Negotiation Skills for Project Managers

" In the name of Allah The All Merciful The most Merciful " Useful Science for the Sake of God

Course:

Negotiation Negotiation Skills for Project Managers

‫لمشاريع‬ ‫ي‬ ‫لتفاوض لمدي‬ ‫ر‬ ‫هار‬ Instructor: Dr. Attia Hussien Gomaa Industrial Engineering Consultant Engineering Service - American University In Cairo

Email: [email protected] – Tel: 0122738497

Who Should Attend:

Managers, engineers, and other practitioners concerned with planning and control in government, industrial and services sectors. Objectives: •

•

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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. 2. 3. 4. 5. 6. 7.

Negotiation overview Negotiation management Negotiation for selling & buying Negotiation for salary Conflict management Negotiation for project managers Neg Negot otia iati tion on case case stud studiies for for proj projec ectt mana manage gerrs

Negotiation Skills for Project Managers

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Chapter 1: Negotiation Overview

Negotiation is interaction between two or more parties to achieve certain goals or targets, & to overcome certain constrains or problems

(1) Targets

(3) Interaction

(2) Constraints

(7) (5) Conference Agreement

(4) Communication

(6) Conviction

Chester Karrass

Joseph Joubert Negotiation Skills for Project Managers

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Negot Ne gotiat iatio ion n:

Interaction between two or more parties & Each party having certain goals to be achieved

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To confer with another or others in order to come to terms or reach an agreement

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Negotiation is the process of achieving goals through an agreement. 

Negotiating is the art of reaching an agreement by resolving differences through creativity

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The process by which at least two people seek to make something happen. To be successful, both sides must agree with with the resolution. This is just the beginning, however. Both sides must cooperate cooperate in the implementation implementation of the contract they have accepted 

The definition of negotiation as it relates to employment is: a series of communications (either oral or writing) that reach a satisfying conclusion for all concerned parties, most often between the new employee and the hiring organization. 

Process of give-and-take exchange among persons aimed at resolving problems or conflicts

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Chester L. Karrass: ‘In business, you don't get what you

deserve, you get what you negotiate’. 

Joseph Joubert : ‘Never cut what you can untie’.


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Robert Estabrook : ‘He who has learned to disagree

without being disagreeable has discovered the most valuable secret of a diplomat’. “Everyone has just his [or her] own negotiating style, and the worst thing you can do is to adopt a negotiating technique that does not feel comfortable [because] credibility, based on an evident sincerity, is the most important single asset of a good negotiator.” James C. Freund, Anatomy of A Merger(1975) 

PRINCIPLES OF NEGOTIATION:

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The greatest failure in negotiation is failing to negotiate.

• The most important person to know in a negotiation is yourself. •

Everyone has power in a negotiation.

•

Single-issue bargaining leaves both parties unsatisfied.

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Urgency drives decisions.

•

Agreement is the end; trading off is the means.

• Even in a collaborative environment, best results are obtained by keeping the other party on a "need to know" basis. • The value of something is always in the eye of the beholder. Negotiation Skills for Project Managers

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• Success in negotiation is directly related to the amount and kind of preparation preceding the negotiation. • The ability to walk away or select another alternative to a negotiated agreement puts a negotiator in a very strong position. • Even when two sides are far apart on major issues, there are always things they can agree upon. • Meaningful negotiation involves conflicts. The person who has a strong need to be liked, or who tends to avoid conflict, is likely to be at a disadvantage. A Simple Example: • • •

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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 ?

What is the basis for your next step? Previous bid of yourself and the other agent • (e.g., monotonic concession protocol) How bad is it to raise your bid? • (e.g., how much can you afford) How bad is it when the transaction does not succeed? • (e.g., are there alternatives) Do you have information about a normal price? • (e.g., estimation of the value on the free market) • How reasonable are you willing to be with respect to the other agent? (e.g., is it a friend of yours) Negotiation Skills for Project Managers

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Strategies for Negotiation:

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

THE OLD BOOK ON NEGOTIATION:

• • •

“Win -Win” Negotiations: The Good Ones “Win-Lose” Negotiations: The Bad Ones “Lose-Lose” Negotiations: The Tragedies

THE NEW BOOK ON NEGOTIATION:

• Everyone negotiates for one and only one reason: to achieve their goals. • No one ever does anything that is against their interests (at least as they perceive those interests).


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Team work Individuals (1)

?

Lose / Lose

Individuals

(2)

Targets

(3)

Team Approach

(5)

Team

(4)

Planning

Win / Win

(6)

Target plan

"In business, you don't get what you deserve.... you get what you negotiate"; Chester Karrass Dr. Attia H. Gomaa: [email protected] 0122738497


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NEEDS & WANTS:

Emotion Illogical Powerful Responsive Costly Negotiable

Logical Important Non-negotiable Critical

W A N T S

N E E D S

The wants often distort the negotiation process, creating a desire for something that is not critical to the task. Wants are frequently an emotional response and are therefore often beyond reason. Alpha Point Needs are those things that are seen as critical to the task or outcome. They represent a basic or foundational view, the absence of which would severely restrict the purpose. .

Everyone!   

Children when they ‘beg’ for something: sweets or late to bed Friend, Wife, etc. Owner, Contractor, etc.

Negotiating is a basic, generic human activity - a process that is often used in: Labor-management relations Business deals like mergers and sales International affairs Everyday activities Negotiation is not a process that everyone does, almost daily •

• • • •

•


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To arrive at a win-win situation

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Both parties must leave the table feeling satisfied with results

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Conflict model not helpful in insurance circumstances although may be applicable to third party (TP) claims

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Power an issue in TP claims

NEGOTIATION CRITERIA: •

Issue must be negotiable

•

Negotiators must be interested in both giving and taking

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Parties must trust each other and the negotiation process

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Accept the status quo

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More powerful side can try to impose solution

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Negotiate


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The structure of the negotiation itself plays an important part in determining how two negotiating parties should interact.   

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Win / Win Orientation collaborative approach assumes that solutions can be reached to satisfy all parties look beyond means and focus on end

5 Steps to Win-Win Negotiating identify needs of both parties brainstorm list of possible solutions evaluate alternative solutions implement solution(s) follow up     

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Win / Lose: Bargaining Orientation used by competitive communicators victory by one party matched by loss of other requires much information gathering negotiations are begun by taking positions Lose / Lose Orientation if one party believes that a negotiating partner is blocking them, seek revenge generally occurs when partners ignore other’s needs Compromise Orientation (lose/lose): usually done when resources are limited or scarce both parties lose some of what they want


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  

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”  

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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 

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Realistic  Both sides satisfied, win/win situation  Usually results from deliberate style Acceptable  Likely to result from quick style  Something is better than nothing  Always ask for a better deal Worst  When you’re too stubborn to be flexible  Usually from quick style Predetermine the outcomes before you start negotiations, you have a better chance of getting a better result “Think carefully, think creatively, and think ahead” 

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There are no rules Establish an agenda Everything is negotiable Ask for a better deal Be creative Learn to say “NO” yourself Creative Versatile Motivated Has the ability to walk away

Enthusiasm  Confidence  Engaged Recognition  Accomplishment  Pat on the back Integrity  No trickery  Trustworthiness Social Skills  Enjoy people  Interest in others Teamwork  Better as a team  Self-control Creativity  Always looking for ways to complete the deal


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The Art of Negotiation: o

Identify your power

o

Decide what you are willing to concede

o

What are the consequences of disagreement

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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

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Know the negotiator

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What’s the negotiator’s model?

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What does the negotiator want?

Double Think: 

What do you want? (think)

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What does the negotiator want? (double think)

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What does the negotiator think you want? (triple think)

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Where’s the middle ground?


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Build Trust: 

Tell the truth

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Respect confidences

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Honor your commitments

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Be clear

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Be open

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Be firm

External Listening: 

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Body language – yours and theirs Non verbal messages: 

Facial expressions

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Voice inflections

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Eye movement

Move Beyond Positions: 

Ask questions that probe specific needs / interests

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Create a supportive climate

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Find mutual ground


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LEAVE SOMETHING ON THE TABLE:

Peace treaties are made between enemies, not friends: It usually takes a war to get them to the bargaining table. Deals are made between parties who seek mutual advantage, not unilateral victory. Both sides have to win something, or you don't have a deal, you have a homicide. One way or another, your counterpart will see to it that crime doesn't pay. FIRST NOT FINAL:

Don't create a situation in which your opponent can't justify his value to his principal by accepting your offer. Give the person on the other side of the table a chance to knock you down a little. Remember the previous point: He or she needs to win something, too. DON’T NEGOTIATE WITH YOURSELF:

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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USE EXPERTS:

You don't know everything. Trying to pretend to your opponent, your client or yourself that you are knowledgeable in some area or have some vital information when you don't harms your position. It makes you appear weak and foolish. ACCURATELY ASSESS OTHER SIDES STRENGTH:

Remember, in any negotiation, both sides are under pressure to perform. They have bosses, deadlines, pressures, fears and objectives, the same as you do. TAKE YOUR TIME:

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. REVIEW AND LEARN:

Look back on the negotiation that you have conducted and identify what worked and what did not. Learn from the experience. Know Your BATNA: BATNA – Best Alternative To A Negotiated Agreement Can you afford to walk away?  


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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.

Calculate the value of each concession. Before making the concessions, ask yourself: 

What is the value of such concession to the other party?

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What will it cost me?

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What do I need in return?

Concessions: 

Leave room for negotiation

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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. Negotiation Skills for Project Managers

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Impasses: 

Pause

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Honorable withdrawal

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Change of place, person or proposal

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Mediator

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Respond to aggressions with facts

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Avoid personality conflicts

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Emphasize previous points of agreement

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Move on to non conflicting issues

Negotiating a Raise or Promotion: 

What have you done for them lately?

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How often can you ask for a raise or promotion?

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How much should you ask for?

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How do you ask?

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What if the answer is no?

Setting It Up: 

Agree on a benchmark job

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Agree on proficiency / performance level

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Job value

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Salary range

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Necessary performance


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What is a Win? 

Settlement range

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What’s your bottom line?

Enjoy Yourself: 

Negotiation is an art

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Logical steps set the parameters

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The art is in the deal

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Have fun!

The Buyer’s Role in Negotiation: 

Acting Alone: 

Recurring purchases of standard, low price

items 

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Meets in office with supplier reps.

Buyer as Team Leader: 

Expensive, technically advanced items, or

complex contracts 

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Setting up long term relationships Negotiating details and specs not included in

the RFP Negotiation Skills for Project Managers

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1-

2-

3-

4-

5-

6-


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Chapter 2: Negotiation Management Negotiation Management is a powerful systematic methodology to achieve certain targets between two or more parties. 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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Preparation- 1

Establishing - 2 Objectives

Control &- 5 Assessment Face-to-Face- 3 FACE-TO-FACE Discussion DISCUSSIONS

Final - 4 Action


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   

What do you want? What does the other side need? Decide on style What are the consequences of each choice.

Know the item or service:       

What is being purchased? Who is it for? How will it be used? Are there any substitutes? What is the procurement history of this item? What is its future with this company? Is there any trade lingo to be familiar with?

