Secrets of Successful Project Negotiation| PMAlliance Project Management Blog


Secrets of Successful Project Negotiation| PMAlliance Project Management Blog

A tremendous amount of give and take—compromises both large and small—occurs during an average project. If your project office has encountered challenges during the negotiation process, consider these additional strategies as you work to ensure that agreements come out in your favor.

The best negotiations begin with a thorough knowledge of the other party’s needs and limitations. Those responsible for negotiating key issues for the project office are already keenly aware of what their own team requires, where they have flexibility, and where they don’t. Skilled negotiators also understand these same concepts as they apply to the other party. Vendors may have little leeway when it comes to labor fees, for example. Health and life safety regulations may also limit where they can make concessions. If the Project Team tries to make these issues a primary point of negotiation, the discussions probably aren’t going to be fruitful. Focus instead on those matters the other party can and will include in any compromise.

Pinpointing exactly what you hope to get out of the negotiations isn’t truly possible until you have the data to back up your position. Do you know what other providers are charging for similar services or products? Are you familiar with existing supply levels in your region or across those industries that purchase these materials? Have you compiled enough information on existing market pressures to know the average availability and lead time? Asking a provider or collaborator to compromise is best done when you have a deep understanding of what’s reasonable.

Though some negotiations can drag on unexpectedly, beginning the process at the right time is still key. Project teams sometimes want to push negotiations back, perhaps because a later timeframe appears advantageous (availability of labor or materials, expenditure accruals, etc.). This tactic may pay off occasionally but it’s more likely to be a hindrance in the long run. If the other party feels they’re under a time pressure or their team isn’t able to free up the necessary approvers with little notice, your Project Team may find there’s little left to negotiate. Prices can often be more easily adjusted early in the process, when availability can be better matched to the need and early scheduling can secure the most cost-effective resources.

Even if several PMP®s are involved in defining the needs and wants of the team, it’s still important to identify one point person in every negotiation. You don’t want the team inadvertently working against itself as the discussions advance, or the other party spending time dealing with the wrong person. Without clear direction around who has the authority to negotiate, multiple PMP®s could be engaging in the conversation, setting different expectations or asking for (and offering) different things. Not only does this scenario look bad—if stakeholders get wind of the issue, they could wonder how well your Project Team is managing its other activities—it’s also counterproductive. It could even make the other party less willing to compromise.

Because negotiations don’t always produce the results you want, PMP®s must have a contingency plan in place in case the final terms aren’t to their liking. This doesn’t mean your team should be ready to break off negotiations and walk away at a moment’s notice. Instead, it represents a practical, real-world view of project execution. There may be times when negotiations don’t deliver the services or materials you want, at the price you want to pay or the timeframe you need. Knowing what other options the team has when it comes to addressing these potential issues will help keep the negotiations on track and the project moving forward.