Dr.

Atif Shahzad
_____________________
BE, MECHANICAL ENGINEERING
UNIVERSITY OF ENGINEERING & TECHNOLOGY, TAXILA, PAKISTAN, 2000

MCS, SOFTWARE ENGINEERING

SZABIST,, ISLAMABAD, PAKISTAN, 2003

MS, AUTOMATION & PRODUCTION SYSTEMS

ECOLE CENTRALE DE NANTES, NANTES, FRANCE, 2007

PhD, AUTOMATION & APPLIED INFORMATICS

UNIVERSITE DE NANTES, NANTES, FRANCE, 2011

EMAIL: atifshahzad@Gmail.com

TEL: +92-333-5219846, +92-51-5179755

LINKEDIN: pk.linkedin.com/in/dratifshahzad
 PROJECT
MANAGEMENT
COURSE OBJECTIVES
 COURSE OBJECTIVES
 Learn what project management is and the qualities of an effective
project manager.
 Understand the nine knowledge areas of project management and
how they can be applied to your project.
 Discover the phases of a project and what deliverables are expected
when.
 Identify a project’s key stakeholders.
 Understand the different types of business cases and how to create a
Statement of Work.
 Learn to be prepared for the unexpected by utilizing risk
management and change control.
 Learn how to organize project activities by creating a Work
Breakdown Structure.
Dr. Atif Shahzad

 Create a network diagram to track your project’s progress.

 Learn budgeting and estimating techniques.
 PROJECT
MANAGEMENT
TODAY’S LECTURE
 Outsourcing
 Contracting: If we are transferring a business
process alone, then we are subcontracting
 Procurement: act of acquiring, buying goods,
services or works from an external source.
 Outsourcing: we transfer people or assets to a
third-party provider as well as business
processes.
Dr. Atif Shahzad
 Project Partnering
 Partnering
¤A process of transforming contractual
arrangements into a cohesive, collaborative
team that deals with issues and problems
encountered to meet a customer’s needs.
Dr. Atif Shahzad
 Project Partnering:
Assumes that …
12–7

the traditional adversarial relationship

between the owner and contractor is
ineffective and self-defeating.

both parties share common goals and

mutually benefit from the successful
completion of projects.
Dr. Atif Shahzad
 Factors favoring partnering
12–8

Existence of
common goals

Shared High costs of

benefits of the
the adversarial
collaborative approach
approach
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 Reclining Chair Project
12–9
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FIGURE 12.1
 Why should
I go outside of my company?

I still don’t buy it. Why should

I go outside of my company?
Why can’t I just have my team
do all the work?
Dr. Atif Shahzad
 Outsourcing Project Work
 Advantages  Disadvantages
¤ Cost reduction ¤ Coordination
breakdowns
¤ Fasterproject
completion ¤ Loss of control
¤ Highlevel of ¤ Interpersonal conflict
expertise
¤ Security issues
¤ Flexibility
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12–11
 Chunnel project
12–13

the Chunnel project,

which created a transportation
tunnel between
France and England,
involved
more than 250 organizations.
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 Best Practices in
Outsourcing Project Work
12–14

Well-defined Fair and incentive- Long-term

requirements and laden contracts. outsourcing
procedures. relationships.

Extensive training Co-location when

and team-building needed.
activities.

Well-established Frequent review

conflict and status
management
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processes in place. updates.

 Key Differences Between Partnering and
Traditional Approaches to Managing Contracted
Relationships
12–15
Partnering Relationships
• Mutual trust forms the basis for
strong working relationships.
• Shared goals and objectives
ensure common direction.
• Joint project team exists with
high level of interaction.
• Open communications avoid
misdirection and bolster
effective working relationships.
• Long-term commitment
provides the opportunity to
Dr. Atif Shahzad
attain continuous improvement.
Traditional Practices
• Suspicion and distrust; each
party is wary of the other.
• Each party’s goals and
objectives, while similar, are
geared to what is best for them.
• Independent project teams;
teams are spatially separated
with managed interactions.
• Communications are structured
and guarded.
• Single project contracting is
normal.
 Key Differences Between Partnering and
Traditional Approaches …(cont’d)
12–16
Partnering Relationships
Objective critique is geared to
candid assessment of
performance.
Access to each other’s
organization resources is
available.
Total company involvement
requires commitment from CEO
to team members.
Integration of administrative
systems equipment takes place.
Risk is shared jointly among the
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partners, encouraging innovation
and continuous improvement.
Traditional Practices
Objectivity is limited due to fear of
reprisal and lack of continuous
improvement opportunity.
Access is limited with structured
procedures and self-preservation
taking priority over total optimization.
Involvement is normally limited to
project-level personnel.
Duplication and/or translation takes
place with attendant costs and delays.
Risk is transferred to the other party.
 Strategies for Communicating
with Outsourcers
.
1 Recognize cultural differences

