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 Skills for Project Managersلم التفاوض المشاريع مهارات ديري

Instructor:Dr. Attia Hussien Gomaa

Industrial Engineering ConsultantEngineering Service - American University In CairoEmail: [email protected] – Tel: 0122738497

Who Should Attend:Managers, engineers, and other practitioners concerned with planning and control in government, industrial and services sectors.

Objectives: 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. Negotiation overview 22. Negotiation management 21 3. Negotiation for selling & buying 394. Negotiation for salary 495. Conflict management 646. Negotiation for project managers 707. Negotiation case studies for project managers 104

Negotiation Skills for Project Managers 1

Chapter 1: Negotiation Overview

What is the Negotiation?

Negotiation is interaction between two or more parties

to achieve certain goals or targets, &to overcome certain constrains or problems

"In business, you don't get what you deserve, you get what you can negotiate",

Chester Karrass

"Never cut what you can untie", Joseph Joubert


(3)Interaction

(4)Communication

(5)Conference

(6)Conviction

(7)Agreement

Negotiation

(2)Constraints

(1)Targets

Negotiation :

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

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

Negotiation is the process of achieving goals through an agreement.

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

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

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’.


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:

• 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.

• 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.


• 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: • Two agents: A and B• Agent B wants to buy a bicycle from agent A• Start:

agent A 150agent 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)


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).


Team work:

(1) (2)

Individuals Targets

(3) (4)

Team Approach Planning

(5) (6)

Target plan Agreement

"In business, you don't get what you deserve....you get what you negotiate"; Chester Karrass

Dr. Attia H. Gomaa: [email protected] 0122738497


Win / Win

Lose / Lose

Individuals TeamHow?

mailto:[email protected]

NEEDS & WANTS:

Who Negotiates?

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

Negotiation Skills for Project Managers

WA

NT

SN

EE

DS

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.

EmotionIllogicalPowerfulResponsive CostlyNegotiable

Alpha PointLogicalImportantNon-negotiableCritical

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.

.

8

What is the Aim of Negotiation?

To arrive at a win-win situation

Both parties must leave the table feeling satisfied with

results

Conflict model not helpful in insurance circumstances

although may be applicable to third party (TP) claims

Power an issue in TP claims

NEGOTIATION CRITERIA:

• Issue must be negotiable

• Negotiators must be interested in both giving and taking

• Parties must trust each other and the negotiation process

When parties disagree they either:

Accept the status quo

More powerful side can try to impose solution

Negotiate


Negotiating Orientation (structures):

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

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

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


Negotiating Styles: 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”

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

Outcomes: 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”


Principles: There are no rules Establish an agenda Everything is negotiable Ask for a better deal Be creative Learn to say “NO” yourself

A Good Negotiator Is.. Creative Versatile Motivated Has the ability to walk away

Are you a Motivated Negotiator? 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


The Art of Negotiation:

o Identify your power

o Decide what you are willing to concede

o What are the consequences of disagreement

o 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

Know the negotiator

What’s the negotiator’s model?

What does the negotiator want?

Double Think:

What do you want? (think)

What does the negotiator want? (double think)

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

Where’s the middle ground?


Build Trust:

Tell the truth

Respect confidences

Honor your commitments

Be clear

Be open

Be firm

External Listening:

Body language – yours and theirs

Non verbal messages:

Facial expressions

Voice inflections

Eye movement

Move Beyond Positions:

Ask questions that probe specific needs / interests

Create a supportive climate

Find mutual ground


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.


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?


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?

What will it cost me?

What do I need in return?

Concessions:

Leave room for negotiation

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.


Impasses:

Pause

Honorable withdrawal

Change of place, person or proposal

Mediator

Respond to aggressions with facts

Avoid personality conflicts

Emphasize previous points of agreement

Move on to non conflicting issues

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?

Setting It Up:

Agree on a benchmark job

Agree on proficiency / performance level

Job value

Salary range

Necessary performanceNegotiation Skills for Project Managers

18

What is a Win?

Settlement range

What’s your bottom line?

Enjoy Yourself:

Negotiation is an art

Logical steps set the parameters

The art is in the deal

Have fun!

The Buyer’s Role in Negotiation:

Acting Alone:

Recurring purchases of standard, low price items

Meets in office with supplier reps.

