Author: Anshul Bindal

Why Negotiations Fail?

Why Negotiations Fail?

  1. Mismanagement of expectations

Imagine going to a pizza shop and then being told it only serves sushi; disappointment is likely. The same goes for negotiations. If expectations aren’t managed properly, disappointment or frustration may ensue from a misalignment of expectations and reality, and may result in a less-than-ideal outcome for one or all parties.

Properly managing expectations comes from preparation and flexibility. If a party has done its homework –including understanding past precedents and current alternatives—that party is much more likely to have realistic expectations for its encounters. In addition, acknowledging that things may not go as planned can lead to preparation of alternative and backup plans. These plans must lay out acceptance and walk-away scenarios prepared before negotiations begin.

 

  1. Unwillingness to empathize

It’s like watching someone go fishing and not realizing that some people may enjoy fishing. Often, people do not consider the other side’s points of view and cannot appreciate that the other side has different needs and desires, which have a big impact on how negotiations are approached.

By considering the other side’s goals, needs, and thought processes, a negotiator will be able to anticipate arguments the other party may make and consider alternatives that the other party may find appealing even before they meet. In addition, understanding and acknowledging the other side’s point of view may improve the rapport between the parties and can have a positive impact on long-term relationships.

 

  1. Lack of preparation

Have you ever gone to the grocery store without knowing what you already had at your house, only to end up getting more of things you don’t need and less of what you do? Going into any deal without a knowledge of the negotiation’s landscape and potential traps can be treacherous for a negotiator and inhibit proper management of expectations.

A negotiator should come in knowing what relevant precedents exist for the current negotiation, what alternatives may be available (or currently unavailable), and what curveballs may be thrown during the conversation. Preparation in the form of a checklist can be especially helpful as a visual representation of what the negotiator has done, is doing, and needs to do in order to fully prepare for the negotiation. This detailed preparation will make the negotiator more flexible, confident, and purposeful than coming in with only a vague idea of what to expect.

Risk Management Failure – Why does it happen?

Risk Management Failure – Why does it happen?

 

Big projects more often fail because of poor evaluation than poor execution. But many organizations focus on improving only the latter. As a result, they don’t identify the projects that pose the greatest risks of delay, budget overruns, missed market opportunities or, sometimes, irreparable damage to the company and careers, until it’s too late.

It would be easy to point the finger at poor execution. After all, problems occurs as cost or schedule is run over. But overruns are just symptoms of the real problem: poor estimation of project size and risk. As a result, organizations take on projects they shouldn’t and under-budget those they should. H Here are the two drivers of failure and how to avoid them.

  1. Scope and Risk Estimates Are Sourced from Project Advocates.

In a project’s earliest stages, very little is known about what it will take to execute it. So most companies seek out expert internal opinions — usually from stakeholders of the project, since they have the most knowledge around the project. The problem is bias. Research is clear that project stakeholders are likely to fall under its influence, favor optimistic outcomes and produce dangerously inaccurate estimates.

One simple way to expose the impact of bias is with something we call the project estimate multiplier (PEM). It’s simply a comparison of average actual costs vs. average original estimates. The larger the PEM, the greater the impact bias has on your estimating function.

  1. “Big Bet” Risks Are Evaluated the Same Way Smaller Projects Are.

According to research, the risk of failure is four times greater for large projects, and they exceed their already-large budgets by three times as much as smaller projects — enough to cost jobs, damage careers and even sink companies.

Most companies can accurately estimate small projects that may take, say, three to six months, but they are unfortunate at estimating the time and cost of big ones. There are three key reasons for that.

First, large projects usually involve many interdependent tasks, which creates complexity that smaller projects do not have. That makes large projects prone to uncertainty and random events, so they can’t be estimated in the traditional way. Risk-adjusted techniques, such as Monte Carlo analysis, are significantly more accurate.

Second, large projects usually involve tasks whose difficulty is unknown at the time of estimation.

Third, the tipping point between low-risk and high-risk projects is sudden, not gradual. Once a project passes the tipping point, the risk curve changes quickly and dramatically. Unfortunately, under the influence of bias, many companies fail to see the curve, much less correct for it, until it’s too late.

To better assess and manage project risk, develop a process to measure projects against your tipping point. Projects that exceed the tipping point need to be estimated and managed differently. We’ve found the best way is to run the project plan through a series of Monte Carlo simulations. That not only accounts for the risk of uncertainty, it also identifies the tasks with the most risk of affecting the outcome.

The analysis output can then be used to develop a plan for mitigating the risk. This can include techniques like breaking the initiative into smaller projects or running tests to reduce uncertainty.

 

 

Anshul Bindal

Anshul Bindal

I am a recent graduate, experienced with data manipulation and visualization with a strong interest in projects that require both conceptual and analytical thinking. Passionate for continuous improvement and enhancing productivity via automation. Always eager to learn more tricks and enhance my skill set.

I have a wide experience in financial services and a deep understanding of how infrastructure is set up to help the business win.

I am curious about new tools and concepts being introduced in the industry and how they are utilized to increase performance and productivity. With experience with Splunk, AppDynamics, AWS, IBM Mainframes, SAP, etc., I aspire to be a jack of all trade, with the ability to understand and implement, upcoming and complex system designs methodically and effectively.