collaborating project management for high performance business …€¦ · ·...

Feedback: [email protected], [email protected] Synergy June 2014,

June 2014

SYNERGY Collaborating Project Management for High Performance Business Insight

Message from Editor-in-chief

Quality attracts quality. The response on

previous editorial helped us pull more

traction for this editorial.

Message from the President

Changes and gearing up the activities in

the board and the same is shared in this

edition.

Managing the MESS

Humans are complicated, hence the pro-

jects created by humans are even further

complicated. Revisiting six steps to sim-

plify.

by Nafees Ahmad

Employee engagement & Soft Skills

Projects are created & executed by hu-

mans. As a leader or manager, let’s look

into as how to connect with our resources

on at the required frequency to help

them deliver what is expected.

by Neelima Chakara

02

03

06

Agile Requirements

Is agile fit for all? If not, then let’s un-

cover some insights to make different

type of projects fit under the umbrella.

by Jahnavi Rao

Agile, Agility and Project Manage-ment

One day event at Hotel Clarens, Gurgaon

to understand all about Agile and PMI’s

support of the same.

05

16

Pros & Cons of Negotiations

Understand the pros & cons of Negotia-

tion. Also, let’s get behind the curtain to

understand tactics, counter tactics and

shifting of power.

by Ajay Bhargove

29

12

Cloud Storage

Everybody talks about cloud; one likes to

stay on Cloud 9. Know what’s all it takes

to stay on the cloud.

by Nitin Anand

25

Interview Series—Prof Vilas, Shah, ASCI

Prof Vilas Shah has been training civil

servants and practicing managers in Op-

erations Management. He is leading key

projects from the government sector too.

We caught him for a small chit-chat to

understand how differently corporate &

government sectors operate on projects.

23

Platinum Sponsor - Project Management National Conference 2013

mailto:[email protected]?subject=Feedback%20on%20PMI%20Magazine



Foreword Hello Members,

I hope you would have enjoyed reading our March (HOLI Edition). As the new gov-

ernment after a miraculous win comes to power, creating hopes for better India; simi-

larly I hope we too do better every day, and enjoy the journey of learning every single

second.

On journey aspect, I remember that taking the first step is always tough and once

you are in momentum, it becomes easier to go along. The interesting aspect which no

one realizes is that remaining in momentum is way tougher, harder than the initial

step. It only looks easy, as we have companions walking along making the journey

mesmeric. We received praises from many members, chapter presidents and senior

members on our last release and hope to raise or at least maintain that quality on this

journey of Synergy.

I would like to thank my editorial team once again in making our last edition a great

success.

We have started including articles that give education to our member society in gen-

eral, one such example is ‘Cloud Storage’ that we have covered this time.

As mentioned last time, if something comes to your mind about our editorial whether

it is an area of improvement, something is missing or this journal is great, please feel

free to share across. We are open to any kind of feedback, be it good or bad as we

treat bad news as an opportunity to improve and excel further down the lane.

I again r

With best regards

Prashant Malhotra Vice President - Communications, PMI North India Chapter

Abhijit Kumar, PMP Senior Executive

Siemens Ltd.

Hemant Seigell, PMP,MBA,CPP,ITIL Director - Riskpro India

Risk Consulting & Advisory

Kumar Saurabh, PMP

Asst. General Manager

Samsung Heavy Industries Pvt. Ltd.

Nirmallya Kar Sr. Program Manager

STMicroelectronics

Pooja Kapoor Sr. Engg. Proj. Mgr. (Program Manager)

Aricent

Shashank Nepalli Assistant Manager

TVS Motors

Prashant Malhotra

“Take ad-

vantage of eve-

ry opportunity

to practice your

communication

skills so that

when im-

portant occa-

sions arise, you

will have the

gift, the style,

the sharpness,

the clarity, and

the emotions to

affect other peo-

ple.” — Jim

Rohn




Message from the President Dear Chapter Members & Practitioners,

Welcome to this monsoon edition of our Q2-2014 Quarterly magazine Synergy!! This

magazine now comes with a new interview feature of senior practitioners being covered

on specific topics and sharing their experience with our member community and readers.

As earlier, we will continue to strive for new features and new ideas to continuously im-

prove the quality and readership base of this magazine. Also to keep you posted on some

key initiatives on which chapter board is working and will be in front of you soon for re-

view and approval are:

1. PMI Chapter Multi-Year Business Plan Support Program – This is an initiative on

which we did initial work last year and few weeks back had a work with our Regional

Mentor, Tejas Sura on the same. As per this initiative, chapters are expected to identi-

ty their long term high level objectives as per the geography and environment they

are working in along side Economic Intelligence Unit report provided by PMI to the

respective chapter for their environment along with certain key indicators for setting

and tracking goals for their multiyear performance for coming years. This initiative is

being led by me directly along with other board members besides Jay Kumar, our new

Director Finance playing an important role on account of his position

2. Chapter Board Position Alignment with PMI Role Delineation Study – This exercise

is being led by Pritam D. Gautam with inputs from board and supported by Amit Ag-

garwal directly in the initiative. This initiative is aimed at aligning our board posi-

tions and their role definition with PMI’s Role Delineation study exercise which is

targeted to standardize board positions and their roles globally for all PMI Chapters.

The exercise will go through few round of reviews and approvals between board, chap-

ter members, PMI before being implemented for future volunteers coming into the

chapter board / working within the chapter board from next year.

3. Volunteer Recognition & Opportunities – No chapter can function or grow without

volunteers or their active participation in chapter activities. As part of our chapter

recognition initiative, Pritam as Conference Director for the conference has rolled out

the following new placeholder on our chapter website for National Conference 2013

volunteers with details of their profile and their personal experience in the conference,

all put together on a single link. This is being updated with details from volunteers

who have been left out or whose complete details are being collated. We are going to

work out more extensive recognition programs like recognizing loyal members of the

chapter (say 7 Years or more) at chapter AGM and few more initiatives soon and de-

tails will be shared with the community in following months.

With best regards

Manoj K Gupta

President & CEO, PMI North India Chapter

Manoj K Gupta



http://pminorthindia.org/About-Us/Board-Of-Directors/2010-Pritam-Gautam.aspx

http://pminorthindia.org/About-Us/Board-Of-Directors/2014-Amit-Aggarwal.aspx

http://pminorthindia.org/About-Us/Board-Of-Directors/2014-Amit-Aggarwal.aspx

http://www.pminorthindia.org/Volunteers/PMNC2013/PMNC2013.aspx

http://pminorthindia.org/About-Us/Board-Of-Directors/2010-Manoj-Gupta.aspx


EVENTS

@

PMI NIC




Agile, Agility & Project Management Agile is a topic of growing im-

portance in project management.

The marketplace reflects this im-

portance, as project management

practitioners increasingly em-

brace agile as a technique for

successful projects. This was a

full day event starting with Agile

Manifesto taken by Ashish. It

was followed by a Scrum session

by Naveen. While the brains had

their feast during session, we

were surprised to know when del-

egates shared that the food was

yummy too. Despite of a

lovely meal, delegates were

incredibly active in post-

lunch session taken by Saket

on Pull Planning, Lean &

Kanban. Before closing out,

we had an open discussion

on PMI-ACP for one full

hour where our speakers &

PMI NIC guided as how to

go about attaining PMI

ACP certification. The

event had overwhelmed re-

sponse and turnout, good

meal, interactive sessions &

nice networking opportuni-

ty.

Event Date 26th Apr 2014

Members were awarded 6 PDUs.




EMPLOYEE

ENGAGEMENT

AND

SOFT

SKILLS

BY NEELIMA CHAKARA




Employee engagement is the emotional connection that an employee feels towards his/her

job. This connection is a function of and also drives:

the enthusiasm and dedication of employees towards their work,

the feeling that they contribute to the achievement of the organization’s goals, and

the pride in the work done by them

Multiple studies suggest that en-

gaged employees put discretion-

ary efforts in their work. They

care about their work & the per-

formance of their organization.

Engaged employees are more

productive. In fact, according to

Towers Perrin research compa-

nies with engaged workers have

6% higher net profit margins,

and according to Kenexa re-

search such companies have five

times higher shareholder returns

over five years

This makes for a compelling business case for organizations to invest in employee engage-

ment at both macro and micro level.

It is important that senior leaders drive this culture, build trust with employees and are

seen as role models. However, the role of immediate supervisors / managers is most im-

portant in driving engagement. They can make a difference by building strong relationship

with employees, create robust team interactions and lead in a person centric way. Here is

how a supervisor/manager can prove that he/she cares for team members:

Macro To help employees understand organiza-

tional aspirations

How their day to day contribution leads

to accomplishing organizational objectives

What needs to change to reach the goals

What does the change means for employ-

ees? After all, if they do not sign up for it,

they will fear it and resist it.