Buyer as Team Leader:

Expensive, technically advanced items, or

complex contracts

Setting up long term relationships

Negotiating details and specs not included in the

RFP


Personality Types:

1-

2-

3-

4-

5-

6-


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


The Negotiation Process:


1 -Preparation2 -Establishing

Objectives

FACE-TO-FACE DISCUSSIONS

3 -Face-to-Face Discussion

4 -Final Action

5 -Control & Assessment

22

Negotiation Process: Preparation

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


Negotiation Process: Establishing Objectives

Objectives must be specific!! General objectives are inadequate and

too vague to foster good negotiation. Planning sheet

Issues involved Realistic, possible, worst

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 positionsPotential 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 F.O.B. point


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

Negotiation Process: Face-to-Face Discussion

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

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


Fact Finding Recess

Narrowing Differences

Hard Bargaining

25

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

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

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


Tactics: Use

Walk out

Don’t use 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

Negotiation Process: Final Action (Agreement)

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).


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


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

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


JOVIAL: 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

willOther Party Doesn't Play:

Other party is more powerful Other party won't use principled negotiation Other party uses dirty tricks

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

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


Cartoon of the Day:


Customer-Oriented Development:

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

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


Reasons for poor relationships:

o Lack of collaboration among key stakeholderso “culture gap” between technical specialists and their business-

focused clientso 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

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 customer-oriented

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


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

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


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

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


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:o Identify & include all the stakeholderso Establish reasonable expectationso Assign tasks so people can achieve their own win conditionso 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 riskso Keep people involved

3- Structure Win-Win Product:o Internal parts that developers & maintainers see

Documentation Modifiability

o External parts that customers/users see Easy to learn and to use Robust


When is Win-Win Appropriate?

o 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

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

Leverage the People:

Restore team morale o Improve working conditions

Clean up major personnel problems

Replace problem leadership, o Give managers assistanceo Change manager’s supervisor

Add people carefully, if at all

Instead focus existing team members’ time on project

Allow team members to respond differently:o Some work hardero Some work slowly but surely

See that developers pace themselves


Leverage the Process: 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 mistakeso 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 milestoneso Track scheduling progress carefullyo Record reasons for missed milestoneso Recalibrate schedules from what you learn after 2-3

weeks have passedo 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


Chapter 3: Negotiation forSelling & Buying

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

When to Negotiate? 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


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.


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.


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


Negotiation For Selling & Buying:

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


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 haggling4- Criteria:

Produce a wise agreement Efficient Don’t damage the relationship

5- Problems with Positions: 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


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


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

Prescription:

Brainstorming

Broaden your options

Look for mutual gain

Make their decision easy

Give them an answer, not a problem

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


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


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


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.


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.


Y: 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.

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 WritingAccepting 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;


• 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.


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.


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.


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?


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.


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.


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?


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


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.


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.


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


Chapter 5: Conflict Management

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…


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.


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.


Conflict encourages psychological development. Persons become more accurate and realistic in their self-appraisals. 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.


Conflict Management :

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

Inaction (avoiding) – show little interest or concern in whether they attain their own outcomes, nor do they show


Concern About Own Outcomes

Inaction Contending

Yielding Problem Solving

Compromising

Co n c e r n

A b o u t O t h e r ’ s O u t c o m e s

68

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)


Chapter 6: Negotiation Skills for Project Engineers

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.


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:


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.


Evaluating and resolving conflicting objectives :

1. Technical Proposal

– if OK then move onto

2. 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?


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?


Contract evaluation matrix

LevelTechnical Proposal

BudgetK M G

Strategic

Assessment

x

Technical

Assessment

x

Cost-benefit

assessment

x

Risk Analysis x

K - knowledge and experience in relevant fields – 50%

M - Managerial and financial capabilities – 20%

G - General capabilities – 30%

1- Strategic Assessment

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


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– Direct benefits (reduction in salary bills)– Indirect benefits (increased accuracy, increased

timeliness, more user friendly)– Intangible benefits (Better customer and supplier

relationships, better information flows/problem solving)


• Cost-benefit Analysis

– If benefits > cost, that is good– If benefits < cost – that is bad

• How do you measure intangible benefits?

4- Risk Analysis

• What is the likelihood that an event will result in the project not meeting its objectives?

• A cost-benefit style of analysis can also be used to quantify possible losses. “What if” analysis

• The difficulty is determining the likelihood of an event 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.


Service level: • Ask the question whether specific technologies 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 Service

Best Effort Deterministic Guaranteed

Response Time

Accuracy

Availability

Network Utilisation

Throughput

Efficiency

Latency


Negotiation Timeline for real project:

Activity

Type

Dur.

Week

Month

1 2 3

Select Preferred Vendor 4 X

Review Contract 1 X

Select Negotiation Team Members 1 X

Orient Team to Issues 1 X

Hold Negotiation Kickoff Meeting 1 X

Validate/Negotiate Sizing and Pricing 1 X

Draft Milestones 1 X

Agree on Acceptance Criteria 1 X

Draft and Finalize Work Plan 2 X

Complete Terms/Conditions 4 X X

Conduct Legal Review 1 X

Sign Contract 1 X


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.


