BUS403: Negotiations and Conflict Management (2016.A.01)

Negotiation and Conflict Resolution

Einsiedel discussed qualities of successful project managers. The project manager must be perceived to be credible by the project team and key stakeholders. The project manager can solve problems. A successful project manager has a high degree of tolerance for ambiguity. On projects, the environment changes frequently, and the project manager must apply the appropriate leadership approach for each situation.

The successful project manager must have good communication skills. Barry Posner connected project management skills to solving problems. All project problems were connected to skills needed by the project manager:

• Breakdown in communication represented the lack of communication skills.
• Uncommitted team members represented the lack of team-building skills.
• Role confusion represented the lack of organizational skills.
  

The research indicates that project managers need a large numbers of skills. These skills include administrative skills, organizational skills, and technical skills associated with the technology of the project. The types of skills and the depth of the skills needed are closely connected to the complexity profile of the project. Typically on smaller, less complex projects, project managers need a greater degree of technical skills. On larger, more complex projects, project managers need more organizational skills to deal with the complexity. On smaller projects, the project manager is intimately involved in developing the project schedule, cost estimates, and quality standards. On larger projects, functional managers are typically responsible for managing these aspects of the project, and the project manager provides the organizational framework for the work to be successful.

Listening

One of the most important communication skills of the project manager is the ability to actively listen. Active listening takes focus and practice to become effective. Active listening is placing yourself in the speaker's position as much as possible, understanding the communication from the point of view of the speaker, listening to the body language and other environmental cues, and striving not just to hear, but to understand.

Active listening enables a project manager to go beyond the basic information that is being shared and to develop a more complete understanding of the information.

Client's Body Language Indicates Problems at a Board Meeting

A client just returned from a trip to Australia where he reviewed the progress of the project with his company's board of directors. The project manager listened and took notes on the five concerns expressed by the board of directors to the client.

The project manager observed that the client's body language showed more tension than usual. This was a cue to listen very carefully. The project manger nodded occasionally and clearly demonstrated he was listening through his posture, small agreeable sounds, and body language. The project manager then began to provide feedback on what was said using phrases like "What I hear you say is…" or "It sounds like.…" The project manager was clarifying the message that was communicated by the client.

The project manager then asked more probing questions and reflected on what was said. "It sounds as if it was a very tough board meeting". "Is there something going on beyond the events of the project?" From these observations and questions, the project manager discovered that the board of directors meeting did not go well. The company had experienced losses on other projects, and budget cuts meant fewer resources for the project and an expectation that the project would finish earlier than planned. The project manager also discovered that the client's future with the company would depend on the success of the project. The project manager asked, "Do you think we will need to do things differently?" They began to develop a plan to address the board of directors' concerns.

Through active listening, the project manager was able to develop an understanding of the issues that emerged from the board meeting and participate in developing solutions. Active listening and the trusting environment established by the project manager enabled the client to safely share information he had not planned on sharing and to participate in creating a workable plan that resulted in a successful project.

The project manager used the following techniques:

1. Listening intently to the words of the client and observing the client's body language
2. Nodding and expressing interest in the client without forming rebuttals
3. Providing feedback and asking for clarity while repeating a summary of the information back to the client
4. Expressing understanding and empathy for the client

The active listening was important to establishing a common understanding from which an effective project plan could be developed.

Negotiation

Negotiation is a process for developing a mutually acceptable outcome when the desired outcome for parties in the negotiation is sufficiently different that both cannot achieve the desired outcome. A project manager will often negotiate with a client, with team members, with vendors, and with other project stakeholders. A larger and more complex project will have a large number of stakeholders, often with conflicting desired outcomes. Negotiation is an important skill in developing support for the project and preventing frustration among stakeholders, which could delay or cause project failure.

Vijay Verma suggests that negotiations involve four principles:

1. The first principle is to separate people from the problem. If the person is seen as the problem, then finding a mutually acceptable solution will be difficult. Framing the discussions in terms of desired outcomes enables the negotiations to focus on finding new outcomes.
2. The second principle is to focus on common interests. By avoiding the focus on differences, both parties are more open to finding solutions that are acceptable.
3. The third principle is to generate options that advance shared interests. Once the common interests are understood, solutions that do not match with either party's interests can be discarded, and solutions that may serve both parties' interests can be more deeply explored.
4. Verma's final principle is to develop results based on standard criteria. The standard criterion is the success of the project. This implies that the parties develop a common definition of project success.

For the project manager to successfully negotiate issues on the project, he or she should first seek to understand the position of the other party. If negotiating with a client, what is the concern or desired outcome of the client? What are the business drivers and personal drivers that are important to the client? Without this understanding, it is difficult to find a solution that will satisfy the client. The project manager should also seek to understand what outcomes are desirable to the project. Typically, more than one outcome is acceptable. Without knowing what outcomes are acceptable, it is difficult to find a solution that will produce that outcome.

