1. ‫بسم هللا الرحمن الرحيم‬

2. College Of Engineering
GE402-Project Management
Group (1)
Done by :-
Mohammad Al- Rasheed 425035374
Anas Ahmed AL-Moshigeh 271100085
Abdussalam AL-Shodokhi 425035104
Abdulaziz Al-Nasser 425035227
Awad Al- Mutairy 424037043
Yazeed Abdullah AL- Roqieebh 426035098
Submitted to :-
prof.Dr.Tomas u Ganiron

3. PLANNING PROCESS
 4-1 Quality plan
 4-2 Communication Plan
 4-3 Implementation Plan
 4-4 Change Plan
 4-5 Risk Plan
 4-6 Negotiating
 4-7Contracting
 Summary key points

4. Quality plan

5. What is Quality?
 Quality is seven attributes(portability, reliability,
 efficiency, usability, testability, understandability,
 modifiability) ( Glass )
 Quality is conformance to requirements(Crosby)
 Quality is fitness for use (Deming)
 Quality is value to some person (Weinberg)
 Quality is whatever the customer decides (Ginac)
 Quality is an attitude or state of mind (Juran)

6. Quality
 Quality means many things to many people
 Quality ISO 8402: “the totality of features
and characteristics of a product or service
that bear on its ability to satisfy started or
implied needs”.

7. Definitions: Quality
Fitness for use
+ Conformance to
specifications.
Features they
want
+ Problems they
don‟t want.
Customer
+
value Zero defects.

8. Quality vs. Grade
 Grade — a category or rank given to
entities having the same functional use but
different requirements for quality:
 Ford Escort vs. BMW 635i

9. Cost of Quality
 Cost of conformance:
 Prevention costs
 Appraisal (inspection) costs
 Cost of non-conformance:
 Internal failure costs — fixes prior to delivery
 External failure costs — fixes after delivery

10. Cost of Quality Details
 Prevention
 Quality planning.
 Formal process audits.
 Training.
 Detection
 In-process and inter-process review.
 Test equipment.
 Equipment calibration.
 and maintenance.
 Testing.

11. Cost of Quality Details
 Failure Costs
 Rework.
 Repair.
 Scrap.
 Failure mode analysis.
 Complaint resolution.
 Product return and.
 Replacement.
 Help line support.
 Warranty work.

12. What is a Quality
Plan?

13. What is a Quality Plan?
A Quality Plan is different than a Test Plan
 Defines the Quality Goals.
 Realistic about where defects come from.
 Selects appropriate detection and
prevention
methods.
 Has means not to “go dark”.

14. Quality plan
This plan details :
 Quality policy : if the organization delivering don‟ t
have a quality policy Project Management Team
should develop it for the project
 The level of quality required in the deliverables
 Shows how quality is going to be assured in the
project: Quality assurance
 what quality control measures you will use :
Quality Control

15. Quality plan
 It also may list standards that your
deliverables will be measured against
(particularly where a product is involved).
Example :
- HACCP
- FAR
- Environmental, safety ,and health
regulations(ES&H)

16. What is Quality Control ?
 Quality Control (QC) is fault/failure
detection
through static and/or dynamic testing of
artifacts.
 Examining the artifact against pre-
determined
criteria to measure conformance.

17. Defining Quality Goals
A goal is SMART
 Specific.
 Measurable/Testable.
 Attainable.
 Relevant.
 Time-bound.
 The primary project goals must be
 described in the chartering process.

18. Enterprise Approaches to Quality
Improvement
 Total Quality Management — statistical
process control, continuous improvement
 Lean Production — eliminate waste
 Six Sigma — TQM focused on financial
performance

19. Quality tools
 More than 300 tools
 Choose your tool according to your problem
Example :
 ISHIKAWA tree
 SPC
 PARETO
 Six Sigma

20. Quality tools
Ishikawa emphasizes on what can causes defects to the
project:

21. PARETO
 Pareto Principle say: s that 80% of the
results caused 20% of the reasons. This is
known also to launch the database from
80 to 20. This principle is called the name
of the Italian economist who noted that
80% of the property in Italy, is owned 20%
of the population.

