Conflicts in Project Business

Conflicts in cross-corporate projects quickly become a nightmare for all the people and companies involved. Everyone’s expectations were geared toward great project success and business success that they could be proud of. Instead, there is anger, frustration, and, in the worst case, legal action. A survey established the most frequent causes of conflicts in project business.

How to reference this page:

Project Business Foundation (2017) Report: Conflicts in Project Business, September [Online]. Available from: https://project-business.org/research/report-conflicts-in-project-business (Accessed: ## #### 202#).

A major success impediment in Project Business:

Project business takes place when two or more organizations come together as customers and contractors to do a project together. In major projects, complex networks of contractors, subcontractors, etc. emerge, and other players come on board, such as banks, surety and insurance companies, but also freelanced individuals.

Conflicts are a major success impediment in Project Business. Everyone’s expectations were for great project and business success to be proud of. Instead, there is now anger, frustration and, in the worst case, litigation. Dealing with conflict ties up scarce resources – especially management attention – and damages trust, the key driver of good projects.

Between parties in a project, conflicts are not a rare occurrence. Using a survey, the question was asked, what the most common causes of conflicts are.

The #1 Cause: Conflicting Business Interests

Each organization involved in the project has its own business interests. In some projects, the contract parties turn into project partners and follow a “Completing over competing” paradigm. In others, they don’t follow this paradigm. Then, their individual business interests may run into conflicts to the detriment of the project.

#2: Incompatible Organizations
#3: Incompatible Individuals

Differences in cultures and other environmental influence factors were at second place. The third place was held by incompatible people. People, whose tendency to conflict and quarrel makes it hard to develop the collaborative spirit that is necessary for the success of cross-corporate projects.

We also asked, what percentage of the respondents were self-employed freelancers, and what percentage were employed. The responses were:

• Freelancers: 25.5%
• Employees: 68.9%

The remaining others (5.6%) came from management, coaching, Academia, and consultancies. 

Another question referred to the respondents’ experience in project business.

They responded:

• Experience as customer (= buyer): 50.3
• Experience as contractor (= seller): 61.6%
• Experience as prime contractor (= seller/buyer): 52.6%
• Experience as subcontractor (= seller to a seller): 32.1
• I have no experience in project business management: 2.6%
• I cannot say: 1.3%

Note: Participants could select multiple options, so that the results do not add up to 100%.

The survey brought interesting results for the discipline of Project Business Management:

1. The most frequent cause of conflicts in Project Business, according to the responses, are diverging business interests.
   
2. On second and third places follow organizational and interpersonal incompatibilities.
   
3. Corporations must help their project managers develop their skills in managing Project Business. Project business is high-risk business, and the cost of failure is immense.

As a not-for-profit platform, the Project Business Foundation has defined its mission: Help organizations and individuals cope with the complex challenges of Project Business Management. The survey confirms that there is a profound need for such help.

To learn more about project business management and how you can use the Project Business Foundation as a center of solution competency, contact: [email protected].

“The subcontractor is not fully exposed to the contract/agreement

“Subcontractors do not have the same understanding of project goals as contractor.”

“Serious lack of common understanding due to “lack of time”. However spending all time and money of the world when rescuing the project is necessary.”

“Our dependency on a large number of sub-contractors for every project poses large risks for or business success and our customer’s business success. Global internal vendor management organization and tools are needed to vet and monitor vendor quality and control the risks.”

“Buyer (Government Entity) hooks us with a vague/generalized contract terms that got exploited at later stage to include large and dubious scope increase (without additional money) to the Seller (us).”

“It seems that the ego of my long term customer is the main draw back to the entire account. She is unpredictable, nonsensical, and narcissistic. She does not keep up with her records keeping (one her side) no matter the updates given and frequency. Thus, when she gets called out for not having her part together, she attacks me. “