Business Project Management and Marketing by Michael Kleinaltenkamp Wulff Plinke & Ingmar Geiger

Author:Michael Kleinaltenkamp, Wulff Plinke & Ingmar Geiger
Language: eng
Format: epub
Publisher: Springer Berlin Heidelberg, Berlin, Heidelberg

3.3.2 Internal Approval

The internal approval process for the handling of customer demands is an important element in the supplier’s implementation strategy. For it is only through negotiation that the practical viability of the strategy becomes clear. Can the business model as ‘idealized’ in the bid be implemented in the market? In line with the dynamics of the bidding process, the negotiating team must brace itself for a deterioration of the risk profile once the bid has been submitted. The decision regarding how to deal with the main customer demands is a decision regarding the expected profitability of the chosen business model. That is why it is a key management responsibility in many companies. We intend to outline briefly here how such a process can be organized.

The management levels which have business responsibility for the project must make decisions regarding its benchmark data. If several management levels are involved (e.g.: managers at local, regional, and global level), the process should be tiered. In line with the principle of subsidiarity each level can make decisions regarding the risks which lie within its own area of business responsibility. The locally responsible management should decide about risks which have little impact on profitability. This could, for example, apply to the responsibility for obtaining local construction permits. The decision as to whether the local organization has the necessary resources and staff for this should be made at this level. By contrast, risks which potentially have company-wide implications (e.g. the assumption of unlimited liability or putting the bid together as part of an open consortium) must properly be decided at the level which has global responsibility. The negotiating team will compile all the relevant information and documents to help prepare for these decisions. Starting at the first management level, decisions are taken in successive meetings regarding the respective relevant risks, and the higher-level risks are escalated to the next level. This means that all the levels involved maintain the overview of the project that they need in order to exercise their business responsibility.

The ways in which the supplier can respond to demands for it to assume additional risks are shown in Fig. 7.

Fig. 7Handling risks in the customer negotiations

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