22. PARETO
 The principle has many applications in all areas, the following are
some examples of these applications:
In sales: 80% of your profits come from 20% of customers
Management: 20% of employees are 80% of the company.
At time: 80% of your time is spent on 20% of the tasks or objects.
To contact: 80% of the time you spend in speakerphone with 20% of
those who are in the book of your phone.
In clothing: dress in 80% of the time 20% of what is in your clothes
closet.
And others ...

23. An Introduction to
Six Sigma

24. Six Sigma Methodology
 Define — what to work on
 Measure — current performance
 Analyze — root causes
 Improve — the process
 Control — ongoing performance

25. Design for Six Sigma
 Define — what to work on
 Measure — customer needs
 Analyze — how to meet customer needs
 Design — a process to meet those needs
 Verify — that customer needs were met

26. 26

27. Communications Plan

28. What Drives the Plan?
• Your organization‟s
goals
• The vision as
expressed in the
mission statement
• Your organization‟s
values and beliefs

29. Vision and Mission Statement
-Provides overall direction for
media activities.
-The plan must advance your
organizations agenda.

30. Typical Communication Goals
• Enhancing visibility and
reputation
• Planning for crisis management
• Generating positive media
coverage
• Changing attitudes or teaching
new skills
• Generating public support
• Fund raising

31. Six Critical Elements
1. Understand your target audience and
how to reach it
2. Research past media coverage and
public opinion about your issue
3. Determine key messages
4. Determine key materials to be
produced

32. 5. Obtain resources for staff and
equipment
6. Develop written work plan

33. Identifying Target Audience
• List your stakeholders
• What do they like to read
or watch
• Obtain demographic info
from media
• Don‟t forget internal
audiences

34. Research
• Use the internet to conduct
media trend analysis
• Analysis should include
story placement, tone and
Bylines
• Look within your own data
for newsworthy research

35. Developing Key Messages
• A phrase of 4 to 10
words you want to
see in every story
• Produce 3 or 4 key
message points
• Imagine the
Headline
• Review, revise and
repeat

36. Developing Effective Materials
• Strong visual
identity
• Brochures
• Videos, slides
• Reports, bios
• Newsletter, news
stories

37. Assessing Resources
• Assess staff time and
in-house services
• Arrange for training if
necessary
• Designate a
communications leader
• Develop a budget

38. Develop Written Plan
• Create time lines,
calendar of events,
priorities
• Assign tasks
• Review progress,
enforce or revise
deadlines
• Reassign tasks as
needed

39. Implementation Plan

40. INTRODUCTION :
The chances to implement the policies, practices,
and programs contained within the fourteen
components of the Comprehensive Transportation
Plan are almost unlimited. If implementation is openly
defined, then many past, current, and future projects
have, do, or will implement the policies, practices, and
programs of the Comprehensive Transportation Plan.

41. What is the definition of
implementation plan?
Detailed listing of activities, costs, expected
difficulties, and schedules that are required to achieve
the objectives of the strategic plans.

42. Another Definition
The sum of all the planning tools. The
implementation plan is based around the
future-state map and should include the
goals, to-do lists, and other devices that will
help improve the process.

43. Implementation Plan?

44. DESCRIPTION OF THE
IMPLEMENTATION PLAN
The Implementation Plan table, which is included in
this document, is composed of five sections:
* Implementation Strategies
* Associated Projects
* Project Type
* Topics
* Scope

45. The implementation strategies capture the
intent of transportation policies in a
consolidated and action-oriented manner.
Associated projects provide more specific,
yet still general, guidance regarding how to
achieve the implementation strategy.
Project type refers to whether a project can
be categorized as a new initiative, an existing
operations requiring additional emphasis.

46. The topics column provides a general list of
topics to be addressed within each project.
Scope provides additional insight regarding
the timeframe in which a project is expected
to extend. For each project.

47. From Strategy to Implementation :
Getting from smart ideas to action requires serious
attention and fortitude to a supporting set of practices.
Four things are necessary for success: marketing,
operations, finance, and professional services. If any of
these are missing, a firm‟s performance will be
marginalized

49. Backing up and Going Around :
Because everything changes, you must have a
back-up and go-around plan. Just like your plan
for backing up the data on your computers, you
need a backup and go-around plan for everything
else.

