Partnering: Managing Inter- Organizational Relations

Transcription

1 Partnering: Managing Inter- Organizational Relations Anand ANTHONY 安杰褔 [M: (65) ] Education Master of Laws (Commercial & Corporate) LL.M London Master of Science (International Construction Management) M.Sc. NTU S pore Bachelor of Laws LL.B (Hons) London Bachelor of Engineering B.Eng. (Civil) NU S pore Working Experience 27 years of leadership and management in the regional construction industry 19 years as Construction Contracts Consultant 19 years lecturing in the areas of law, management, business, finance & insurance

2 Key References for Reading Project Management, Gray & Larson, Ch 12 Project Management, Cleland & Ireland, Ch 13

3 On Partnering (or Joint Venturing or alliancing).being a good partner has become a key corporate asset. I call it a company s collaborative advantage. In the global economy, a well-developed ability to create and sustain fruitful collaborations gives companies a significant competitive leg up. Rosabeth Moss Kanter, HBS Professor

4 Introduction to 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. Assumes that the traditional adversarial relationship between the owner and contractor is ineffective and self-defeating. Assumes that both parties share common goals and mutually benefit from the successful completion of projects. Factors favoring partnering: Existence of common goals High costs of the adversarial approach Shared benefits of the collaborative approach

5 Reasons for Partnering Share risk Shared resources Access to suppliers Access to customers Access to distribution channels Access to network of partner & foreign culture, legal framework Formation of Learning Network

6 Partnering Advantages of Long-term Partnerships Reduced administrative costs More efficient utilization of resources Improved communication Improved performance

7 Key Practices in Partnering Relationships versus Traditional Practices 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 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.

8 Key Practices in Partnering Relationships versus Traditional Practices (cont d) 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 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.

9 Three Key Elements of Partnering Trust Commitment Shared Vision Shared Vision Maximum Benefit Commitment Trust

10 The Partnering Triangle Result Process Relationship Relationship is the foundation of partnering!

11 Another Partnering Triangle Mutual objectives PARTNERING Problem resolution Continuous improvement

12 Two categories of Partnering Project Partnering or Short-term partnering Strategic Partnering or Long-term partnering

13 Types of Project Partnering Arrangements Relationship & binding Description of possible documentation working arrangements Formal & contract Formal & consortium Formal & contract Informal & agreement Two companies obligate themselves to perform parts of a project Two or more companies obligate themselves to perform project work thru single contract that joins them in separate legal entity One company bids on a project & use another company s resources One company bids & wins work on a project. One or more other companies agree to contribute to the project thru selected work

14 Examples of Project Partnering E&C firms mix capabilities Aerospace uses best capabilities to build airplanes Small companies partner to expand capability Licensing to obtain technology

15 Project Partnering Framework

16 Preproject Activities Setting the Stage 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.

17 Project Implementation Sustaining 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

18 The Partnering Process 1. Educate own organization 2. Make intention clear (from or to the client) 3. Commit top management (of all parties) 4. Partnership workshops (discuss individual roles) 5. Create partnering charter 6. Develop process for resolution 7. Develop joint evaluation process 8. Periodic evaluation 9. Final evaluation 10. Achieve successful partnering

19 Project Partnering Charter

20 Steps to Successful Partnering Success Institutionalization Information Integration Interdependence Importance Investment

21 Managing Partnered Projects Management structure includes Steering Committee Co-Project Managers Project Manager

22 Technical Aspects of Partnered Projects Work allocation Project control Project management Company participation Customer interface

23 Strategic Partnering Framework Critical Contextual Characteristics Critical Management Skills Partnering Success Critical Success Measures Subjective Measures Objective measures

24 Critical Success Factors for Partnering Critical contextual characteristics - financial status of partner(s) - mutual goals/objectives - management support - organizational culture - mutual trust - long-term commitment - creativity Critical management skills - effective communication - continuous improvement - conflict resolution

25 Outsourcing as a Form of Partnering At GE, under banner of on back offices, CEO Jack Welch told managers to digitize or outsource their business that didn t touch the customer. However, outsourcing of core competency is not recommended as the company would lose its capability to compete. Under some circumstances, project management service can be outsourced to an organization that specializes in it. Benefits of outsourcing project management include improved and more economical operations.

26 Project Completion Celebrating Success Conduct a jointly review of accomplishments and disappointments. Hold a celebration for all project participants. Recognize special contributions.

27 Sample Partnering Evaluation

28 Problems faced in Partnering Organizational culture Traditionally adversarial roles Lack of commitment Lack of trust Creation of dependencies Misunderstanding the cost of partnering Uneven balance of power Ambiguous roles and responsibilities

29 Risks of Partnering Protecting proprietary information Assurance of value/benefits received Equitable sharing of risks Obtaining & maintaining total commitment Creating a strong dependency on partner Limiting competitive market strategy Integrating different company cultures

30 Why Project Partnering Efforts Fail 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.

31 Five Useful Guidelines to Initiate Partnering 1. Partnering relationship formed before contracts signed, initial meetings organized, external expert recruited to facilitate process, partnering goals set 2. Share resources, restrict leakage of data 3. Team to compose of senior members of each stakeholder, team members to posses leadership skills, total support of top management secured 4. Teams conduct regular meetings to discuss & address problems 5. Evaluate degree of success of partnering using subjective & objective measurement, team looks for continuous improvement in midst of rapid changes

32 Dos & Don ts of Partnering Don ts - don t partner to correct a weakness - don t partner someone who is trying to correct his own weakness - Never, never license proprietary technology - Don t partner around products or markets Dos - partner to exploit a unique strength - partner with someone who has a unique strength - partner when neither party desires to acquire other s strength - partner around capabilities

33 The Art of Negotiating Project management is NOT a contest. Everyone is on the same side OURS. Everyone is bound by the success of the project. Everyone has to continue to work together. Principled Negotiations Separate the people from the problem Focus on interests, not positions Invent options for mutual gain When possible, use objective criteria

34 The Art of Negotiating (cont d) Dealing with Unreasonable People 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 Fisher and Ury s best alternative to a negotiated agreement (BATNA) concept to work toward a win/win scenario.

35 Managing Customer Relations Customer Satisfaction The negative effect of dissatisfied customers on a firm s reputation is far greater than the positive effect of satisfied customers. Every customer has a unique set of performance expectations and met-performance perceptions. Satisfaction is a perceptual relationship: Perceived performance Expected performance Project managers must be skilled at managing both customer expectations and perceptions.

36 Managing Customer Relations (cont d) 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 on decisions about project development changes. Handle customer relationships and problems in an expeditious, competent, and professional manner. Speak with one voice. Speak the language of the customer.

37 Conclusion Project partnering is a proactive response to challenges associated with working with different organizations Persistent leadership is required to make partnering work Top management must champion principles of openness, trust & teamwork Effective negotiation skills are essential for partnering Separate people from the problem, relying on objective criteria to resolve disagreements.

38 Group Exercise on Partnering Form into groups of five or six students. Assign half of the groups the role of Owner and the other half the role of Contractor. Owners: After saving for many years you are about to hire a contractor to build your dream home. What are your objectives for this project? What concerns or issues do you have about working with a contractor to build your home? Contractors: You specialize in building customized homes. You are about to meet with prospective owners to begin to negotiate a contract for building their dream home. What are your objectives for this project? What concerns or issues do you have about working with the owners to build their home? Each Owner group meets with another Contractor group & share their objectives, concerns & issues. Identify what objectives, issues & concerns you have in common & which ones are unique. Discuss how you could work together to realize your objectives. What would be the keys to working as partners on this project?