The Sellers Bargaining Strength   

Seller’s Desperation Certainty of getting contract Time to reach agreement

The Buyers Bargaining Strength    

Extent of competition Adequacy of cost/price analysis Knowledge of the Seller Thoroughness of preparation

Note: 99% or more of the time involved in a successful negotiation is invested in preparation for the actual face-to-face discussion


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Objectives must be specific!! General objectives are inadequate and too vague to foster good negotiation. Planning sheet  Issues involved  Realistic, possible, worst  

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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   

The buyer should also develop estimates of the sellers positions Potential Negotiation Issues Objectives should be developed for all of the following issues: Costs and prices Delivery schedules Quality levels All technical aspects of the purchase Types of materials and substitutes Buyer-furnished material and equipment Mode of transportation Warranty terms and conditions Payment terms Discount provisions Liability for claims and damage           


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F.O.B. point


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Presentation: Creative title Reduce to “must know” items Keywords Mini-speeches around keywords Visuals Don’t give concessions just to keep things going Make note of concerns and keep going       

Fact Finding

Recess

Narrowing Differences

Hard Bargaining

Fact Finding:

Initial Meeting Focus on inconsistencies between supplier’s proposal and buyer’s information Should gain a better understanding of the supplier’s interests and abilities (strengths & weaknesses) Focus on interests and information, NOT positions  

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The Recess:

Buyers reassess relative strengths and weaknesses Review and refine Organize an agenda Prioritize issues to be discussed in the order of their probable ease of solution Goal is to develop a cooperative atmosphere; yet, one that is going to allow you to effectively negotiate    

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Narrowing the Differences:

The “back and forth” process Define the issue, state the facts, attempt to convince supplier that your position is reasonable If agreement can’t be reached, move on to next issue Continue until all things are worked out If agreement cannot be reached, there are two choices Adjourning Hard bargaining  

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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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When in doubt, ask questions! Open questions Reflective questions Tactics


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Use 

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Don’t use           

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Walk out 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

Arrangements should be neutral and comfortable Pay attention to what others say Screen out all visual distractions Ask open ended questions Listen to responses Proactive vs. reactive behavior

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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Principled Negotiation:    

Separate the people from the problem Focus on interests, not positions Invent options for mutual gain Insist on using objective criteria

Separate People from Problem: Understand the other side's position Acknowledge emotions, let steam out Use active listening   

Focus on Interests, not Positions: Position is something decided, interests are cause of decision Identify underlying interests---some interests will be shared by both sides  

Invent Options for Mutual Gain: Brainstorm options Evaluate alternatives Reconciling differences: look for items that are of low cost to you and high benefit to them, and vice versa   

Insist on Using Objective Criteria: Find objective criteria: both parties should be willing to be bound by standard Use and acknowledge reason Do not give in to pressure 

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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   

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ETHICAL: Productive.  Sets high standards, independent thinking  Develops proposals in common interest Less productive.  Becomes ‘preachy’. Overly concerned with ideals and common values Tendencies in conflict.  Sticks to his case because he is ‘right’. Becomes easily disillusioned ANALYTICAL: Productive.  Careful analysis. Preference for hard facts and figures. Predictable, Holds to goals Less productive.  Over pre-occupation with details. No ability to improvise. Not sensitive to climate of meeting Tendencies in a conflict.  Amasses more and more evidence that argument is right. Becomes stubborn FLEXIBLE: Productive  Wants to get things done. Takes advantage of opportunities. Quick to act. Likes to organise Less productive.  Bossy. Easily becomes impatient and impulsive Tendencies in a conflict  Does not concede. Tries to win. Becomes angry 

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JOVIAL: 

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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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Other Party Is More Powerful: Don't focus on a "bottom line" Know your Best Alternative To a Negotiated Agreement (BATNA) Know your opponent's BATNA Don't agree to anything less than your BATNA  

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Won't Use Principled Negotiation:  

Continue to use principled negotiation Use "Negotiation Jujitsu": deflect attacks onto problem  Assertion of position --> ask for reasons  Attack your ideas --> ask for advice  Personal attacks --> recast as attacks on problem

Other Party Uses Dirty Tricks: Deception: seek verification for claims Personal attacks: recognize them Refusal to negotiate: ask why  


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Cartoon of the Day:


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Customer-Oriented Development: It is important to develop good relationships with customers (I.e. clients) -- WHY? §

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System development is a partnership effort (it is a ‘two-way street’) It is difficult (if not impossible) to achieve high quality partnership without good IT-business relationships High quality IS-client relationships reduce chances of IS implementation failures. How? High quality IS-client relationships reduce chances of IS implementation failures. How? • management of client’s expectations as to project scope, deliverables, development speed, etc. • improvement in mutual understanding as to quality and satisfaction • building systems clients actually use • improving efficiency of interrelated tasks High-quality relationships also • enhance professional IS credibility • improve quality of work life for ISPs and clients

Poor IS-business relationships contribute to IS project failures detract from IS credibility hinder success of subsequent organizational change projects plant the seed for the decision to eventually outsource IS services to a third party contractor   

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Reasons for poor relationships: Lack of collaboration among key stakeholders o “culture gap” between technical specialists and their businessfocused clients o behaviors of IS specialists during projects: failure to understand client’s needs and incentives overemphasis on technical issues at the expense of social issues overall, a lack of client-oriented behaviors and service culture o

• •

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High quality IT-business relationships: Will discuss conditions under which good relationships evolve at the end of this presentation §

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 customeroriented 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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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 •

•

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Managing Customer Expectations: Prevent customer-determined schedule before requirements & resources are known Manage the size & complexity of features Emphasize that the prototype isn’t the product Don’t create unrealistic expectations about schedule, functionality, etc. •

• • •

Use Project Recovery When... • • • • • • •

Don’t know when project will finish Laden with defects Developers working burnout hours, low morale Nobody can control the schedule Customer doesn’t believe project will be done The team is defensive, relations are strained… Project is about to be canceled

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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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 • •

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THEORY- W --?? ** WHAT IS IT AND HOW DOES IT WORK? ** WHAT ARE THE BENEFITS?

Theory W-Stakeholder Conflicting Goals: Customers want quick schedule, low budget, lots of features, user-friendly, robust software Bosses want no overruns, no surprises, successful project Developers want interesting work, challenge, no grunt work, home life Maintainers want no defects, documentation, modifiability •

• •

•

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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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: 1-

Establish Win-Win Preconditions: Identify & include all the stakeholders o Establish reasonable expectations o Assign tasks so people can achieve their own win o conditions o Provide environment that supports project goals, e.g., training, appropriate lifecycle model

2- Structure Win-Win Software Process: o Establish a realistic plan (see Step 1) o Use the plan to control the project (follow it!) o Identify & manage win-lose & lose-lose risks  For each win condition, identify & monitor risks o Keep people involved 3- Structure Win-Win Product: Internal parts that developers & maintainers see o  Documentation  Modifiability o External parts that customers/users see  Easy to learn and to use  Robust


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When is Win-Win Appropriate? Project recovery or from beginning (best)

o

When there is a champion (upper-level support) to bring in all stakeholders o

Small or large projects

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Downside? -- Manager’s role more demanding: Has to manage stakeholder relationships Negotiate with stakeholders Set & monitor goals

o

• • •

Leverage the People: •

•

•

Restore team morale o Improve working conditions Clean up major personnel problems Replace problem leadership, o Give managers assistance o Change manager’s supervisor

•

Add people carefully, if at all

•

Instead focus existing team members’ time on

project •

o o

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Allow team members to respond differently: Some work harder Some work slowly but surely See that developers pace themselves


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Leverage the Process: •

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•

•

•

Find & fix the classic mistakes o Are you still changing the project definition? o What about the design adequacy? o Too few management controls to track status? o Shortchanged quality to meet the deadline? o Are people getting burned out? Find & fix the classic mistakes o Is the deadline realistic? o Are people working too hard & quitting? o Is new technology a problem? o Problem developers? Low morale? Accountability? Fix broken development processes o Usually software development fundamentals, e.g., version control, defect tracking Use miniature milestones o Schedule realistically with miniature milestones o Track scheduling progress carefully o Record reasons for missed milestones o Recalibrate schedules from what you learn after 2-3 weeks have passed o Don’t commit to schedule until you have one you can believe Manage risks carefully

Leverage the Product: •

• • • •

Stabilize the requirements o First determine WHAT the requirements are Trim the feature set - prioritize what’s left Assess your political position? Reduce number of defects & keep them low Get to a state you can test & keep it working


41

Chapter 3: Negotiation for Selling & Buying 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    

  

Sole source situation Sellers market Specification not complete Competitive bidding not appropriate New products When Competitive Bidding is Impractical or Inappropriate When Risks and Costs cannot be accurately predetermined When the buyer is contracting for a portion of the seller’s production capacity When tooling and set-up costs represent a large percentage of the supplier’s total costs When a long period of time is required to produce the item When products of a specific supplier are desired to the exclusion of others      












42

NEGOTIATIONS WITH VENDORS: Can you negotiate? Yes, negotiation is natural! (Would you be here today if you could not negotiate?) Negotiation is the means by which we gain what we need or want or desire want or desire when somebody else controls what we need or want or desire. But there are skills to be learned. And we should be prepared for negotiation to expose our weaknesses (e.g. losing our temper) as well as our strengths. And if after learning the skills and getting some experience we do not feel comfortable with negotiation, we should leave it to others to negotiate on our behalf. •

•

• •

•

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. •

•

•

•


43

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. •

•

•

When the negotiation starts … Stay calm and strong! This helps to keep you in control of the negotiation. Ask the vendor to justify their position. Stay in control of the agenda. Prepare a list of issues to be covered. Use short, simple words and sentences to describe the points of greatest importance to you. Know what you expect to be included as part of the basic price and what you are prepared to consider as “extras”. Know when to compromise. Compromise is almost inevitable but the art is in knowing what to concede, when and how. Make notes on concessions won and given. Know when to say “no” and walk away. Librarians have not done this enough because of the need to supply content their users need. Make clear the issues on which negotiations have broken down so that they can be resumed if conditions change. •

•

•

•


44

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. •

•

Define the issues!    

Interests Success Performance or function Details  Terms - conditions  Price  Liabilities  Delivery - dates


45

Selling: • Recognise ‘buying roles’ – particularly within organisations / families • Need identifier • Budget holder • Purchaser • Gatekeeper • User 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


46

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 business £2000 an hour 

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 • decide issues on their merits rather than through haggling 4- Criteria: Produce a wise agreement Efficient Don’t damage the relationship 

  

  

5- Problems with Positions: Negotiation Skills for Project Managers

47

   

Ego Stalling Endanger relationship Hard game always dominates a soft one

Three Stages of Negotiation: Analysis Planning Discussion   

New Focus:    

People Interests Options Criteria

1- Focus on People: Separate the people from the problem Don’t degenerate into blaming, anger etc. People problems are:  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


48

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


49

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



Brainstorming



Broaden your options



Look for mutual gain



Make their decision easy



Give them an answer, not a problem

Prescription:

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


50

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


51

Chapter 4: Negotiation for Salary

The definition of negotiation as it relates to employment is: a series of communications (either oral or writing) that reach a satisfying conclusion for all concerned parties, most often between the new employee and the hiring organization. It takes the Right Attitude: • Employers don’t give salary increases, employees earn them. • You have no right to an increase, you earn it. • You have the right to a salary adjustment due to inflation or an increase in the cost of living, but you have no right to an increase based on merit.

Timing is Everything

How much time should pass before you should think about your next salary increase? • •

When you have been praised for work you have just completed. When major changes occur in your job responsibilities or tasks. The Art of Negotiation Principles of Negotiation


52

1. Postpone the negotiation Bounce back the question to the interviewer. • Stall elegantly. • • Use your sense of humor. Disarm your interviewer • 2.

• •

Avoid mentioning your last salary Employers use this to: Gauge where you fit in the salary range; You may be screened out quickly if the number of candidates is large, as salary is an ideal and obvious way to compare candidates and screen them out.