50. CHANGE
PLAN

51. CHANGE PLAN
Kelly’s Concept
The Wright Brothers‟ great insight was that
instability was necessary for maneuverability.
A ponderous bird would not fly.

52. MODULE OVERVIEW
 Change plan
 Four project baselines
 Types of changes
 Evaluating change requests
 Exercise: team competition

53. CHANGE PLAN
Helpful tools for managing change are :
 The Action and/or Issue register and
 The Change Control form/register.
What these two documents do is :
 Help you control the issues/risks/actions
that people are raising
 Help change will affect your project
outcomes (time, cost or scope)

54. CHANGE PLAN
Change process make sure the change is :
 identified
 and approved.
 Just because someone thinks a change would
be a good idea doesn‟t mean it should be added
to your project.
 Once you start to deliver something amazing,
everyone will want to have a say. The challenge
is to manage their expectations without
compromising your original plan.

55. FOUR PROJECT BASELINES
 Scope baseline = progressively
detailed product description
 Stakeholder satisfaction baseline =
project success criteria
 Cost baseline = budget
 Schedule baseline = schedule

56. TYPES OF CHANGES
 Scope changes (modify product documentation
and often project plan):
 Requirements changes
 Clarifications
 Site emergencies
 Work changes (modify project plan):
 Resource changes
 Modified approach
 Corrective action

57. EVALUATING CHANGE
REQUESTS
 All change requests are documented:
 Emergency changes are documented
after the fact.
 Non-emergencies are documented
before being considered.
 Change requests should be
documented by the requestor.

58. FIRST LEVEL APPROVAL
OF CHANGE REQUESTS
 Usually provided by the project manager or a
senior team member:
 Are the expected benefits significant
enough to merit further investigation?
 Implications:
 Must have budget for this work!
 Benefits may include cost avoidance
 Organizational politics must be considered

59. SECOND LEVEL APPROVAL
OF CHANGE REQUESTS
 Usually provided by a Change Control Board
(CCB):
 Do the expected benefits outweigh any negative
impacts?
 Implications:
 Must have budget for this work!
 Benefits may include cost avoidance
 Organizational politics must be considered

60. Risk Plan

61. Risk Plan Definitions :
- The possibility of suffering harm or loss
- The potential for realizing unwanted , negative
consequences from an event .
- More things can happen than will happen

62. What is a Risk Plan ?
A Risk Plan helps you to foresee risks, identify
actions to prevent them from occurring and
reduce their impact should they eventuate.
The Risk Management Plan is created as part of
the Risk Planning process.
It lists of all foreseeable risks, their ranking and
priority, the preventative and contingent actions,
along with a process for tracking them

63. So, What is a risk management plan ?
A good definition of risk and risk management is:
Risk is anything that threatens or limits the ability of a
project to achieve its goal, objectives, or the
production of project deliverables.
Risk management is a process of thinking
systematically about all possible undesirable
outcomes before they happen and setting up
procedures that will avoid them, minimize or cope
with their impact .

64. When do I use a Risk Plan ?
A Risk Plan should be used anytime that risks
need to be carefully managed.
For instance, during the start up of a project a
Risk Plan is created to identify and manage
the risk involved with the project delivery.
The Risk Plan is referred to frequently
throughout the project, to ensure that all risks
are mitigated as quickly as possible .

65. In some cases , risk plan may be rescue plan
that mean risk plan may be important to Planned and
implemented .
In this cases risk plan will try to reduce the Damages
And loss .
In other words risk plan may be as plan B
This plan B Created because the plan A is not work .
So, plan B try to solve problem that happen from plan
A and reduce the Damages And loss

66. Threats and Opportunities
Some authors divide risk into threats and opportunities:
What is a threats ?
A threat is equivalent to the dictionary definition of risk
(The possibility of suffering harm or loss) .
What is an opportunity ?
An opportunity is the potential for realizing desirable,
positive consequences from an
event .

67. We will focus on threats :
- The most important opportunity on most
project is to reduce the impact to negative risk
events .
- Many opportunities are business opportunities
that are not always the responsibility of the
project manager .