Micro Communicate expectations clearly

Build accountability for progress in the

system

Offer rewards and recognition for good

work

Provide regular feedback

Build career paths




CONNECT WITH AN INDIVIDUAL

Relating with employees at a personal level, makes

them feel appreciated. It does not mean that a man-

ager knows day to day details of team members’

lives but sharing their major life events and knowing

their significant others tells them that they matter

as individuals and not just as resources to meet cor-

porate goals.

Good bosses extend help to meet personal challenges.

One of my bosses helped me find accommodation to

suit my budget when I shifted cities for a particular

role. This conveyed a message to me that he would

do anything in his power to support me.

APPRECIATE CONTRIBUTION Recognizing a job well done is the top motivating factor. Thoughtful, sincere and personal

appreciation is very inspiring to employees. It is important that appreciation is expressed in

a manner which is valued by employees. Some employees like to be publically recognized

while others prefer it in private. A certificate in the employee town-hall, a personalized

thank you mail from the boss or a chance to have coffee with the big boss are some of the

ways of expressing gratitude and bringing out the best in individuals.

KNOW THEIR PERSONAL GOAL AND CHALLANGES

When employees know, how their roles contribute to

achieving organizational objectives, they feel in-

spired to do their best. Similarly, if what they do al-

so aligns to achieving their personal objectives, they

are doubly invested in their job. A good manager

tries to sculpt roles, which allow employees to play

to their strengths in achieving team targets while

steadily marching towards their personal goals.

UNDERSTAND THEIR POTENTIAL




High potential employees are not only talented and engaged but aspires to take responsibil-

ity, face challenges and be rewarded in the form of senior positions in the organization. A

smart manager can spot them, tap their potential and not feel threatened by them, thereby

strengthening the talent pipeline of the organization.

CREATING NEW EXPERIENCES

Paying attention when employees show interest in different aspects of business and creating

occasions to explore those interests, breaks monotony of daily work, stretches employees

and hones their personalities. For example, having a training content creator contribute to

the marketing collateral for the team!

CREATE A CAREER PATH

Helping employees chart a course for career development within the organization is a win

for both employees as well as employers. A manager can help employees

focus on their growth,

think about what knowledge, skills, char-

acteristics and experiences they need, to per-

form better and progress in their careers

know what options do they have/need to

get help to build particulars skills, for exam-

ple coaching, job shadowing, mentoring, etc.

The above steps ready the employees for challenges of tomorrow and make them feel valued

as individuals, mentally stimulated and regarded a part of the organization’s future!

The last two factors are possibly the most significant winning approaches, especially, since

our educational curriculum is too academic and does not focus enough on creating well

rounded personalities. The soft skills that an employee needs to become an effective leader

cannot be taken for granted. Employees do not come equipped with good communications

skill, emotional intelligence, ability to collaborate and be resilient and respectful under all

circumstances. As organizations have become flatter and matrix, knowing how to handle

self, deal with ambiguity, get things done without being in the direct chain of command,

relate to customers & colleagues go a long way building credence for an employee and posi-

tive, productive workplace in an organization. Hence, organizations in general & managers



Feedback: [email protected], [email protected] Synergy June 2014, Page

in particular can make a huge impact by investing in developing these much needed soft

skills in employees.

This effort requires comprehensive planning, knowing each team member’s areas of

strengths & focus, creating a development plan for them, making them accountable for im-

plementing that plan while supporting them with necessary inputs and opportunities. At

different points of their career, employees need a differential skill set to be effective. An in-

dicative list of skills needed at junior, middle and senior levels of career is given below for

reference. Having of all these skills in requisite measure is not a mean task. The good news is

that they can be acquired with the help of appropriate interventions.

To provide the right impetus to develop soft skills, sending employees for training sessions is

not enough. Creating opportunities for experiential learning and setting stretch targets are

an integral part of supporting their journey of learning and growth. Engaged employees ap-

preciate being put in waters untested by them. The excitement of a challenge and the pride

of having risen to the occasion strengthen the engagement. Developing employees’ soft skills

also enhances their personality, increases their confidence, broadens their horizon and moti-

vates them to stay invested and grow with their organization.

This is a strong pull factor creating stickiness in the organization. Employee who see them-

selves get better in the softer aspects of personality, appreciate the investment made in

them by the organization. They know they are listened to, treated with respect and trusted

Time manage-

ment

Presentation

skills

Building trust

Setting

SMART goals

Interviewing

skills

How to build

effective teams

How to provide

feedback

Asking effective

questions

Communica-

tions manage-

ment

Influencing

skills

Negotiating

skills

Change man-

agement

Conflict resolu-

tion

Stakeholder

management

Inclusive cul-

ture / leveraging

diversity

Level A Level B Level C




and thus are emotionally engaged with their organization. Here is further proof in the form

of Gallup study - Data from over 23 thousand business units showed that those with the

highest engagement scores (top 25%) averaged 18% higher productivity than those with the

lowest engagement scores (bottom 25%) and also:

31% in turnover for high-turnover companies (those with 60% or higher annualized

turnover)

51% in turnover for low-turnover companies (those with 40% or lower annualized turn-

over

12% in customer loyalty/engagement

62% in safety incidents

51% in shrinkage

18% in productivity

12% in profitability

This is impressive proof that the right management commitment and focus on people and

their skill building can lead to every employee feeling like they have a stake in the organiza-

tion!

References

The Towers Perrin research, Kenexa research and Gallup study are taken from open

sources /internet, www.delta7.com , 123rf.com

Neelima Chakara is a Management Account-

ant and a Project Management Professional

by qualification. She has 18+ years of work

experience in Finance, operations and pro-

jects management. She is currently working

for EYGBS India Private Limited and have

worked for organizations like Infosys, Oracle,

Accenture and ITI Limited in the past.

You can reach her out on LinkedIn



in.linkedin.com/pub/neelima-chakara-pmp/2/21b/259


BY JAHNAVI RAO




The essence of Agile lies in being able to define the

requirements in such a manner that the product/

solution gets created with features that are imple-

mented incrementally. Unlike waterfall models, we

do not need to wait till the business users are able

to visualize and define the entire requirements fully

before starting off with the designing and other

phases of the product/solution. The Agile philoso-

phy is for the entire team, a set of experts in their

own fields, to own up the solution and move fast

towards achieving the milestones, with intellect and

understanding amongst themselves.

Agile is adopted by businesses with the objective to

be able to market/implement the product/solution

early, in order to start reaping the benefits as

quickly as possible. The objectives could differ de-

pending on the business model.

Few objectives for adopting agile could be as fol-

lows:

Catch users’ attention and get them interested

in the new product by launching it early, high-

lighting some of the major features that convey

the vision of creator/innovator. Newer features

can be then incrementally introduced.

Reduce maintenance costs of corporates by in-

troducing new systems and getting rid of the

legacy systems.

Launch the solution (like online shopping site,

job related web sites) with a few critical mod-

ules and start reaping the benefits quickly.

Many-a-times, the entire system’s requirements

clarity is missing, even though the business may

know what it wants on-the-whole. In such cases it

is important to adopt Agile. It is important for

business users to be able to visualize the product/

solution skeletally as a whole, and be able to pass

on the vision to the business analysts. Then they

should give guidance on aligning and planning the

dependent features together, and that would reduce

the risk of huge changes & rework in the subsequent

iterations. The business analysts’ responsibilities

increase many folds of being able to visualize and

translate what the business users want and define

requirements incrementally.

Requirement volatility actually defines success or

failure of any Agile project. Also, the efficiency

with which the requirements are broken into stories

makes huge impact on the achievement of goals. If

the business analysts are able to visualize the itera-

tively incrementing product and define the stories;

keeping in mind the impact of each such story on

the already defined/implemented product, the going

is smooth.

At times just for the sake of adopting Agile model,

which is in vogue, certain contracts are signed with-

out even analyzing whether business teams would

be able to visualize and define requirements incre-

mentally or not. In such cases the sequencing of

stories are completely unorganized and randomly

picked, causing chaos and huge rework during each

of the subsequent iterations. This results into addi-

tional effort and cost.

To quote an example, one such project was picked

recently where the stakeholders, from the client and

the vendor realized quite too soon the mistake of

defining Agile model for the project. The require-

ments included heavy UI components with multi-

ple grids, almost like an excel sheet, and complex

calculations, along with all possible complex algo-

It is important for business users

to be able to visualize the

product/solution skeletally as a

whole, and be able to pass on the

vision to the business analysts.




rithms. Such requirements cannot be broken into

smaller stories and therefore one cannot plan such

requirements incrementally or in parallel.

Two major issues that were faced :

The UI could not be broken into smaller chunks

to fit into 6/8 weeks’ iteration

Even a small change due to implementation of

another functionality in the next iteration end-

ed up in huge rework in the earlier complex al-

gorithm resulting in schedule slippage and qual-

ity concerns.

