Dear PM Advisor. Nov 17, 2014

Dear PM Advisor,

I'm learning about the different types of contracts: Fixed Price, Cost Plus, etc. I'm curious what my current project would be classified as. It is a Turnkey EPC (Engineering, Procurement & Construction) Contract with a Price Variation Clause. 

Various in Varanasi,

Dear Various,

I'm not sure what the Price Variation Clause is on your particular project but it usually varies depending on certain commodities like the price of oil or steel. If that is the case, you are dealing with a Fixed Price - Economic Price Adjusted type of contract. 

In these contracts the price of the work is set and agreed to by both parties but the commodity is split out and varies based on the world price over the course of the work. As people use oil and steel, the buyer pays that commodity price in addition to the work being done. 

Good luck,

PM Advisor.

Send your questions to Bruce@RoundTablePM.com

Dear PM Advisor. Apr. 28, 2014

Dear PM Advisor

I had a real weird experience last week. I'm a consultant for a pharmaceutical company and I am managing a project where my client is outsourcing its packaging to a contract manufacturing organization (CMO). I am just taking over this project. I had a few calls with the CMO but wanted to plan the project with them face-to-face. 

I met with their director of quality who was extremely rude to me from the first moment. He said he had no respect for me because I wasn't a full-time employee of the pharma company. He told me the pharma company needs the CMO more than they need my client. He accused me of trying to intimidate him while trying to push his agenda down my throat. The meeting degenerated to a stand-off with me saying: "Well, my first impression of you was correct." (He threw me under the bus after my first phone conversation) and him saying: "Same applies to me!"

I've never been treated like that in 30 years of experience in the pharma world. I felt like walking out. How would you handle this situation? 

Flabbergasted in Philadelphia

Dear Flabbergasted,

Wow! First of all, sorry about your experience. That was indeed unfortunate and unprofessional. I'd love to know how you solved it.

Is it possible that you did anything before this meeting to antagonize this CMO before your arrival? It sounds like you did nothing to intimidate him during the meeting so you may have done so during that earlier call. Throwing you under the bus makes it sound like you were called out for some kind of bad behavior on your part. Perhaps you need to ask someone else who was at that phone call what their impression was.

The other possibility is that the director is a jerk. There are indeed people like that in the world and they often gravitate to positions of responsibility where they can force people to put up with their bad behavior. I've met a few jerky quality and regulatory people.

But the CMO needs your client and it's important you tell your client the attitude of the CMO. The CMO needs to get straight the customer/provider relationship.

As to what you should have done, there's nothing like a few deep breaths to defuse a tense situation like this. Allow the other person to speak first. If they refuse, speak first but use the diplomatic approach:

1. Make a statement both of you agree with and get him to at least nod his head: "We both want to hand over this work to your CMO, right?"
2. Show how there is an obstacle in the way of reaching this mutually agreed upon goal: Planning the project.
3. Ask him what he thinks is the best way to proceed.
4. Work together to remove the obstacle

And make sure he understands that, as project manager, you will be the person he has to deal with and that's easier if you develop some sort of working relationship. 

Good luck,

PM advisor.

Send your questions to Bruce@RoundTablePM.com

Diners that linger could bankrupt restaurant

Chang Lee  NY Times

There is a phenomina where elderly men gather in fast food joints to socialize with their peers. Sounds like a good deal until you find out that they are lingering all day over one cup of coffee and are denying seats to other paying customers. While these places don't want to reject paying customers, there is a limit to how much they can extend their welcome to men who split a small fries between four and sit from dawn to dusk.

A recent NY Times article shows how the owners resorted to asking police to get these men to leave. The men chose the McDonalds because it is closer than their social club a mile away. One man argued that it takes more than 20 minutes to drink a large cup of coffee. True but it doesn't take more than an hour.

So what's the win win solution? There must be one since you have two groups that are pretty close together. One group wants a place to eat, drink and socialize and the other group wants paying cutomers to eat and drink but needs a certain amount of income to stay profitable. Could the social club pay money to the McDonalds to subsidize the visits? Should the men agree to spend a certain amount per hour to keep the restaurant from failing? Can McDonalds or the social group open up the space above or next door for the  men? Surely by working together a solution can be reached.