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.

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


Contract Negotiation Process:

Step Main items

1. Determine Goals/

Objectives

• Uses.• Growth.• Timing.

2. Obtain the “Complete”

Contract From the Vendor

• Bill of materials.• Terms and conditions.• Appendices.

3. Review and Identify Major

Issues

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

4. Identify Negotiation Team • Executive sponsors.• System owner(s).• Legal counsel.

5. Develop Strategy • Goal.• Leverage.• Concessions.• Go/no-go.

6. Negotiate Contract • Location.• Frequency.

• Format.


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 StatusOwner Contractor

Good & Long term Win Win

Bad & Short term Lose WinWin LoseLose Lose


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? (D) What does the negotiator want? (T) What does the negotiator think you want? (T) Where’s the middle ground? (D) What’s your bottom line? (T)

3- Build Trust:

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


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 expressionso Voice inflectionso 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?


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


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 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


PMIS - Negotiation Issues

# ID Form/report Responsibility1 PSR Project scope & requirements

ProjectManager

2 WBS Work breakdown structure3 PBP Project base price

4 SEC Standards & Engineering calculations

DesignManager

5 DDS Detailed drawing and specs 6 BOQ Bill of quantity7 WPA Work package activities 8 RAL Resource allocation (Mat., HR, Eq., SubCont.)

9 RPR Resource performance rates

Resource Manager

10 BOM Bill of materials and program11 BOE Bill of equipment and program12 BOH Bill of human resources and program 13 IER Internal and external resources and program14 PPR Procurement program reports

15 RCR Resource cost rates

CostManager

16 TMC Total material cost17 TEC Total equipment cost18 TLC Total labor cost19 TSC Total subcontractor cost20 TDC Total direct cost21 TOH Total overhead cost22 TPC Total project cost23 NVA Net value added and Margin factor24 NPR Net profit (or Saving) ±X %

25 MAP Target Master plan for WBSPlanningManager

26 APS Action plans for each WP27 DPS Detailed plans for each work type

28 WOS Work orders for each crew (weekly or monthly) SiteManager29 WFU Work order follow-up (weekly or monthly)

30 PER Performance evaluation report All

3132

KPIRAS

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

Project Manager


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 %

Normal Capacity60-85%

Unused capacity<60%

Parameter Profit Markup Value added

Target 1) Profit 1) Overhead2) Profit

1) Internal Resources2) Profit

ResourceView

External Mixed Internal


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.


Example: Project Cost & Price Analysis:

- Direct cost:- Materials 10 E- Equipment 20 I- Manpower 10 I- Subcontractor 5 E

===- Total direct cost: 45- Room overhead 20 I- Office overhead 10 I

===- Total cost 75 I + E- Internal resource 60 - External resources 15

Example: Three Projects:

Cost itemProjects

A B C- Direct cost:

Materials Equipment Manpower Subcontractor

151120

135710

912112

- Total direct cost 37 35 34- Project overhead 1 2 3- Sector overhead 2 2 2- Total cost 40 39 38- Price 50 48 46- Profit 10 9 8- Value added 15 25 35

RemarkFull

capacity>85 %

NormalCapacity60-85%

Unused capacity<60%


Technical Condition Parameters

Schedule Parameters


Payment Condition Parameters

Bonus / Penalty Condition Parameters


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 %


Negotiation Management For Project Engineers

Negotiation Process Cycle:


1 -Preparation2- Establishing

Objectives

FACE-TO-FACE DISCUSSIONS3- Face-to-Face

Discussion

4- Final Action

5- Control & Assessment

96

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


Conviction Indicators:مؤشرات االقناع

تقديم نفسك بالشكل االئق-1

المصداقية والثقة-2

األهداف واألولويات-3

االثبات والبراهين-4

قوة االنطباع األول واألخير-5

البساطة والوضوح-6

تبادل األخذ والعطاء-7

التحفيز والتوجيه والتخويف-8

التعهد وااللتزام بالوعد-9

السلطة الفعالة-10

تبني األغلبية-11

المحبة والصداقة-12

تحليل وفهم اآلخرين-13

ضبط حركات الجسد ونبرات الصوت-14

مخاطبة العقل الباطن-15



)1(تقديم نفسك

الخبرةالمؤهالت

المظهر السمعةالخارجي

)2(المصداقية والثقة

األدلة الشخصيةوالبراهين

األفكار والعبارات

الهيئة أو الجهة

)3(األهداف واألولويا

ت

نقاط القوةدقة البيانات

تحليل وتقييم

قاعدة األولوية


)4(االثبات والبراهي

ن

دقة ووضوح االحصائيات

التخطيط الجيد

دقة وقوة الحقائق

المعايير المناسبة

)5(قوة

االنطباع األول

واألخير

درجة انتباه اآلخرين

مراعاة المستوي المخاطب

العبارات القوية

الصادقة

التركيز علي األولويات

والفوائد

)6(البساطة والوضو

ح

تحليل الفوائد وااليجابيات

المؤثرات المرئية المناسبة

لغة التفاهم المناسبة

ترتييب األفكار وعدم التشتت


)7(تبادل األخذ والعطاء

المساعدة والنصيحة

العرض والطلب

حدود القبول

التنازل المنطقي

)8(التحفيز والتوجيه والتخوي

ف

اختيار نوعية األسئلة

توجيه النقاش

التشجيع للهدف

التخويف من الخسائر

)9(التعهد

وااللتزام بالوعد

بساطة اللغة

أولوية التعهدات

التعهدات المكتوبة

التعهدات المعلنة


)10(السلطة الفعالة

الضغوط عند الضرورة

االستغالل السليم للسلطة

قوة التأثير والتحفيز

تشجيع المشاركة

)11(تبني

األغلبية

تنشيط الجمهور

وجذب االنتباه

التأثير االنفعالي

العمل الجماعي

التركيز والتأكيد

علي الهدف العام

)12(المحبة والصداق

ة

حل المشكالتوعدم إصطياد األخطاء

التوافق االجتماعي

التواضع

المقابالت الودية


)13(تحليل وفهم اآلخرين

تحليل الحالة المزاجية ومدي االنسجام

تحليل طرق الخداع والكذب

تحليل األراء واألفكار

تحليل لغة الجسد

والكلمات والسلوك

)14(ضبط

حركات الجسد والصوت

التحية والتصافح للجميع

تجنب الضحك المبالغ

عدم االنفعال

ضبط لغة الجسد

)15(مخاطبة العقل الباطن

االغراء والمودة

النوحي االجتماعية

النواحي االنسانية

النواحي الدينية

Chapter 6: Negotiation Case Studiesfor Project Engineers

Case #1:Negotiation ِApproach for Salary Increased

مقدمة:

هندسة مجال في المتخصصين المهندسين احدي تعيين تمل تابع مشروع عقد علي الصيانة الصيانة شركات احدي

البترولية البترول Xوالمشاريع شركات احدي Yفي

شهري مرتب تحديد تم العقد لشروط جنيه، 2000وطبقا. الموقع عاملين علي المطبقة الحوافز نسب إلي باإلضافة

فترة العقد، ستة وبعد تنفيذ من إلي شهور وباإلضافةبان لسيادته تبين الموقع، في بأهميته المهندس إحساس

التخرج وسنة الخبرة مستوي نفس في الزمالء بعض هناكيتراوح مرتبهم فان ذلك ومع واإلقامة، العمل ظروف ونفس

.3000إلي 2500بين شهريا جنيه

لزيادة الشركة مسئولي مع التفاوض في المهندس ويرغب. بزمالئه أسوة مرتبه

. للتفاوض محدد ميعاد علي الطرفين اتفق ذلك، علي وبناء

:المطلوب للوصول - التفاوض هذا إلدارة متكاملة منهجية وضع كيفية

للطرفين حالة أفضل .)Win / Win Approach(إليهذا - عليها يبني سوف التي التفاوض أسس هي وما

الحوار؟


بنوده ضمن ومن جنيه مليون بقيمة مفتاح تسليم مشروعوتشطيب وتركيب سراميك 1000توريد مربع متر

بسعر الغرف سراميك تأمين العقد شروط ضمن ومنعن يزيد ال المربع من 25المتر ذلك توريد وإمكانية جنيه

من تخصم المالك قبل من توريدها حالة وفي المالك، قبل. العقد قيمة

المتر سعر وكان السراميك وتوريد بشراء المالك قام وقد18. جنيه

بخصم المالك المقاول 25000ويطالب يطالب بينما.18000بخصم فقط


Case #2:Negotiation ِApproach for Salary Increased

مقدمة:

هندسة مجال في المتخصصين المهندسين احدي تعيين تمل تابع مشروع عقد علي الصيانة الصيانة شركات احدي

البترولية البترول Xوالمشاريع شركات احدي Yفي

شهري مرتب تحديد تم العقد لشروط جنيه، 2000وطبقا. الموقع عاملين علي المطبقة الحوافز نسب إلي باإلضافة