It is therefore very important to decide, during con-

tracting period itself, whether to go Agile for cer-

tain projects or not, instead of struggling later to

keep a check on cost and quality. Unmatched meth-

odology adoption may result in chaos because of

huge ripple effects resulting from complex inter-

related requirements not planned correctly!!

In the above example it would have been helpful to

both parties to have gone in for a combination of an

iterative-waterfall model where the entire project

could have been divided into stages with specific

features that in turn could have been developed

adopting waterfall model within, that is by adopt-

ing Agile Waterfall Hybrid.

There are other challenges as well. At times the

fixed price contracts for products/solutions to be

developed using Agile approach, end up in huge

losses for the vendor because of uncertain require-

ments. Both time and effort are lost in trying to get

the right business user (from client’s end) to help

define the system’s requirements efficiently and in

one go. This challenge, results in chaos and loss for

both the parties involved.

In such cases again, it is always recommended to

have the contract split into Time & Material for Re-

quirements phase and Fixed Price for rest of the

phases of the project.

Another scenario is when an existing system is be-

ing re-built using Agile approach. In this case not

only the definition of existing and newly required

features a challenge but also being able to com-

pletely map the external systems’ dependencies and

mapping of these systems’ requirements becomes a

tough task. The business user has to have a holistic

approach keeping in mind what external inputs and

outputs might be needed and accordingly define the

approach/requirements for agile development.

If you are getting the system developed in the Agile

mode, then the biggest challenge is having your

business users give appropriate guidance and inputs

around the requirements of the system to be devel-

oped incrementally. If you have a team defining the

requirements then you would benefit defining the

KPI’s for the business analysts around the follow-

ing:

REQUIREMENT VOLATILITY

This is to measure the extent of changes in

the requirements. This can be evaluated as

(Agreed change in size FP or KLOC/

Planned Size in FP or KLOC as per the con-

tract) * 100. The greater the value the high-

er instability in requirements.

QUERY QUOTIENT

This is to measure how much of clarity

At times, the fixed price con-

tracts for products/solutions to

be developed using Agile ap-

proach, end up in huge losses for

the vendor because of uncertain

requirements.

“We don’t need an accurate document, we need a shared understanding.” - Jeff Patton.




found in the requirements. Measured as

((number of internal queries which are raised

by other stakeholders from the organization+

number of external queries raised by the vendor

team)/ Planned Size for the specific Require-

ment in FP or KLOC) * 100. The higher the

number, the poorer the quality of the re-

quirements written.

Looking at all the above scenarios, it is evident that

in order to have a project succeed using Agile mod-

el, the requirements team has to be the smartest. It

may also pay off better if some mature solution ar-

chitects are also consulted while defining the re-

quirements, which would ensure having the tech-

nical aspect also looked into and thus the project

could be expected to be a sure shot success!!

A Senior Management

Professional with 23+

years of experience in suc-

cessfully delivering effi-

cient IT solutions across

varied domains and tech-

nologies to cater to cus-

tomers’ needs. I have suc-

cessfully managed duel-

shore programs

around .NET, Java/J2EE, AS/400 Technologies

and HR Solutions, Media Sales, Commercial Insur-

ance, Banking and Financial Services, Travel and

Inventory domains for Customers across Australia,

US and UK Geographies.

You can reach him on LinkedIn

US $109 million Organizations

lose an average

of US $109 mil-

lion for every US

$1 billion spent

on projects.

Source: PMI Pulse 2014



http://in.linkedin.com/pub/jahnavi-rao/10/aba/5a5


MANAGING

THE

BY NAFEES AHMAD




A complex project or situation deals in the ‘UNKNOWN UNKNOWN’, therefore to manage such

projects exploring and experimenting approach is recommended with patience and creativity.

“Managers are not confronted with problems that are independent of each other, but with dynamic situa-

tions that consist of complex systems of changing problem that interact with each other, I call such situa-

tions messes.” R.L. Ackoff wrote in his book ‘The Art of Problem Solving.’

Mess or complex situations generally categorize into STATIC Complexity – where there are too

many variables to manage and DYNAMIC Complexity – where factors and variable might be less

but speedy changes, feedback loops, evolution, self-organizing and changing environment make it

difficult to comprehend it. In

complex situation the rela-

tionship between cause and

effect is not evident and can

only be perceived in retro-

spect. Therefore exploration

and experimentation are key

techniques to establish a

cause-effect relationship or

rather sense a pattern. Own-

ing to dynamic nature, in-

volvement of too many vari-

ables and complex relation-

ships – it further demands

vigilance over longer time to

correctly see the linkages and

impact of introduced changes into the complex situation. This article focuses on how to decipher

complex situations and organize them. Changing and influencing complex situations into intended

direction is of equal or rather more importance however it is not covered here.

CONTEXT SETTING

As a project or program manager, one of the daunting thing is to take the responsibility of complex

project or simply a ‘mess’ and then it is expected of you to collect information, organize the

things , seek common ground and kick start the realization. Though, it is easier said than done

even for experienced PMs. These types of projects involve many different, connected and moving

parts. Multiple Inter-dependencies, feedback loops and lack of knowledge furthers the difficulty at

hand. New and emerging technologies, cross-functional projects with dispersed stakeholders, highly

connected and evolving situations, implementation of complex government regulations, mergers,

process-re-engineering etc., all fall under this category. With so much uncertainty, complexity

and risks, PMs are puzzled; they don’t know where to start , how to grasp and organize the situa-

tion within stipulated schedule and produce ‘matching’ or expected deliverables. We will, in this

article, try to answer these questions and provide a generic framework to successfully manage such

With so much uncertainty, complexity

and risks, PMs are puzzled; they don’t

know where to start , how to grasp and

organize the situation within stipulated

schedule and produce ‘matching’ or ex-

pected deliverables.




situations. Proposed framework comprises of following steps :

EAT ONE BITE AT A TIME

“You can’t cross the sea merely by standing and staring at the water.” - Rabindranath Tagore

How to eat an elephant? Answer is: one bite at a time. Take a plunge; every big

journey starts with a small step. At the outset, adjust your vision downward

from the big and complex picture, to zero in on one small ‘action area.’ While

selecting an action area - the focus is on pro-

gression and not perfection.

Figure-A represents complexity or messing

situation; where do we start from? Remem-

ber that there is no clear cause-effect exist-

ing in a mess, so we do not know the best

action area to start upon. However, there

are some generic techniques to help us here. In sampling technique, we take a

part of the picture i.e. a sample and start from there. A second technique is called Boundary Man-

agement. In boundary management we draw an artificial boundary and define an ‘action area’ or

’bounded area’ within the big picture. This reduces the scale and provides more focused handling of

situation. Additionally, we need to clearly define our priorities that really matters and keep these

few over-riding priorities firmly in mind. These would act as ‘complexity-reducers’ and help us se-

lect the most appropriate action area, that aligns with our priorities. For example, if we are deploy-

ing an emerging technology; most probable implementation area and environment could be R&D

related location, environments, processes or low impact sites. Please note that the action area is a

partial and temporary view of complete situation. As we further dive down, irrespective which part

of picture we select; iteration remains the key to understand the complete situation.

DIVIDE AND CONQUER

“Nothing is particularly hard if you divide it into small jobs” -

Henry Ford

After selecting ‘action area’, next task is

to divide the action area into multiple

sub-systems or windows or categories.

Many well known frameworks and

methodologies are available to select

from, with their own pros, cons, suita-

bility and applicability. Enterprise ar-

chitecture framework (business, pro-

cess, information/data, application and

technology), System thinking framework (process, structure, meaningfulness

a)

b)

Figure-A

Figure-B




and knowledge power), 7 S organization model (structure, strategy, systems, skills, style, staff and shared

values) are some of the popular way to categorize the action area for further analysis.

As shown in figure-B, we will use system thinking framework as articulated by Robert Louis Flood in his

book “Rethinking the Fifth Discipline - Learning within the unknowable”. An alternative approach could be

to combine and use multiple frameworks either in sequence or in parallel.

GO GET THE DETAILS

“God is in the details” – Ludwig Mies

In this step we will get into the details of each of selected category and try to under-

stand more about them. In figure-C, processes are related to how activities and

functions are performed in present or are supposed to be performed in future. Pro-

cesses are concerned with efficiency and reliability. Structure is about how functions

and teams are organized; and are concerned with effectiveness. Meaningfulness and

knowledge-power have to do with culture, style and power groups of the organiza-

tion. For more details you may refer to “Rethinking the Fifth Discipline - Learning

within the unknowable”.

As complex situation is non-linear, dynamic,

self-evolving and unpredictable, the best way

to understand such system is to observe the

system in action. Get a feel of the complex situation, spend some time

with team who manages its operations, understand their concerns

and challenges, brainstorm, and interview them. Find out pros and

cons about different aspect of situation.