68. Risk management
Minimize risk with management plans
Like any business transaction, export involves
risk .
There are a number of techniques to protect
your company from the risks associated with
export. Developing a simple risk management
plan is a good starting point .

69. Creating a Risk Management Plan is a
critical step in any project, as it helps you
to reduce the likelihood of risk from
occurring.

70. There are six basic elements of the risk
management process :
* Establishing the context
* Identifying the risks
* Assessing probability and possible
consequences of risks
* Developing strategies to mitigate these risks
* Monitoring and reviewing the outcomes
* Communicating and consulting with the parties
involved

71. Create a risk management matrix
Start your risk management plan by creating a simple
matrix of potential risks. This is a good way of
identifying the probability of risks occurring and the
consequences if they did occur .
Creating the matrix will help you to order the priority of
issues that cannot be ignored. Grading risks helps
you to focus on the critical areas and to mitigate
them before they become a crisis .

72. Example :
if all your export business is with a single client
in Malaysia, and that company becomes
insolvent, the outcome could be catastrophic.
But if the likelihood of insolvency is low, your
risk ranking for that event is more moderate,
although still requiring to be monitored .

73. A risk management plan will also help you
develop and broaden your risk profile for
the Australian market. For a small
business, keep your risk management
analysis clear and simple, but ensure it
has priority for everyone in the company .

74. This project ( Risk management plan )
helps you to identify risks and implement a plan to
reduce them .
risk It helps you do this, by giving you a complete
showing you how to take action to ,management plan
reduce risk in your project .
Using this risk plan, you can monitor and control risks
effectively, increasing you chances of achieving
success .

75. Risk Statement
Like any business is exposed to risk as
an inherent part of creating value shareholders.
It has put in place processes designed to
identify the principal risks and to manage and
mitigate the effect of them.

76. Two Main Parts To a Risk Statement :
A- Structured risk statement .
B- Sample risk statement .

77. Risk Taxonomy
Definition :
Domain specific classification or categorization
of risks .
Objective :
Help to ensure that the most common risk
causes have been identified .

78. A Simple Taxonomy :
- Environment :
War, famine, flood, and pestilence ; terrorism ,
pollution .
- Economy :
Currency rate changes, market conditions, competition
.
- Government :
Changes in laws and regulations .
- Company actions :
Change in strategic direction, internal politics

79. - Stakeholder actions :
Changes in requirements, conflicts .
- Other projects :
Reliance on their staff or their deliverables .
- Planning errors :
Estimating errors .
- Assumptions and constraints :
Things that can go wrong .

80. Impacts :
Impacts may affect the project, the business, or another
project.
Typical impacts include :
- Cost overruns .
- Schedule delays .
- Shortfalls in scope or quality .
- Stakeholder dissatisfaction .
- Multiple impacts .

81. Summary or conclusion
* Risk are always in the future .
* you can never eliminate all risk .
* Focus your attention on the most severe
risks .

82. 4-7 Contracting for
Project Managers

83. Boundaries
- Definition of a contract: An agreement
enforceable by law is a contract.”
 We will discuss contracting from the perspective
of the buyer in the buyer-seller relationship.
 Our focus will be on purchases made for a
specific project:
 Products that are tailored or customized
 Services provided by non-employees

84. Day One Agenda:
Why Contracts End Up In Court
 Conduct of the work:
 Product description
 Price
 Schedule
 Payment terms
 Assurances for both sides:
 Product performance guarantees
 Product warranties
 Financial guarantees
 Limitation of liability

85. Day Two Agenda:
Procurement Management Process
 procurement planning — deciding what to
buy
 Acquisition — selecting a seller
 Contract management — working with the
seller

86. Some Topics We Won’t Cover
 Detailed administrative procedures
 Joint ventures
 Jurisdictional differences
 Ongoing contractual relationships:
 Service level agreements
 Employment contracts
 Proposal preparation

87. Key Learning Objectives
 Upon completion, you should be (better) able
to:
 Identify the basic elements of a contract
 List eight key business issues
 Differentiate common contract types
 Understand common contract terms
 Describe the procurement process from start to
finish
 Apply SMART to seller selection
 Establish a positive relationship with your sellers

