Point Lookout: a free weekly publication of Chaco Canyon Consulting
Volume 6, Issue 12;   March 22, 2006: Dubious Dealings

Dubious Dealings

by

Negotiating contracts with outsourcing suppliers can present ethical dilemmas, even when we try to be as fair as possible. The negotiation itself can present conflicts of interest. What are those conflicts?

Andrew stopped outside Jane's door and knocked on the doorframe. Her back to him, studying her screen, Jane must have somehow recognized Andrew's knock. "Andrew," she said without looking up. "One sec."

A cup of coffeeShe half-stood, still holding the mouse and staring at the screen. Then she clicked, stood up straight, and turned to face him. "OK," she said. "Where to?"

"Courtyard," Andrew replied.

They walked silently to the elevator, rode it to One, crossed the lobby, went out into the brilliantly sunny courtyard, and sat down at an empty umbrella table. Jane still had her coffee mug in hand. She sipped.

"So…" she prompted him.

"This contract bothers me," Andrew began. "I'm a project manager. I don't know much about negotiating contracts. I'll probably do something dumb, but I'm not sure that's what bothers me."

Managing a project for which
you negotiated contracts
presents a conflict of interest
Andrew wasn't sure, but Jane was. She'd been there. "Right," she began. "The real problem is that project managers shouldn't be negotiating contracts. It's a conflict of interest."

Jane's insight isn't widely shared, but she does raise a critical point. Project managers who must monitor day-to-day performance of contracts they personally negotiated have a potential conflict of interest. Here are some of the ways this conflict can appear.

Vulnerability to time pressure
Especially if negotiations drag on, the organization might apply pressure to the negotiator to bring negotiations to completion. For those project managers who are also the negotiators, this pressure can lead to a temptation to yield, based on a belief that we can "close the gap" through cleverness during project execution.
When project manager and negotiator are separate people, the project manager can better represent the project's interests, insisting on what is actually required, and compelling more creative negotiation.
Hidden cost transfers
During negotiations, it's common to entice the vendor with the promise of work on future projects. But when the negotiator manages both the project at hand and the future project, this tactic amounts to a transfer of resources between the two projects. It distorts the costs of both, invalidating the metrics used to manage projects.
When the negotiator and project managers are independent, each contract is more likely to stand on its own.
Concealed contract flaws
When there are flaws in the contract that become evident only during execution, and when the negotiator has gone on to become the project manager, it is the project manager who must report defects in the contract that he or she produced. It can be tempting to find a way to avoid reporting a flaw of one's own creation.
When the negotiator and project manager are independent, contract flaws are more likely to be reported, and remedial action is possible.

Even considering whether or not we have a conflict of interest can be problematic. Since we don't want to believe we have a conflict of interest, we do. Go to top Top  Next issue: When You Aren't Supposed to Say: I  Next Issue

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Related articles

More articles on Ethics at Work:

A bristlecone pine in the Great Basin National ParkExtrasensory Deception: II
In negotiating agreements, the partners who do the drafting have an ethical obligation not to exploit the advantages of the drafting role. Some drafters don't meet that standard.
A hot dog with mustard on a bunCounterproductive Knowledge Workplace Behavior: II
In knowledge-oriented workplaces, counterproductive work behavior takes on forms that can be rare or unseen in other workplaces. Here's Part II of a growing catalog.
Left Ventricular Assist Device (LVAD)Full Disclosure
The term "full disclosure" is now a fairly common phrase, especially in news interviews and in film and fiction thrillers involving government employees or attorneys. It also has relevance in the knowledge workplace, and nuances associated with it can affect your credibility.
A happy dogMore Things I've Learned Along the Way: IV
When I gain an important insight, or when I learn a lesson, I write it down. Here's Part IV from my personal collection. Example: When it comes to disputes and confusion, one person is enough.
The Scapegoat by William Holman Hunt (1827-1910)Red Flags: III
Early signs of troubles in collaborations include toxic conflict, elevated turnover, and anti-patterns in communication. But among the very earliest red flags are abuses of power. They're more significant than other red flags because abuses of power can convert any collaboration into a morass of destructive politics.

See also Ethics at Work and Project Management for more related articles.

Forthcoming issues of Point Lookout

Cracking walnuts with a nutcrackerComing February 1: The Big Power of Little Words
Big, fancy words, like commensurate or obfuscation, tend to be more noticed than the little everyday words, like yet or best. That might be why the little words can be so much more powerful, steering conversations where their users want them to go. Available here and by RSS on February 1.
Two bull elk sparring in Grand Teton National Park, WyomingAnd on February 8: Kerfuffles That Seem Like Something More
Much of what we regard as political conflict is a series of squabbles commonly called kerfuffles. They captivate us while they're underway, but after a month or two they're forgotten. Why do they happen? Why do they persist? Available here and by RSS on February 8.

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