SOLICIT DIVERSE VIEWS AND VIEWPOINTS

“Everyone you will meet ever knows something you don’t” – Bill Nye

No one knows everything. In fact, as humans we have limited physical and cognitive capabilities. We live

in our bounded rationality and limited perspective. We only know partial, incomplete and relevant part of

the whole. I am sure you have heard the story of nine blind men and the elephant.

In the story nine blind men were put in a room with an elephant. Everyone was

asked to observe the creature and report back once out of the room. Each could re-

port only a part of elephant which he was facing and sensing. One talked about

trunk, other one talked about long tail, another one about big feet and so on. Eve-

ryone was right but nobody could explain the whole. Similarly no matter how

much expert, experienced and intelligent we are, we can’t understand everything

from all angles.

We have to have more, different, diverse and cross-functional views and perspec-

tives to figure out the big picture. As mentioned in Figure-D, we need to encourage

and interact with key stakeholders and understand their side of the story; concerns

c) Figure-C

d)




and challenges. This will plug the gaps in our own

understanding of action area, augment and enrich

the collected information.

Another useful place to look at is past trends and

metrics. These could also provide valuable insights

and clues about the behavior of the complex system

and help further deepen and widen our understand-

ing. Yet another method is to go out and seeking

external help in the form of expert support, consult-

ant, books etc. It is rarely that this is the first time

someone in this world is facing such problem.

REPEAT WITH RENEWD FOCUS

“Success is the sum of small efforts repeated day in and day out”- Robert Collier

It is time to repeat. Iterate through step 1 to 4 however for a different action area. Duration of and cover-

age in each iteration depends upon many things and can range from weeks to months. Shorter iterations

are better. Number of re-iteration is again dependent on urgency, risks, available

time & knowledge and

complexity apart from

many other contextual

conditions .While select-

ing a second action area

(action area B in figure-

E ); keep in mind that

this could mean different

scope, new stakeholders

and news questions. As

before, choosing appro-

priate action area is very

important. Albert Einstein beautifully summariz-

es it in his famous quote, “Insanity: doing the

same thing over and over again and expecting different results”.

e)

Figure-D

Figure-E




CONNECT THE DOTS

“You can't connect the dots looking forward; you can only connect them looking backwards” – Steve Jobs

Put all the information and metrics on the table. It is time to digest and synthesize. Using post-it to write

key findings, labeling and grouping them is very handy technique in this step. Spe-

cial focus should be on – inconsistent and misaligned and outliers’ points (point

that falls beyond normal and expected range). Place conflicting data or opinions

side-by-side and reconcile with key stakeholders to select the most appropriate and

applicable ones. This exercise should provide enough clarity in terms of important

goals, tasks and risks. Subsequent discussions should produce multiple hypotheses.

The most important hypotheses must be selected as per agreed priorities. These hy-

potheses should then be tested one-by-one or in parallel to ascertain and prove

basic assumptions.

At this point either we may decide to charter a project to implement necessary

changes as per tested premises or may go back to above framework for another

around.

TO SUM UP

Human body is an example of complex system. If you have some health problem and go to a doctor, an

experienced doctor will not right away starts with the prescription. He first collects as much information

as possible through tests and health records. He asks you questions focusing more on your behavior; read-

ing between lines and not just your answers. Sometime, he goes back and even asks questions related to

the health concerns of your parents like blood sugar problems, diabetes or your surrounding environment

like pollution level, water qualities or even your lifestyle including smoking and drinking etc. Sometimes,

he may need to consult another doctor. Once he thoroughly probes and senses the complexity involved, it

is then that he prescribes appropriate medication. If prescribed medication doesn’t generate expected re-

sults, he would change as per reaction (quantity and quality) of medicine to the body. Similarly, to decode

any complex system or situation, we need to feel the system, collect as much data as possible, run tests,

talk to concerned people, go back to history to check for clues, understand context and surroundings and

then only formulate hypotheses and test them. If not successful, we need to go back and form new hypoth-

eses and test again.

If you observe closely the overall pattern here revolves around:

Convergent thinking for congregating information, views and perspectives to make sense, focus and

prioritize

Divergent thinking for opening up, collecting information , views and perspectives

Agile execution for testing the hypotheses in small , calculated and controlled environment

f)




Iterative process for repetition to get more insights, enrichment and learning

A long , diligent and sometime painful exercise though please remember that we are dealing with

‘UNKNOWN UNKNOWN’ and therefore we need exploration and experimentations with patience and

creativity.

Nafees is a seasoned professional with more than 16 years of expe-

rience in IT/ ITeS /Telecom/Financial sectors. At present, he is

heading Nokia Networks Customer extranet platform called NSN

Online Services (NOLS). He had played leading roles in the area of

product development, program management, process reengineer-

ing, technologies road- mapping, enterprise architecture, plat-

forms and operations management. With global exposer (worked

in Boston, Singapore, Germany, Finland); Nafees is a trained en-

terprise architecture practitioner (TOGAF 9.1 level-1&2). His cer-

tifications include PMP, 6sigma GB, CCNP and ITIL.


Source: Ethics @ Work, Alankar Karpe (PMI Virtual Library)

Companies

that active-

ly managed

ethical is-

sues outper-

formed

their peers

financially

by between

3.3% and

7.7% over a

five-year pe-

riod.



http://www.linkedin.com/in/nafeesahmad


Prof. Vilas Shah is an M.Tech from IIT Bombay and has 35+ years of

experience out of which 30 years has been invested in education indus-

try. He is currently teaching Operations Management in ASCI

(Administrative Staff College of India). ASCI was established in 1956

and has sharpened skills of more than 75000 civil servants and practic-

ing managers in both Government and Corporate sectors.

He specializes in Procurement, Projects, Operations Management and

Strategic Initiatives in start-up and high performance organizations.

A TEA BREAK WITH

Prof. VILAS SHAH

As you have worked into multiple projects across industries and since you are in education industry, it would

be nice if you could share, as how has advocacy of Project Management evolved over the past many years in

India.

Most difficult problem of advocacy of project management has been that although almost every stake holder

accepts the need for Scientific Project Management but have not been able to implement / implemented the

same due to various reasons. In my opinion, organizations working in project management advocacy have

failed to impress on the govt. authorities the possible gains of adopting scientific project management.

The projects in government sector suffer mainly due to delay in land acquisition & various clearances like en-

vironmental, forest etc. These delays are sometimes so huge but nobody realizes that there can be serious de-

lays due to bad project management. So all the stake holders are almost resigned to the fact that the projects

will be delayed and there is little that they can do about it. Hence when Project Management advocacy is

done, it should also be impressed upon the government to manage clearances as part of Project Management.

In some large projects like Delhi Mumbai Industrial Corridor Project (DMICDS), they have been carving out

projects by taking all the necessary clearances as part of Project SPV creation phase and then outsourcing the

projects to potential bidders / vendors to avoid project delays.

You have worked in private sector and government sector. Please share some unique challenges of both the

sectors.

Private sector has very strong objective and target driven culture and most of the time it is the monetary ob-

jective, along with the pressure to deliver to manage performance expectations of senior management. How-

ever in private sector, there may be some people who will take shortcuts and as a country we have not devel-

oped the culture or laws which dissuade them from preventing shortcuts. But private sector does use scientific

project management to certain extent, inspite of small and medium (including some large) sized players still

not following the same and appreciating the same. However even in that sector they unlike their overseas

competitors, they are not developing new ways of managing projects and analysis and research in the domain,

something which is seriously missing and impacting their growth and maturity in project management.




Government sector is now a days working mostly by employing outsourced services. This has taken away the

need and hence the zeal to acquire new techniques and mastering and retaining the old expertise. Many small

and medium scale contractors do not use project management to manage the projects and mostly not interest-

ed in reporting along with the updated program. The accountability of delays are not normally fixed as the

delays due to reasons discussed earlier are so huge that everybody accepts the delay as a given fact. Also there

is no incentive / dis-incentive lot of times on the officers to manage projects efficiently and not exceed time,

cost & quality parameters of the project on account of various other political and economic reasons.

Can you share some insights of defense sector projects. And how do they differ from other government pro-

jects

Defense sector projects are normally research projects. There are high level of uncertainties while estimating

the time for research activity. Also customers are always pressing for aggressive delivery schedule due to stra-

tegic reasons. Hence ambitious targets are taken up and most of the projects end up in delays in time and cost

overrun.

As a result of over ambitious targets and the past culture of procedural delays, the project team is ready for

delays from day one. Another peculiar fact in this area is that as the project gets delayed, new technologies

and capabilities are displayed in the global area. This results in request from customers to enhance the scope

of the project to include these advances. This causes further delays in the projects.

How do you see Project management scaling up among IAS people after coming to ASCI.