88. Thesaurus (1): Alternative
Terminology
 Acquisition — more common among
government agencies
 Buying, purchasing — usually used for off-
the-shelf items; price is paramount
 Contracting, procurement — more
common within the private sector
 Tendering — British English
9

89. Thesaurus (2): Buyer and Seller
 Different names:
 Buyer = customer, sponsor, owner
 Seller = vendor, supplier, contractor, provider
 Different perspectives:
 For the buyer, the seller‟s work is usually a
deliverable or subproject
 For the seller, the contract is often a complete
project

90. Thesaurus (3): Contracts
 Legally binding obligations may be called:
 Agreements
 Contracts
 Memoranda of understanding (MOU)
 Purchase orders
 Others?

91. A Valid Contract Must:
A. Be between competent parties.
B. Accomplish a lawful purpose.
C. Include an offer and acceptance of that
offer.
D. Involve an exchange of value.

92. A. Competent Parties, B. Lawful
Purpose
 Competent parties:
 Legal age
 With appropriate authority
 Mentally competent
 Lawful purpose:
 Does not violate applicable laws
 Compatible with public policy

93. C. Offer and Acceptance
 Anything said or done that shows a
willingness to exchange value.
 Offers and acceptances may be:
 Written
 Spoken (with limitations)
 Demonstrated through action

94. Example of Offer and Acceptance
 Offer — Projects wishes to engage PM
Partners for project management
consulting and training.
 Acceptance — PM Partners wishes to
provide consulting and training to Projects
and its clients.
16

95. D. Exchange of Value
 Both parties must receive something:
 Financial or non-financial
 Directly or indirectly
 Also called “consideration”

96. Module Overview
 Product description
 Pricing issues
 Scheduling issues
 Payment terms

97. Product Description
 Definition — an explanation of what the
buyer wants to buy:
 Normally written by the buyer.
 May be supported by “technical” detail.
 How do we end up in court?
 Differing interpretations.
 Changes — improperly approved, poorly
defined.

98. Buyer and Seller Interests Often Differ
 Buyer wants:
 Flexibility
 Minimum effort
 Seller wants:
 Clarity
 Completeness

99. Developing a Good Product Description
 Must provide enough detail for the seller to
understand the buyer‟s needs.
 Will generally describe a specific result or
deliverable.
 Reflects the difference between scope and
work.

100. Pricing Issues
 Key concept — price and cost are not the
same:
 Buyer‟s cost is seller‟s price
 Seller‟s price is not seller‟s cost
 How do we end up in court?
 Agree to an unreasonable price
 Wrong type of contract

101. Types of Price-Based Contracts
 Firm fixed price:
 Seller agrees to deliver the defined scope for
a set price
 Also called “lump sum”
 Unit price:
 Set price per unit of product or service
 Widely used in construction

102. Buyer View of Fixed Price Contracts
 Advantages:
 Better budget control
 Seller assumes most cost risk
 Fewer staff needed to monitor and
manage
 Disadvantages:
 More effort needed to define scope
 Changes can be expensive
 Seller may compromise on quality
24

103. Seller View of Fixed Price Contracts
 Advantages:
 Higher profit potential
 Limited day-to-day buyer oversight
 Disadvantages:
 Higher loss potential
 Cost of proposal preparation

104. Unit Price Contracts
 Buyer provides detailed list what is
needed:
 Items
 Quantities
 Seller provides unit price for each item.
 Quantities may vary, but usually only within
defined range.

105. Buyer View of Unit Price Contracts
Advantages:
-More insight into sellers‟ pricing
-Quantity variations easy to process
Disadvantages:
-Effort required to develop item list and quantities
-Missing items can generate claims

106. Cost-Based Contracts
 The amount that the buyer pays is driven
by the actual costs incurred by the seller:
 Used mostly in defense sector
 Used when scope is difficult to define
 Three main types:
 Cost plus fixed fee (CPFF)
 Cost plus incentive fee (CPIF)
 Fixed price incentive fee (FPIF)

107. Buyer View of Cost-Based Contracts
 Advantages:
 Less effort needed to define scope
 More sellers likely to be interested
 Easier to get changes accepted
 Disadvantages:
 Limited control over total cost
 Can be difficult to agree on indirect cost rates

