Kuliah 4

Managing Conflict and

the Art of Negotiation

Copyright 2018 John Wiley & Sons, Inc.

Learning Objectives

• 04-01 Understand what is conflict and negotiation

• 04-02 Understand the way to manage stakeholders

• 04-03 Distinguish various conflicts in Project Life Cycle

• 04-04 Understand the nature of negotiation

• 04-05 Understand partnering, chartering and scope change

• 04-06 Understand the concept of principled negotiation

2
Introduction

• Project Manager (PM) should seek to identify

opportunities that satisfy all stakeholder needs
simultaneously by aligning the goals of all stakeholders
with the purpose of the project.
• Projects that are characterized by considerable conflict.
• Why is there so much conflict on projects?
• Negotiation—the skill required to resolve most
conflicts

4-3
Conflict and Negotiation (1)
• One of several causes is that conflict arises when people
working on the same project have somewhat different
ideas about how to achieve project objectives.
• But why should such a disagreement occur? Is there not
“one best way?”
• There may be one best way, but exactly which way is the
“one best” is a matter surrounded by uncertainty.
• The client of the project’s outputs often has a substantially
different point of view
• Other stakeholders may have even different points of view, such
as the project’s top management, the local community, or the
project firm’s lawyers.
• Most conflicts have their roots in uncertainty, and negotiation is a
way of managing the resultant risk.

4-4
Conflict and Negotiation (2)
• Conflict: the process which begins when one party
perceives that the other has frustrated some concern
of his
• Our concern is goal conflicts that occur when a group
pursues goals different from other groups
• Not all conflicts are bad:
• Conflict can play a creative role in the planning process
• Debate over the proper technical approach to a problem
often generates a collaborative solution that is superior to
any solution originally proposed
• Conflict often educates individuals and groups about the
goals/objectives of other individuals and groups

4-5
Conflict and Negotiation (3)
• Conflict is resolved when the level of frustration has been
lowered to the point where no action, present or future,
against the other party is contemplated.
• Ways to resolve conflict: withdrawal, smoothing,
compromise, forcing, and confrontation/problem-solving.
• Conflict resolution is the ultimate purpose of law
• Contracts between a firm and its suppliers, its trade
unions, and its customers are written to govern the
settlement of potential conflicts.
• uilding trust and good relationships among stakeholder
groups is the best approach for ensuring a smooth-
running project.

4-6
Stakeholders
• Stakeholder: Any individual, group, or entity who can
affect or is affected by the project process or the
project outcomes

4-7
Why Important to be Aware of Roles Stakeholder
Play
• Project may need contributions from stakeholders
• Stakeholder resistance may negatively affect the
project
• The project may affect stakeholders in unanticipated
ways
• Stakeholder may have their won criteria for
evaluating the “success” of the project

4-8
Identifying and Analyzing Stakeholders
• Identify stakeholders
• Usually through expert judgment of PM
• Create stakeholder register
• Create stakeholder issue log
• Analyze stakeholders
• Update stakeholder register
• Power-Interest Grid
• Commitment Assessment Matrix

4-9
Power-Interest Grid

4-10
Commitment Assessment Matrix

4-11
Project Life Cycle (Adams, et al., 1983):
• Conceptualization: senior management tentatively,
sometimes unofficially, approves preliminary planning for a
project. Initial planning is undertaken, basic objectives are
often adopted, and the project may be “scoped out.”
• Planning: detailed planning, budgeting, scheduling, and
the aggregation of resources.
• Execution: the lion’s share of the actual work on the
project is accomplished.
• Termination: final stage of the life cycle, work is
completed and products are turned over to the client or
user. This stage also includes disposition of the project’s
assets and personnel. It may even include preparation for
the initial stage of another related project to follow.
• Conflicts: schedules, priorities, staff and labor
requirements, technical factors, administrative
procedures, cost estimates, and, of course,
personalities 4-12
Categories of Conflict
• Different goals and expectations
• Conflicts about schedules, intra- and interproject
priorities, cost estimates, and staff time tend to fall
into this category.
• Uncertainty about authority
• Resource allocation, on administrative procedures, on
communication, on technological choices, and on all
the other matters affecting the project produces
conflict between the PM and the other stakeholders.
• Interpersonal conflict
• Personalities clash, conflicts between the project and
the client, or between senior management and the
project, it is the PM who personifies the project and
thus is generally a party to the conflict.
4-13
Categories of Conflict

“I have to take the responsibility, but I have no authority at all.”