Dear PM Advisor. February 18, 2013

Dear PM Advisor,

What's the difference between smoothing and avoiding and the difference between compromising and collaborating? There seems to be too many different conflict management techniques.

Compromiser in Connecticut.

Dear Compromiser,

I agree. What happened to the old days of conflict management when it was 'My way or the highway?' I've seen a lot of time wasted in consensus building and political correctness. But then I've never been known for my patience. Still, these conflict management techniques come up in the PMP exam so it's nice to know what they are. So let's look at them. I used the Personality Explorers website for their official definitions, examples, advantages and disadvantages. Click here for more details.

But the cheat-sheet answers appear below.

Forcing: Make other party use your solution
Collaborating: Solve root cause and find a solution that helps everyone (Win-win)
Compromising: Both parties give up something for solution
Withdrawing: Walk away from the conflict (Avoiding)
Smoothing: Give up. Let the other party win (Accommodating)

Each conflict management style has its pluses and minuses. It depends on if you want speed or long-lasting effects. Is this a big conflict or a small one? Do you want to work with this person again? You'll use a very different conflict management technique when asking for a raise from your boss than when negotiating for a car from a used car salesman.

Below I've plotted the speed of using each of these techniques versus the long- or short-term effectiveness of the solution. As expected, the quick methods result in the shortest lasting solutions. Sometimes, that's OK, like walking away when your opponent is getting overheated and coming back at another time when temperatures have cooled.

Read the full article for all the pluses and minuses and have all five of these techniques in your tool-kit to use at the right time.

Good luck,

PM Advisor

Send your questions to bfieggen@gmail.com

Dear PM Advisor January 14, 2013

Dear PM Advisor,

I have been running a project that was delayed for several months beyond the end date due to contract negotiations. My company's legal team caused most of the delays. Now they have signed off and the vendor is just about to approve it from their end. I expect their signature tomorrow.

Meanwhile, my company's purchasing department has looked at the contract and is starting to nitpick it. They want to add boilerplate things about non-compete clauses and change when payment must be made from 30 to 45 days. 

I'm ready to go live with this project and have people lined up to fly to foreign countries to perform work. I'm afraid that monkeying with the contract at this late date for trivial reasons will cause more months of delays. What should I do?

Talking Turkey in Mahwah, NJ

Dear Turkey,

If the contract changes your purchasing department wants are truly trivial, and what you mentioned above do appear so, do what I recommend below. If, however, there are some real sticking points that could cost your company serious money or put them at risk for quality issues, do what purchasing suggests and delay the project until the contract is modified and approved.

It does sound nit-picky from your description so here is my recommendation. You are only waiting on the vendor's signature. Don't tell them yet that your company is making changes. Get their signature and keep your go-live date on track. Meanwhile, make the modifications your company is requesting. When your company has approved the changes present it to the vendor as a revised version of the contract. The changes are small and they should agree to them and won't feel like you hit them with a bait and switch.

With any luck, your go-live will be preserved and the revised contract will be approved by both parties sometime later.

Good luck,

PM Advisor

Send me your questions at bfieggen@gmail.com

Dear PM Advisor October 8th, 2012

Dear PM Advisor,

Our company doesn't have an official prioritized list of active projects. People are working on too many projects. How do I motivate team members to work on my projects?

Entertainer in Massachusetts

Dear Entertainer,

You have the right idea. Keep them entertained and they will work on your projects. The problem, as you have figured out, resides above your pay grade with senior staff. They are the people who need to own the PM process and need to prioritize projects and fully resource the top priorities.

In the absence of this priority list, people will prioritize their work however they see fit. Some do work on a First In, First Out (FIFO) basis, some FILO. Some will prioritize alphabetically, some will refuse to work on projects sponsored by those who root for a different football team. Most will follow the squeaky wheel syndrome and will work on activities that they are being bugged about by vocal project managers.

You ask how to motivate your team members. That's easy. Get to know your team members. Take them out to lunch, do a 'beers and peers' session after work. Find out what motivates them. It will be different based on their personality type, their interests, their ambition. Then set out to keep them motivated in an individual way.