One of the most common issues in formal negotiations is finding a mutually acceptable price for a service or product. Understanding the market value for a product or service will provide a range for developing a negotiations strategy. The price paid on the last project or similar projects provides information on the market value. Seeking expert opinions from sources who would know the market is another source of information. Based on this information, the project manager can then develop an expected range from the lowest price that would be expected within the current market to the highest price.

Additional factors will also affect the negotiated price. The project manger may be willing to pay a higher price to assure an expedited delivery or a lower price if delivery can be made at the convenience of the supplier or if payment is made before the product is delivered. Developing as many options as possible provides a broader range of choices and increases the possibility of developing a mutually beneficial outcome.

The goal of negotiations is not to achieve the lowest costs, although that is a major consideration, but to achieve the greatest value for the project. If the supplier believes that the negotiations process is fair and the price is fair, the project is more likely to receive higher value from the supplier. The relationship with the supplier can be greatly influenced by the negotiation process and a project manager that attempts to drive the price unreasonably low or below the market value will create an element of distrust in the relationship that may have negative consequences for the project. A positive negotiation experience may create a positive relationship that may be beneficial, especially if the project begins to fall behind schedule and the supplier is in a position to help keep the project on schedule.

Negotiation on a Construction Project

After difficult negotiations on a construction project in Indiana, the project management team met with a major project supplier and asked, "Now that the negotiations are complete, what can we do to help you make more profit?" Although this question surprised the supplier, the team had discussed how information would flow, and confusion in expectations and unexpected changes always cost the supplier more money. The team developed mechanisms for assuring good information and providing early information on possible changes and tracked the effect of these efforts during the life of the project.

These efforts and the increased trust did enable the supplier to increase profits on the project, and the supplier made special efforts to meet every project expectation. During the life of the project, the supplier brought several ideas on how to reduce total project costs and increase efficiency. The positive outcome was the product of good supplier management by the project team, but the relationship could not have been successful without good faith negotiations.

Conflict Resolution

Conflict on a project is to be expected because of the level of stress, lack of information during early phases of the project, personal differences, role conflicts, and limited resources. Although good planning, communication, and team building can reduce the amount of conflict, conflict will still emerge. How the project manager deals with the conflict results in the conflict being destructive or an opportunity to build energy, creativity, and innovation.

David Whetton and Kim Cameron developed a response-to-conflict model that reflected the importance of the issue balanced against the importance of the relationship. The model presented five responses to conflict:

1. Avoiding
2. Forcing
3. Collaborating
4. Compromising
5. Accommodating
   

Each of these approaches can be effective and useful depending on the situation. Project managers will use each of these conflict resolution approaches depending on the project manager's personal approach and an assessment of the situation.

Most project managers have a default approach that has emerged over time and is comfortable. For example, some project managers find the use of the project manager's power the easiest and quickest way to resolve problems. "Do it because I said to" is the mantra for project managers who use forcing as the default approach to resolve conflict. Some project managers find accommodating with the client the most effective approach to dealing with client conflict.

The effectiveness of a conflict resolution approach will often depend on the situation. The forcing approach often succeeds in a situation where a quick resolution is needed, and the investment in the decision by the parties involved is low.

Resolving an Office Space Conflict

Two senior managers both want the office with the window. The project manager intercedes with little discussion and assigns the window office to the manager with the most seniority. The situation was a low-level conflict with no long-range consequences for the project and a solution all parties could accept.

Sometimes office size and location is culturally important, and this situation would take more investment to resolve.

Conflict Over a Change Order

In another example, the client rejected a request for a change order because she thought the change should have been foreseen by the project team and incorporated into the original scope of work. The project controls manager believed the client was using her power to avoid an expensive change order and suggested the project team refuse to do the work without a change order from the client.

This is a more complex situation, with personal commitments to each side of the conflict and consequences for the project. The project manager needs a conflict resolution approach that increases the likelihood of a mutually acceptable solution for the project.

One conflict resolution approach involves evaluating the situation, developing a common understanding of the problem, developing alternative solutions, and mutually selecting a solution. Evaluating the situation typically includes gathering data. In our example of a change order conflict, gathering data would include a review of the original scope of work and possibly of people's understandings, which might go beyond the written scope.

The second step in developing a resolution to the conflict is to restate, paraphrase, and reframe the problem behind the conflict to develop a common understanding of the problem. In our example, the common understanding may explore the change management process and determine that the current change management process may not achieve the client's goal of minimizing project changes. This phase is often the most difficult and may take an investment of time and energy to develop a common understanding of the problem.

After the problem has been restated and agreed on, alternative approaches are developed. This is a creative process that often means developing a new approach or changing the project plan. The result is a resolution to the conflict that is mutually agreeable to all team members. If all team members believe every effort was made to find a solution that achieved the project charter and met as many of the team member's goals as possible, there will be a greater commitment to the agreed-on solution.

Project Goals Accomplished

In our example, the project team found a new way to accomplish the project goals without a change to the project scope. On this project, the solution seemed obvious after some creative discussions, but in most conflict situations, even the most obvious solutions can be elusive.

This text was adapted by Saylor Academy under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 License without attribution as requested by the work's original creator or licensor.