There is increasing awareness in government and bureaucracy that IAS officers should be aware of project

management but the initiatives are yet to deliver the result in terms of larger adoption. Senior IAS officers

need to be made aware of the importance of project management. Most of the administrators feel that the pro-

jects are delayed due to external reasons (mentioned above), so the efforts are generally focused on addressing

those reasons due to which project management takes a backseat. There needs to be some demonstrative pro-

jects where ideal conditions, tools and techniques can be demonstrated on a realistic scale and visits to these

projects can be organized to impress upon the benefits derived from project management.

As everybody is more aware of saving energy or moving towards go-green initiative; how do you see Govt. of

India's contribution in encouraging govt. projects in alignment with it. (One may list some successful projects

and statistics related to it

Saving energy has been a priority area of the government and there are various awards, mechanisms, report-

ing structures instituted by the government in these areas. But these initiatives do not differentiate between

ongoing operations and projects. There is possibility of instituting separate awards for green projects etc.




CLOUD

STOR-AGE

BY NITIN ANAND




Cloud storage has become the new standard for file

and data sharing between users, companies, institu-

tions and corporations. As no two clouds in the sky

are unique, same principle applies for cloud storage

systems too. Cloud storage indirectly refers to stor-

ing and saving data [Documents, movies, photos,

emails and much more] for further or immediate

use to an off-site storage system maintained by a

third party and made available over a network,

typically through internet. So instead of storing

your data on a physical hard drive or a local storage

device, the data is saved remotely. This gives the

users the access to their files from anywhere in the

world 24x7 all around the year. Cloud storage sys-

tems always rely on many data servers. Everything

in the world requires maintenance including these

servers which brings in the concept of redundancy

that ensures that same data is stored on multiple

systems so that data is available all round the

clock. Does the adage “don’t put all your eggs in

one basket” ring a bell right now? Facebook,

Myspace, Google, Picasa, Flickr, GoDaddy, Star-

tlogic, Strongspace, Mediamax, Hostmonster, Hot-

mail, Yahoo all use cloud platforms.

Change is never an easy thing. Questions such as, will

cloud be useful for the organization? Is the investment

feasible enough? What benefits may be realized out of

cloud? Readiness factor and the fear of implementa-

tion? Will we get the same security that we get on our

premises, in the cloud too?

These are some of the questions that put companies

at a standstill for decisions. Risk vs. convenience is

a key consideration for deciding on cloud migration

strategy and a proper balance needs to be main-

tained between the two for startups, small business-

es and enterprises. The complete data and applica-

tions that need to be migrated to cloud storage can

be divided on the basis of urgency, importance, risk

and criticality to a company. The companies can

follow the 80:20 rule on deciding the cloud storage

migration. 20% of the data might be 80% critical to

the user and might be given due consideration for

keeping it on local storage systems whereas 80% of

the data might be only 20% critical, which can be

migrated. The infrastructure performance over a

period of time and the network latency are crucial

factors in decision making process.

There are 4 main cloud storage models:

Public cloud This type of model is generally preferred by

companies or individuals that are much less

concerned about data availability and data

security. The individuals preferring the Pub-

lic cloud model don’t have or don’t want to,

Cloud storage has become

the new standard for file

and data sharing between

users, companies, institu-

tions and corporations.




shell out much money to avail the benefits.

Amazon’s S3 service provides a multi ten-

anted storage interface that is most suitable

for unstructured data.

Private Cloud This offers a dedicated environment with

firewalls intact for increased security. This is

most suitable for companies that need a

more control and more flexibility over their

data. Risk and security is a major concern

for going in, for Private Cloud strategy.

Hybrid cloud This is a combination of the public and pri-

vate cloud models. The small businesses

might want to store mission critical and in-

creased risk data on private cloud and back-

up and archival data on public cloud. Re-

member the 80:20 rule?

Community Cloud These are infrastructures that are shared by

several different groups based on common

concern or mindset. For example a number

of medical institutions and schools might get

together to share common knowledge that

helps a wider audience.

There are several cloud storage providers in the

market and it is not easy to choose them, as per

your defined needs. Several factors can be account-

ed for on your choice:

Efficiency and value for money You may choose a cheap cloud storage provider and

end up at loss. There can be missing data and also

data not available on time. Amount of storage

space offered, superior features provided and the

reliability when weighed against the costs define

this factor. Total cost of ownership and return on

investment, setup costs and operational costs,

should always be considered during this phase.

Technical support and customer service This factor defines how fast a customer gets a re-

sponse for his query and a solution for his problem

as in relation to the technicalities. SLA and TAT

form an important criterion for this factor.

Reliability and Uptime If we consider statistics and analytics into our dis-

cussion then we can very well imagine that the cus-

tomer would never like to miss accessing his data

even for 1 minute. Expectations from cloud storage

companies are more than for 99.99% uptime.

Storage space How much is the storage space available for each

rupee of money. This factor is closely related with

efficiency and value for money.

GUI and ease of use features

The interface between the storage and the user also

plays an important role in deciding which cloud

storage to go for. The more the number of features

and the more the ease of operating would surely

make a distinction. It all depends on the customer

on whether those features are really useful to him

or not. At the end customized packages tend to be

more favorite among in the market where compa-

nies can choose from pre-defined packages or on a

long term relationship even create new refinements.

Future amendments How easy it is to remove services in future? Can the

package be modified according to customer prefer-

ences and needs? Are all current and future require-

ments been met during the deal?

So the overall rating will comprise of the above

mentioned factors on a scale of 10 and getting a

common rating for each cloud storage provider on

that basis. Proper validation needs to be completed

and tested after data migration to the cloud before

production gets re-enabled and optimized. Perfor-




mance analysis of before and after, need to be con-

ducted by technical resources and differences high-

lighted.

For sure, the performance on outsourced storage

will be more likely to be lower than local storage,

depending on how much a customer is willing to

release from his pocket. Also cloud storage is more

prone to hackers and other unscrupulous needs.

Proper Authentication procedures and Authoriza-

tion practices need to be implemented at a ground

level. Companies may not exist in future or maybe

overtaken by big enterprises or may vanish in thin

air leading to your data being dangled and exposed

freely with no access for months. Who owns the da-

ta in the cloud system? Does it belong to the com-

pany that owns the physical equipment or does it

belong to the company that hosted the data? The

legal aspect from compliance and regulatory stance

is of apprehension.

There’s more to come in cloud storage in future.

Happy Flying on cloud 9 !!

Nitin is working with EMC Corporation as Project

manager and has more than 14 years of experience

in Supply chain management and IT infrastructure

Project management. He has been involved with

long term projects with American Express, Coke,

Pepsi, Singulus Gmbh, and McGraw Hill during his

stint as project manager. Nitin holds B.E. Degree in

Electronics from Pune University. MBA from IMT

Ghaziabad and 2nd MBA from University of Texas

at Dallas, USA. He is PMP, ITILv3 and EMC

Cloud certified professional. His hobbies include

travelling, psychology and Numerology.


Source: NPA Computers



in.linkedin.com/in/nitinanandscmerp


BY AJAY BHARGOVE

PROS

CONS

POWER

SHIFT

TACTICS




Everything is shrinking like our world economy

today, leading to lesser availability of working

capital and pushing project based business to operate

almost at no premiums.

The scope of this paper is to analyze “how to achieve

the win-win situation in project business”. We go

through traditional negotiations tactics & counter

tactics and pros & cons of using them. We must

understand, why not negotiate hard, especially when

we know that the other side is very desperate to have

the business and may accept everything whatever

thrown on them. So, the need generated to know the

possible ways to ensure win-win position in current

market scenario without losing business and making

scenario profitable for all the negotiating parties.

INTRODUCTION

We are negotiating all throughout life, every moment

we are negotiating. Somebody is negotiating on some

matter may include personal, diplomatic, hijacking

or even higher salary & perks or transfer to other de-

partment or with the prospective employer. We do

negotiate back at home with children on matters of

their interests and ironically we lose all such negotia-

tions.

Countries do negotiate often on matters of common

interests including but not limited to, creating trade

free zone, entering into double taxation avoidance

agreements and lesser duties on some commodities or

they negotiate to resolve disputes, which can be any-

thing like to isolate the border areas from army of the

countries, not to promote the Nuclear Weapons or its

first use by one country on the other etc. A profes-

sional negotiator know the importance of cultural

differences and prepares the negotiations accordingly.

In India, while shopping in local markets, it is a tra-

dition to ask for double digit discount, which is con-

trary to other international markets.

Negotiations cannot be avoided, as somebody else

definitely drags us into the negotiations. The purpose

of this paper is to understand the traditional negotia-

tion tactics, counter tactics and why to use or not use

any of them. To know the latest Practices to avoid

lengthy negotiations every time for same set of terms

& conditions with familiar suppliers.