3. Make them talk first: Wait for the interviewer to expose himself. Effectively postponing the negotiation and making the interviewer talk first has several advantages. Most importantly you: • Get a better offer than you originally planned; • Refrain from “shooting yourself in the foot” by asking for too high of a figure; Take the necessary time to obtain specific information about the level of the job and its corresponding responsibilities; • Gauge how the interviewer is evaluating you before you have to negotiate with him; • Discover the starting point of the negotiation process. •


53

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. Stand Your Ground : Agree with Gentle Humor

I: You certainly are tough when it comes to negotiating! Y: Why, thank you! Turn Negatives to Positives

I: You seem so sure of yourself! It appears that

nothing will make you budge. Y: Yes, this is a compliment given to me by many of my past employers. Common Sense

I: You appear to be a person who is always watching

out for himself.


54

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. Y:

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; Negotiation Skills for Project Managers

55

•

•

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. Money Isn’t Everything

• •

• • •

Communicate salaries after the offer has been made. Analyze other options/ child care, elder care, disability/ life insurance, other perks… Ensure you like your job. Don’t accept a job based on salary. Accept a job that you will enjoy.

Negotiation is a Gamble we all Play…

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. •

When we are dependent on another, we have to accept and accommodate the demands of another. •

Interdependent relationships are characterized by interlocking goals-both parties need each other to accomplish their goals. •


56

Standards for Evaluating Relationship Outcomes: Anticipated Outcome (0): What we expect to receive from this relationship. •

Comparison Level (CL): The standard against which a person evaluates a relationship---what we could receive from other relationships. •

Comparison Level for Alternatives (CLalt): The lowest level of outcome that would be accepted from this relationship before changing to another relationship. •


57

Standards for Evaluating Relationship Outcomes (SERO): The Thibaut and Kelly mode of analysis permits us to draw a distinction between attractiveness and satisfaction on one hand and dependency on the other. •

A person can dislike a relationship and stay, or like a relationship and leave. •

In negotiation, the other party may dislike dealing with us, but since we have "the best deal in town;' he or she will continue to negotiate with us. •

Alternately, the other party may like us, but nonetheless break off negotiations because of more attractive possibilities elsewhere. •

Whether you should or should not agree on something in a negotiation depends entirely upon the attractiveness to you of the best available alternatives •

This concept is called BATNA (an acronym for Best Alternative To a Negotiated Agreement) and suggest that negotiators need to understand both parties' BATNAs when they negotiate. •


58

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?


59

The greater the distance between 0 and CL, the greater the attractiveness or unattractiveness of the relationship. •

When a relationship is unattractive, we may think of leaving, but whether we do depends upon our options. •

We may not like our current job, but if we are relatively unskilled, we may find it difficult to get another job. •

If we have many skills, however, we may know of several jobs to which we can easily move. •

People leave relationships when outcomes fall below this CLalt. •

It is assumed that the more a person's actual outcome exceeds the CLalt, the more dependent upon the relationship he is. •


60

The Dilemma of Honest: •

Concerns how much of the truth to tell the other party

Telling the other party everything about your situation may give that person the opportunity to take advantage of you. •

However, not telling the other person anything about your needs, wants, and desires may lead to a stalemate. •

•

Just how much of the truth should you tell the other

Example: The Dilemma of Honest If X told Y that he would work for as little as $35,000 but would like to start at $40,000, •

It is quite possible that Y would hire him for $35,000 and allocate the extra money, that he might have paid to him elsewhere in the budget. •

•

If Y does this, he might hurt their long term relationship.

•

Y should insure that both parties’ needs are met.

If X does not tell Y any information about his salary aspirations, then Y would have a difficult time knowing how to satisfying those needs. •


61

The Dilemma of Trust: Concerns how much to believe what the other party tells you. If you believe everything the other party says, then he or she could take advantage of you. If you believe nothing the other party says, then you will have a great deal of difficulty in reaching an agreement. Exactly how much to believe of what the other party tells you depends on many factors: The reputation of the other party How he treated you in the past The present circumstances, and so on. •

•

•

•

• • •

Example: The Dilemma of Trust If Y told X that $38,000 was the maximum has was allowed to pay him for the job, without seeking approval “from above”, should X believe him or not?


62

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. Two efforts in negotiation help to create this trust and belief: Perceptions of outcomes Perceptions of the process The former attempts to change a party's estimation of the perceived importance or value of something • •

•

Perceptions Of Outcomes: •

•

Attempts to change a party's estimation of the perceived importance or value of something If Y convinces X that a lower salary for the job is relatively unimportant given the high promotion potential associated with the new job, the X can feel more comfortable making a concession on this point.

Perceptions Of The Process: •

•

Efforts based on the negotiating process help convey images of equity, fairness, and reciprocity in proposals and concessions Satisfaction with a negotiation is as much determined by the process through which an agreement is reached as with the actual outcome obtained


63

Understand the Nature of the Interdependence: Understanding the nature of the interdependence between parties in a negotiation is a critical negotiation skill. •

Unfortunately, negotiation situations do not present themselves with neat labels, typically, describing the nature of the interdependence between parties. •

Negotiators make judgments about the nature of the interdependence in their negotiation situations, and negotiator perceptions about interdependence become as important as the actual structure of the interdependence •

Understanding History: •

The point here is that people bring much baggage with them to a negotiation, including: Past history Personality characteristics Moods Habits Beliefs about how to negotiate • • • • •

•

These factors will influence how people perceive an interdependent situation, and this perception will in turn have a strong effect on the subsequent negotiation.


64

Cooperators and Competitors: •

There are two general types of negotiators: Cooperators Competitors • •

Competitors enter negotiations expecting the other party to compete, and to compete with everyone. •

Cooperators will cooperate with other cooperators and compete with 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. •


65

Mythical Fixed Pie: Most negotiators in a situation containing both cooperative and competitive elements (mixed-motive) will assume that there is a fixed pie – the more I get the less you have •

68% of negotiators assume that negotiations will be win-lose and only 32% assume a win-win situation •

Those negotiators that adjust to a situation quickly generally achieve better results •


66

Chapter 5: 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. 

Negotiation is a strategy for productively managing conflict. 

Conflict more generally When a person or group frustrates the goal attainment of another. 

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. •

•

Interpersonal – conflict between individual people

Intragroup – conflict within a small group – among team members, committee members, familes, etc… •

Intergroup – conflict between groups, unions and management, warring nations, feuding families, etc… •


67


68

Elements That Contribute to Conflict’s Destructive Image: 1. Competitive Processes – parties compete against each other because they think their goals are in competition and that the two of them cannot both achieve their objectives. 2. Misperception and Bias – as conflict intensifies, perceptions become distorted. People tend to view things consistently with their own perspective on the conflict. Thinking tends to become stereotypical and biased 3. Emotionality – conflcits tend to become emotionally charged as the parties become anxious, irratated, annoyed, angry, or frustrated. Emotions tend to dominate thinking and the parties may become more emotional and irrational as the conflict escalates. 4. Decreased Communication – Communications declines. Parties stop communicating with those who disagree with them and communicate more with those that agree. 5. Blurred Issues – Central issues in the dispute become blurred and less defined. New, unrelated issues are drawn in as the conflict becomes a vortex that attracts both related and innocent bystanders. 6. Rigid Commitments – parties become locked into positions. As they are challenged by the other side, parties become more committed to their points of view and less willing to back down from them for fear of losing face and looking foolish. Thinking processes become rigid, and the parties tend to see issues as very simple and either or rather than as complex. Negotiation Skills for Project Managers

69

7.

Magnified Differences; Minimized Similarities

8.

Escalation of the Conflict

Functions and Benefits of Conflict: Discussing conflict makes organizational members more aware and able to cope with problems. Knowing that others are frustrated and want change creates incentives to try to solve the underlying problem. •

Conflict promises organizational change and adaptation. Procedures, assignments, budget allocations, and other organizational practices are challenged. Conflict draws attention to those issues that may interfere with and frustrate employees. •

Conflict strengthens relationships and heightens morale. Employees realize that their relationships are strong enough to withstand the test of conflict; they need not avoid frustrations and problems. They can release their tensions through discussion and problem solving. •

Conflict promotes awareness of self and others. Through conflict, people learn what makes them angry, frustrated, and frightened and also what is important to them. Knowing what we are willing to fight for tells us a lot about ourselves. Knowing what makes our colleagues unhappy helps us to understand them. •

Conflict enhances personal development. Managers find out how their style affects their subordinates through conflict. Workers learn what technical and interpersonal skills they need to upgrade themselves. •


70

Conflict encourages psychological development. Persons become more accurate and realistic in their selfappraisals. Through conflict, persons take others' perspectives and become less egocentric. Conflict helps persons to believe that they are powerful and capable of controlling their own lives. They do not simply need to endure hostility and frustration but can act to improve their lives. •

Conflict can be stimulating and fun. Persons feel aroused, involved, and alive in conflict, and it can be a welcome break from an easygoing pace. It invites employees to take another look and to appreciate the intricacies of their relationships. •


71

Conflict Management:

n

A

b

o

u

t

O

t

h

e

Yielding

r

’

s

O

u

t

c

o

m

Problem Solving

Compromising

Inaction

Contending

Concern About Own Outcomes Contending (competing or dominating) – Parties who employ this strategy maintain their own aspirations and try to persuade the other party to yield •

Yielding (accommodating or obliging) – Show little or no concern in whether they attain their own outcomes, but are quite interested in the other party attains their outcome •


72

e

s

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 •

Problem Solving (Collaborating and integrating) – actors pursue a problem solving strategy showing high concern for attaining their own outcomes and high concern for whether the other party attains their outcome. Both parties pursue approaches to maximize their own joint outcome so both sides win. •

Managing conflict: Assertiveness vs. Cooperation     

Avoidance (low, low) Accommodation (low, high) Competing (high, low) Compromise (med, med) Collaboration (high, high)


73

Chapter 6: Negotiation Skills for

Golden Rules for project engineers: •

In business, you don't get what you deserve, you get

what you negotiate. •

If you fail to plan, then you plan to fail.

•

Negotiation is an art and The art is in the deal

•

When you see a problem, you say welcome

•

In practice, there is no optimal solution.

•

The best solution must be customizing according to the

working conditions. •

There is always room for negotiation.

•

Ensure that the negotiation team members have a

consistent message, roles, and approach for the negotiation. •

Determine your “drop dead” conditions and fallback

positions before beginning the negotiation. •

Negotiate to a complete contract, taking into

consideration potential changes to your organization and to the vendor’s. •

Hope for the best and plan for the worst.


74

Timeline for Project Engineer Negotiation: What are the bases of negotiation in the following? Timeline

Owner

Contractor

1. Initial Contact 2. Initial Interview 3. Tender /Offer Interview 4. Follow-up Interview 5. Offer detailed negotiation 6. Contract review negotiation 7. Progress negotiation 8. Closed-out negotiation

Contract negotiation:


75

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

3.

Evaluate product demonstration

4.

Site visit

5.

Contract and cost analysis

6.

Contract negotiation

7. Agreement

•

In summary, we often need to balance the desire for

technical excellence and cost

•

It can be a point where management and engineering

collide.


76

Evaluating and resolving conflicting objectives: 1.

Technical Proposal

– 2.

if OK then move onto

Budget (or Financial)

Technical Proposal:

–

knowledge and experience in relevant fields – 50%

–

Managerial and financial capabilities – 20%

–

General capabilities – 30%

Knowledge and Experience in Relevant fields:

• The design document should detail how the proposed design will meet the design requirements • The document should detail a timeline as to how the project will be executed Managerial and Financial Capabilities:

Does the tenderer have appropriate personnel (CV)? Is the tenderer able to substitute a similarly qualified • person should the primary person become unavailable? • Is the tenderer able to complete the work within the budget allocated? •


77

General Capabilities:

•

Is the tenderer or good reputation?