108. Hybrid Contracts
 Time and materials (T&M):
 Labor charged at hourly rate(s)
 Materials charged at cost plus a percent for
administrative overhead
 Time and materials, not to exceed:
 Seller stops work once limit has been reached
30

109. Factors to Consider When Choosing
Type of Contract
 Detailed requirements = price-based
 Many able vendors = price-based
 Urgent = hybrid
 Complex requirements = cost-based
 High value contract = cost-based

110. Scheduling Issues
 Definition — seller may have difficulty
satisfying buyer‟s requirements for date of
completion.
 How do we end up in court?
 Early activities are delayed by buyer
 Inadequate schedule analysis
 Failure to monitor and manage schedule
performance

111. Potential Scheduling Problems
 Seller‟s schedule is fast-tracked
 Inadequate critical path analysis:
 No probabilistic analysis
 No analysis of resource constraints
 No detail beyond milestone schedule

112. Responding to Scheduling Issues
 Schedule incentives — amounts paid for
completing work prior to contractual dates.
 Most often used when the buyer may profit
from early completion:
 Real estate development
 Highway construction
 Power plant maintenance

113. continued
 Incentive amount should always be less
than the gains from early completion!
 May be used with or without:
 Cost incentives.
 Penalties for late completion.

114. Payment Terms
 All payments require a signed contract!
 Advance payments:
 Payments made prior to start of work
 Usually made to support purchase of
materials
 Progress (partial) payments:
 Payments that are less than the full
contract amount
 Method of calculation should be defined
within the contract

115. continued
 Retainage:
 Amounts withheld to ensure performance
 Final payments:
 Payments made when all of the contract work
has been completed and accepted

116. Sample Payment Terms and Conditions
i. Payment requests must be supported by
a correct invoice.
ii. Buyer will pay seller 85% of the agreed
value of each work item upon completion
of the work item.
iii. Payments will be made within 30 days.
iv. Retainage will be paid within 30 days of
final acceptance.
38

117. Module Overview
 Product performance guarantees
 Product warranties
 Financial guarantees
 Limitation of liability

118. Product Performance Guarantees
 Definition — does the contracted item
perform as specified?
 Examples:
 FedEx will refund your shipping charges if we
miss our published delivery time by even 60
seconds.
 Air conditioning unit will cool room to 20ºC
with exterior temperature 40ºC or lower.

119. Product Warranties
 Definition — how post-completion failures
will be addressed
 Normally limited to physical products
 May differ for installation and use
 Key issue — can implied warranties be
excluded?

120. Other Warranty Issues
 Coverage:
 For how long?
 Responsibilities:
 Can buyer actions void the warranty?
 Effect of failure by a subcontractor?
 If a part fails, is the whole product covered?
 Can damages be assessed?

121. Financial Guarantees
 Definition — protection from the risk that
the other party will be financially unable to
fulfill the contract.
 Key issue — enforcement may be difficult.

122. Bonds Used for Financial Guarantees
 Performance bond:
 Paid for by the Seller.
 Protects the Buyer if the Seller fails to perform
for any reason.
 Payment bond:
 Paid for by the Buyer.
 Protects the Seller if the Buyer becomes
insolvent.

123. Limitation of Liability
 Definition — any condition which limits one
party‟s ability to collect from the other in a
court of law.
 Common limitations:
 Indirect damages
 Lawsuits by others

124. Negotiations

125. Negotiating
“Negotiating is the art of
reaching an agreement by
resolving differences
through creativity”

126. Overview :
 Core concepts  The four stages of
 Your negotiating style negotiations
 Relationships  Goals, norms, and
leverage
 More practice

127. Proposed Norms :
 Start (and end) on time
 Ask questions
 Electronics on silent
 Short frequent breaks
 Have fun!

128. Core Concepts :
The road to success is always under
construction.
Lily Tomlin

129. Overview :
 Definitions
 Types of negotiations
 Should you negotiate?
 Six Foundations
 Four Stages

130. Differences Happen …
 Administrative procedures


Cost estimates
Managerial procedures
!
 Priorities
 Resource allocation
 Role definition
 Schedules
 Technical options

131. … and we negotiate to resolve them!