فترة العقد، ستة وبعد تنفيذ من الشركة شهور عرضتب Yالمالكة أفضل فرصة المهندس شهري علي 4000 مرتب

.جنيه

الشركة في بأهميته المهندس إحساس إلي ، Xوباإلضافةوالمديرين الزمالء مع الطيبة ،وعالقاته

لزيادة الشركة مسئولي مع التفاوض في المهندس ويرغبفي وتعيينه باستقالته العرض علي الشركة موافقة أو مرتبه

. األخرى الشركة




الحوار؟


Case # 3 : Negotiation ِApproach for Car Rent

مقدمة:

البترولية الخدمات مجال في العاملة الشركات إحدي ترغبX المواقع لخدمة مالكي سيارات عشرة عدد تأجير في

المختلفة المواقع الي بالقاهرة الرئيس المقر من والسفر( الزيت( جبل ، غارب إسكندرية، ، الجديدة دمياط بورسعيد،

احدي من بعرض التقدم المباشر باألمر الشركة طلبت وقدالمتخصصة وذات Yالشركات السيارات تأجير مجال في

. الجهة مع تعامل سابق وذات الطيبة السمعة قيمة تحديد تم العرض لشروط شهريا 5000 وطبقا جنيه

موديل مرسيدس ماركت بمعدل 2004للسيارة ، بالسائقيوميا 200 الكيلو كم لعدد طبقا حوافز نسب إلي باإلضافة ،

تحمل مع إضافي، كليو لكل إضافي جنيه بمعدل اليومي متر، ( Xالشركة زيوت ، بنزين المستهلكات مصاريف كافةوخالفه).

الشركة الشروط Xوترغب بعض وتحديد القيمة تقليل في. الخدمة وموثوقية وسالمة وجودة سهولة تضمن التي

الشركة ترغب بعض Yكما وتحديد القيمة علي الحفاظ فيوالحفاظ السيارة استخدام حسن تضمن التي الشروط

عليها.. للتفاوض محدد ميعاد علي الطرفين اتفق ذلك، علي وبناء



الحوار؟


Case #4:Negotiation ِApproach

During Contract Implementation Phase

مقدمة:

البترولية والمشاريع الصيانة شركات احدي بتنفيذ Xتقومللعمرات سنوي اإلنتاج Shutdownعقد خطوط من لعدد

trains البترول شركات احدي Yفي: يلي ما العقد بنود ضمن من وكانت

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

قام العقد، تنفيذ من شهور أربعة فترة Xالشركة توبعدعمرات، من تم ما معلومات ضغط وتبين بتحليل إمكانية

( دواعي Crashingتقليل( مراعاة مع الخط عمرة HSEفترةأدوات، ( بالموقع عمالة، الموارد مختلف بزيادة وذلك ، .وخالفه)

الشركة تقاموقدX يومي بتحليل الخط توقف خسائرDown time cost rate ال يوم خط انتاج خسائر أن فوجدت

يوميا دوالر مليون خمسة عن تقل الشركة الشركة Xوترغب مع التفاوض كيفية Yفي في

ممكن، حد أدني إلي الخط عمرة فترة وتدني العمل تحفيز. توفير يوم لكل تحفيز نسبة علس باالتفاق وذلك




الحوار؟


Negotiation Main Steps1. 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: Field: Shutdown planning Topic: Time crashing

4. Formation of negotiation team: Owner: HSE manager - Site manager 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 Contractor: Maximize the bonus for each day saving

7. Constraints / Problems: Owner: Downtime cost rate = 1 M$/day Contractor: Manpower and Tools limitation

8. Available information:

WP Mob W01 W02 W03 W04 W05 DMOPredecessors - Mob Mob Mob W01 W03 W04

W05Day 1 8 5 6 8 10 1Engineers 4 8 7 9 8 10 4


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: ----------------- Requirements: --------------- Policy II: ----------------- Requirements: ---------------

12. Scenario and approach

13. Principles / Bases of negotiation: Quality requirements – HSE conditions – Resource availability Penalty and Bonus rules

14. Recommendation / Agreement Policy xxx - Master plan - Manpower – Penalty/Bonus rules

15. Performance Evaluation: Global KPI:



During Contract Implementation Phaseمقدمة:

البترولية والمشاريع الصيانة شركات احدي بتنفيذ Xتقومللعمرات سنوي اإلنتاج Shutdownعقد خطوط من لعدد

trains البترول شركات احدي Yفي: يلي ما العقد بنود ضمن من وكانت

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

العملية تجاوز حالة في أن العقد، خصم 21وينص يتم يومأقص% 1 بحد يوم كل .10عن العملية% قيمة من