.
2 Choose the right words

.
3 Confirm your requirements

.
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4 Set deadlines
 Project Partnering Charter
12–19
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 Preproject Activities—Setting the Stage
12–20
for Successful Partnering
 Selecting a Partner(s)
¤ Voluntary, experienced, willing,
with committed top management.
 Team Building: The Project Managers
¤ Build a collaborative relationship among
the project managers.
 Team Building: The Stakeholders
¤ Expand the partnership commitment to
include other key managers and specialists.
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 Project Implementation—Sustaining
12–21
Collaborative Relationships
 Establish a “we” as opposed to “us and them” attitude toward the project.
¤ Co-location: employees from different
organizations work together at the same location.
 Establish mechanisms that will ensure the relationship withstands problems
and setbacks.
¤ Problem resolution
¤ Continuous improvement

¤ Joint evaluation

¤ Persistent leadership
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 Project Completion—Celebrating
Success
12–22

 Conduct a joint review of accomplishments

and disappointments.
 Hold a celebration for all project participants.
 Recognize special contributions.
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 Sample Partnering
Evaluation
12–23
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 Why Project Partnering Efforts Fail
12–24

 Causes of Partnering Failures

¤ Senior management fails to address problems or does not

empower team members to solve problems.
¤ Cultural differences are not adequately dealt with
such that a common team culture develops.
¤ No formal evaluation process is in place to identify problems
and opportunities at the operating level or to assess the current
state of the partnering relationship.
¤ A lack of incentive for continuous improvement by contractors
participating in the partnering relationship.
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 Advantages of Long-term
Partnerships
12–25

 Reduced administrative costs

 More efficient utilization of resources
 Improved communication
 Improved innovation
 Improved performance
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 Negotiating
12–26

Negotiating is pervasive through all aspects of project management work.

 Project managers must negotiate
¤ support and funding from top management.
¤ staff and technical input from functional managers.

¤ project priorities and commitments with other project

managers
¤ within their project team to determine assignments,
deadlines, standards, and priorities.
¤ prices and standards with vendors and suppliers.
Dr. Atif Shahzad
 The Art of Negotiating
Project management is NOT a contest.
12–27

Everyone is on the same side—OURS.

Everyone is bound by the success of the

project.

Everyone has to continue to work together.

Dr. Atif Shahzad
 developing win/win solutions
The Art of Negotiating
Principled Negotiations
12–28

Be hard on the Seek first to

problem, soft on understand, then to be
the people. Separate understood.
the people Focus on
from the interests, not
problem positions

Invent When
options for possible, use
mutual gain objective
criteria
create the should insist on
Dr. Atif Shahzad

opportunity for using external,

dovetailing interests objective criteria
 The Art of Negotiating
Dealing with Unreasonable People
12–29

If pushed, don’t push back.

Ask questions instead of making statements.

Use silence as a response to unreasonable demands.

Ask for advice and encourage others to criticize your ideas and
positions.

Use Principled Negotiation to a negotiated agreement (BATNA)

Dr. Atif Shahzad

concept to work toward a win/win scenario.

 Dealing with Unreasonable People:
BATNA
 A strong BATNA gives you the power to walk away and say,
“No deal unless we work toward a win/win scenario.”
 Your BATNA reflects how dependent you are on the other party.

If you are If on the other hand

negotiating price there is only one
and delivery dates vendor who can
and can choose supply you with
from a number of specific, critical
reputable suppliers, material on time,
then you have a then you have a
Dr. Atif Shahzad

strong BATNA. weak BATNA.

 Managing Customer Relations
Customer Satisfaction
12–31

¤ The negative effect of dissatisfied customers on a firm’s

reputation is far greater than the positive effect of satisfied
customers.
 For every happy customer who shares his satisfaction regarding a particular
product or service with another person, a dissatisfied customer is likely to share
her dissatisfaction with eight other people.
Dr. Atif Shahzad
 Managing Customer Relations
Met Expectations
12–32

¤ Every customer has a unique set of performance expectations

and met-performance perceptions.
 customer satisfaction is a function of the extent to which perceived performance
(or outcome) exceeds expectations.
¤ Satisfaction is a perceptual relationship:
Perceived performance
Met Expectations =
Expected performance