Try 'Reward' Power:
You have power as a Project Manager to motivate them with reward power by asking management for a certain percentage of the project budget to be doled out at your discretion for this purpose. Determine your team member's interests and get them gift certificates at their favorite restaurant, gallery openings or sporting events tickets that make them feel like you really know them. Then give these out when they "Go beyond the call of duty." Do this every couple of weeks or on a monthly basis for a long project. They word will get out that you care about your team members.

Try 'Expert' Power:
You were put in charge of this project because you were recognized as a competent manager. Share your knowledge with those team members who want to get ahead in the world. Mentor them, share books and advise on great courses you have attended. Share political knowledge about upper management.

Look at Maslow's needs pyramid:
Look at the below pyramid and decide where your team members are. If they are barely surviving, money will motivate. If they are beyond this, they may be better motivated with a challenge.

Be the squeaky wheel:
If you keep asking about the progress on a certain task, the easiest way for the team member to get you out of their office is to complete the activity. Do this sparingly where all other methods shown above have failed.

Don't use 'Coercive' Power:
Some PMs have authority to punish those who work on your project. This can be done with poor reviews, withholding project bonuses, even reprimands and firings. That may work on your current project but you'll have a hard time finding team members for your next project.

Any other ideas, readers?

Good luck!

PM Advisor

Send me your questions at bfieggen@gmail.com

Celebrating Roger Fisher, author of 'Getting to Yes.'

By LESLIE KAUFMAN

A giant in the world of negotiating died on Saturday. This Harvard professor was so confident in his negotiating abilities that he flew around, uninvited, to trouble spots and got himself into the middle of the fray, helping negotiate agreements to the world's most contracted disputes.

From hostage crises in Peru and Iran to the Camp David accords, Professor Fisher was a master at resolving conflicts. His best-selling book: Getting to Yes, is a treasure trove of advice for project managers and leaders trying to succeed.

Buy the book

In his obituary was the following quote. Whenever I thought, ‘Someone should do something about this,’ it eased my conscience to learn that Roger was already working on it.”

Thirty-eighth excerpt from 'Twelve Towers'

Gwilym was stumbling and blind from lack of air so he stopped for a few minutes, with hands on his knees, pulling air into his bursting lungs. He willed his body to obey the strident orders of his mind: Get to Huish and protect his sons. As soon as the oxygen returned to his leg muscles, he set off again toward Huish.

Once again, he remembered Mecca, his bewilderment at his predicament: Twelve years old and alone in the Meccan bazaar. He knew the language and customs of this place and knew that, as a headman, Escalbor had power in this town to hunt him down and kill him. His light coloring and height made him stick out, even in this trading town, so he must escape now. But leaving town meant either walking through the desert to the next town or joining a camel train. Both would be expected and he would be easily discovered by the sheik’s men. No. He needed to hide in the bazaar somehow, but not with any of the people that the sheik knew. He had to find someone right now who could protect him yet owed no allegiance to this sheik. He wished he knew enough about the local politics to know which clans hated Escalbor’s people.

Just then he saw the fringed garment and side-locks of an observant Jew crossing an alley nearby. Of course! Here was his chance. He ran after the man and followed him into the building. It was the back room of a trading establishment that bought goods from the caravans and sold them to local Meccans.

The man turned around and looked with surprise at Gwilym. “What do you seek, young man?” he asked.

“Sanctuary, Rabbi,” begged Gwilym and he told the man he was being hunted by Escalbor’s men.

The Jew looked frightened and ran to the doors to see if Gwilym had been seen entering his house. Seeing the vacant streets immediately to the rear of his store he became calm and listened to Gwilym’s story.

He introduced himself as Shebna ben Eliud and he promised Gwilym protection if he would stay inside and not make himself known to anyone else. Gwilym promised. Then the enormity of what had happened this morning hit him: his father murdered, himself hunted, his life and this Shebna’s life being in danger and he ran to the corner of the room and threw up. He burst into tears at the shame of defiling this savior’s house. Then he felt a comforting arm around him, a damp cloth on his face, wiping away his tears and vomit and he was led into a back room by the man’s wife. The woman sat Gwilym on a stool by the table.

The man explained the situation to his wife in Hebrew, not guessing that Gwilym could understand their tongue. “The boy’s father was murdered by Escalbor. He was that crazy Christian who asked about Joseph a few weeks back. We need to protect the boy until we can get him safely out of here.”