Copyright ©2017 John Wiley & Son, Inc. 14

Project Formation/Project Front End
• Conflict centers around the confusion of starting a
new project
• Many of the policies and procedures have not yet been
formed
• The objectives of the project are not yet finalized
• Conflict cannot be avoided at this phase
• In fact, much of this conflict is good conflict

4-15
Handling Project Formation Conflict
• Four fundamental issues must be handled to get
order
1. Technical objectives must be set
2. Senior management and line managers must commit
to the project
3. The priority for the project must be set
4. Organizational structure of the project must be
established
• Issues to be resolved:
• Which of the functional areas will be needed to
accomplish project tasks? What will be the required
level of involvement of each of the functional areas?
How will conflicts over resources/facility usage
between this and other projects be settled? What
about those resource/facility conflicts between the
project and the routine work of the functions? Who 4-16
Handling Project Formation Conflict
• Critical but down to earth matters:
• Which of the functional areas will be needed to
accomplish project tasks?
• What will be the required level of involvement of each of
the functional areas?
• How will conflicts over resources/facility usage between
this and other projects be settled?
• What about those resource/facility conflicts between the
project and the routine work of the functions?
• Who has the authority to decide the technical,
scheduling, personnel, and cost questions that will arise?
• Most important, how will changes in the parent
organization’s priorities be communicated to everyone
involved?

4-17
Project Execution/Main Program (1)
• Conflicts tend to be technical in nature
• Conflicts between the PM and the functional areas
tend to predominate
• Schedules are a major source of conflict
• Some tasks will be late and the schedule should be
adjusted or the time made up an requires resources
• Maintaining the project schedule is precisely an exercise in
managing trade-offs,
• The more complex the project, the more difficult it is
to trace the sources of conflict
• There are also technical conflicts
• Frequent and serious during the main program stage.
• The source of technical conflict is somewhat different than
in earlier stages: how to build linkage known as interfaces 4-18
Project Execution/Main Program (2)

4-19
Project Execution/Main Program(3)

Major conflict: Schedule

1) Some project activity runs into trouble
2) Some tasks dependent on (1) will be delayed
3) (2) will delay the entire project
4) PM tries to prevent (3) from happening by requesting
resources from the FM
5) PM vs. FM

4-20
Project Closure/Phase-Out (1)

• Deadlines are a major source of conflict

• Technical problems are rare
• Personality conflicts will be a big deal due to time
pressures: stress caused by the pressure to complete
the project, and to individuals’ natural anxiety about
leaving the project
• Implementation to Delivery Transition

4-21
Project Closure/Phase-Out (2)
• Schedule slippage consequences from main phase
felt strongly during phase out
• Firm deadlines ➔ hectic environment
• Substantial cost overruns ignored to meet deadline
➔ potential conflict with senior management
• Functional groups needed to support project team
to meet deadlines ➔ potential conflict with FM
• Pressure to complete project
• Anxiety to leave project
• Distribution of project resources at project
termination
• Fresh starting projects Vs. Phasing out projects
4-22
Dealing With Conflict
• People deal with conflict along two dimensions
Assertive → Unassertive
Cooperative → Uncooperative
• Dealing With Conflict:

4-23
Strategies to Deal with Conflict (1)
• Competing: When a competing strategy is employed, the person
is viewing the situation as though someone must lose in order for
the other to win, or, in this case, I win and you lose (win–lose). This
competing strategy may be appropriate in situations where the
decision must be made quickly.
• Avoiding: This is a lose–lose strategy because you are not
cooperating with the other person to help them achieve their goals
nor are you actively pursuing your own goals. An avoiding strategy
might be applied when the issue is not that important to you or
you deem the detrimental effects from the conflict outweigh the
benefits of resolving the issue in a desirable way.
• Collaborating: focus is on achieving your goals but with the
recognition that the best solution is one that benefits both parties.
Thus, the collaborating strategy can be considered a win–win
strategy. This is the preferred strategy in most situations and
particularly in situations where the needs of both parties are
important
4-24
Strategies to Deal with Conflict (2)
• Accommodating: In this case, the focus is on resolving the
issue from the other person’s point of view. Here the situation can
be described as I lose, you win, or lose–win. It would be
appropriate to employ the accommodating strategy when you were
wrong or the issue is much more important to the other person
• Compromising: In these cases, nobody wins and nobody loses.
Thus, you have likely arrived at a solution that you and the other
party can live with but are not particularly happy about. You might
employ a compromising strategy when the potential benefits of
trying to develop a win–win solution are exceeded by the costs.

4-25
The Nature of Negotiation (1)
• The process through which two or more parties seek an
acceptable rate of exchange for items they own or control
• “Negotiation is a field of knowledge and endeavor that
focuses on gaining the favor of people from whom we want
things.” (Cohen, 1980)
• Even if no single definition neatly fits all the activities we label
“negotiation,” we do recognize that such terms as “mediate,”
“conciliate,” “make peace,” “bring to agreement,” “settle
differences,” “moderate,” “arbitrate,” “adjust differences,”
“compromise,” “bargain,” “dicker,” and “haggle” (Roget’s
International Thesaurus, 1993) are synonyms for “negotiate” in
some instances.
• Parties to a negotiation often see themselves as opponents
• “If they win, I lose”
• Project manager must avoid this on projects as all
stakeholders are interrelated
4-26
The Nature of Negotiation (2)
• Conflicts that involve the organization and outsiders have
to do with property rights and contractual obligations
• Conflicts arising inside the organization: are conflicts
between allies, not opponents.
• “Organizations, like groups, consist of interdependent parts that
have their own values, interests, perceptions, and goals. Each
unit seeks to fulfill its particular goal . . . and the effectiveness of
the organization depends on the success of each unit’s
fulfillment of its specialized task. Just as important as the
fulfillment of the separate tasks is the integration of the unit
activities such that each unit’s activities aid or at least do not
conflict with those of the others.”
• One of the ways in which organizations facilitate this
integration is to establish “lateral relations [which] allow
decisions to be made horizontally across lines of authority”
(Wall, 1985, p. 150).
Copyright ©2017 John Wiley & Son, Inc. 27
Facilitating the Integration of Activities
• Lateral Relations allow decisions to be made
horizontally across lines of authority
• Because each area has its own goals, integrating
activities of two or more units is certain to produce
conflicts
• These conflicts may be resolved by negotiating a
solution, if one exists, that produces gains (or
minimizes losses) for all parties
• The favored technique for resolving conflict is
negotiation
• Firms should view conflicts within the organization as
conflicts between allies, not opponents
Pareto-optimal Solution (Raiffa, 1982)

A solution, such that no party can be

made better off without making
another party worse off by the same
amount or more (the antithesis of a
win/win situation)

This pareto-optimal solution is an

important concept in
two-party conflict
Negotiating a Resolution
• Approaching intraproject conflicts with a desire to
win a victory over the other parties is
inappropriate.
• The project manager should remember that he will
be negotiating with project stakeholders many
times in the future
• The proper objective should be to optimize the
outcome in terms of overall organizational goals
Project Negotiation Must…

• Must resolve conflict without major damage to

project objectives
• Must foster honesty between the negotiators
• Since negotiators are not enemies, must seek a
mutually-agreeable solution
• It is not “us” versus “them”
Why negotiation?

• Negotiation skills are the biggest skills needed by

project managers
• Must negotiate to get the project
• Must negotiate with line managers to get the work
done
• Must negotiate to solve conflicts
Partnering, Chartering, and Change
• Three common situations that call for negotiating
skills
• Use of subcontractors
• Use of input from two or more functional units
• Management of change
• The former probably accounts for more litigation
than all other aspects of the project combined.
• The last two are, in the authors’ experience, by far
the most common and most troublesome issues
project managers report facing.

