add value to the organisation by
completing the project. Thus meaning that value management could be done using interest
based negotiations. If the project is considered from a benefits point of view it is seen to be
a lot like interest based negotiation. The negotiation can then take place about the
conceptualisation of what the intended benefits of the project actually are. The project can
then be conceptualised as an interest based negotiation with a set of strategic requirements
to meet the strategic goals of the organisation.

Lumsden & Heathcote (2011) suggested that interest based negotiation can be used within
programme management, the capability of a project can be exploited to find out if the
benefits of the project has been met.

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The existence of a project creates stakeholders, the stakeholders can be considered to be

specific to the project. The processes within the project advise the project manager to
identify the stakeholders to enable the risks of the project to be recognised, looking at how
each stakeholder may affect the project.

Weaver and Bourne (2002) had devised a stakeholder circle showing the distance of the
stakeholder from the project stating the influence and degree of impact a stakeholder may
have on a project.

Figure 1.1 Weaver & Bourne (2002)

Bourne & Walker (2005) confirmed that identification of the project stakeholders is crucial
to the success of a project. The analysis must be done of the stakeholders to ensure the
project is a success, the stakeholders may then change throughout the project becoming
more powerful or having more influence over others. This must also be monitored
throughout the project.

Newcombe (2003) stated that there are primary and secondary stakeholders that need to
be identified within the project. Some stakeholders may also have different agendas this
may be moral or strategic within an organisation or livelihood, the power and leverage of
the stakeholder being very important when trying to negotiate with stakeholders. Freeman,
(1984, cited in Frooman,1999) stated that stakeholders can be managed by their power and
the predictability of the stakeholder although this may change throughout the project so
cannot always be reliable. Whether the stakeholder interest is low or high this may change
throughout the project, it would be seen as a good idea to try and keep all stakeholders on

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side in case they are needed throughout the project. It is critically important to analyse the
stakeholders, looking at if the stake holder is voluntary within the project. The project
manager must be aware of which stakeholders may be on side for the project but which
may cause problems if they do not understand the key benefits that can be achieved.

Figure 1.2 Newcombe (2003) Stakeholder Mapping

As shown above Newcombe (2003) identified the areas of identification for the stakeholders
throughout the project, the stakeholder may not always stay within the same place on the
map. It is important to speak with all stakeholders after prioritising them as even the ones
with the low priority could still cause problems and risks for a project.

Heathcote (Lecture, 23 Feb 12) suggested that pre planning process relates back to interest
based negotiation, the organisation will have a problem which then will be analysed
defining the problem, creating the need for a project to be delivered. For the project team
to think about how to mitigate a risk from the project then turns into a problem this could
be solved using interest based negotiation.

There may be a number of situations where negotiation may be used: within the tender
stage of a project, with stakeholders, contractors, supply chain, funding bodies and also the
beneficiaries within the project, the intended benefits of the project will need to be
identified. When the project manager is entering into a conversation with a stakeholder this
may then create a negotiation between the two. Heathcote (Lecture, 23 Feb 12) advised
interest based negotiation can be used throughout the project within the supply chain,
there can be negotiations carried out with the bank to ensure funds are available for a
project, negotiate with the resources that are required for the project.

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There may be a number of situations where the stakeholder would be identified throughout
the project, this could be within the planning and implementation phase. Heathcote
(Lecture, 23 Feb 12) highlighted that there may be additional stakeholders that are applied
throughout the duration of the project. It is important to identify key stakeholders at the
beginning of the project thus helping to identify the risks attached to the stakeholders. The
interest based negotiation approach would help to access the problems that the
stakeholders may have within the project instead of waiting for the stakeholders to go to
the project manager with their problem, thus de-escalating the situation that may arise. The
issues that the stakeholders may bring forward may be a good positional bargaining tool for
the project manager to then go back to the board and ask for further budget increase or a
change of scope within the project, however only when this will benefit the project and
meet the requirements specified within the business case, Heathcote (Lecture, 01 March
2012).

Hartley (2006) confirmed that profit may not always be the main project denominator, the
negotiations may be in relation to business benefits or reputation but after this has been a
success this will in turn also make a profit for the organisation by increasing market share.

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4.0 Conclusion

Negotiation is used within project management to enable stakeholders to identify problems

and risks that can then be eliminated by delivering a project. This is a way to reinterpret
what projects are. Adapting the players to that of what is identified as a stakeholder.

Ward & Chapman (2008) confirmed the delivery of projects to create stakeholders that may
have influence over the outcome, there is some uncertainty and risk involved with the
stakeholder by how much they could influence the project at any time within the life cycle.
The identification of the stake holder at an early stage within the project recognises the
power that the stakeholder may hold. Newcombe (2003) stated that power can be utilised
to cause change within a project.

The project itself may be conceptualised as a problem, it is possible to consider the project
as a whole, as the subject of an interest based negotiation by which it could be explained as
a problem to be solved using an interest based negotiation approach. Ury & Fisher (1991)
stated interest based negotiation has advantages creating a win- win situations therefore
forming good relationships between negotiator and opposition, thus enabling both
organisations to benefit from this approach. By having a relationship with the stakeholders
thus enables the negotiator to develop those problem solutions. Ward & Chapman (2008)
stated that stake holder expectations can be identified using interest based negotiation
enabling risks and problems to be identified and solved. Positional negotiation can be used
to get the stakeholders to a meeting and then the interest based negotiation technique can
be used. Stakeholder management in managing stakeholder issues, is difficult to separate
from interest based negotiation.

The problems within the organisation are the risks, the project then starts when the
problem is thought about and analysed the problem can then be solved throughout
delivering the project benefits, and this can be done by using the interest based negotiation
approach this works to identify and solve the problem. Projects can be seen as problems
with main sub problems and continually occurring problems we tend to refer to as risk. A
project could be defined as a series of overlapping problems to be negotiated or an interest
based negotiation in itself. Ward & Chapman (2008) highlighted that stakeholder

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expectations can be approached by using interest based negotiation, this approach can be
used to identify and mitigate the risks of the project, Identification of the stakeholder could
reduce threats to the project at a later date.

Ury & Fisher (1991) Confirmed that when negotiating, negotiating hard for your interest
does not necessarily mean being closed on the oppositions point of view, being able to see
the argument from both sides of the table can benefit the negotiator. Each party can be
open to each others suggestions and listen to all interests stated, Successful negotiation
requires being firm and open (p.57).

Risks occur throughout the project development and deliver a similar interest based
negotiation approach to address those smaller problems that appear. Within the project
normal development some obvious points for negotiation such as procurement of resources
through contracts might also be seen as problems to be solved interest based negotiation
can serve this better than the traditional positional bargaining generally applied in project
management when in the stage of the procurement of contractors, within supply chain
management. Negotiation can be used throughout the project lifecycle with a number of
different stakeholders from project sponsor to the supply chain, the projects main
stakeholders will need to be identified at the concept phase of the project thus enabling pre
contract negotiations to take place. Rayner (2007) stated that stakeholder analysis gains
knowledge of the stakeholders views and influences towards the project.

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