Eight to Late

Many businesses implement their IT projects with the help of external parties such as consulting or software firms.  In these projects, the eventual outcome – success or failure –  depends critically on the relationship between the business (the customer) and the external party (the vendor).  At one extreme, the relationship could be almost adversarial – which happens quite often.  At the other, it could be collaborative – which happens not often enough.  A recent paper entitled: A negotiation approach to project sales and implementation, published in the Project Management Journal provides a framework to support  and enhance the latter approach.  In this post I review the paper from a practical perspective , asking the question, “Does the paper offer any insights or ideas of immediate value to a practising project manager?”.

The short answer is a qualified, “Yes”. Read on for more.

The authors contend that project related negotiations typically  suffer from the following shortcomings:

• Negotiations between the customer and vendor, which take place at various stages of the project, are typically “local” – i.e. they’re made in isolation, without much regard to possible consequences on subsequent phases of the project.
• The parties approach each of these local negotiations with only their own interests in mind, leading to a win-lose or distributive approach wherein one party gains at the expense of the other.  
• People involved in the discussions are typically not trained negotiators. Consequently they approach the negotiations in an unsystematic manner. 

 To overcome these shortcomings the authors suggest the following:

• A project be viewed as a  continuous process of joint decision-making that lasts through the project. The operative words are the italicised ones – emphasising that optimal outcomes can only be achieved through:
  • a project-wide view as opposed to a local one and,
  • a win-win or integrative approach to negotiations.
• The discipline of  negotiation analysis  be used to analyse and prepare for negotiations.  

Negotiation analysis combines techniques from game theory, decision analysis and behavioural decision analysis . Additionally, negotiation analysis also includes subjective information, such as perceptions etc.,  that do not have analytical backing. It also  acknowledges that negotiations often end up leaving both parties with sub-optimal (or inefficient) outcomes. This essentially because the negotiating parties do not exchange information that would enable them to reach efficient agreements – i.e. the parties do not collaborate. The goal of negotiation analysis is to improve collaborative (or joint)  decision making to the benefit of all parties involved.

A large part of the paper is devoted to discussing the authors’ conceptual framework for project negotiations.  I suspect many practising project managers will find the treatment a tad theoretical and somewhat idealised.  That said, the authors do make practical suggestions on how a qualitative application of negotiation analysis can assist in managing project negotiations.  I found the paper interesting, and recommend it to practitioners, if only for the suggestions it offers in improving ad-hoc approaches to project negotiations.

References:

Kujala, J., Murtoaro, J. and Artto, K., A Negotiation Approach to Project Sales and Implementation, Project Management Journal, 38 (4), 33-44(2007).