4-33
Partnering
• Project firm and subcontractors are at odds on a
project
• Project firm wants high quality and low cost
• Subcontractors want high profits and maximum
flexibility
• Partnering has been developed to replace this
atmosphere with one of cooperation and mutual
helpfulness
• “A method of transforming contractual relationships
into a cohesive, cooperative project team with a
single set of goals and established procedures for
resolving disputes in a timely and effective manner”
(Cowen et al., 1992)
4-34
Reason for Partnering
• Reasons for partnering(Beecham et al., 1998, p. 192):
• Avoidance of litigation
• Diversification of technical risk
• Avoidance of capital investment
• Reducing political risk on multinational projects
• Shortening the duration of the project
• Pooling of complementary knowledge, among others
• Partnering usually involves partners from different
organization
• Partnering is an attempt to mitigate the risks associated
with subcontracting.
• Each step in this process must be accompanied by
negotiation, and the negotiations must be non-
adversarial
• Basic assumptions:
• Mutual trust between the partners
• Requires non-adversarial negotiation
 Steps for Project Partnering
1. Project firm must commit to partnering
• Select committed subcontractors
• Joint team-building exercises
• Develop a project charter
2. All parties must implement the process
• Joint evaluation of the project’s progress
• A method for resolving disagreements
• Continuous improvement
• Support from the senior management
3. Joint review when finished

• Setting this up requires a lot of negotiation

• Negotiations must be nonadversarial in nature
• It has worked well in some settings
4-36
Problems With Partnering
• Requires strong support from senior management
• Requires continuous support of project objectives and
partnering agreements
• Requires open and honest communication

• Partnering can also be done for multiple

organizations
• Airbus Industry is not only a consortium of private firms
from four different nations
• SEMATECH is a consortium of semiconductor manufacturers
for the purpose of conducting joint research projects in the
field.
4-37
Chartering
• The agreements between groups partnering on large
endeavors are often referred to as charters.
• A project (program, etc.) charter is a detailed written
agreement between the stakeholders in the project, that is,
the client or sponsor, the PM, senior management, the
functional managers who are committing resources and/or
people to a specific project (program, etc.), and even
possibly others such as community groups or environmental
entities
• Contains expected deliverables and resource commitments
• Agreeing to a charter implies that none of the parties will
change the agreement unilaterally
• Charter may take different forms, typically it gives an
overview of the project and details the expected
deliverables, including schedules, personnel, resource
commitments, risks, and evaluation methods
• Stakeholders are on the “same page” 4-38
Chartering (Example)
• An informal project charter appears in Cowen et al.
(1992, Figure 2, p. 8), in which the various members
of the partnering team sign a commitment to
• Meet design intent
• Complete contract without need for litigation
• Finish project on schedule:
• Timely resolution of issues
• Manage joint schedule
• Keep cost growth to less than 2 percent …
• Of course, to meet the underlying purpose of a
charter, even these less-specific terms assume an
agreement on the “design intent,” the schedule, and
costs.

4-39
Scope Change (1)
Greek philosopher Heraclitus said, “Nothing endures but
change.”
• Major issue
• Causes of scope change:
• Initial assessment was wrong: Planners erred in their initial
assessment about how to achieve a given end or erred in
their choice of the proper goal for the project
• Technological uncertainty is the fundamental causal factor for either
error.
• Project team learns more about the project
• Change is mandated
• Client ask for changes
• Changes imply:
• Budget
• Schedule
• Performance
• Priorities
4-40
Scope Change (2)
• To some extent, risk management techniques can be
applied to scope change.
• Technological uncertainty can be mitigated by careful
analysis of the technologies involved, including the use of
technological forecasting.
• Risk of scope change caused by increased user knowledge
can only be managed by improving the up-front
communication with the client and then establishing a
formal process to handle change
• Finally, mandates are, for the most part, unpredictable.
These can be “managed” only by having some flexibility
built into the budget and schedule of the project.