•

Does the tenderer have a good understanding of your

business and the environment in which it works? •

Does the tenderer have good contacts within the

industry? Lastly,…

•

Once the tenders have satisfactorily satisfied the

technical requirements then tenders should be compared on the basis of cost Four foci of evaluation (Cotterall and Hughes1995)

1.

Strategic Assessment

2.

Technical Assessment

3.

Cost-benefit assessment

4.

Risk Analysis

•

Where do each of these forms of evaluation relate to

when considering the Tender?


78

Contract evaluation matrix

Strategic

Technical Proposal K M G x

Assessment Technical

x

Level

Budget

Assessment Cost-benefit assessment Risk Analysis

x x

K - knowledge and experience in relevant fields fields – 50% M - Managerial and financial capabilities – 20% G - General capabilities – 30%

1- Strategic Assessment •

•

•

•

•

•

Objectives: Objectives: support for corporate vision Information System (IS) Plan: Plan: legacy systems Organisation Structure: Structure: enhance of destroy? Management Information System (MIS) Personnel: Personnel: manning levels and skill base Corporate Image: Image: will it affect customer perceptions


79

2- Technical Assessment •

Functionality: will the end product work? Applications Security Metrics –design requirements

Scalability: is the network able to grow without major problems Adaptability: will the project be able to incorporate new technologies in the future? Manageability: can we monitor network operations and make necessary changes easily? •

•

•

3- Cost-benefit Analysis:

•

•

Costs – Development cost – Setup cost – Operational costs Benefits – Dire irect be bene nefi fits ts (redu reducction tion in sal salary bill bills) s) – Indi Indire rect ct be bene nefi fits ts (inc (incre reas ased ed accu accura racy cy,, incr increa ease sedd timeliness, more user friendly) – Inta Intang ngib ible le be bene nefi fits ts (Bet (Bette terr cu cust stom omer er an andd supp suppli lier er relationships, better information flows/problem solving)


80

•

Cost-benefit Analysis – –

•

If be benefits > cost, th that is is go good If benefits < cost – that is bad

How do do yo you me measure in intangible be benefits?

4- Risk Analysis

What is the likelihood that an event will result in the project not meeting its objectives? • A co cost st-b -beene nefi fitt sty style le of an anal alyysis sis ca can als alsoo be be use used to to quantify possible losses. “What if” analysis • The diff diffic icul ulty ty is de dete term rmin inin ingg the the like likeli liho hood od of an an eve event nt 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. • •


81

Service level: •

Ask the the que quest stiion wh wheether ther spe specif cific tec techn hnol olog ogie iess ar are

suitable for the kind of service you wish to deliver. •

Best effort

•

Deterministic service

•

Guaranteed Service

Criteria used in your last milestone exercise Milestone Best Effort

Service Deterministic Guaranteed

Response Time Accuracy Availability Network Utilisation Throughput Efficiency Latency


82

Negotiation Timeline for real project:

Activity Select Preferred Vendor Review Contract Select Negotiation Team Members Orient Team to Issues Hold Negotiation Kickoff Meeting Validate/Negotiate Sizing and Pricing Draft Milestones Agree on Acceptance Criteria Draft and Finalize Work Plan Complete Terms/Conditions Conduct Legal Review Sign Contract


Dur.

Month 1 2 3 Type Week 4 X 1 X 1 X 1 X 1 X 1 X 1 X 1 X 2 X 4 X X 1 X 1 X

83

The Role of Contract Negotiation:

•

•

System Planning

•

System Selection

•

Implementation

Establish the foundation and structure for a solid

working relationship. •

Clarify and/or resolve any issues identified during the

selection process. •

Further understand the vendor’s goals, objectives,

priorities, and culture. •

Provide detailed understanding regarding the mechanics

of the relationship to your executive team and project sponsors. •

Assess lingering risk and mitigate with specific

strategies. •

Enable your organization to take advantage of best-case

scenarios. •

Protect your organization against potential worst-case

scenarios. Negotiation Skills for Project Managers

84

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.

Contract Negotiation Strategies: Vendor contracts are, to varying extents, one-sided and in favor of the vendor. The trick to negotiation is to identify the tactics and approaches that are most effective in obtaining concessions.

Hardball Tactic – protracted negotiation typically accomplished via attorneys. •

Pushover (non-tactic) – negotiation on price with acceptance of terms and conditions. •


85

Balanced Approach – open discussion of issues and implications on both sides with a desire to develop a workable solution for each party. •


86

Contract Negotiation Process: Step

1. Determine Goals/ Objectives 2.

Obtain the “Complete”

Contract From the Vendor

Main items • • • • •

Uses. Growth. Timing. Bill of materials. Terms and conditions.

Appendices. Balance of • responsibilities. Inclusion/expansion. • •

3. Review and Identify Major Issues 4. Identify Negotiation Team 5. Develop Strategy

6. Negotiate Contract


• • •

Payment. Executive sponsors. System owner(s).

• • • •

Legal counsel. Goal. Leverage. Concessions.

• • •

Go/no-go. Location. Frequency.

•

Format.

87

Relationship between Owner and Contractor: It is important to develop a good relationship between Owner and Contractor. •

Discuss the major contract terms and conditions that can and should be negotiated. •

•

•

•

Identify various strategies and approaches for negotiation. Provide suggestions to improve leverage. Provide a framework for contract negotiation. Relationship

Status Owner Contractor

Good & Long term

Win

Win

Bad & Short term

Lose Win Lose

Win Lose Lose


88

How to establish Good & Long term Relationship?

1- Information Analysis:        

Scope and requirements analysis Budget and payment analysis Technical conditions analysis Time analysis HSE analysis Resource analysis Risk analysis Others conditions

2- Double / Triple Think:     

What do you want? What does the negotiator want? What does the negotiator think you want? Where’s the middle ground? What’s your bottom line?

(D) (T) (T) (D) (T)

3- Build Trust:      

Tell the truth Respect confidences Honor your commitments Be clear Be open Be firm


89

4- Move Beyond Positions:   

Ask questions that probe specific needs / interests Create a supportive climate Find mutual ground

5- External Listening Body language – yours and theirs  Nonverbal messages o Facial expressions o Voice inflections o Eye movement 

6- Know Your BATNA        

BATNA – Best Alternative To A Negotiated Agreement Don't focus on a "bottom line" Don't agree to anything less than your BATNA Separate the people from the problem Focus on interests, not positions Invent options for mutual gain Insist on using objective criteria Can you afford to walk away?


90

7- Negotiating a Raise or Promotion     

What have you done for them lately? How often can you ask for a raise or promotion? How much should you ask for? How do you ask? What if the answer is no?

8- Setting It Up Agree on a benchmark job  Agree on proficiency / performance level  Job value  Price / Salary range  Necessary performance 


91

Negotiation Issues: Negotiation may be developed for all of the following issues 1- Budget and payment conditions:   

Costs and prices Discount provisions Payment terms

2- Technical conditions:  

All technical aspects Quality levels

3- Time conditions: 



Schedules Crushing

4- Safety conditions: 



HSE levels Safety tools

5- Resource 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


92

 

Warranty terms and conditions Cooperation and relationships

Note: 99% or more of the time involved in a successful

negotiation is invested in preparation for the actual face-to-face discussion

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


93

PMIS - Negotiation Issues #

ID

Form/report

1 2 3

PSR WBS PBP

Project scope & requirements Work breakdown structure Project base price

Project Manager

4 5 6 7 8

SEC DDS BOQ WPA RAL

Standards & Engineering calculations Detailed drawing and specs Bill of quantity Work package activities Resource allocation (Mat., HR, Eq., SubCont.)

Design Manager

9 10 11 12 13 14

RPR BOM BOE BOH IER PPR

Resource performance rates Bill of materials and program Bill of equipment and program Bill of human resources and program Internal and external resources and program Procurement program reports

Resource Manager

15 16 17 18 19 20 21 22 23 24

RCR TMC TEC TLC TSC TDC TOH TPC NVA NPR

Resource cost rates Total material cost Total equipment cost Total labor cost Total subcontractor cost Total direct cost Total overhead cost Total project cost Net value added and Margin factor Net profit (or Saving) ±X %

Cost Manager

25 26 27

MAP APS DPS

Target Master plan for WBS Action plans for each WP Detailed plans for each work type

Planning Manager

28 29

WOS WFU

Work orders for each crew (weekly or monthly) Work order follow-up (weekly or monthly)

Site Manager

30

PER

Performance evaluation report

31 32

KPI RAS

Key performance indicators (for Top mang.) Risk ass. Report for critical (for Top mang.)


Responsibility

All Project Manager 94

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 •

•

•

•

•

•

•

•

•

For construction projects: Lower Price limit = (1.3 to 1.7) * ERC Margin Factor = 1.3 to 1.5 Loading

Full capacity >85 % Profit Parameter Target 1) Profit

Resource External View

Normal Capacity 60-85% Markup 1) Overhead 2) Profit Mixed


Unused capacity <60% Value added 1) Internal Resources 2) Profit Internal 95

Project Price Parameters:

Price = Total Cost * Weight Factor 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. Negotiation Skills for Project Managers

96

Example: Project Cost & Price Analysis:

- Direct cost: - Materials - Equipment - Manpower - Subcontractor

10 20 10 5 === 45 20 10 === 75 60 15

- Total direct cost: - Room overhead - Office overhead - Total cost - Internal resource - External resources

E I I E I I I+E

Example: Three Projects:

Cost item - Direct cost:  Materials  Equipment  Manpower  Subcontractor - Total direct cost - Project overhead - Sector overhead - Total cost - Price - Profit - Value added Remark Negotiation Skills for Project Managers

A

Projects B

C

15 1 1 20 37 1 2 40 50 10 15 Full capacity >85 %

13 5 7 10 35 2 2 39 48 9 25 Normal Capacity 60-85%

9 12 11 2 34 3 2 38 46 8 35 Unused capacity <60% 97

Technical Condition Parameters • • • • • • • • • • •

Schedule Parameters • • • • • • • • • • • •


98

Payment Condition Parameters • • • • • • • • • • • •

Bonus / Penalty Condition Parameters • • • • • • • • • • • •


99

KPI Parameters 1- Bill of Quantities: 

BCWS = Budget Cost of Work Schedule



ACWP = Actual Cost of Work Performed



BCWP = Budget Cost of Work Performed



Total Variance = BCWS – ACWP



Cost Variance = WP (BC – AC) = BCWP – ACWP



Schedule Variance = BC (WS – WP) = BCWS - BCWP



Schedule Late / early duration

2- Productivity: 

Total Productivity %



Equipment Productivity %



Material Utilization %



Material Productivity %



Labor Productivity %


100

Negotiation Management For Project Engineers

Negotiation Process Cycle:

Preparation- 1

2- Establishing Objectives

5- Control & Assessment 3- Face-to-Face FACE-TO-FACE Discussion DISCUSSIONS

4- Final Action


101

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 IV- Final Action:

14- Recommendation / Agreement IV- Control & Assessment :

15- Performance Evaluation


102

‫ععععععع‬ ‫عععععع‬

‫ئق‬ ‫بالشك‬ ‫نفس‬ ‫دي‬ -1 ‫ة‬‫لث‬‫ة و‬‫لمصد‬ -2 ‫يا‬‫ول‬‫و‬ ‫د‬ -3 ‫ل‬‫و‬ ‫ا‬ -4 ‫خ‬‫و‬ ‫و‬ ‫ا‬‫نط‬  -5 ‫ح‬‫ل‬‫ة و‬‫سا‬‫ل‬ -6 ‫طاء‬‫ل‬‫خذ و‬ ‫ا‬ -7 ‫ي‬‫لت‬‫و‬ ‫ج‬‫لت‬‫ز و‬‫ف‬‫لت‬ -8 ‫د‬‫بال‬ ‫لتز‬‫هد و‬‫لت‬ -9 ‫الة‬‫لف‬ ‫طة‬‫لس‬