NEGOTIATION TACTICS

Irrespective of Project Management areas negotia-

tions tactics can be used in other fields too or even in

daily life. There are more than hundred ways to nego-

tiate and thousands of books written on the subject.

Using correct tactics depends on the professional ne-

gotiator and the scenario in his hand.

We must learn the art and science of negotiations,

involved tactics, counter-tactics and implications of

using them. Let’s see some of the traditional negotia-

tion tactics first and then know the associated limita-

tions of these tactics.

Reject the First Offer

This is the first thing you can say even without hav-

ing a detailed look at the offer. If you are sales per-

son, then have heard this thing many times already,

where customer says “your offer is many times their

estimate and they will not be able to proceed further,

kindly correct the offer even before we react on to it.”

Customer doesn’t have to put much effort to get the

first level discount here and major corrections by the

bidder. Counter tactic is to dig out for more strategic

information on the submitted offer from customer, to

know if they are not bluffing. This tactic is mastered

by Customer as you might not be shortlisted further

for evaluation if they are honest and not bluffing.

Bidder should be ready to offer corrections after

knowing the strategic points, where customer is quot-

ing bidder’s offer higher than their estimate.

Overlooking




When you are being dragged by someone to negoti-

ate, you have two choices 1) may overlook the re-

quest 2) cancel the request. When your customer is

trying to get hold of you to negotiate for an improve-

ment in terms & conditions or for reduction in pric-

ing, you may behave as if you didn't even hear their

request.

This is especially easy for contractors to do, if you are

trying to negotiate by an email and / or fax. Igno-

rance is the popular tactic followed by Contractors or

sometime by the Customer if contractor is looking for

a change order during project execution. Generally,

this approach is followed by trainee negotiator and is

not useful except bringing delays in getting to the

real negotiation.

Deflect

When you negotiate for a reduction in price and im-

provement in terms & conditions, a common tactic is

to deflect your attention to another business issue for

which you might not be responsible. It is very com-

mon that when contractor is discussing with Custom-

er’s Technical Person they will try to divert attention

to commercial issues, which may include but not lim-

ited to Payment issue or any other issue. On the con-

trary when discussing with Customers Commercial

team, the contractor may say "I can't really discuss

price until I understand how the technical arrange-

ment will work and the value that you are seeking to

get out of the arrangement.” Counter tactic is to ne-

gotiate collectively not in isolation.

Deferral

When you negotiate for an improvement to pricing or

terms, a Contractor representative will often say "I

gave you the best price/terms that I am allowed to

give. I'll have to check with senior management to

see, if we can do any better." This is where Contrac-

tor creates the impression that nothing further can be

accomplished through the conversation, the Contrac-

tor gets you to stop negotiating in the hopes that you

will not ask again before awarding the order or con-

tract. Hammer down such requests by saying that

“we are deciding the order shortly and you have to

inform your final decision within the next few

hours”. This will shift the pressure back onto the con-

tractor shoulders and you know the bottom line offer.

Splitting the Difference

This approach especially used when both sides of the

party are not ready to accept other party’s opinion /

claim completely. This approach is used often, when

we are executing the Project and dispute arises for

reasons including but not limited to because the un-

clear and improperly written contract order, where

contract order deliverable are not identified clearly

and in detail. So, such situation are normally handled

by splitting the share between the contracting par-

ties, it may be 50-50 or any other ratios. However,

you never want to be the first to offer to split the dif-

ference. It transfers veto power to the other side and

may worsen your position (Robert Menard 2004).




Negotiation after award

The least desirable negotiation, gives an unpleasant

taste to the contracting parties. Such negotiation

generally carried out when one party realized that

they are at a loss and they have agreed a Contract

Price which is lower, where reason could be including

but not limited to current market fluctuations or cur-

rency variations or budget problems or maybe some

other reason. Such negotiations are least preferable.

These negotiations hit the reputation of the initiator

af-

ter

contract award for unjustified reasons. Rarely suc-

cessful!

Electronic Auctions

They are the latest negotiations tactics, most popular

with the organization lacking experienced and profes-

sional negotiator or even the project procurement

teams. As many companies have come up providing

these auction services at nominal fee. Perceived bene-

fits includes saving on time, effort and money. These

exist in various formats e.g. Dutch auction, English

auction, reverse auction etc. Generally these are con-

ducted after everything has been agreed including

Technical Scope and Commercial Requirements ex-

cept the Price. As a rule of auctions E-Agreement

were signed before logging onto the system. Other

advantage of such electronic auctions is that prospec-

tive contracting parties don’t have to be face to face

for negotiating a contract.

Good Organization needs to decide wisely before im-

plementing such auctions, as they can definitely get

the better price (as contractors are under pressure to

be the lowest to win the contract) compared to tradi-

tional negotiations, but creates increased chances of

claims during execution from contractors. Also, this

is being misused by some of the small organizations.

Persuasions

Persuasions’ is important for all dealings as nothing

can be achieved without persuasion. Definitely Pro-

fessional Negotiator needs to be persuasive, because

Contractors know that weak procurement negotiators

only ask for improvements to pricing or term once

and often end up awarding the order or contract to

the Contractor. Negotiator should be determined

enough to ask again and again, and again if neces-

sary. By showing how important it is to get what you

want, you will increase your chances of getting it.

Counter Offer

This is common negotiation tactic, where customers

smartly throws counter offer onto the contractor as

take it or leave it option. Sometime it is good to

make the counter offer but other times it is better to

hide the Target Price.

Good Guy, Bad Guy

Good Guy / Bad Guy tactic is arguably the most

barefaced. Virtually everyone has used it or has been

abused by it (Robert Menard 2004).

The two main objectives of this tactic are : (1) to win

the contractor trust by the Good Buyer, who is very

good in attitude, open to understand the contractor’s

Issue and ready to understand the terms and condi-

tions or even the costing/pricing submitted by the

contractor, and (2) to make the contractor insecure of

the exact situation, where a Bad Buyer play the role,

who is often a person higher in authority and behav-

ing as if contractor is of no importance to him/her,

not ready to discuss the issue with supplier, having

less of time for discussion and sometimes very harsh

during the meeting or even sometime behind the sce-

When you negotiate for a reduction in

price and improvement in terms & condi-

tions, a common tactic is to deflect your

attention to another business issue for

which you might not be responsible.




ne and represented by the Good Buyer only in con-

versations during the meeting with contractor.

If Bad Buyer is present in the meeting, then contrac-

tor should not be afraid of facing him rather be more

attentive towards the Good Buyer, contractor should

keep the cool & calm and try to discuss only issues

with the Good Buyer. Also, when bad buyer is behind

the scene, contractor should bring him from behind

the curtains.

Demeaning

This approach is followed up by some of the profes-

sional negotiators, but often customer’s person who is

higher in authority or the decision maker in the pro-

cess. In this approach customer not ready to give any

respect to the contractor or his organization and is

trying to have the entire ground during negotiations.

Such negotiators may keep the contractor’s waiting

in the reception areas for hours or sometime they of-

fer a chair lower in height. If you find yourself in

such a scenario, refuse such demeaning conditions

politely and ask for another chair, also the best ap-

proach to handle such negotiators is to treat the ne-

gotiator the same way but with humility. And if you

have to wait for more than 20-30 minutes, then you

must notify him that you are leaving as you have an-

other meeting lined up with another client or you

should not give him the importance once the negotia-

tion starts.

Exigency

This is also the approach being followed by profes-

sional negotiators, when the deadlock has reached

and the contractor is not ready to offer any further

discount in terms and conditions or in pricing. In

such scenarios, normally the direct contact will call

up the contractor and asks for his final offer stating

that the management approval meeting has started

and customer will decide in another hour. Because

these urgent situation puts the entire pressure on the

contractor’s shoulder and most often contractor of-

fers better discount as they treat this as their final

chance otherwise they might lose the prospective

contract order. The best approach is to handle such

urgencies is that you need to sense the buyer is bluff-

ing, if so, then ask for more time 5-8 hours to re-

spond.

Authority Limits

This seems also one the tactic applied by the custom-

er some of the times, when he senses that contractor

is not moving an inch. Normally customer’s procure-

ment guy states that “he is not authorized to negoti-

ate contracts over a particular value or cannot ap-

prove the contracts beyond a particular value and if

contractor keep the same offer than he has to start

from scratch and have to discuss the complete pack-

age with the customer’s higher management”. Natu-

rally, Contractor feel trapped just for two reasons, (1)

Tempted to have the Order immediately maybe even

on Customer Terms and (2) Contractor don’t want to

start all over again.

Surprise

This approach is also used some of the times by the

professional negotiators. In such cases the contractor

is made comfortable by notifying that he has won the

contract and when customer sense that contractor is

comfortable, he surprises him with either additional

terms & conditions or price. This approach commonly

followed by Human Resource departments where on-

ly incomplete offer only mentioning role & price is

made to the prospective employee, but the companies

all policies are kept hidden till such time when em-

ployee came for the appointment letter.

