negotiations

Article - Don’t Worry! We Will Break the News Gradually to Him!

 

This true gem of a story happened much earlier in my career when I was working for one of the largest international banks. Basically, it explains how NOT to conduct estimates-related negotiations on your projects!

Director: Hey, I am going to assign you to this new regulatory project. Keep in mind, this is a high-profile endeavour; our main client is the Senior VP of our company. Keep in mind, he hates us, the IT guys. His nickname here is “El Diablo”!

Me: Yes, I have heard about this project. I have spoken to some of our technical people and they have estimated that it would take about nine months to deliver the final product...

Director: Yup, that is another problem. I have personally promised that we would deliver the product in three months

Me: (incredulously) What?! Three months? But now that he finds out the truth he will be mad!

Director: Don’t worry about that. I have a plan. We will proceed by breaking the news to him gradually!

Me: (sarcastically) Do you really think that he got to the position of Senior Vice President of one of the largest financial institutions in the world by being an utter idiot?

Director: (slightly offended) No!!! Why?

Me: How can a normal person NOT notice the difference between a three-month project and a nine-month project?

Director: (somewhat disappointed) I see… Yes, that is a bit of a problem, isn’t it?

 

Have you ever been forced into similar situations by your bosses? How did you handle them?

Article - Project Negotiations Conundrum - What Would You Do?

 

One of the most important lessons I learned after spending close to 20 years in the project management profession is that the underlying interests, constraints and risk tolerances of the project team and other stakeholders – especially customers - are never identical. As a result of this proposition we can derive the following project management axiom:

Good project manager can increase the size of the pie by looking for things that are of low cost to him and his team and high value to the customers (and vice versa).

One of the best examples of this technique is demonstrated in the so-called “Orange Fable”:

Two kids (a boy and a girl) are quarrelling over an orange. Their father enters the room and, operating under the “fixed pie” assumption, cuts the orange in two equal halves. And then he notices that the brother ate the orange and threw away the peel, while his daughter used the peel from her half as an ingredient in pastry while disposing of the fruit. At that point of time the father realizes that had he asked the question “What do you need this orange for?”, he would have doubled the size of the pie for both parties involved!

Here is another example of this technique used on a real project. A relatively small construction company lands a very lucrative deal to build a shopping mall for a large and established real estate management company. All the contracts have been discussed and signed when a project manager from the construction company receives a call from a representative of the real estate management organization…

Customer: “I would like to add another clause to our contract. If the work is on the new mall not finished by the deadline in the contract, I want your company to pay a penalty of $5,000,000”

PM: “Hmm, we have already signed the contract without the late penalty clause; I am not sure how our management would react to that …”

Customer: “I am sorry, but I have been instructed by my boss not to proceed ahead without this modification to the contract”

PM: “And may I ask you why do you, guys, feel the need to add this clause?”

Article - Top 20 Questions to Ask When Negotiating Your Estimates

 

The science of project management tells us that there are three common constraints to any project: scope, time and budget. Having said that, throughout my project management career, I preferred to work with a PM Pentagon model (see Figure 1) and treat constraints as “degrees of freedom”.

Figure 1

pm-pentagon.PNG

Here is what I did every time I was supposed to present our clients with time, budget or human resource estimates. Usually the estimates presented rarely met customer expectations (budget was too high, duration was too long, etc.) So, the thing to do is for the project manager is to point to each corner of the pentagon and to ask the questions presented in Tables 1 and 2.

Table 1

project-negotiations1.PNG

Table 2

project-negotiations2.PNG

The idea here is that every question you ask is like a door leading to a room with a whole bunch of other doors presenting you with options to deliver a project in a reasonable manner.

And what questions do you ask during your project negotiations?

About the Author

Jamal Moustafaev, MBA, PMP – president and founder of Thinktank Consulting is an internationally acclaimed expert and speaker in the areas of project/portfolio management, scope definition, process improvement and corporate training. Jamal Moustafaev has done work for private-sector companies and government organizations in Canada, US, Asia, Europe and Middle East.  Read Jamal’s Blog @ www.thinktankconsulting.ca

Article - Negotiations: How to Talk Your Boss into Doing the Unthinkable

 

A couple of years ago I was commissioned by a product company to run a crucial project of theirs, the delivery of the next version of their flagship product. The project has been hindered by problems from the very inception: too much scope to deliver ("customers demand ALL of these features!), not enough time ("we absolutely MUST deliver this by the start of the Christmas season!") and lack of resources ("you need HOW many people?!").

I started this endeavor by sitting together with the product managers and a couple of senior architects in order to prioritize the features and to determine the proverbial "low hanging fruits" that were of utmost importance but could be delivered relatively easy. At the end of the day we were able to cut or postpone some of the "nice to have" but cumbersome scope items. However we still only had a 50% chance of hitting the required deadline. So, I gathered my documents and walked into the office of the CEO ...