-10

‫ة‬‫غ‬ 

-11

‫ة‬‫لصد‬‫ة و‬‫لم‬

-12

‫ي‬‫خ‬ ‫ه‬‫و‬  -13 ‫لص‬ ‫سد ون‬‫ل‬ ‫ا‬ 

-14

‫ا‬‫ل‬ ‫ل‬ ‫ة‬‫ا‬

-15


103

‫ل‬

‫لمؤ‬ (1) ‫نفس‬ ‫دي‬

‫ارج‬‫ل‬ ‫لمظه‬

‫ل‬‫لة و‬

‫ة‬‫لسم‬

(2) ‫ة‬‫لمصد‬ ‫ة‬‫لث‬‫و‬

‫هة‬‫ل‬ ‫ة أو‬‫له‬

‫ل‬ ‫ا‬‫ن‬

‫ة‬‫ص‬‫لش‬

‫ار‬‫ل‬‫كار و‬

( 3) ‫د‬ ‫يا‬‫ول‬‫و‬

‫انا‬‫ل‬ ‫ة‬ 104


‫ية‬‫ول‬ ‫د‬‫ا‬

‫و‬ 

‫د‬‫ل‬ ‫ط‬‫لت‬

( 4) ‫ا‬ ‫ل‬‫و‬

‫ة و‬ ‫ائق‬‫ل‬

‫ة‬‫ا‬‫لم‬ ‫اي‬‫لم‬

‫ا‬‫نت‬ ‫رجة‬ ‫ي‬‫خ‬

(5) ‫ا‬‫نط‬  ‫خ‬‫و‬ ‫و‬

‫لمست‬ ‫ا‬ ‫ا‬‫لم‬

‫ئد‬‫لف‬  ‫ا‬‫اب‬‫ي‬‫و‬

‫ح‬‫ة وو‬ ‫ا‬‫صائ‬

‫ية‬‫ل‬ ‫ار‬‫ل‬ ‫ة‬‫لصا‬  ‫ز‬‫لت‬ ‫ئد‬‫لف‬‫و‬ ‫يا‬‫ول‬

(6) ‫ة‬‫سا‬‫ل‬ ‫ح‬‫ل‬‫و‬

‫ة‬‫ئ‬‫لم‬ ‫لمؤ‬ ‫ة‬‫ا‬‫لم‬ Negotiation Skills for Project Managers

‫لتفا‬ ‫ة‬‫ل‬ ‫ة‬‫ا‬‫لم‬ ‫كار‬  ‫لتشت‬ ‫د‬‫و‬ 105


106

‫ة‬‫ص‬‫ل‬‫و‬ ‫د‬‫لمسا‬

(7) ‫خذ‬ ‫ا‬ ‫طاء‬‫ل‬‫و‬

‫لط‬‫ض و‬‫ل‬

‫ة‬‫ار ن‬‫خت‬ ‫ة‬

‫ا‬‫ل‬ ‫ج‬

‫ة‬‫ل‬ ‫ة‬‫بسا‬

‫هد‬‫لت‬ ‫ية‬‫أول‬

‫ل‬ ‫دو‬

‫ط‬‫لم‬ ‫ا‬‫لت‬

(8) ‫ز‬‫ف‬‫لت‬ ‫ج‬‫لت‬‫و‬ ‫ي‬‫لت‬‫و‬

‫هد‬‫ع ل‬‫لتش‬

(9) ‫هد‬‫لت‬ ‫لتز‬‫و‬ ‫د‬‫بال‬

‫بة‬‫لمكت‬ ‫هد‬‫لت‬


 ‫ي‬‫لت‬ ‫سائ‬‫ل‬

‫ة‬‫لم‬ ‫هد‬‫لت‬ 107


108

‫د‬ ‫ل‬ ‫ور‬‫ل‬ ‫لس‬ ‫ت‬ ‫طة‬‫س‬‫ل‬

‫ر‬‫مه‬‫ل‬ ‫ش‬ ‫ا‬‫نت‬ ‫وجذ‬

(10) ‫طة‬‫لس‬ ‫الة‬‫لف‬

‫ة‬‫لمشار‬ ‫ع‬‫ش‬

(11)  ‫ة‬‫غ‬

‫ال‬‫نف‬ ‫لت‬

‫لمشك‬  ‫ا‬‫ط‬‫إ‬ ‫د‬‫و‬ ‫خطاء‬

‫لت‬  ‫ز‬‫ف‬‫لت‬‫و‬

(12) ‫ة‬‫لم‬ ‫ة‬‫لصد‬‫و‬

‫جتما‬ ‫ق‬‫لت‬ Negotiation Skills for Project Managers

‫ما‬‫ل‬ ‫م‬‫ل‬ ‫د‬‫لت‬‫ز و‬‫لت‬ ‫ا‬‫ل‬ ‫لهد‬ 

‫ع‬‫لت‬

‫ية‬‫ل‬ ‫اب‬‫لم‬ 109


110

‫ة‬‫ج‬‫لمز‬ ‫الة‬‫ل‬  ‫ا‬‫نس‬ ‫د‬‫و‬ ‫د‬‫ل‬   ‫لكذ‬‫و‬

‫لتصا‬‫ة و‬‫لت‬ ‫ع‬‫م‬‫ل‬ ‫ال‬‫لم‬ ‫ل‬ 

‫لم‬‫ء و‬‫غ‬

‫ة‬‫جتما‬ ‫ل‬

(13) ‫ه‬‫و‬  ‫ي‬‫خ‬

(14) ‫ا‬  ‫سد‬‫ل‬ ‫لص‬‫و‬

(15) ‫ة‬‫ا‬ ‫ل‬ ‫ا‬‫ل‬


‫ء‬‫ر‬  ‫كار‬‫و‬ ‫سد‬‫ل‬ ‫ة‬‫ل‬  ‫لس‬‫و‬ ‫ما‬‫لك‬‫و‬

‫ا‬‫نف‬ ‫د‬

‫سد‬‫ل‬ ‫ة‬‫ل‬ 

‫ة‬‫نسان‬ ‫ل‬

‫ة‬‫لدي‬ ‫ل‬

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112

Chapter 6: Negotiation Case Studies for Case #1:

Negotiationِ A  pproach for Salary Increased :‫ة‬‫د‬

‫انة علي‬‫ص‬ ‫دسة‬‫ه‬ ‫في مجا‬ ‫تخصص‬ ‫دس‬ ‫حد‬   ‫حد‬ ‫ في‬X ‫ة‬‫ترو‬ ‫شا‬‫انة و‬‫ص‬ ‫ركا‬ ‫احد‬ ‫اب‬ ‫عقد مشرو‬ Y ‫ترو‬ ‫ركا‬ •

‫ي‬‫ضافة إ‬‫با‬ ، 2000 ‫ر‬ ‫د مر‬‫د‬  ‫قد‬ ‫شروط‬ ‫قا‬‫و‬ . ‫قة علي عامل‬ ‫فز‬ ‫ن‬

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‫د‬ ‫ا‬‫ي إح‬‫ضافة إ‬‫ وبا‬،‫قد‬ ‫ذ‬ ‫م‬  ‫ ستة‬‫د فتر‬‫وب‬ ‫ت‬‫م‬ ‫ء في ن‬‫زم‬ ‫ب‬ ‫ا‬‫ه‬ ‫با‬ ‫ا‬  ، ‫في‬ ‫ت‬‫بأه‬ ‫مر‬ ‫فا‬  ‫وم‬ ،‫امة‬‫و‬  ‫ظرو‬ ‫ ون‬‫تخر‬ ‫ة‬‫وس‬ ‫ر‬‫خ‬ .‫ا‬‫ر‬  3000 ‫ي‬‫ إ‬2500 ‫ب‬ ‫و‬‫تر‬ •

‫س‬ ‫مر‬ ‫ا‬‫ز‬ ‫شركة‬ ‫ي‬‫ئ‬‫م‬ ‫م‬ ‫او‬‫ت‬ ‫في‬ ‫د‬ ‫رغ‬‫و‬ .‫بزم‬

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.‫او‬‫لت‬ ‫د‬‫م‬ ‫ا‬‫علي م‬ ‫رف‬  ، ‫اء علي‬‫وب‬ :‫لمط‬ ‫ة‬‫حا‬ ‫ف‬ ‫ي‬‫إ‬ ‫ل‬ ‫او‬‫ت‬ ‫هذ‬  ‫املة‬‫ة مت‬‫ج‬‫م‬ ‫ة وض‬‫ ك‬.(Win / Win Approach) ‫رف‬‫ل‬ ‫؟‬ ‫ا هذ‬‫ي عل‬ ‫تي س‬ ‫او‬‫ت‬ ‫س‬ ‫وما هي‬ -


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113

‫رك‬‫د و‬ ‫ب‬ ‫ض‬ ‫وم‬  ‫ة مل‬‫ بق‬‫تا‬‫م‬ ‫ل‬ ‫مشرو‬ ‫م‬‫سر‬ ‫ متر مرب‬1000 ‫ش‬‫و‬  ‫رب‬ ‫تر‬ ‫ر‬‫ب‬ ‫ر‬ ‫م‬‫سر‬ ‫أم‬ ‫قد‬ ‫روط‬ ‫ض‬ ‫وم‬ ‫دها‬ ‫ة‬‫وفي حا‬ ،‫ا‬  ‫م‬  ‫د‬ ‫ة‬‫ان‬‫وإم‬  25 ‫د ع‬‫ز‬ .‫قد‬ ‫ة‬ ‫م‬ ‫خص‬ ‫ا‬  ‫م‬ . 18 ‫تر‬ ‫ر‬‫س‬ ‫وكا‬ ‫م‬‫ر‬ ‫د‬‫ء و‬‫بشر‬ ‫ا‬ ‫ا‬ ‫د‬‫و‬ .‫ فق‬18000 ‫بخص‬ ‫قاو‬ ‫ا‬ ‫ا‬‫ ب‬25000 ‫بخص‬ ‫ا‬ ‫ا‬‫و‬


114

Case #2: Negotiationِ A  pproach for Salary Increased :‫ة‬‫د‬

‫انة علي‬‫ص‬ ‫دسة‬‫ه‬ ‫في مجا‬ ‫تخصص‬ ‫دس‬ ‫حد‬   ‫حد‬ ‫ في‬X ‫ة‬‫ترو‬ ‫شا‬‫انة و‬‫ص‬ ‫ركا‬ ‫احد‬ ‫اب‬ ‫عقد مشرو‬ Y ‫ترو‬ ‫ركا‬ •

‫ي‬‫ضافة إ‬‫با‬ ، 2000 ‫ر‬ ‫د مر‬‫د‬  ‫قد‬ ‫شروط‬ ‫قا‬‫و‬ . ‫قة علي عامل‬ ‫فز‬ ‫ن‬

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‫ علي‬Y ‫ة‬‫ا‬ ‫شركة‬ ‫ عرض‬،‫قد‬ ‫ذ‬ ‫م‬  ‫ ستة‬‫د فتر‬‫وب‬ . 4000 ‫ر‬ ‫ر‬ ‫ب‬ ‫ف‬ ‫ة‬‫فر‬ ‫د‬

