GROUP PRESENTATIONON NEGOTIATION

NEGOTIATION

•Negotiation is a dialogue between two or more people or parties, intended to reach an understanding, resolve point of difference or gain advantages in outcome of dialogue to produce an agreement upon courses of action.

Negotiation is a process where each party involved in negotiating tries to gain an advantage for themselves by the end of the process negotiation is intended to aim at compromise

Project management is all about negotiation, the reason being that nothing is set so you usually have to negotiate our resources, scope and budget.

WHY NEGOTIATION IS IMPORTANT? It is so important to identify and define

all the deliverables and the work you will be required to perform to produce them to include, what will be included and what will not be included.

SCENARIO

In 2008 Nepal announced The Upper Karnali Project, a major hydropower project.

Estimated the cost of building UKP is around $ 468.6 million.

Indian infrastructure projects, GMR Group won the bid for the hydro project beating 13 contenders.

SCENARIO

GMR Energy’s first bid offered 7.5 per cent free energy to Nepal and 33 per cent free equity for the 309 MW hydro project.

After several political obstacles and negotiations GMR Group was awarded the hydro project.

Then the Nepalese government announced its biggest hydroelectric project, Arun III.

SCENARIO

The committee formed by the government assessed the bids and announced that yet again GMR offered the best bid for the 402 MW Arun III.

Cabinet committee decided that bids would be re-evaluated on the basis of who offered the highest amount of free energy and, not to award more than one project to a company at a time.

SCENARIO

Despite this, GMR started negotiations with the Nepal government hoping to pocket both mega projects.

GMR’S NEGOTIATIONS WITH NEA

1) GMR had the first bid for the Upper Karnali Hydroelectricity project despite the problems Nepal faced by Maoists and French government.

RULE OF NEGOTIATION

Rule number 1: Don’t negotiate Don’t negotiate unless you need to. As

it involves may be unnecessary compromises

Evaluate your needs and honesty.

GMR’S NEGOTIATION WITH NEA

GMR offered to increase 12% free energy(earlier 7.5 %) and in return 27% free equity(earlier 33%)

RULES OF NEGOTIATION

Rule number 3: Never accept the first offer

There is always better/different offer behind this one.

You may annoy the other party. Rule number 4: Never make the first

offer It leaks your bottom line straight away Keeps value pressure in you

GMR’S NEGOTIATION WITH NEA

Give us the second Mega project- Arun 3 as we have the all the necessary expertise and we may increase the amount of bank guarantee. Previously $7,900 per MW.

RULES OF NEGOTIATION

Rule number 9: Never make a quick deal

Other party may think that you have taken advantage.

MCQ

What is the name of the project that GMR signed with the Nepal Electricity Authority, NEA?

1) The upper karnali project2) Arun 33) The lower Karnali project4) Mega project

Which of this is not a negotiation process?

1) Agree to negotiate2) Gather points of view3) Create win-win option4) Gather many project managers.

THANK YOU