Chapter 3: Negotiation and Conflict Resolution in Project Management

Negotiation

Negotiating is trying to reach agreement with another party when the two parties share an objective, but have a conflict about other matters.

Conflict Resolution

Conflict resolution is a process/activities aimed at settling disputes (disagreements) between individuals or groups.

Nature of Negotiation

Negotiation is one of several mechanisms by which people can resolve conflicts.

Characteristics of Negotiation

There are two or more parties. Negotiation can be between individuals, within groups, and between groups.

Conflict of Needs

There is a conflict of needs and desires between two or more parties.

Negotiation by Choice

The parties negotiate by choice; they think they can get a better deal by negotiating than by simply accepting what the other side will voluntarily give them or let them have.

Give and Take Process

We expect a give and take process; both sides will modify their opening position in order to reach an agreement.

Preference for Negotiation

The parties prefer to negotiate and search for agreement rather than to fight openly.

Successful Negotiation

Successful negotiation involves the management of tangibles and also the resolution of intangibles.

Intangible Factors

Intangible: underlying psychological motivations that may directly or indirectly influence the parties during a negotiation.

Need to Win

Need to win; beat the counter-party, or avoid losing.

Need to Look Good

Need to look good, competent or tough.

Need to Defend Principles

Need to defend an important principle or precedent.

Need to Appear Fair

Need to appear fair, honorable, to protect one's reputation.

Need to Maintain Relationships

Need to maintain a good relationship.

Principled Negotiation

Principled negotiation is the name given to the interest-based approach to negotiation.

Four Principles of Effective Negotiation

Four fundamental principles for effective negotiation: 1) separate the people from the problem; 2) focus on interests, not positions; 3) invent options for mutual gain; and 4) insist on objective criteria.

Separating People from the Problem

Separating the people from the problem means separating relationship issues (or 'people problems') from substantive issues, and dealing with them independently.

Perceptions

Perceptions are important because they define the problem and the solution, interpreted differently by different people in different situations.

Effective negotiation

Effective negotiation may be very difficult to achieve when different parties have different understandings of their dispute.

Principle 2 & 3

By focusing on interests, disputing parties can more easily fulfill the third principle--invent options for mutual gain.

Options for mutual gain

This means negotiators should look for new solutions to the problem that will allow both sides to win.

Principle 4

The fourth rule is to insist on objective criteria for decisions.

Objective criteria

If some outside, objective criteria for fairness can be found, this can greatly simplify the negotiation process.

Union and management negotiations

If union and management are struggling over a contract, they can look to see what other similar companies have agreed to use as an outside objective criteria.

Negotiating over price

If people are negotiating over the price of a car or a house, they can look at what similar houses or cars have sold for.

Fairness in negotiations

Looking at similar sales gives both sides more guidance as to what is 'fair,' and makes it hard to oppose offers in this range.

Negotiation Skills

Learning some basic negotiation skills can go a long way in your attempt to be successful in the business market.

Articulate requirements

You need to be able to articulate your requirements to the other party so that they can work on fulfilling them.

Asking for what you want

Many people go into negotiations and they never actually get around to telling the other person what they want out of the process.

Negotiating against yourself

Many people make the mistake of taking the side of the other individual during negotiations.

Silence in negotiations

Instead of negotiating against yourself because you feel awkward during the silence, you need to learn how to sit quietly.

Knowing your bottom line

To know what your bottom line is.

Negotiation

A process where two or more parties discuss and come to an agreement on a particular issue.

Art of Listening

The skill of sitting quietly and attentively to understand what the other person is saying and what they want.

Safety Net

A mental figure that represents the highest amount of money one is willing to pay for something.

Bottom Line

The minimum price that one is willing to accept in a negotiation.

Negotiation Skills

Basic skills that can significantly impact overall business success.

Project Management

The discipline of planning, executing, and closing projects effectively.

Project Life Cycle

The series of phases that a project goes through from initiation to closure.

Functional Manager

A manager responsible for a specific function within an organization.

Project Manager

The individual responsible for leading a project and ensuring its success.

Work Breakdown Structure (WBS)

A hierarchical decomposition of a project into smaller, more manageable components.

Gantt Chart

A visual representation of a project schedule showing tasks over time.

Critical Path Method (CPM)

A project management technique used to determine the longest sequence of dependent tasks.

Program Evaluation Review Technique (PERT)

A statistical tool used to analyze the tasks involved in completing a project.

Resource Allocation

The process of assigning available resources in an efficient manner.

Crash Costs

Additional costs incurred to expedite a project schedule.

Resource Loading

The amount of work assigned to a specific resource.

Resource Levelling

A technique used to resolve resource conflicts by adjusting the project schedule.

Earned Value

A project management technique that measures project performance by comparing planned progress to actual progress.

Project Termination

The process of concluding all activities of a project and closing it formally.