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‫ا‬‫وع‬ ، X ‫شركة‬ ‫ في‬‫ت‬‫بأه‬ ‫د‬ ‫ا‬‫ي إح‬‫ضافة إ‬‫وبا‬ ،‫ر‬‫د‬‫ء و‬‫زم‬ ‫ة م‬

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‫و‬ ‫مر‬ ‫ا‬‫ز‬ ‫شركة‬ ‫ي‬‫ئ‬‫م‬ ‫م‬ ‫او‬‫ت‬ ‫في‬ ‫د‬ ‫رغ‬‫و‬ .‫رى‬ ‫شركة‬ ‫في‬ ‫و‬ ‫ت‬‫ باستقا‬‫ر‬ ‫شركة علي‬ ‫فقة‬‫م‬

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115

Case # 3 : Negotiationِ A  pproach for Car Rent :‫ة‬‫د‬

‫ في‬X ‫ة‬‫ترو‬ ‫خدما‬ ‫املة في مجا‬ ‫شركا‬ ‫إحد‬ ‫رغ‬ ‫ر‬ ‫قر‬ ‫ر م‬‫و‬  ‫خدمة‬ ‫كي‬‫ م‬‫ا‬‫س‬ ‫عشر‬ ‫ر عد‬‫أ‬ ، ‫غا‬ ،‫ة‬‫د‬‫إس‬ ، ‫د‬‫جد‬ ‫اط‬‫م‬ ،‫د‬‫س‬‫ب‬) ‫ة‬‫ختل‬  ‫ي‬ ‫قاهر‬‫با‬ (‫ز‬  ‫شركا‬ ‫حد‬ ‫م‬ ‫ر‬‫ب‬ ‫تقد‬ ‫ر‬‫ا‬ ‫مر‬‫شركة با‬ ‫ل‬ ‫د‬‫و‬ ‫ساب‬ ‫ة و‬ ‫ة‬ ‫و‬ ‫ا‬ ‫ر‬‫أ‬ ‫ في مجا‬Y ‫تخصصة‬ .‫ة‬‫ج‬ ‫م‬ ‫ام‬ ‫ا‬‫ل‬ ‫ا‬‫ر‬  5000 ‫ة‬ ‫د‬‫د‬  ‫ر‬ ‫شروط‬ ‫قا‬‫و‬ ‫ضافة‬‫با‬ ، ‫ا‬‫م‬ ‫ ك‬200 ‫د‬‫ب‬ ، ‫ا‬‫ با‬2004 ‫م‬ ‫د‬‫مرس‬ ‫ك‬‫ما‬ ‫كل‬  ‫إضافي‬  ‫د‬‫مي ب‬ ‫متر‬ ‫ل‬ ‫د‬ ‫قا‬ ‫فز‬‫ح‬ ‫ي ن‬‫إ‬ ،  ، ‫ز‬‫ب‬) ‫ا‬‫ل‬‫ت‬ ‫ كافة مصا‬X ‫شركة‬  ‫م‬ ،‫إضافي‬ .(‫ف‬‫و‬  ‫تي‬ ‫شروط‬ ‫د ب‬‫د‬‫ة و‬‫ق‬ ‫قل‬ ‫ في‬X ‫شركة‬ ‫رغ‬‫و‬ .‫خدمة‬ ‫ة‬‫ث‬‫مة وم‬‫وس‬ ‫ة و‬‫س‬ ‫شروط‬ ‫د ب‬‫د‬‫ة و‬‫ق‬ ‫علي‬ ‫ا‬ ‫ في‬Y ‫شركة‬ ‫رغ‬ ‫ا‬‫ك‬ .‫ا‬‫عل‬ ‫ا‬‫و‬ ‫ا‬ ‫ستخد‬ ‫ح‬  ‫تي‬ .‫او‬‫لت‬ ‫د‬‫م‬ ‫ا‬‫علي م‬ ‫رف‬  ، ‫اء علي‬‫وب‬ •

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:‫لمط‬ ‫ة‬‫حا‬ ‫ف‬ ‫ي‬‫إ‬ ‫ل‬ ‫او‬‫ت‬ ‫هذ‬  ‫املة‬‫ة مت‬‫ج‬‫م‬ ‫ة وض‬‫ ك‬.(Win / Win Approach) ‫رف‬‫ل‬ ‫؟‬ ‫ا هذ‬‫ي عل‬ ‫تي س‬ ‫او‬‫ت‬ ‫س‬ ‫وما هي‬ -


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116

Case #4: Negotiationِ A  pproach During Contract Implementation Phase :‫ة‬‫د‬

‫ذ عقد س‬‫ بت‬X ‫ة‬‫ترو‬ ‫شا‬‫انة و‬‫ص‬ ‫ركا‬ ‫حد‬ ‫ق‬ ‫ركا‬ ‫حد‬ ‫في‬trains ‫نتا‬ ‫ط‬ ‫م‬ ‫د‬ Shutdown ‫ر‬‫ل‬ Y ‫ترو‬ :‫لي‬ ‫قد ما‬ ‫ب‬ ‫ض‬ ‫ م‬‫وكان‬ •

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Contract information: Total price = 0.5 M$/train Total duration = 21 day/train Total manpower = 15 Engineers • •

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‫ل‬‫ بت‬X ‫شركة‬  ‫ام‬ ،‫قد‬ ‫ذ‬ ‫م‬  ‫ة‬‫ب‬ ‫د فتر‬‫وب‬ ‫ فتر‬Crashing (‫قل‬) ‫ة ض‬‫ان‬‫ إم‬‫ و‬،‫ر‬‫ع‬ ‫م‬  ‫ما‬ ‫ما‬‫ل‬‫م‬  ‫مختل‬ ‫ا‬‫بز‬ ‫و‬ ، ‫ با‬HSE ‫عي‬‫و‬ ‫عا‬‫مر‬ ‫م‬ ‫خ‬ ‫ر‬‫ع‬ .(‫ف‬‫و‬ ،‫و‬ ،‫ة‬‫ا‬‫ع‬) Down time ‫مي‬ ‫خ‬  ‫ر‬‫ا‬ ‫ل‬‫ بت‬X ‫شركة‬  ‫ام‬ ‫د‬‫و‬ ‫و‬ ‫ة مل‬ ‫ع‬ ‫ق‬    ‫نتا‬ ‫ر‬‫ا‬  ‫د‬‫ ف‬cost rate ‫ا‬‫م‬  ‫ز‬ ‫ة‬‫ في ك‬Y ‫شركة‬ ‫م‬ ‫او‬‫ت‬ ‫ في‬X ‫شركة‬ ‫رغ‬‫و‬ ‫ز‬ ‫ة‬‫ن‬ ‫عل‬ ‫ا‬‫با‬ ‫و‬ ،‫ني حد م‬ ‫ي‬‫إ‬ ‫خ‬ ‫ر‬‫ع‬ ‫دني فتر‬‫و‬ .‫ر‬‫ف‬   .‫او‬‫لت‬ ‫د‬‫م‬ ‫ا‬‫علي م‬ ‫رف‬  ، ‫اء علي‬‫وب‬ •

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:‫لمط‬ ‫ة‬‫حا‬ ‫ف‬ ‫ي‬‫إ‬ ‫ل‬ ‫او‬‫ت‬ ‫هذ‬  ‫املة‬‫ة مت‬‫ج‬‫م‬ ‫ة وض‬‫ ك‬.(Win / Win Approach) ‫رف‬‫ل‬ ‫؟‬ ‫ا هذ‬‫ي عل‬ ‫تي س‬ ‫او‬‫ت‬ ‫س‬ ‫وما هي‬ -


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Negotiation Main Steps

1. Introduction:  XXX Oil Company & YYY Contractor 2. Scope of work:  Complete shutdown planning for train 01 at xx site. 3. Field and Topics of negotiation: Shutdown planning  Field:  Topic: Time crashing 4.

Formation of negotiation team: HSE manager - Site manager  Owner:  Contractor: Project manager - Maintenance manager

5. Normal / Standard conditions: Contract information:  Total price = 0.5 M$  Total duration = 21 day  Total manpower = 15 Engineers 6. Requirements / Needs:  Owner: Minimize the shutdown duration Maximize the bonus for each day saving  Contractor: 7. Constraints / Problems: Downtime cost rate = 1 M$/day  Owner: Manpower and Tools limitation  Contractor: 8. Available information: WP Predecessors Day Engineers

Mob -

W01 Mob

W02 Mob

W03 Mob

1 4

8 8

5 7

6 9


W04 W05 DMO W01 W03 W04 W05 8 10 1 8 10 4

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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  10. Strengths and weaknesses Owner:  Strengths:  Weaknesses: Contractor:  Strengths:  Weaknesses: 11. Possible / Best solutions / Best objectives:

Policy I: ------------------------------ Policy II: ------------------------------

12.

Requirements: Requirements:

Scenario and approach

13.

Principles / Bases of negotiation:  Quality requirements – HSE conditions – Resource availability  Penalty and Bonus rules 14. Recommendation / Agreement Negotiation Skills for Project Managers

119

Policy xxx - Master plan - Manpower – Penalty/Bonus rules 15. Performance Evaluation:  Global KPI: 


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Case #5: Negotiationِ A  pproach During Contract Implementation Phase :‫ة‬‫د‬

‫ذ عقد س‬‫ بت‬X ‫ة‬‫ترو‬ ‫شا‬‫انة و‬‫ص‬ ‫ركا‬ ‫حد‬ ‫ق‬ ‫ركا‬ ‫حد‬ ‫في‬trains ‫نتا‬ ‫ط‬ ‫م‬ ‫د‬ Shutdown ‫ر‬‫ل‬ Y ‫ترو‬ :‫لي‬ ‫قد ما‬ ‫ب‬ ‫ض‬ ‫ م‬‫وكان‬ •

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Contract information: Total price = 0.5 M$ Total duration = 21 day Total manpower = 15 Engineers •

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‫ع‬ %1 ‫ص‬ ‫ت‬  21 ‫ة‬‫ل‬ ‫جاو‬ ‫ة‬‫في حا‬  ،‫قد‬ ‫و‬ .‫ة‬‫ل‬ ‫ة‬ ‫م‬ %10  ‫د‬‫ ب‬ ‫ك‬ ‫تلزما‬‫وم‬ ‫ا‬  ‫ر‬‫ف‬ ‫ة‬‫ئ‬‫م‬   ‫قد علي‬ ‫ا ن‬‫ك‬ ‫عد‬ ‫انة ب‬‫ص‬ ‫ة‬‫ل‬‫ع‬  ‫ة‬‫وفي حا‬ ،Y ‫ة‬‫ا‬ ‫شركة‬ ‫انة علي‬‫ص‬ ‫م‬ ،‫ة‬‫ل‬ ‫ة‬ ‫م‬ %40 ‫ر‬ ‫ت‬ ‫انة‬‫ص‬ ‫تلزما‬‫وم‬ ‫ا‬  ‫فر‬ ‫ا‬‫ل‬‫ء ع‬‫ر‬ ‫مة‬ ‫و‬‫ة و‬‫ا‬‫ل‬ ‫ي‬‫ت‬ ‫با‬ ‫ام‬ ‫ا‬‫حت‬ ‫مة‬ ‫ا‬   ‫د و‬‫ة ب‬‫ل‬ ‫ة‬ ‫ي‬‫با‬ ‫ر‬ ‫ت‬ ‫ث‬ .‫انة‬ ‫ص‬ .‫بة‬‫ل‬ ‫ة‬‫ل‬ ‫ذ‬‫و‬ ‫مة‬ ‫ا‬  ‫ر‬‫أ‬ ،‫قد‬ ‫ذ‬ ‫م‬  ‫ة‬‫ب‬ ‫د فتر‬‫وب‬ ‫د‬‫د‬ ‫ت‬ ‫د و‬‫ ب‬‫ص‬ ‫و‬ ،‫ر‬‫ش‬ ‫تجاو‬ ‫د‬ ‫د‬ ‫حد‬ ‫ر‬ .‫رها‬‫ف‬‫ت‬ ‫ا‬ ‫عد‬‫م‬ ‫مد‬ ‫تجاو‬  ‫كا‬ ‫تا‬ ‫ا‬  ‫د‬ ‫م‬ ‫س‬‫مت‬ ‫با‬ ‫ل‬ ‫م‬ .‫ساب‬ ‫ة‬‫ب‬  ‫ز‬ ‫ة‬‫ في ك‬Y ‫شركة‬ ‫م‬ ‫او‬‫ت‬ ‫ في‬X ‫شركة‬ ‫رغ‬‫و‬ . ‫ة علي‬‫تر‬ ‫ر‬‫ا‬‫خ‬ ‫و‬ .‫او‬‫لت‬ ‫د‬‫م‬ ‫ا‬‫علي م‬ ‫رف‬  ، ‫اء علي‬‫وب‬ :‫لمط‬ ‫ة‬‫حا‬ ‫ف‬ ‫ي‬‫إ‬ ‫ل‬ ‫او‬‫ت‬ ‫هذ‬  ‫املة‬‫ة مت‬‫ج‬‫م‬ ‫ة وض‬‫ ك‬.(Win / Win Approach) ‫رف‬‫ل‬ ‫؟‬ ‫ا هذ‬‫ي عل‬ ‫تي س‬ ‫او‬‫ت‬ ‫س‬ ‫وما هي‬ •