4-41
There Level pf Priority
1. First, there are the high-priority projects, that is, the
“set” of projects currently being supported.
• When resource conflicts arise within this high-priority
set, precedence is typically given to those projects
with the earliest due date
2. Second, there are the lower-priority projects, the
projects “we would like to do when we have the time
and money.”
3. Third, occasionally, there are urgent projects—
mandates—that must be done immediately.
• “Customer A’s project must be finished by the end of
the month.” “The state’s mandate must be met by
June 30.” Everything else is delayed to ensure that
mandates are met.

4-42
Some Requirements and Principles of Negotiation
• Few conflicts have to do with whether or not a task
will be undertaken
• Instead, they have to do with the design of the
deliverable
• How
• Whom
• When
• What cost
• The work of the project should get done
• If not, everyone loses

4-43
Requirements for Conflict Reduction Methods
• They must allow the conflict to be settled without
irreparable harm to the project’s objectives
• They allow and foster honesty between the
negotiators
• Win-win situation for all parties involved
The conflicting stakeholders to a project are not enemies or
competitors, but rather allies.
It is a requirement of all conflicting parties to seek solutions to
the conflict that not only satisfy their own individual needs but
also satisfy the needs of other parties to the conflict, as well as
the needs of the parent organization.
In the language of negotiation, this is called a “win–win”
solution. Negotiating to a win–win solution is the key to conflict
resolution in project management.
4-44
Principled Negotiation (Fischer, et al., 1983
1. Separate the people from the problem
2. Focus on interests, not positions
3. Before trying to reach agreement, invent options
for mutual gain
4. Insist on using objective criteria

4-45
How to Separate People from Problems

Carefully define the substantive

problem
Then, let everyone work on the
problem – not on the person
 How to Focus on Interest, not Position

WRONG: Focus on position

PM: “I need this subassembly by November 15”
FM:” I can’t deliver it before February 1 next
year”

RIGHT: Focus on interest

FM and PM: “Let’s talk about the schedule
for this subassembly.”
Two Examples of Negotiating Positions

1. Real estate bidder, assuming a future

property value:
“I will not pay more than 1 million for
that property.”

2. Assume that a workgroup’s current

workload will not change, FM states:
“We cannot deliver this subassembly
before February 1.”
Shifting Focus from Position to Interest

Real estate bidders true interest:

Earn a certain return on investment in the
property

Workgroup FM’s true interest:

Not to commit to delivery of work if
delivery on the due date cannot be
guaranteed
An Interest Negotiator’s Knowledge
and Purpose

Knowledge:
The parties-at-interest’s interests

Purpose:
Suggesting solutions that satisfy the
conflicting party’s interests without
agreeing with either side’s position
Before Reaching Agreement, Invent Options for Mutual Gain

Marital conflict:

Joe wants to go to the

mountains
Sue wants to go to the
shore

WIN/WIN solution:
Go to lake Tahoe
Four Steps to Move from Parties-at-Conflict to Win/Win

1. Parties-at-conflict (pac) enter

negotiations knowing what they want
2. The negotiator spells out the
“substantive problem”
3. As the negotiator presents a variety of
possible solutions that advance their
mutual interests, the pac’s converge in
their positions
4. A win/win situation emerges
Key to Finding a Negotiator’s Interests and Concerns

Ask “WHY?” when he or she states a

position
Insist on Using Objective Criteria

Instead of bargaining on positions,

try to find a standard
Example:
Our friend, the FM, wants to use an
expensive process to test a part
The cost conscious PM then asks if
there is not a less expensive test to
achieve the same result
Tactical Issues Covered by Most Books on Negotiations
• What to do if you want “win-win” but the other
party wants “win-lose”
• What to do if the other party is seating you so that
bright lights shine into your eyes
• What to do if the other party drags their feet so as to
put you into a situation of extreme time pressure to
accept whatever solution they offer
• How to settle purely technical disputes
• How to handle threats
• The FM tries to go over your head and attempts to
enlist the aid of your boss to get you to accept an
unsatisfactory solution
• How to deal with a person that dislikes you
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Copyright © 2018 John Wiley & Sons, Inc.
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Copyright ©2018 John Wiley & Son, Inc. 56