الغيار قطع توفير مسئولية تكون أن علي العقد نص كماالمالكة الشركة علي الصيانة حالة Yومستلزمات وفي ، الغيار قطع توفر عدم بسبب الصيانة عملية توقف

صرف يتم الصيانة مع% 40ومستلزمات العملية، قيمة منالالزمة واألدوات للعمالة التنظيمي بالهيكل الكامل االحتفاظ

. بعد العملية قيمة باقي صرف يتم ثم الصيانة عمليات إلجراء. المطلوبة العملية وتنفيذ الالزمة الفيار قطع جميع وصل

،العقد تنفيذ من شهور أربعة فترة الغيار وبعد قطع تأخرتولم الشهرين، تتجاوز لمدة المعدات أحدي لعمرة الالزمة

. لتوفيرها قاطع موعد تحديد يتم ولم بعد تصل ال كان المعتاد الغيار قطع توريد زمن متوسط بان العلم مع

. أسابيع أربعة مدة يتجاوز الشركة الشركة Xوترغب من التفاوض كيفية Yفي في

. ذلك علي المترتبة الخسائر وتعويض العمل تحفيز. للتفاوض محدد ميعاد علي الطرفين اتفق ذلك، علي وبناء:المطلوب

للوصول - التفاوض هذا إلدارة متكاملة منهجية وضع كيفيةللطرفين حالة أفضل .)Win / Win Approach(إلي

هذا - عليها يبني سوف التي التفاوض أسس هي وماالحوار؟



Between Maintenance and Safety managers

مقدمة:

البترولية والمشاريع الصيانة شركات احدي بتنفيذ Xتقومالبترول شركات احدي لمعدات لصيانة سنوي Yعقد

مدير الحظ العمالة، انتاجية وتحليل التابع وبدراسة الصيانةمعامل Xللشركة يتراوح اذ جدا منخفضة العامل انتاجية أنبين Utilization factorاالنتفاع هذا % 35الي 25ما وبتحليل ،

الوقت هي لذلك أدت التي العوامل أهم من أن تبين النسبالعمل تصاريح في Work permitsالمستغرق

للشركة التابع الصيانة مدير مدير Xويرغب مع التفاوض فيللشركة التابع تقليل Yالسالمة كيفية المستغرق في الوقت

ومتطلبات نواحي كافة مراعاة مع العمل، تصاريح HSEفي




الحوار؟


Case #7:Project: Gas pipe line 120 Km

مقدمة:

عقد اجراء والمشاريع ابين Aتم الصيانة شركات حديالبترول Xالبترولية شركات احدي العقد ، Yمع Aوينص

بطول غاز خط انشاء اجراء الي 120علي أسيوط من كمتوقيع سوهاج، تاريخ من شهور ستة خالل الخط استالم ويتم

تأخير غرامة توقيع وتم أقصي% 2العقد، بحد اسبوع كل عن15.%

في العقد توقيع تم تسليم 1/1/2006وقد تأخير تم ولكن ، المالية المستحقات من المقدمة Down paymentالدفعة

في إال المشروع في البدء يتم لم وبالتالي شهرين، لمدة1/3/2006.

من االنتهاء صعوبة المشروع مدير الحظ المشروع بدء وبعدالحدد الوقت في ، 1/7/2006المشروع

علي األطراف جميع مع التفاوض في المشروع مدير ويرغب. األوان فوات قبل الخالفات هذه حل

. للتفاوض محدد ميعاد علي األطراف اتفق ذلك، علي وبناء



الحوار؟


Scope of Work:Gas Pipe Line 120 Km

ID Activity Description Performance rate Km/day

Cost1000 L.E. / Km

E Excavation 2 5S Stringing 4 400

W Welding 1 20N NDT 2 10C Coating & Wrapping 2 2L Lowering 4 1B Backfilling 4 3T Hydrotest (3 days) 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?

Policy 1 – What?…………………… Why? .……………

Policy 2 – What?…………………… Why? .……………

Policy 3 – What?…………………… Why? .……………


Case #8:Negotiation ِApproach for Direct Contract

مقدمة:

عقد اجراء والمشاريع ابين Aتم الصيانة شركات حديالبترول Xالبترولية شركات احدي العقد ، Yمع Aوينص

بطول غاز خط انشاء اجراء الي 120علي أسيوط من كمتوقيع سوهاج، تاريخ من شهور ستة خالل الخط استالم ويتم

تأخير غرامة توقيع وتم أقصي% 2العقد، بحد اسبوع كل عن15.%

الشركة للوائح بين Xوطبقا مناقصة بطرح قامتوالمستلزمات المواد جميع لتوريد المعتمدين المورديين

