When you’re starting out in project management, you don’t realize that good negotiation skills will be such a key to your success. I can attest that project managers are called upon to act as negotiators often and for numerous reasons. These are some of the situations in my work that have required negotiations:
- Out-of-scope work that needs to be included in the current timeline
- A customer request for a different resource or skill set
- Customer training
- Budget issue vs. timeline issue
- Functionality needed earlier than expected
- Data management issues and who handles them
- Additional funding needed internally from your senior management
- Key resources needed from internal department managers
- Production or testing assistance needed to get through a critical phase
Project issues that require negotiation usually fall into four categories: scope, resources, timeline, and budget. Let’s examine each category in more detail and look at strategies for working each negotiation.
Scope negotiations are almost a given for any project. One reason why scope negotiations may be necessary is because loose ends weren’t properly tied up during the sales process; this is why I encourage someone from the project management side to be an active participant in the sales process. OK, I’m getting down off my soapbox.
When a customer says, “but I thought that was included in the project,” you should look at the situation from their side and investigate what happened. For instance, perhaps Sales told them it was included, or maybe the details about agreed-upon requirements were a little gray.
For most scope issues, you’ll draw up a change order. If the customer balks, there may be some room for negotiation. You might be able to price the implementation of a new functionality but throw in the training for free. In order to make this offer, you’ll likely need to get approval from your executive management team, which in turn becomes another negotiation; this is the time to remind senior managers about customer satisfaction, retention, and referrals, and possibly your vision for some bigger add-on work in the future.
There may be times when you need to sell the customer on a different project resource; this is usually because a resource or a skill set that was promised to you isn’t available. (When you tell the customer, you may feel the need to put a different spin on the reason.)
You may not be able to do anything about the resource issue, but don’t give up right away. You should meet with your resource’s direct supervisor and discuss their overall availability and your project schedule. A key negotiation strategy is to guarantee that you’ll free up the resource when he or she needs to work on their regular assignments. This may require shifting your schedule and more client negotiations, but it will likely be worth it because getting the right resource at the right time is critical.
In my projects, negotiations about timeline issues usually involve the customer asking for functionality to appear earlier than previously expected; this request often comes from their senior management as a strategical need. Depending on the project, this can be a major issue, so I negotiate with the customer on implementing functionality in phases if that is an appropriate approach. Here is my typical process for handling timeline negotiations:
- Review the request for functionality
- Discuss with my project team experts
- Rework an alternate project plan to move the requested functionality to earlier in the timeline
- Document a narrative for the customer outlining what needs to be pushed to later in the project to make it happen
- Conduct a formal meeting with both teams to present the proposal
My proposal is usually to restructure priorities and move the needed functionality to an earlier point in the timeline, implement it, and create later phases for the remaining functionality. This restructuring may impact the budget, but that’s an easy sell if the customer is getting the functionality when they need it.
The most common budget issue I deal with is the need for higher-priced resources for specific project tasks. Budget negotiations also come up when the project starts to run out of funding, and you have to get more money either internally from senior management or from the customer.
In the case of the resources, if it is warranted by the project due to some undocumented customer needs, then I can usually sell the customer on the higher-priced resource. This process does necessitate a change order to document the change in resource and price.
If the delivery organization wrongly assessed the resource needs, then you’ll need to convince senior management to agree to give your project the more skilled resource and bill the customer for the same rate. Either way, it requires a sell to either the customer (to justify the need for the skill set) or to senior management (to justify paying for the higher rate out of pocket).
Regardless of the circumstances, project negotiations are a give and take. For instance, you might be more willing to negotiate on the budget if you know the customer will bring you more business down the road. In addition, never miss an opportunity to improve your customer satisfaction rating by letting clients know you’re always fighting for them when it comes to project negotiations.