132. Dictionary Definition
“To confer with another or others in order to
come to terms or reach an agreement;
to arrange or settle by discussion
and mutual agreement.”

133. A Practitioner’s View
“Think of negotiation as a cooperative
enterprise: common interests must be
sought.
In a good negotiation,
everybody wins something.”
Gerard Nierenberg

134. Definition: Successful Negotiation
 Both sides think the other was fair.
 Both sides feel the other side cared about
their needs.
 Both sides believe the other side will fulfill
the agreement.
 Both sides are reasonably satisfied with the
agreement.
 Both sides would negotiate together again.

135. Negotiating Situations
Concern for Results
Low High
Concern for Relationship
High
Type I:
Type II:
Balanced
Relationship
Concerns
Type IV:
Type III:
Tacit
Transactions
Low
Coordination
135

136. … continued
 We will focus on Type I, Balanced
Concerns, since that is the situation for
most project negotiations.
 Each type of situation assumes that both
sides have the same view — we will deal
with what happens when the sides have
different views later in the program.

137. Should You Negotiate?
Not … if you are already in agreement.
Not … if only one outcome is acceptable.
Not … if time is of the essence and a
decision must be made.
Not … if potential gains are not worth the
effort to prepare.

138. Negotiations :
 In a typical negotiation, the customer attempts to increase the
performance specifications while reducing the schedule and
the budgeted cost.
 A common negotiation problem is deciding how to deal with
the customer „s request to lower the price
 If it is a competitive solicitation, the customer often will play
off one prospective contractor against another to try to
maximize his benefit

139. Several things can help :
1-A good plan, well explained 
2-A clear understanding of your risk- 
response planning ( have you any padding?
Any contingency budget?
3-Management guidance , or clearance, on 
how much you can give up

140. Several things can help :
4- A complete WBS with activity schedule 
and cost estimate can help to explain and
defend to the prospective customer
5- A reputation for having met prior 
commitments

141. Six Foundations :
 Your negotiating style
 Your goals and expectations
 Standards and norms
 Relationships
 Your counterpart‟s interests
 Leverage

142. Four Stages :
 Preparing
 Exchanging information
 Making offers and concessions
 Gaining commitment

143. Summary :
 Negotiation is part art and part science.
 Six Foundations define the concepts you
must master.
 Four Stages define the process of
negotiating.

144. Your Negotiating Style :
Nothing is quite as astonishing as common
sense and plain dealing.
Ralph Waldo Emerson

145. Five Negotiating Styles :
Concern for Results
Low High
Concern for Relationship
High
N3. Accommodate N2. Collaborate
N5. Compromise
N4. Withdraw N1. Defeat
Low
145

146. Compromise :
 Find an acceptable agreement:
 Meet halfway.
 Split the difference.
 Look for trade-offs.
 Behavior in thought
experiment?

147. Accommodate :
 Accommodate the other party‟s needs:
 Good relationships produce good deals.
 Maintain harmony.
 Make concessions for the sake of the
relationship.
 Behavior in thought
experiment?

148. Defeat :
 Defeat the other party
at any cost:
 Drive a hard bargain.
 Total victory is the goal.
 There can be only one
winner.
 Behavior in thought
experiment?

149. Withdraw :
 Withdraw and remove oneself:
 Keep a low profile.
 Results are beyond my influence.
 Indifferent; resigned.
 Behavior in thought
experiment?

150. Collaborate :
 Work to build a win-win outcome:
 Form a partnership.
 Push for mutual gain.
 Focus on problem-solving.
 Behavior in thought
experiment?

151. What Style Do the Professionals
Prefer?
 Of all lawyers:
 65% are consistently collaborative (N2)
 24% are consistently competitive (N1)
 Of those viewed as most effective:
 75% were consistently collaborative
 12% were consistently competitive

152. … continued
 Irritators (i.e., insults, attacks):
 Average negotiator = 10.8 per hour
 Best negotiators = 2.3 per hour
 Emotion-laden comments:
 Average negotiator = 6.3%
 Best negotiators = 1.9%

153. Personal Attributes of the Best
Negotiators :
 Listening skills
 Willingness to prepare
 Subject matter knowledge
 Verbal communication ability
 Analytic ability

154. Relationships:
“Doverai no proverai”
Said Russian Responsible
during cold war

155. Your Counterpart :
The person or persons sitting across the
table from you is your peer — they deserve
your respect.