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121

Case #6: Negotiationِ A  pproach Between Maintenance and Safety managers :‫ة‬‫د‬

‫ذ عقد س‬‫ بت‬X ‫ة‬‫ترو‬ ‫شا‬‫انة و‬‫ص‬ ‫ركا‬ ‫حد‬ ‫ق‬ Y ‫ترو‬ ‫ركا‬ ‫حد‬ ‫د‬ ‫انة‬‫ص‬ •

X ‫لشركة‬ ‫تاب‬ ‫انة‬‫ص‬ ‫ر‬‫مد‬ ‫ح‬ ،‫ة‬‫ا‬ ‫ة‬‫نتا‬ ‫ل‬‫سة و‬‫وبد‬ Utilization ‫ا‬‫نت‬ ‫ام‬‫م‬ ‫و‬‫تر‬  ‫د‬ ‫ة‬‫خ‬‫م‬ ‫ام‬ ‫ة‬‫نتا‬  ‫م‬ ‫ه‬ ‫م‬    ‫هذ‬ ‫ل‬‫وبت‬ ،% 35 ‫ي‬ 25 ‫ ما ب‬factor Work permits  ‫صا‬ ‫في‬ ‫ر‬‫ت‬  ‫هي‬ ‫ذ‬  ‫تي‬ •

‫مة‬ ‫ر‬‫مد‬ ‫م‬ ‫او‬‫ت‬ ‫ في‬X ‫لشركة‬ ‫تاب‬ ‫انة‬‫ص‬ ‫ر‬‫مد‬ ‫رغ‬‫و‬ ‫م‬ ، ‫صا‬ ‫في‬ ‫ر‬‫ت‬  ‫قل‬ ‫ة‬‫ في ك‬Y ‫لشركة‬ ‫تاب‬ HSE ‫ا‬‫ل‬‫حي ومت‬‫كافة ن‬ ‫عا‬‫مر‬

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122

Case #7: Project: Gas pipe line 120 Km :‫ة‬‫د‬

X ‫ة‬‫ترو‬ ‫شا‬‫انة و‬‫ص‬ ‫ركا‬ ‫حد‬ ‫ ب‬A ‫ء عقد‬‫ر‬  ‫غا‬  ‫نشاء‬ ‫ء‬‫ر‬ ‫ علي‬A ‫قد‬ ‫ و‬، Y ‫ترو‬ ‫ركا‬ ‫حد‬ ‫م‬  ‫ستة‬  ‫خ‬ ‫ست‬ ‫ت‬‫ و‬،‫ها‬‫ي س‬ ‫ط‬‫س‬ ‫م‬ ‫ ك‬120 ‫ب‬ ‫د‬‫ب‬ ‫س‬ ‫ك‬ ‫ع‬ %2 ‫ر‬‫أ‬ ‫مة‬‫غر‬  ‫و‬ ،‫قد‬  ‫ا‬ ‫م‬ .%15 ‫صي‬

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‫ة‬‫دف‬ ‫ل‬ ‫ر‬‫أ‬  ‫و‬ ، 1/1/2006 ‫قد في‬   ‫د‬‫و‬  ‫ي‬‫تا‬‫وبا‬ ،‫ر‬ ‫د‬ Down payment ‫ة‬‫ا‬ ‫قا‬‫ت‬ ‫قدمة م‬ .1/3/2006 ‫في‬ ‫إ‬ ‫شرو‬ ‫دء في‬ ‫ت‬ •

‫شرو‬ ‫اء م‬‫نت‬ ‫بة‬ ‫شرو‬ ‫ر‬‫مد‬ ‫ح‬ ‫شرو‬ ‫د بدء‬‫وب‬ ،1/7/2006 ‫د‬  ‫في‬

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‫هذ‬ ‫علي ح‬ ‫ر‬  ‫م‬ ‫او‬‫ت‬ ‫في‬ ‫شرو‬ ‫ر‬‫مد‬ ‫رغ‬‫و‬ .‫و‬ ‫ف‬  ‫فا‬‫خ‬

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.‫او‬‫لت‬ ‫د‬‫م‬ ‫ا‬‫علي م‬ ‫ر‬  ، ‫اء علي‬‫وب‬ :‫لمط‬ ‫ة‬‫حا‬ ‫ف‬ ‫ي‬‫إ‬ ‫ل‬ ‫او‬‫ت‬ ‫هذ‬  ‫املة‬‫ة مت‬‫ج‬‫م‬ ‫ة وض‬‫ ك‬.(Win / Win Approach) ‫رف‬‫ل‬ ‫؟‬ ‫ا هذ‬‫ي عل‬ ‫تي س‬ ‫او‬‫ت‬ ‫س‬ ‫وما هي‬ -


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123

Scope of Work:

Gas Pipe Line 120 Km ID E S W N C L B T

Activity Description Excavation Stringing Welding NDT Coating & Wrapping Lowering Backfilling Hydrotest • •

Performance rate Km/day 2 4 1 2 2 4 4 (3 days)

Cost 1000 L.E. / Km 5 400 20 10 2 1 3 0.1

Overhead cost rate = $ 1,000 /day Downtime cost rate = $ 2,000/day What are the bases of negotiation?

Which policy would you choose? •

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Policy 1 – What?…………………… Why? .…………… Policy 2 – What?…………………… Why? .…………… Policy 3 – What?…………………… Why? .……………


124

Case #8: Negotiationِ  Approach for Direct Contract :‫ة‬‫د‬

X ‫ة‬‫ترو‬ ‫شا‬‫انة و‬‫ص‬ ‫ركا‬ ‫حد‬ ‫ ب‬A ‫ء عقد‬‫ر‬  ‫غا‬  ‫نشاء‬ ‫ء‬‫ر‬ ‫ علي‬A ‫قد‬ ‫ و‬، Y ‫ترو‬ ‫ركا‬ ‫حد‬ ‫م‬  ‫ستة‬  ‫خ‬ ‫ست‬ ‫ت‬‫ و‬،‫ها‬‫ي س‬ ‫ط‬‫س‬ ‫م‬ ‫ ك‬120 ‫ب‬ ‫د‬‫ب‬ ‫س‬ ‫ك‬ ‫ع‬ %2 ‫ر‬‫أ‬ ‫مة‬‫غر‬  ‫و‬ ،‫قد‬  ‫ا‬ ‫م‬ .%15 ‫صي‬

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 ‫صة ب‬‫ا‬‫ م‬‫ر‬‫ ب‬‫ام‬ X ‫شركة‬ ‫ل‬ ‫قا‬‫و‬ B ‫قد‬ ‫رس‬  ‫د‬‫ و‬،‫مة‬ ‫تلزما‬‫ و‬  ‫د‬‫ت‬ ‫د‬‫ت‬ ‫تلزما‬‫و‬   ‫ست‬ ‫ت‬  ‫علي‬ ‫ ن‬‫ح‬ ، Z  ‫علي‬ ‫ك‬ ‫ع‬ %3 ‫ر‬‫أ‬ ‫مة‬‫غر‬  ‫و‬ ،B ‫قد‬  ‫ا‬ ‫م‬ ‫ر‬  .%10 ‫صي‬ ‫د‬‫ب‬ ‫س‬ •

‫ر ب‬ ‫د‬ ‫د‬‫ت‬ ‫ع‬  ‫ر‬‫أ‬ ‫ح‬ ‫شرو‬ ‫د بدء‬‫وب‬ .‫ة‬‫قد‬ ‫ة‬‫ا‬ ‫قا‬‫ت‬ ‫شركة علي‬ ‫ م‬‫ف‬ •

‫علي‬ ‫شركة و‬ ‫ي‬‫ئ‬‫م‬ ‫م‬ ‫او‬‫ت‬ ‫في‬ ‫شرو‬ ‫ر‬‫مد‬ ‫رغ‬‫و‬ ‫حد‬ ‫د‬‫لت‬ ‫ر‬‫ا‬‫مر م‬ ‫ا‬‫س‬ ‫و‬ ‫و‬ ‫ف‬  ‫فا‬‫خ‬ ‫هذ‬ ‫ح‬ ‫ر‬‫ا‬ ‫مر‬ ‫ف‬ ‫ر‬ ‫شركة‬‫با‬ ‫ق‬   ‫ة‬‫ح‬‫م‬ ‫م‬ ، .‫ل‬ ‫د‬‫د‬ ‫صة‬‫ا‬‫م‬ ‫ر‬‫د و‬‫لت‬ •



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125

Case #9: :‫ة‬‫د‬

‫ئا‬ ‫حد‬ ‫ م‬X ‫قاو‬ ‫ركا‬ ‫حد‬ ‫ء عقد ب‬‫ر‬  ‫ت‬ ‫ا‬‫س‬ ‫ة ب‬‫متتا‬ ‫ثة س‬‫ث‬ ‫د‬ ‫جد‬‫و‬ ‫عا‬ ‫د‬ Y ‫ة‬‫م‬ ‫قد ب‬ ‫اء‬‫إنت‬  ‫قد‬ ‫في ف‬ ‫ت‬‫ برغ‬‫رف‬ ‫حد‬ ‫ر‬‫خ‬   ،‫ا‬‫عل‬ . ‫علي‬ ‫ر‬ ‫كافي‬

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‫املة‬ ‫انة‬ ‫ء‬‫ر‬ ‫ا‬‫ر‬  100,000 ‫قد‬ ‫ة‬ ‫وكان‬  ‫قاو‬  ‫م‬ ‫ا‬  ‫عة‬‫ز‬‫سة و‬‫ر‬‫و‬ ‫م‬‫و‬ ‫تش‬‫و‬ .‫ف‬‫و‬ ‫أم‬‫و‬ ‫تلزما‬‫وم‬ ‫و‬‫ة و‬‫ا‬‫وع‬ ‫م‬ ‫ م‬‫قا‬ •

