collaborating project management for high performance business …€¦ · ·...
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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
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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
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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
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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.
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EMPLOYEE
ENGAGEMENT
AND
SOFT
SKILLS
BY NEELIMA CHAKARA
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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
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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
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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
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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
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BY JAHNAVI RAO
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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.
Feedback: [email protected], [email protected] Synergy June 2014, Page
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.
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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
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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.
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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
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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)
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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
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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)
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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.
You can reach him on LinkedIn
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.
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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.
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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.
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CLOUD
STOR-AGE
BY NITIN ANAND
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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.
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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-
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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.
You can reach him on LinkedIn
Source: NPA Computers
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BY AJAY BHARGOVE
PROS
CONS
POWER
SHIFT
TACTICS
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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
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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).
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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.
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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
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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
Feedback: [email protected], [email protected] Synergy June 2014, Page
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.
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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
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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-
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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-
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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
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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).
You can reach him on LinkedIn