The wife nodded and turned to the stove where she produced some soup, ladled it into a bowl and sat in front of Gwilym, spoon-feeding him like a baby, murmuring calming words. Before long Gwilym grew tired and was taken upstairs to sleep.

He stayed with this family for three months, never letting on that he spoke Hebrew for fear of embarrassing them that he had understood their first words. He helped out in the back room, organizing their stores and learning the inventory system. He learned about the camel trade routes from China to Constantinople and Cairo. The two talked about their trades with merchants and customers and Gwilym learned all about how to negotiate the best deal. “Remember, Gwilym,” Shebna had told him, “The most money you make per hour are the last few shekels you add to a deal at the very end.”

In the evenings he talked with the couple and learned their story. They had been married for forty years and their children had long since moved away. Their oldest son lived in Jerusalem and was one of their trading partners. They were part of a small Jewish community in Mecca who were at the mercy of the whims of the sheiks and their families. The community had lent money to the man for some of his expeditions and he owed them but they knew that Escalbor’s father had once cancelled the debt and killed many Jews who objected. It was a tense relationship.

“Why did you protect me?” asked Gwilym of the man one day.

“Our people have been oppressed by others for most of our history and often have received sanctuary from the unlikeliest sources. This is our way of paying back past kindnesses.”

After three months, Shebna told Gwilym that he would be transporting him, along with a shipment of slaves to his son in Jerusalem. This motley group of various races was pulled from many countries to the south and east and was being brought to the slave market in Cairo. Shebna blackened Gwilym’s face and hair, told him to act mute and to trust the caravan leader. In this way Gwilym left town and was set free in Jerusalem.

To read the entire first draft in one shot, click here:

Ten things to consider when negotiating for that new job

You've done it! All your hard work getting your resume into shape, all the network interviewing and company research, posting that resume to all the right places, going through the phone screen and the real interview. You receive a phone call and the person tells you they are ready to make you an offer. Here it is...

Now what?

1. Now is your last chance to negotiate.
There are some very important things you need to consider at this point. First of all, this is your last chance to negotiate. Every penny extra you get now not only gets multiplied by every year you work at this company but it is the basis on which all future raises are based. So if you can negotiate an extra $10,000 now and work there for 5 years, that's $50,000 extra you earn, plus those 3 - 5% raises you get are added to the $10,000 meaning an additional $2,500. Chances are, your salary at your following job will be based on your ending salary at this job so the stakes keep getting higher. Negotiations you perform at this point could literally be a million dollar decision. So get it right.

2. They want you.
The people who interviewed you and several other candidates came to a tough decision. You are the person who will best suit their needs. People rarely change their minds at this point. It's not as though they are deciding between two people and will take whomever they can get the cheapest. New employees are not airfares. We are stuck with these people for the long haul and, once we decide who we want, we don't back down just because they are asking for a little more money.

3. No-one ever gives you their best offer first.
Let's say the budget for hiring a new person for this position ranges from $60,000 - $120,000. That's not unusual. Ranges can be quite large because people often have much greater than the minimum requirements for the job. The hiring manager decides they want you. She talks with Human Resources and they agree to offer you $100k. But, the economy is bad so they think they can save a little so they offer $90k. If you say yes to that, what will they think? Most likely, "What's wrong with him that I got him that cheap?" or "Damn! I should have offered $80,k."
If you negotiate and bring them up to $110k, they believe they got a better product. So it's a win-win.

4. Don't say yes right away.
The first offer you receive might be over the phone. "Bruce, we've talked it over and decided to offer you the position. Can you start in two weeks? The salary is $90,000 and you will get all the benefits we discussed during the interview."
How do you respond?
First of all, sound excited. "Cheryl. Thank you for the offer. I'm so excited to start working working with you soon. I have many ideas on how to tackle the problems you told me about."
That's good, you sound excited and didn't say no. Now for the other shoe to drop.
"Can you send me the offer in writing and I'll talk it over with my wife and get back to you tomorrow?"
Nobody expects you to agree to a life-changing offer in an instant so this is quite acceptable. Most offers in writing will give you a week to respond. You haven't said no but you haven't said yes either. You are deferring to an unseen authority, a classic negotiating strategy. Do you recognize this from the last time you purchased a car and the salesman asked you to write down your offer and he'd try to talk his sales manager into accepting it?