PROJECT PHASES

Project Business organizations can have many phases

and these can be any number based on organizations

internal decision to deal with the Projects. But, for

simplicity and to understand the things in better




way, we will divide the Project into three phases

namely, pre-award, execution, warranty.

Pre-Award

Project Phase, where customer is discussing the pos-

sible requirements of the project, including but not

limited to scope of work, deadline to complete the

project, licensing requirements, environmental clear-

ances, health & safety instructions to be followed and

all other deliverables. Once all is agreed, time is to

shake hands and sign the contract order.

The output of this phase will become input to the ex-

ecution phase, warranty phase and based on contract

agreement work will be performed by the contractor

and verified by the customer.

Execution

Phase where Contract agreement will become input

to the execution phase and now its contractor turn to

perform against the agreed deliverable and Customer

will verify the scope. This is the phase where all work

is being done and performance reporting initiated

against the contract deliverables. This is the project

phase, where the contractor, if not performing well as

per the contract then customer has to look for the

other available options to get the project work done.

Warranty Phase

Project Phase, where the contractor has performed

against the contract and had handed over the works

to the customer and if works are acceptable by the

customer then Contractor has nothing to perform

against the Contract except to comply with the war-

ranty requirements of the contract agreement. Nor-

mally, Warranties are back to back, which means end

-customer warranty requirements are passed on to

the end-contractor to avoid all the risk of the inter-

mediate customer or contractors.

Now, we keep these three project phases in mind and

make an attempt to understand who is having upper

hand at negotiation in which phase of project.

NEGOTIATION POWER SHIFT

We are not living in the perfect world, where custom-

er is always having the upper hand at negotiations

just because they are customers, there are times when

contractor can also influence the results of negotia-

tions. Therefore, it is important to understand who

can influence the negotiations results during which

phase of the project, then we will be able to decide

our moves accordingly before starting the negotia-

tions.

Fig1 - Power Shifting Curve

SELLER

PRE AWARD EXECUTION WARRANTY

N

E

G

O

TI

A

TI

O

N

P

O

W

E

R

BUYER




It is evident from curve that Customer is having an

upper hand in the negotiation during the pre-award

as all the bidders are in competition mode and they

have to compete against each other. On the contrary

to above, contractor will become more and more

powerful during execution phase as his involvement

at site increases as the project progresses. If we have

squeezed our contractors to the maximum possible

extent during pre-award, then this is the contractor’s

turn to trap us by submitting claims even for a small

change including but not lim-

ited to small change in scope

of work or terms & conditions

or because of other reasons on

the project. As the contrac-

tors are mobilized to site,

they got to know how their

performance will affect the

project and what is critical

for customer on the project

and there contractor will

make an attempt to tap all

these opportunities to recover

for the perceived losses and

accepting small changes, which is sometime totally

unjustified and customer has no choice but to pay

through nose sometimes for these small changes.

You might ask, why would customer pay to a mobi-

lized contractor a huge amount for accepting small

changes? The one answer to above question, is in

question itself, which is no one can meet the schedule

better than mobilized contractor and second answer

the customer is lacking all the time to go back into

the market and get this small change executed from

the new contractor.

Definitely termination of Contracted work is the least

desired option, not only because of schedule con-

straints, but sometimes we have no other option be-

ing as contractor is having a monopoly in the market

and they are the sole source or maybe end customer’s

preference for project. Also beyond threshold point as

marked in the power shift curve above, customer is

not having much influence on the contractor as pro-

ject acceptance date is approaching and customer has

to meet the deadline agreed with their customer oth-

erwise they will make huge loss and have to pay high

liquidated damages if misses on the agreed deadline.

This Liquidated damages or penalty may be many

times the contract value of the non-performing con-

tractor. Moreover, less repeat business in future from

the end customer for lost reputation. So, what will

make the contractor perform beyond threshold

point?

Somebody may say we will

go to arbitration and

thereafter into litigation if

required; definitely these

are last solutions to con-

front the disputes when

negotiation fails. The pro-

cess of arbitration is

lengthy and will eat lot of

time to get to the solution

and if the decision awarded

by the arbitrator not ac-

ceptable to any party, then they can approach the

court of law and further delay to reach to the conclu-

sion. Frankly speaking, we don’t have much time to

go through this when we are into executing the pro-

ject. So, what really motivate contractor is the con-

sideration in terms of Bonus, Incentive for mitigation

measures. These are the only allurements which can

motivate the non-performing contractor to start per-

forming and finally achieving the project milestones.

Work once completed, the Project is handed over to

the end client. Therefore, only priority during execu-

tion is to get the work done. The disputes between

the contracting parties should be parked till then and

if required then the affected party should approach

the arbitrator and subsequently the litigation.

Third major phase of any project, involves a period

for complying with the warranty Requirements

agreed under the main contract with the end Custom-

er. This is the phase where Contractor will definitely

Project Phase, where customer is dis-

cussing the possible requirements of

the project, including but not limited

to scope of work, deadline to com-

plete the project, licensing require-

ments, environmental clearances,

health & safety instructions to be fol-

lowed and all other deliverables.




be having upper hand as no payment is withheld by

the customer except as agreed under the contract. If

you analyze this situation, the contractor has already

created buffer for these retentions while submitting

the offer to you as their risk mitigation strategy. So,

whatever retention amount or performance bank

guarantee amount withheld by the customer is only a

bonus for them, which they might like to have or just

don’t care about it.

NEGOTIATIONS ALONE NOT SUFFICIENT

All negotiations tactics, counter-tactics are being

used very often by one party with other party. Being

these are traditional Negotiation tactics, therefore

everybody knew them. So, might not be very useful.

The negotiation tactics were very successful in the

twentieth century, but not today. This is the era,

when we need to devise new tools & tackles to

achieve better results.

Let’s have a look why the negotiation tactics are not

generating the desired results. Some of the points are

mentioned below:

Obsolete Tactics

These days’ company executives are coming from the

Top Business Schools, where they have played roles

on all these traditional negotiation tactics and have

mastered the art and science of it. Therefore, they

know how to handle these negotiation tactics and

come out as a successful negotiator. Even if the exec-

utive not experienced enough to handle these tactics

the first time, they will recover losses from future

projects. Therefore, advisable is not to use these tac-

tics when you want a long term relationship.

Constrained Project Schedules

Project completion periods have shrunk compared to

the earlier days, hence the timelines for negotiations

and placement of order. Therefore, this is the time

when you are not allowed to have a procurement or-

der placement cycle time of 16-20 weeks. Today, Pro-

curement is supposed to place the contracts as soon

as they have the approved purchase requisition, as

the rest of the construction milestones can be

achieved once the resources mobilized to site.

Affected Relationship

As the timelines for completing the projects has

shorten considerably, therefore compared to last dec-

ade when we have time of 5 years to complete the

project but now we have only 3 to 4 years. Therefore

it is not desirable at all do the repetitive negotiations

for the different projects with the same party for sim-

ilar requirements all over again. For sure, Vendor de-

velopment efforts are part of project procurement

team and customer development is part of sales

team, therefore procurement personal is tempted to

misuse contractor strategy to develop customers and

sales team is tempted to have the contract agreement

from the new customer. In such scenario if the pro-

curement personnel is strong enough in negotiations,

they will influence the results and contractor will

have to make some sacrifices to have the contract

order. Here, Procurement Professional has achieved

the targets in short term even without much negotia-

tion but in long term customer will have troubles due

to more execution claims planned by the new con-

tractor for them. Due to all this mutual relationship

will be at stake once these claims are on the table for

solutions. Therefore, Better approach is to create a

long term business relationship.

More Execution claims, Arbitration & litiga-

tions issues

First timers may fail to negotiate a better contract as

they are not familiarized with enterprise environmen-

tal factors. If one party makes loss on account of

these factors, then there will be more claims ongoing

back & forth during the project execution stage, es-

pecially when particular party is having more influ-

ence to drive the results of negotiations in their favor.

Also, If the contracting parties are not satisfied with




the contractual obligations and considerations creat-

ed under the contract order, then there will more ar-

bitration cases and subsequently increased litigation

issues. Therefore, the attempt is to have long term

relationship and less arbitration issues. From above,

it is clear that rules of the game have changed and

squeezing of Contractor is not correct.

ALTERNATIVES

Squeezing of Contractor is no more preferred

because even if contractor accepts the Order

under pressure irrespective of whatever nego-

tiation tactic followed by the customer, con-

tractor will very likely not to perform well

against the set performance standards, as

nothing comes for free. Gone are the days,

when negotiations used to generate better

results for the organizations and enhancing the direct

revenue through negotiation savings. In fact, Negoti-

ation approach is changing minute by minute and

seconds by second. Now, Negotiations are being con-

ducted by having a long term view which not only

include the present project in hand but also the fu-

ture projects which may come up. Therefore, con-

tracting parties will make every effort to create bet-

ter relationship making Project Business profitable

for each other and sustenance in business is ensured.