156. Cooperative: High Trust
 Acknowledge degree of trust.
 Tell your counterpart what your interests
are.
 Ask them to disclose their interests.
 Share your options, ask them to do the
same.

157. Adversarial: Low Trust
 You have to decide whether or not to
acknowledge the low level of trust.
 Start slow, start small.
 Look for incremental agreements; be
persistent.

158. Foundation :Goals, norms, and
leverage
High achievement
comes from high aims.
Chinese Proverb

159. 2. Goals and Expectations :
 Goals (hopes):
 Something to strive for
 Beyond our previous best
 No real surprise if we fall short
 Expectations:
 What we can reasonably accomplish
 Real disappointment if we fall short

160. … continued
Goal Expectation
Buyer’s Cost Range
Negotiating
Range
Seller’s Price Range
Expectation Goal

161. Increasing Your Chances :
 Be specific with both goals and
expectations.
 Use the security of your expectations to
challenge yourself with some stretch goals.
 Write them down and carry them with you.

162. 3. Standards and Norms :
 The Consistency Principle:
 We have a proven, psychological need to be
consistent with our prior words and deeds.
 Consistency is an interest — it is not always
logical.
 Authority:
 People in most cultures will defer to authority.
 Authority comes in different forms.

163. 6. Leverage
Who has the most to lose from a failure to
agree?
Who needs an agreement most?

164. Understanding Leverage
 Leverage and power are not the same —
power is objective, leverage is situational.
 Leverage changes over time — the side
that most needs the deal now lacks
leverage.
 Leverage is based on perception — the
facts may not be relevant!

165. Three Types of Leverage :
 Positive — I have something you want.
 Negative — I can cause you pain.
 Normative — I can show you to be violating
the consistency principle.

166. Sources of Leverage
 Time — project deadlines, fiscal year end
 Competition — supply and demand
 Marketability — name recognition
 Opportunity — future business
 Investment — emotional, financial
 Environment — location, temperature, etc.

167. … continued
 Information — public reports, body language,
spoken comments
 Importance — strategic fit, financial impact
 Pressure — from your boss
 Composure — staying in control of yourself
 Precedent — what happened last time?
 Policy — law, ethics, procedures

168. More Practice
Sometimes we stare so long at
a door that is closing that we
see too late the one that is
open.
Alexander Graham Bell

169. Multiple Issue Negotiation
 Before the negotiation:
 Read the case description.
 Meet with your team to discuss the case.
 Use the tools and techniques covered in the
program to prepare.
 Complete a “Negotiating Plan.”
 Schedule a meeting with your counterparts.

170. Multiple Issue Negotiation :
 During the negotiation:
 Meet with your counterparts as needed.
 Meet with your team as needed.
 Craft an agreement.
 After the negotiation:
 Be prepared to share your results with the other
participants.

171. Some Final Thoughts
The power of accurate
observation is frequently
called cynicism by those who
don‟t have it.
George Bernard Shaw

172. Practice, Practice, Practice
 Practice at work
 Practice at home

173. A Good Negotiator Is..
 Creative
 Versatile
 Motivated
 Hasthe ability
to walk away

174. Remember…
Don‟t dwell on people or gains. Stick to
the interests at hand.
Don‟t close doors. Be fair. You may wish
to enter into negotiations again.
The end result should be acceptable to
both parties.
Your BATNA establishes the reality of
how important the agreement is to you
and what you are willing to accept.

175. Remember…
If you don‟t ask, don‟t expect…
Negotiations with high expectations do
better.
The pie is almost never “fixed”.
Don‟t be afraid to offend: “it‟s only
business.”
Most negotiations are as much about
emotion as they are money.

176. Remember…
Pay attention to both levels of process:
Discussion of the issue about which decision must
be made
Development of a relationship that leads
often to win/win solution
Don‟t give too much credit to the other
side
You are an asset and present from
strength

177. The End !
Thank You