.‫شرو‬ ‫فتر‬  ‫ا‬‫س‬ ‫ا‬‫ث‬ ،‫قد‬ ‫ ب‬‫ض‬ ‫م‬ ‫وكان‬

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 ‫ا‬‫س‬ ‫ا‬ ‫ح‬ ‫شرو‬ ‫بدء‬ ‫ر م‬ ‫ة‬‫ان‬‫ ث‬‫د مرو‬‫وب‬ ‫ا‬‫م‬ ،%20 ‫ر م‬‫ك‬ ‫ة‬‫ب‬ ‫امل‬   ‫ا‬‫ك‬ ، %40 ‫ر م‬‫ك‬ ‫ة‬‫ب‬ .‫قاو‬‫ل‬ ‫ة‬‫اس‬‫ر م‬‫غ‬  ‫قد‬ ‫ة‬  ‫ي‬ •

‫شاك‬ ‫هذ‬ ‫ة علي ح‬‫ئ‬ ‫ي‬‫ئ‬‫م‬ ‫م‬ ‫او‬‫ت‬ ‫في‬ ‫قاو‬ ‫رغ‬‫و‬ .‫قد‬ ‫و ف‬ ‫تجد‬

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126

Case #10: :‫ة‬‫د‬

‫ئا‬ ‫حد‬ ‫ م‬X ‫قاو‬ ‫ركا‬ ‫حد‬ ‫ء عقد ب‬‫ر‬  ‫ت‬ ‫ا‬‫س‬ ‫ة ب‬‫متتا‬ ‫ثة س‬‫ث‬ ‫د‬ ‫جد‬‫و‬ ‫عا‬ ‫د‬ Y ‫ة‬‫م‬ ‫قد ب‬ ‫اء‬‫إنت‬  ‫قد‬ ‫في ف‬ ‫ت‬‫ برغ‬‫رف‬ ‫حد‬ ‫ر‬‫خ‬   ،‫ا‬‫عل‬ . ‫علي‬ ‫ر‬ ‫كافي‬

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‫املة‬ ‫انة‬ ‫ء‬‫ر‬ ‫ا‬‫ر‬  100,000 ‫قد‬ ‫ة‬ ‫وكان‬  ‫قاو‬  ‫م‬ ‫ا‬  ‫عة‬‫ز‬‫سة و‬‫ر‬‫و‬ ‫م‬‫و‬ ‫تش‬‫و‬ ‫ة‬ ‫ وكان‬.‫ف‬‫و‬ ‫أم‬‫و‬ ‫تلزما‬‫وم‬ ‫و‬‫ة و‬‫ا‬‫وع‬ ‫م‬ ‫ م‬‫قا‬ .‫و نقد‬ ‫ء بش‬‫قد س‬ ‫ة‬ ‫ م‬%5 ‫قد‬ (‫ا‬) ‫تأم‬ •

‫مقاو‬ ‫ئة م‬ ‫عقد‬ ، ‫شرو‬ ‫بدء‬ ‫ر م‬ ‫ة‬‫ان‬‫ث‬ ‫د مرو‬‫وب‬ ‫خا‬ ‫قد‬ ‫ر علي ب‬‫تأث‬ ‫ي‬  ‫ا‬‫م‬ ،‫ا‬ ‫ر هذ‬‫ت‬ ‫ عقد‬Y ‫ر‬ .X ‫قاو‬‫با‬

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‫شاك‬ ‫هذ‬ ‫ة علي ح‬‫ئ‬ ‫ي‬‫ئ‬‫م‬ ‫م‬ ‫او‬‫ت‬ ‫في‬ ‫قاو‬ ‫رغ‬‫و‬ .‫قد‬ ‫و ف‬ ‫تجد‬

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127

Case #11: :‫ة‬‫د‬

Y ‫ئا‬ ‫حد‬ ‫ م‬X ‫قاو‬ ‫ركا‬ ‫حد‬ ‫ء عقد ب‬‫ر‬  ‫وفتر‬  ‫ مل‬25 ‫ت‬ ‫قد‬‫ ب‬10MW ‫ة‬‫ا‬‫ة ب‬‫ربا‬‫ك‬  ‫ة‬‫نشاء م‬ ‫ة‬‫دف‬ ‫ست‬‫قد و‬  ‫ا‬ ‫ م‬‫د‬ ‫عا‬ ‫د‬ ‫نشاء‬‫د و‬‫و‬ ‫ص‬ ‫ك‬ ‫ع‬ %5 ‫ر‬‫أ‬ ‫مة‬‫غر‬  ‫ و‬،Down payment 20% ‫قدمة‬ .%15 ‫صي‬ ‫د‬‫ر ب‬ •

 ‫ج‬ ‫د‬ ‫عقد‬ ‫بر‬‫ ب‬X ‫قاو‬ ‫ركة‬ ‫ام‬‫و‬ ‫لي‬‫ل‬ ‫ر‬ ‫د‬‫ت‬ ‫فتر‬   ‫علي‬ ، Z  ‫م‬ ‫تلزما‬‫و‬ ‫ر‬ ‫د‬‫ب‬ %50 ‫ة مقدمة ث‬‫كدف‬ %25 ‫ر‬ ‫ت‬‫و‬ ،‫ت‬‫ل‬  ‫ثة‬‫وث‬  ‫ا‬ ‫م‬ ‫صي عا‬ ‫د‬‫وب‬ ‫شرو‬ ‫ة‬‫ا‬‫د ن‬‫ب‬ %25 ‫ث‬ ،‫ست‬ ‫م‬ .‫د‬‫ت‬ ‫عقد‬

•

‫شركة‬ ‫ر‬‫أ‬ ، Z  ‫م‬ ‫تلزما‬‫و‬   ‫ست‬ ‫د‬‫وب‬ ‫علي‬ ‫ا‬ ‫وعد‬  ‫ثة‬‫ث‬ ‫د‬ ‫ عل‬‫ت‬ %50 ‫تخل‬‫م‬ ‫ف‬ ‫ في‬X ‫قاو‬ ‫ة ب‬‫ا‬ ‫شاك‬  ‫ر‬‫ن‬ ،‫تخل‬ ‫هذ‬ ‫دف‬ ‫د‬‫م‬ ‫ا‬ .‫ئة‬‫و‬ •

‫في‬ ‫قاو‬ ‫رغ‬ ‫ا‬‫ك‬ ،‫قاو‬ ‫م‬ ‫او‬‫ت‬ ‫في‬  ‫رغ‬‫و‬ .‫قد‬ ‫و ف‬ ‫تجد‬ ‫شاك‬ ‫هذ‬ ‫ة علي ح‬‫ئ‬ ‫ي‬‫ئ‬‫م‬ ‫م‬ ‫او‬‫ت‬

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•

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128

Case #12: :‫ة‬‫د‬

‫ذ عقد س‬‫ بت‬X ‫ة‬‫ترو‬ ‫شا‬‫انة و‬‫ص‬ ‫ركا‬ ‫حد‬ ‫ق‬ ‫شركة‬ ‫م‬ ‫ في إحد‬Y ‫ترو‬ ‫ركا‬ ‫حد‬ ‫د‬ ‫انة‬‫ص‬ •

‫ي‬‫ر‬ ‫ت‬‫با‬ ‫ا‬‫ق‬  ‫ب‬ ‫صا‬ ‫ت‬ ،‫د‬‫عد‬ ‫وفي مر‬ ‫ي‬ ‫ر‬ ‫و‬ ‫ر‬‫ا‬‫م‬  ‫دسي‬‫م‬ ‫مختل‬ ‫ م‬‫قاهر‬ ‫ في‬X ‫لشركة‬ ‫ح‬ ‫ر م‬‫في ك‬ ‫قر‬ ‫ا‬ ‫ي‬  ‫ا‬‫م‬ ،‫ر‬‫ا‬  ‫ر‬‫مد‬ ‫ة با‬ ‫ة‬‫ل‬ ‫ي ض‬ ‫ضافة‬‫با‬ •

‫ت‬‫با‬ ‫ا‬‫ق‬  ‫م‬ ‫او‬‫ت‬ ‫ في‬‫انة با‬‫ص‬ ‫ر‬‫مد‬ ‫رغ‬‫و‬ ‫ة با‬ ‫ة‬‫ل‬ ‫ت‬ ‫تجاو‬ ‫هذ‬ ‫قل‬ ‫ة‬‫ي في ك‬‫ر‬ .‫ام‬ ‫ة‬‫نتا‬  ‫ي‬‫تا‬‫وبا‬

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•

•

129

Case #13: Select the best method:

Cost item A

Methods B C D

- Direct cost: 0 15 15 15  Materials 0 1 6 10  Equipment 0 1 7 10  Manpower 36 20 10 4  Subcontractor - Total direct cost 36 37 38 39 - Project overhead 1 2 3 4 - Total cost 37 39 41 43 - Price 50 50 50 50 What are the bases of negotiation?

E 15 13 12 0 40 4 44 50

Which method would you choose? •

•

•

•

•

Method 1 – Why? ……………………………………… Method 2 – Why? ……………………………………… Method 3 – Why? ……………………………………… Method 4 – Why? ……………………………………… Method 5 – Why? ………………………………………


130

Case #14: Select the best payment terms: Budget planning for annual project Work package A Predecessors Duration (week) 16 Budget $M 80 Total Budget = $ 526 M Annual Cash Flow: Owner: 526/6 = 87.67 Month 0 3 $M 88 88 Contractor: Month 0 3 $M 150 125

B 10 70

C 12 96

D A 16 80

E C 40 200

• •

6 88

9 88

12 88

13 86

6 100

9 75

12 50

13 26

What are the bases of negotiation? Which policy would you choose? •

•

•



131

Case #15: Select the best schedule: Annual Project List: Description

ID

Budget (M$)

Duration (month)

Predecessors

1 Project #1 P1 45 5 2 Project #2 P2 6 2 3 Project #3 P3 12 2 4 Project #4 P4 8 2 5 Project #5 P5 24 3 P2 & P4 6 Project #6 P6 14 2 P3 7 Project #7 P7 6 3 P6 8 Project #8 P8 3 3 P5 & P7 Direct cost 118 Overhead cost 2 Total cost 120  Down time cost = $ 10 M/ month  Budget or Payment Limitation: 120/12 = 10 M$ /month What are the bases of negotiation? Which policy would you choose? •

•

•



132

Case #16: Select the best offer: Scope of Work: •

Network between the office and site

Objective / Requirements / Needs: • • • • •

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 are the bases of negotiation? Which tender would you choose? •

•

•

Offer 1 - Why? ……………………………….

Offer 2 – Why? ……………………………….

Offer 3 – Why? ……………………………….


133

•

•

•

Offer 4 – Why? ……………………………….

Offer 5 – Why? ……………………………….

Go for a change in design criteria –

What? …………………………….…………………….

Why? …………………………….……………………. How? ……………………..…….…………………….


134

Case #17: Select the best offer: Scope of Work: •

Case Study of Commonwealth Gov Tender

The Design Criteria states that a backup line needs to be provided for the ISDN serial link between office 1 and office 2 Tender 1. Tender 2 •

• •

$120,000

•

Back up Line – Dial- up modem using PSTN

Main Serial Line – Telstra ISDN line


• •

$130,000 Main Serial Line – Telstra ISDN Line Back up line – ‘Line-ofsight’ microwave link owned b business.

135

• Some common anxieties that evaluation should relieve – Will it work? – Will it meet the design criteria? – How much is it going to cost? Which tender would you choose? •

Offer 1 - Why? ……………………………….

Or •

Offer 2 – Why? ……………………………….

Or •

Go for a change in design criteria –

What? …………………………….…………………….

Why? …………………………….……………………. How? ……………………..…….…………………….


136

Negotiation Skills for Project Managers

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