5. Say 'No' in a way that makes them offer more money.
You want them to offer more money before you negotiate. When you return to them the next day, start by saying something along these lines. "You wanted a go-getter in this position. I'm clearly the best man for the job. When we talked during the interview you said you were offering a competitive salary. I don't think $90,000 is competitive. Can you do better?"
Notice you are not counter-offering, just asking them to up their bid. Remember when they thought they could get you for $90k even though they thought you were worth $100k? Now is when they come up to that point. When they do, thank them and acknowledge their new position. "So you are now offering $100k in addition to the same benefits and start date?"

6. Bargain for every last cent.
Remember that $10k extra is a million dollar decision. That means that $1k is a $100k decision. So fight for every cent. If you think you can get $110k, your counter-offer should be $120k. If they offer to split the difference by offering $110k, your response should be along these lines: "Your new offer is $110k, my position is $120k, can we split the difference here?"

7. Be tough. You aren't negotiating with your boss.
Unless it's a small company and you are. In which case, be gentler since you want a good, long-term relationship with this person. But most people are negotiating with Human Resources and will be working in a different department. When negotiations are concluded, HR will tell the hiring manager, "It was tough and he negotiated hard but I finally got him for you at the best price I could." This is a compliment to you and makes the HR person look good also.

8. Now negotiate for other things.
Salary isn't the only thing on the table. Negotiate start date, review time, level of benefits, signing bonus, vacation time. Sometimes you can trade one off against the other. If the HR person is up against the top end of the range on salary, ask for a signing bonus. (Remember that the bonus won't multiply yearly like extra salary will so don't trade a $10,000 raise for a $20,000 bonus. It's worth a lot less in the long run.) But a performance bonus could multiply each year. You could trade salary for vacation either way that you prefer. Some companies have two or more levels of benefits and you may be able to switch from one to the other. And try to get reviewed in 6 months instead of a year so that your raise comes earlier.

9. Congratulate them when the negotiations are over
Everyone is nervous at the end of contracted negotiations and wonder if they got the best deal. You are aren't you? So put their minds at ease by telling them what great negotiators they are. Say something like, "I hadn't planned on working for you at this rate but you are such a skillful negotiator and made such a compelling argument, how could I say no? You are an asset to the company. I'm proud we're on the same team now."
That kind of a statement makes them say what you wanted them to say in section 7. "It was tough and he negotiated hard but I finally got him for you at the best price I could."

10. Don't go overboard
It's one thing to negotiate with a used car dealer you'll never need to deal with again. In that case, go for the throat and walk away if you need to. When negotiating for a job that you'll likely be in for five years, you want to remain in their good graces. So leave a little money on the table and show a little bit of a soft side. That will pay dividends when you need that promotion later or when lay-off time comes around again. You need to work with these people so treat them well.

Here's a good book to read before you go through your next negotiating round, whether it be at a garage sale, a used car lot or your next job. Just be careful about which tools to use with people you want a long term relationship with:

Poor negotiation on Celebrity Apprentice

Last night I finally picked up one of the Celebrity Apprentice episodes I had missed: the one where Niki Taylor was fired. In the previous episodes she had stood out on the women's team as a great team player who rose above the back-stabbing and cliques that had doomed every challenge undertaken by them.

Watching the episode I saw how she lost. My first surprise was the naivete she showed when negotiating for the camper set. She recognized immediately that the men's team would choose the $200,000 bus while she wanted the other set. But rather than using this knowledge to her benefit, she simply told the men, 'No problem, I wanted the other camper.' Why didn't she use this knowledge to actually negotiate, as asked, and get some money from the men? She could have used this to buy more equipment or decorations for her set.

She was not a tough leader and allowed her team to shirk an important task: buying greenery for her set, which really hurt the impression her team made on the judges. The one time she got tough was when Dionne was looking for LaToya and this was one case when Dionne was in the right.

She also seemed to be confused about which century she was in, constantly referring to this as the Twentieth century. Seeing her chatting with Hope was like listening to air hissing rapidly out of a pair of heads.

I will say this for her, and Trump was also impressed: she took the fall gracefully and refused to throw any of her team-mates under the bus for her team's failure.

Watch the full episode here if you wish. Full episode: unhappy-campers