Me: Listen, our chances of finishing project on-time are still pretty slim. We are hovering somewhere around 30% probability of hitting the deadline. We need to look for some additional degrees of freedom ...

CEO: And what are you proposing?

Me: Well, we went through the list of potential options to obtain additional degrees of freedom: adding more people, replacing inexperienced experts with the experienced ones, cutting some additional scope, etc., but received an unequivocal "no" to each one of our requests ...

CEO: Well, I guess you guys will just have to roll up your sleeves and work harder!

Me: Actually, there is another option that can give us some wiggle room. You know how we conduct company-wide meetings every Tuesday? (Note: The company had a long-standing tradition of running "all hands on deck" meetings on a weekly base. The gatherings lasted for 2-2.5 hours each time and largely consisted of  employees passing on teddy bears as prizes and thanking each other for being especially helpful last week. The management was convinced that such gatherings improved communications and employee morale, thus treating these events as sacred cows.)

CEO: Yes ...

Me: Would you mind exempting my team from these meetings? We think it can free up ...

Article - Should You Lie to Your Customers to Get Them a "Little Bit Pregnant"?

Introduction

In my consulting and training practice whenever I get to talk to project managers, both experienced and new, the question of whether it pays off to be honest when interacting with your clients always comes up. I usually say that it is much easier to weather the storm at the beginning of the project than to suffer the death of the thousand cuts through the entire duration of the venture.

However, one time an experienced project manager approached me after the session and, with a "wink wink, nudge nudge" look on his face, said the following:

"Oh, c'mon, man like you never lied to your customer in order to get the project off the ground! You know perfectly well, once they get a little bit pregnant, there is no way back for them!"

Once I got over the painful image of "getting my customers slightly pregnant", I remembered the following dialogue I had with my former boss, the director of the IT department at a global bank.

The Story

Director: Hey, I am going to assign you to this new regulatory project. Keep in mind, this is a high-profile endeavour; our main client is the Senior VP of our company. By the way, you should not, he is a very difficult individual. As a matter of fact his nickname in our department is "El Diablo"!

PM: Yes, I have heard about this project. I have spoken to some of our technical people and they have estimated the project to take about nine months ...

Director: Yup, that is another problem. I have personally promised that we would deliver the product in three months

PM: “What?! Three months? But now that he finds out the truth he will be mad!”

Director: “Don’t worry about that. I have a plan. We will proceed by breaking the news to him gradually!”

Article - How to Negotiate on Projects: Inventing Options for Mutual Gain

 

One of the prevailing superstitions in project management is the "fixed pie" assumption. In other words, both sides assume that the project results, speaking mathematically, are binary - either the team delivers the project on time or it doesn't; either the project is on budget or over, etc. Fortunately, negotiations are typically not like NBA Finals when team A meets team B in a seven-game series where the winner gets the Larry O'Brien Championship Trophy and the loser goes home empty-handed.

In my experience, situations on most projects are similar to the fable involving two kids quarrelling over the ownership of an orange. Finally, their father enters the room and, operating under the fixed pie assumption, cuts the orange in two equal halves distributing the fruit between the brother and the sister. Interestingly enough, the brother eats the orange and throws away the peel. The sister uses the peel from her half as an ingredient in pastry while disposing of the fruit.

The situations between customers and project teams are often similar to the fable described previously: the underlying interests, constraints and risk tolerances of both parties are rarely identical. The proverbial pie usually looks quite different to each party. Hence, a good project manager can increase the size of the pie by looking for things that are of low cost to him and his team and high value to the customers (and vice versa).

Consider the following interaction between an experienced construction project manager and a customer:

Customer: “I would like to add another clause to our contract. If the work on the new mall is not finished by the deadline in the contract, I want your company to pay a penalty of $5,000,000”

PM: “Hmm, we have already signed the contract without the late penalty clause; I am not sure how our management would react to that …”

Customer: “I am sorry, but I have been instructed by my boss not to proceed ahead without this modification to the contract”

PM: “And may I ask you why you guys feel the need to add this clause?”

Article - Mistakes Analysis: How Not to Handle Project Negotiations

 

As a part of my project and portfolio management consulting practice I frequently get involved in advising various companies on how to run their real-life projects. In my previous article "How Not to Handle Project Negotiations" I shared a discussion that took place between three project stakeholders and invited the readers to find the mistakes that happened in that conversation. Today I am providing my proverbial two cents on the situation at hand ...

Sheila: You know about the problems we had with the release 4.0 of this product. You guys were late by 3 months, went almost 50% over budget and delivered way less features that we expected. Besides even the stuff you did deliver had serious quality issues.

Aha! So the previous similar project has been a failure on all three fronts: late, over budget and delivered less scope than expected. I wonder if optimistic estimation had anything to do with that?