العقد ترسيت تم وقد المورد Bالالزمة، نص Zعلي حيث ، شهرين خالل والمستلزمات المواد جميع استالم يتم أن علي

العقد توقيع تاريخ تأخير Bمن غرامة توقيع وتم كل% 3، عنأقصي بحد %.10اسبوع

شهر لمدة التوريد عن المورد تأخر لوحظ المشروع بدء وبعد. القديمة المالية المستحقات علي الشركة مع خالفه بسبب

الشركة مسئولي مع التفاوض في المشروع مدير ويرغباسناد أو األوان فوات قبل الخالفات هذه حل علي والموردادارة ان مالحظة مع المورديين، آلحدي للتوريد مباشر أمر

وطرح للتوريد المباشر األمر رفض تري بالشركة العقود. للموردين جديدة مناقصة



للطرفين حالة أفضل .)Win / Win Approach(إلي


Case #9:

مقدمة:

بين عقد اجراء المقاوالت اتم شركات احدي Xحدي معالحكومية سنوات Yالهيئات ثالثة لمدة ويجدد عام لمدة

أحد يخطر لم أن عليها، المتفق االسعار بنفس متتاليةكافي بوقت العقد إنتهاء قبل العقد فسخ في برغبته الطرفين

. األقل علي شهرين

العقد قيمة شهريا 100,000وكانت شاملة جراء الجنيه صيانةمع الميادين لبعض والزراعة والحراسة واألمن والتشغيل

وادوات وعمالة مواد من النفقات جميع المقاول تحمل. وخالفه وتأمين ومستلزمات

فترة خالل األسعار ثبات العقد، بنود ضمن من وكانتالمشروع.

زيادة لوحظ المشروع بدء من أشهر ثمانية مرور وبعدمن أكثر بنسبة المواد العاملين% 40أسعار أجور زادت كما ،

من أكثر غير% 20بنسبة أصبحت العقد قيمة أن يعني مما ، . للمقاول مناسبة

حل علي الهئية مسئولي مع التفاوض في المقاول ويرغب. العقد فسخ أو المستجدة المشاكل هذه




الحوار؟


Case #10:

مقدمة:

بين عقد اجراء المقاوالت اتم شركات احدي Xحدي معالحكومية سنوات Yالهيئات ثالثة لمدة ويجدد عام لمدة

أحد يخطر لم أن عليها، المتفق االسعار بنفس متتاليةكافي بوقت العقد إنتهاء قبل العقد فسخ في برغبته الطرفين

. األقل علي شهرين

العقد قيمة شهريا 100,000وكانت شاملة جراء الجنيه صيانةمع الميادين لبعض والزراعة والحراسة واألمن والتشغيل

وادوات وعمالة مواد من النفقات جميع المقاول تحمل. وخالفه وتأمين )ومستلزمات الضمان ( التأمين قيمة وكانت

.5تقدر نقدا% أو بشيك سواء العقد قيمة من

مع الهيئة عقدت ، المشروع بدء من أشهر ثمانية مرور وبعدأخر التأثير Yمقاول الي أدي مما الميادين، هذه لتطوير عقد

بالمقاول الخاص العقد بنود .Xعلي

حل علي الهئية مسئولي مع التفاوض في المقاول ويرغب. العقد فسخ أو المستجدة المشاكل هذه




الحوار؟


Case #11:

مقدمة:

بين عقد اجراء المقاوالت اتم شركات احدي Xحدي معبطاقة Yالهيئات كهربائية قوي محطة بعقد 10MWالنشاء

عام 25قيمته لمدة وانشاء وتوريد تصميم وفترة جنيه مليونالمقدمة الدفعة واستالم العقد توقيع تاريخ من Downتبدأ

payment 20% ، تأخير غرامة توقيع بحد% 5وتم شهر كل عن%.15أقصي

المقاوالت شركة المواد Xوقامت لجميع توريد عقد بإبرامالمورد مع التوريد Zوالمستلزمات فترة تكون أن علي ،

صرف ويتم للمستورد، شهور وثالثة للمحلي %25شهرينثم مقدمة ثم% 50كدفعة االستالم، من شهر بعد% 25بعد

. التوريد عقد توقيع تاريخ من عام أقصي وبحد المشروع نهاية

المورد من والمستلزمات المواد جميع استالم ، Zوبعدالشركة مستخلص Xتأخرت دفع لمدة% 50في عليه المتفق

هذا لدفع محدد تاريخ علي االتفاق وعدم شهور ثالثةالمقاول بين المالية المشاكل لبعض نظرا المستخلص،

والهيئة.