Long-Term Agreements (LTA’s)

The only possible solution to above issues is to create

a long term relationship. So, Long-term agreements

are the future of the relationships between customer

and the contractor.

In the Long-term agreements Price, terms & condi-

tions are already agreed so customer don’t have to

discuss the same standard set of terms and conditions

again and again, hence reduction in order placement

time, cost and efforts. However, Project specific addi-

tional terms & conditions will be discussed even if

required for delta changes.

LTA’s Timing & Structure

In project business the Long Term Agreements are

being agreed by the organization at the proposal

stage, when customer is bidding for specific project

and even before that in some cases especially when

customer is only doing one

kind of pro-

jects, like

Power EPC

(Engineering,

Procurement

and Construc-

tion) compa-

nies doing on-

ly Power Pro-

jects. Howev-

er, different industries can

have different approach or the nomenclature of these

agreements but the idea is only to secure more busi-

ness through collaborations. The Long Term Agree-

ment Structure solely depends on the organization

contractual arrangement with the clients because of

the associated risks. If the organization is doing

Lump Sum Turnkey (LSTK) projects then definitely

they would like to pass on the risks associated in exe-

cuting the LSTK Projects. Otherwise, for Cost Reim-

bursable Contract, the EPC Organizations may take

a business call to have the LTA’s on LSTK approach

or Cost reimbursable basis with their contractors.

This LTA’s structure solely depend on the kind of

arrangement the organization would like to have

with their contractor, whether they want to exploit

the opportunities by taking more risks or to transfer

the risks to the contractors and just play safe.

How LTA’s work

The approach is very simple, as can be best judged

from the figure, where the Long Term Agreements

are already agreed between the contracting parties

and they will become the framework for entering fu-




ture contracts. The future contracts can be for same

project or for different projects of the EPC Company.

We would not be wrong if we say they are the heart

and everything depends on this. The LTA’s can be

agreed for projects coming up in different parts of the

globe or for different project locations with the same

country. When LTA’s agreed for project for different

project locations, normally following may be affected

including but not limited to applicable law, place of

arbitration, transportation costs (if agreed), and li-

censing requirements etc., which are to be taken care

while framing the Long Term Agreements.

Whereas Customer is saving on time, efforts and

money on agreeing on Long term agreement and Con-

tractor is also having the same benefit in addition to

less competition available for him in the market

while quoting for individual project, creating win-win

situation for each other.

BENEFITS OF LTA’s

Savings on Time, Efforts & Cost

The main benefit of these agreements is that, you

save on time, efforts and hence savings on cost,

which lead to enhanced chances to win the project

during proposal / bidding phase. Also, time is saved

in executing the projects if you already have agreed

terms and conditions beforehand. Other Benefit will

be that contracting parties are experienced enough

with each other and understand each other con-

straints, requirements, style of operating, and which

matters a lot in Project Business. Therefore, if you

are successful in saving time maybe during bidding or

execution, this will create additional free floats in the

project leading to projects completed comfortably on

time and enhanced reputation in the eyes of the cus-

tomer. We can use this energy to create more value in

the projects and have definitely more time for these

value creations things, which again will enhance our

reputation. As less man-hours spent during execu-

tion, hence savings on overhead costs which would

otherwise be required to maintain more manpower to

discuss contracts during executions. This will lead to

competitive price for the customer and more savings

for contracting parties. This will also enhance our

chances of winning more projects.

Relationship remains Intact

The heat generated during negotiating the contracts

is avoided and the relationship remains maintained.

As the negotiation is required for agreeing the Long

Term Agreement, it is required only once. Here the

contracting parties are more than customer or con-

tractor, as they know they have to work for all other

projects as well and small issues can be ignored.

Repeat Business and No Execution claims &

Less Arbitration and Litigations Issues

The main benefit of Long term agreement is lesser

claims during the execution or any other phase of the

project. Hence, closing project would be faster, easier

and without any re-negotiations. There can be claims

for the first time on the first project but this will get

eliminated completely for future projects as the in-

volved parties will be more aligned on expectation,

requirements and way of working. Such arrange-

ments will definitely ensure the repeat business as far

as the Long term agreements are valid and not lim-

ited by any regulatory requirements for public pro-

jects.

As the contracting parties have been experienced

enough in executing the project under the long term

frame agreements, there are less issues of arbitration

or litigation as both have to work for a long time de-

fined in the LTA’s.

LIMITATIONS OF LTA’s

Long-term agreements are definitely better than the

traditional approach of agreeing contracts every time

based on the specific Projects requirements. As eve-




rything has its pros and cons associated with it, simi-

larly the long Term agreements too have cons. Some

of the limitation including but not limited to are as

follows:

Good for Standard Project Requirement

Long-term agreements are useful only when you have

standard set of deliverables, which is hardly the case

as every Project is unique in nature including but not

limited to whether because of Projects Location or

deliverables etc.

Additional terms & Conditions agreement

Most Often Customer is also having the Customer

and therefore to avoid risks or to transfer the Project

risks to the Contractor, better approach considered is

to have back to back arrangements, which means

that Obligations of the end customer passed onto the

Contractor and intermediate Customer is safe because

of any associated risks. Therefore, it is very difficult

to agree on project specific terms and conditions with

the same price at least.

Regional Laws & Limitations

Projects of highly complex natures which may in-

volve building Nuclear Power Plant in any country

has its associated law limitations which may force to

have maximum local contents be used for the Project

which may vary from 80% to 100% in some of the

cases. There can also be limitations related to licens-

ing and inspections of the material being imported

into the country, so this long-term agreements may

not be useful or viable in such countries if the Con-

tractor is not able to fulfill the regional or local law

requirements.

Compliance with Anti-Competition Laws

In almost all the countries there are laws which says

to avoid any monopoly, you have to have the com-

petitive bidding process especially when you are deal-

ing with the Government projects. Therefore, in Gov-

ernment Project such agreements are rarely possible.

Therefore, Pre-existing Long-term not of much use.

So, we have to have spent time, effort and money in

freezing the contracts in compliance with Anti-

Competition Laws of the Land or local regulatory

requirements.

May go uncompetitive

Where long-term agreements are long enough sup-

pose more than a year, there are flourishing the

chances of becoming you less competitive in market

and we might lose the projects from our customers

especially, when we are not able to agree the Price

Variations in case of downfall in Prices of the Raw

material in the market. Therefore while agreeing the

Long Term agreements it is desirable to agree on the

market fluctuations in the prices and not to agree on

lump-sum basis which can make Long-term agree-

ments ineffective and useless. Therefore, special ef-

fort is required during negotiating long term agree-

ments to avoid such situations.

Let’s Collaborate

This is the era where more efforts, time and money

are being spent to increase the customer-contractor

collaborations. These days Customer and Contractor

are sitting on the same side of the table and are at-

tacking the differences collectively and think open

points as a common problem where both are contrib-

uting to find the solution.

Customer-Contractors are no more walking off the

negotiation table because of the heated arguments

but they treat the differences as a common problem.

Contractor is treated like Business associate by the

Customer instead of contractor and this association

starting from the proposal stage even and collaborat-

ing at the as early as possible can take the form of

MoU (Memorandum of understanding) or Customer

Relationship Agreement or anything else, but the




target is to achieve a common goal. Now, Customers

is not wholly and completely dependent on the inde-

pendent cost estimators for making a proposal to

their Customers rather they are collaborating with

their contractors as early as on the Project, where

they are going ahead collectively and have a shared

interest which is to win the Project from the end cus-

tomer, so if contractor’s customer secured a contract

from the end customer then contractor will also get

his share for supporting the proposal phase and the

contractor don’t have to compete with others during

the project execution phase. The crux of such collab-

orations early on the project is only “If I win, you

will also win, so let’s collaborate!!”

REFERENCES 1. Roger Fisher & William Ury and for the revised

editions Bruce Patton. Getting to Yes negotiating

an agreement without giving in: Random House

Business Books 2012. 2. Robert Menard 2004.

You’re the Buyer You Negotiate It! Author

House 04/26/04.

A Project Professional

with over 9 years experi-

ence in the construction,

infrastructure, commer-

cial, and government -

specializing in Procure-

ment Management, Plan-

ning, Scheduling, and

Project Management. Tal-

ented and inventive pro-

fessional with a proven

track record of accelerating revenue growth

through strategic and tactical decisions driving

revenue growth, cost savings, and market develop-

ment. Was a Lead Member from Siemens India for

Costing Workshops held in Germany for Steam

Power Project Proposals of 6400 MW (6X800

MW).




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