Dan: Yes, and because of all these problems we lost two of our customers and several others warned us not to contact them until we have e-Merchant 5.0 ready with all the necessary features …

And these failures are beginning to have a strategic impact on the company's well-being ...

John: Yes, I understand your concerns and that is why we decided to invest a bit more time in scope definition in order to be able to better estimate project size, risks and duration.

Sounds like a very smart move to me. After all it is impossible to come up with any meaningful estimates until one knows the scope of work.

Dan: How much time are you planning to spend on requirements gathering?

John: We estimated that we would need about four weeks to elicit and document all the requirements and another week to for the team to conduct document inspections and generate estimates.

Again, sounds very reasonable.

Quiz - How Not to Handle Project Negotiations

 

As a part of my project and portfolio management consulting practice I frequently get involved in advising various companies on how to run their real-life projects. Several years ago I was requested by a CEO of one organization to sit in a meeting where several stakeholders were supposed to discuss various aspects of the new "do-or-die" project. The ensuing conversation was so hilarious, that I excused myself from the room as soon as I could and recorded the entire exchange before it escaped my mind.

So, my challenge to you: how many estimation/negotiation handling mistakes were you able to spot in the following conversation?

John the project manager at the ABC Software Inc. a producer of e-Commerce software was preparing for a meeting with Dan, a VP of Sales and one of the original founders of the company and Sheila, a Senior Product Director. They were supposed to discuss the next major release of the company’s e-Merchant product.

Sheila: You know about the problems we had with the release 4.0 of this product. You guys were late by 3 months, went almost 50% over budget and delivered way less features that we expected. Besides even the stuff you did deliver had serious quality issues.

Dan: Yes, and because of all these problems we lost two of our customers and several others warned us not to contact them until we have e-Merchant 5.0 ready with all the necessary features …

John: Yes, I understand your concerns and that is why we decided to invest a bit more time in scope definition in order to be able to better estimate project size, risks and duration.

Dan: How much time are you planning to spend on requirements gathering?

Article - 7 Tips for Successful Project Negotiations

 

Negotiation is a dialogue intended to produce an agreement

upon courses of action, not only by actively selling

your position but also by focusing on the other side's

interests, needs, priorities, constraints and perspective.

 

Tip #1: Use Investigative Negotiations

 When negotiating on projects, both parties involved default to the discussion of their respective demands or try to state their positions in the clearest ways possible. Dig into your own memories and try to see if you have ever heard the following statements from your clients or managers:

  • “This project must be delivered by October 30th of this year”.
  • “You are limited to ten resources on this project”.

Project managers are also prone to uttering statements like:

  • “We can’t hit this deadline even if we work sixteen hours a day”.
  • “If I don’t get the resources I asked for, we are not going to deliver this project”.

The problem with this approach is that we focus on the positions or demands of both parties rather than trying to understand their underlying interests and reasons. We assume that the key to a successful negotiation lies in understanding what the counterpart actually wants. While this is true, it is not the end of the process but rather a beginning. Focusing on what their customers want frequently distracts even the most experienced project managers from why they want it in the first place.

Therefore, questions like "why?" and "why not?" become the project manager's best friends during any negotiation process.

 

Article - Are We Supposed To Negotiate On Projects?

"Operation Husky": Allied Forces and Don Calo

"Operation Husky", the Allied invasion of Sicily started on July 9th, 1943. It was a large-scale amphibious and airborne operation, followed by six weeks of land combat. The Anglo-Canadian forces landed on the east cost of the island and had a seemingly simple task in front of them. The resistance was known to be poorly equipped with weapons and ammunition; in some cases their positions were defended by captured Russian artillery that nobody could operate because the Italian army forgot to translate the operating manuals. And yet, despite all of the planning shortcomings, the Italians fought well and it took English and Canadian forces five weeks and thousands of casualties to reach their objective - the town of Messina.

arewesupposed1American troops, on the other hand, had a much tougher challenge: the occupation of the mountainous centre and western half of the island. Nevertheless, the American Seventh Army was able to reach the north coast of Sicily in only seven days and with hardly a shot fired. What allowed the US troops to accomplish "the fastest blitzkrieg in history", as General Patton once described this campaign?

According to some historians, the American government managed to strike a deal with the most powerful man on the island, the capo di tutti capi of the Sicilian mafia - Don Calogero Vizzini. The US Office of Strategic Services (OSS) - the wartime predecessor of the Central Intelligence Agency (CIA) - recruited Charles "Lucky" Luciano to act as an intermediary between the advancing US Army and "La Cosa Nostra". As a result of these negotiations the mafia protected the roads from snipers, arranged enthusiastic welcomes for the advancing troops, arewesupposed2encouraged mass desertions from the Italian army and provided guides through the confusing mountain terrain.