المقاول يرغب كما المقاول، مع التفاوض في المورد ويرغبالمشاكل هذه حل علي الهئية مسئولي مع التفاوض في

. العقد فسخ أو المستجدة



للطرفين حالة أفضل .)Win / Win Approach(إلي


Case #12:

مقدمة:

البترولية والمشاريع الصيانة شركات احدي بتنفيذ Xتقومالبترول شركات احدي لمعدات لصيانة سنوي في Yعقد

الشركة مواقع إحدي

بالمكتب القطاع رئيس بين االتصال يتم عديدة، مرات وفيللشركة القاهرة Xالرئيسي مهندسي في مختلف مع

مما المباشر، الموقع مدير الي الرجوع دون مباشرة الموقعالي باالضافة األحوال من كثير في القرارت تضارب الي أدي

بالموقع االدارية العملية ضعف

بالموقع الصيانة مدير مع ويرغب التفاوض القطاع في رئيسالرئيسي لتحسين بالمكتب التجاوزات هذه تقليل كيفية في

. العامل انتاجية رف وبالتالي بالموقع االدارية العملية




الحوار؟


Case #13: Select the best method:

Cost item MethodsA B C D E

- Direct cost: Materials Equipment Manpower Subcontractor

00036

151120

156710

1510104

1513120

- Total direct cost 36 37 38 39 40- Project overhead 1 2 3 4 4- Total cost 37 39 41 43 44- Price 50 50 50 50 50


Which method would you choose?

Method 1 – Why? ………………………………………

Method 2 – Why? ………………………………………

Method 3 – Why? ………………………………………

Method 4 – Why? ………………………………………

Method 5 – Why? ………………………………………


Case #14: Select the best payment terms:Budget planning for annual project

Work package A B C D E

Predecessors - - - A C

Duration (week) 16 10 12 16 40

Budget $M 80 70 96 80 200

Total Budget = $ 526 M Annual Cash Flow:

Owner: 526/6 = 87.67Month 0 3 6 9 12 13$M 88 88 88 88 88 86

Contractor:

Month 0 3 6 9 12 13$M 150 125 100 75 50 26



Policy 1 – What?…………………… Why? .……………

Policy 2 – What?…………………… Why? .……………

Policy 3 – What?…………………… Why? .……………


Case #15: Select the best schedule:

Annual Project List:

Description IDBudget(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 & P46 Project #6 P6 14 2 P37 Project #7 P7 6 3 P68 Project #8 P8 3 3 P5 & P7Direct cost 118Overhead cost 2Total cost 120

Down time cost = $ 10 M/ month

Budget or Payment Limitation: 120/12 = 10 M$ /month



Policy 1 – What?…………………… Why? .……………

Policy 2 – What?…………………… Why? .……………

Policy 3 – What?…………………… Why? .……………


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 $/mOffer 2 – Fibber cable – 5 $/mOffer 3 – Wireless – 5000 $Offer 4 – Phone lines + 2 Modems – 3000 $Offer 5 – Main satellite at AUC – 2000 *2 = 4000 $


Which tender would you choose?

Offer 1 - Why? ……………………………….

Offer 2 – Why? ……………………………….

Offer 3 – Why? ……………………………….


Offer 4 – Why? ……………………………….

Offer 5 – Why? ……………………………….

Go for a change in design criteria –

What? …………………………….…………………….

Why? …………………………….…………………….

How? ……………………..…….…………………….


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.

• $120,000

• Main Serial Line – Telstra ISDN line

• Back up Line – Dial- up modem using PSTN

Tender 2

• $130,000

• Main Serial Line – Telstra ISDN Line

• Back up line – ‘Line-of-sight’ microwave link owned by business.

• 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? ……………………..…….…………………….


Case #18: KPI:Target Performance:

Item Unit ValueWork Schedule:

Excavation Concrete F-Concrete

m3

m3

m3

300015001000

Budget Cost: Excavation Concrete F-Concrete

LE/m3

LE/m3

LE/m3

5100800

Critical equipment: Excavator Concrete pump

m3/daym3/day

200100

Critical materials: Cement for concrete Cement for F-concrete

kg/m3

kg/m3250350

Actual Performance:

Item unit ValueWork Performed:

Excavation Concrete F-Concrete

m3

m3

m3

40002000800

Actual Cost: Excavation Concrete F-Concrete

LELELE

16,000180,000600,000

Critical materials: Available Cement Used Cement

tonton

800800


Which KPI would you choose? Policy 1 – What? …………………… Why? .…………… Policy 2 – What? …………………… Why? .…………… Policy 3 – What? …………………… Why? .……………


Negotiation Skills for Project Managers

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