Project managers must be skilled at managing both customer expectations and

perceptions.
with all other things being equal, one should strive for a satisfaction ratio of 1.05, not 1.5!
Dr. Atif Shahzad
 The Met-Expectations Model
of Customer Satisfaction
12–33

0.90 Perceived performance 1.10

= =
Dissatisfied Expected performance Very satisfied

When performance falls short of expectations (ratio <

1), the customer is dissatisfied. If the performance
matches expectations (ratio = 1), the customer is
satisfied. If the performance exceeds expectations (ratio
> 1), the customer is very satisfied or even delighted.
Dr. Atif Shahzad

FIGURE 12.5
 Managing Customer Relations
(cont’d)
12–34

 Managing Customer Expectations

¤ Don’t oversell the project; better to undersell.
¤ Develop a well-defined project scope statement.
¤ Share significant problems and risks.
¤ Keep everyone informed about the project’s progress.
¤ Involve customers early in decisions about project development
changes.
¤ Handle customer relationships and problems in an expeditious,
competent, and professional manner.
Speak with one voice.
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¤ Speak the language of the customer.

 Project Roles, Challenges, and
Strategies
12–35
Project Manager Roles Challenges
Entrepreneur Navigate unfamiliar
surroundings
Politician Understand two diverse
cultures (parent and client
organization)
Friend Determine the important
relationships to build and
sustain outside the team
itself
Marketer Understand the strategic
objectives of the client
organization
Coach Motivate client team
members without formal
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authority
Strategies
Use persuasion to influence
others
Align with the powerful
individuals
Identify common interests
and experiences to bridge
a friendship with the client
Align new ideas/proposals
with the strategic objectives
of the client organization
Provide challenging tasks
to build the skills of the team
members TABLE 12.3
 Key Terms
12–36

Best alternative to a negotiated agreement (BATNA)

Co-location
Escalation
Met-expectations model
Outsourcing
Partnering charter
Principled negotiation
Dr. Atif Shahzad
 Remember
 Contracting is not limited to large projects.
 Many outsourced projects operate in a virtual environment in which people
are linked by computers, faxes, computer-aided design systems, and video
teleconferencing.
 This can be problematic when you have firms with more advanced project
management systems working with less developed organizations.
 What is obvious to you is not necessarily obvious to your partner.
 Companies that treat contractors as partners consider continuous
improvement as a joint effort to eliminate waste and pursue opportunities
for cost savings. Risks as well as benefits are typically shared 50/50
between the principals, with the owner adhering to a fast-track review of
proposed changes.
Dr. Atif Shahzad

 The art of negotiating says “Project management is NOT a contest.”

 Bad news travels faster and farther than good news.
 Procurement Management Process
12–39

1. Planning purchases and acquisitions

2. Planning contracting
3. Requesting seller responses
4. Selecting sellers
5. Administering the contract
6. Closing the contract
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 Contract
12–40

 A formal agreement between two parties wherein the contractor obligates

itself to perform a service and the client obligates itself to do something in
return.

¤ Defines the responsibilities of the parties, spells out

the conditions of its operations.
¤ Defines rights of the parties to each other.
¤ Grants remedies to a party if the other party
breaches its transactional obligations.
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 Types of Contracts
12–41

 Fixed-Price (FP) Contract or Lump-sum Agreement

¤ The contractor with the lowest bid agrees to perform all work
specified in the contract at a fixed price.
¤ The disadvantage for owners is that it is more difficult and more
costly to prepare.
¤ The primary disadvantage for contractors is the risk of
underestimating project costs.
¤ Contract adjustments:
 Redetermination provisions

 Performance incentives
Dr. Atif Shahzad
 Types of Contracts (cont’d)
12–42

 Cost-Plus Contracts
¤ The contractor is reimbursed for all direct allowable costs
(materials, labor, travel) plus an additional prior-negotiated fee
(set as a percentage of the total costs) to cover overhead and
profit.
¤ Risk to client is in relying on the contractor’s best efforts to contain
costs.
¤ Controls on contractors:
 Performance and schedule incentives
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 Costs-sharing clauses
 Contract Type versus Risk
12–43
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FIGURE A12.1
 Contract Changes
12–44

 Contract Change Control System

¤ Defines the process by which a contract’s authorized

scope (costs and activities) may be modified:
 Paperwork
 Tracking systems
 Dispute resolution procedures
 Approval levels necessary for authorizing changes

¤ Bestpractice is the inclusion of change control system

Dr. Atif Shahzad

provisions in the original contract.

QUESTIONS
THANK YOU FOR YOUR INTEREST