Learning Diary -3 (Pre-lect)

A project success largely depends on the successful negotiation of project sales and implementation
between the seller and the customer. Negotiation is a process of joint decision making between the
seller and the buyer. The lack of communication and cooperation between the supplier and the
customer leads the project into risk. Thus, satisfying both party in an optimum way is the most
important determinant to a successful project. Every project can be looked up in two ways, one is
customer perspective as a procurement and investment project and another one is supplier
perspective as a sales and implementation project. Thus, both perspective should be satisfied in the
process of project sales. To held a negotiation, some characteristics must have to be- there have to
be two or more parties who will cooperate to make a joint decision and who can directly exchange
information. The roots of negotiation can be described through game theoretical analysis, decision
analysis and behavioral decision analysis. A framework is created for the negotiation analysis in which
the main items are structure of negotiations, flow of negotiation and the outcome (Arto, Kujala and
Murtoaro, 2007). Some common supplier and customer negotiation strategies is also identified to
boost up the negotiation process to make the project successful.
1. What is the influence of third party negotiator between the main buyer and seller?
2. How to balance between supplier and customer negotiation strategies?
3. What is sum games in negotiation?
 Learning Diary -3 (Post-lect)
This lecture reflects the discussion about the process of decision making in project selling between
seller and buyer and in also delivery process, role of negotiation and negotiation strategies between
the customer and the buyer, project contract element and contractual risk management policies.
Negotiation is the process of making the selling and buying process optimum which ensures that both
party have their own logical opinion about the project buying and selling process. Through
negotiation, both seller and buyer comes to an agreement which ensures joint decision making. The
example of funding on a project by Harri and Kujala was a great example to understand the theme of
agreeing the conditions. This negotiation phase comes after the bidding step in the project selling &
buying process when both parties have to sign the contract for further ownership and
implementation.
Negotiation can be done in two ways- one is distributive or power based negotiation and another
one is integrative or interest based negotiation. The main assumption of distributive negotiation is
that a fixed amount of value exists on the negotiating table to be distributed among the negotiating
parties (Rob Grace, 2015). Since power plays an important role in this negotiation process, one party
uses his power and give pressure to make agreement to the other party by issuing threats or
sanctions and also by providing incentive through proposed rewards. In this negotiation, one party
must have to compromise so that other party receive something otherwise adverse consequences
might be happen. On the other hand, Integrative negotiation is a procedure by which parties team
up to discover "win-win" arrangements. The attention is on growing mutually valuable contracts in
view of the interests of the negotiator, with the understanding that interests are the basic reasons
that individuals wind up noticeably required in a contention (Rob Grace, 2015). In this negotiation,
both parties do trade off so that both get benefitted from this agreement. In summary, it can be
understood that, distributive transaction is best utilized when you have some solid preferred
standpoint focuses and you're in a decent position to deal. Despite this, integrative transaction will
be most gainful in circumstances where your position is not solid but rather regardless you need to
win something in the deal by mutually bargaining.

Negotiation starts with two or more parties with the negotiable options and elements through either
distributive or integrative negotiation process to make impact in the process with claiming value and
finally come up with the agreement either one party fully satisfaction or both parties mutual
satisfaction, this can be sum up by calling negotiation analytic approach.
In decision theory, situation where one or more participants' gain equals the loss of other participants
which is called sum game. Thus, a gain for one must result in a loss for one or more others (Sum
game, 2016). This zero sum game, positive sum game and negative sum game are the outcome of
the negotiation. Professor said in the class that BATNA means best alternative from a negotiation
agreement. It is a kind of advantageous action if somehow a negotiation fails and agreement can not
be reached.
The practical assignment session in the class about buying the flat through the team of buyers,
contractors and chairman was a really interesting one. It gave us practical experience about how to
negotiate with the contractors.

In addition, there are constantly some approaches to enhance an agreement to keep up a few open
doors amid the later period of the deals and execution. It is ideal to keep some specialized and
business issues for arrangement purposes dependably. With the goal that you can catch the client in
any case. For saying, at first demonstrate the client some business issues and extra that if takes this
office, you will give him some specialized elements. In any case, in the vast majority of the cases,
those specialized elements are not required. In this way, it will be a benefit for the provider. In this
way, an effective contract must have some space for minor changes. Nobody needs to have
obligation yet a few confinements or constraints in the risk is constantly better.

References:
1. Rob Grace, Understanding Humanitarian Negotiation: Five Analytical Approaches, November 30,
2015
http://atha.se/thematicbrief/understanding-humanitarian-negotiation-five-analytical-approaches
2. Sum Game (2016), retrieved from http://www.investopedia.com/terms/z/zero-sumgame.asp
3. J. Kujala, J. Murtoaro, K. Artto, A Negotiation Approach to Project Sales and Implementation,
Project Management Journal; Dec 2007