Article - Project Negotiations Conundrum - What Would You Do?Submitted by Jamal Moustafaev on Tue, 03/07/2017 - 11:07
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?”