Here are some typical reasons that project managers are forced into the role of negotiator on their projects:
- Out of scope work that needs to be included in current timeline
- 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 on your project from internal department managers
- Production or testing assistance needed on the project to get through a critical phase
The list can go on and on and as you see they can be external negotiations with the customer and their management or internal negotiations with your own senior leadership just to get the money, time, and resources needed to perform on the project. These are just a few of the ones that I’ve personally run into on my projects so I’m sure there are more out there. These issues usually fall into four different categories: Scope, Resources, Timeline, and Budget. All of those topics above, when looked at in detail, can be slotted into one of these four categories.
Let’s look at each of these in more detail and look at strategies on how to best work each negotiation…
Scope negotiations can happen on any project – in fact it’s almost a given that they will happen, however large or small, at some time during an engagement. This is especially true if there were some loose ends that weren’t properly tied up during the sales process – as can often be the case. Not that sales is bad by any means…but this is where I again tell everyone that someone on the project management side should be allowed in as an active participant in the sales process. Ok, I’m getting down off my soapbox now.
When the customer says, “but I thought that was included”, you have to look at it from their side as well as your own. Do some investigation. Maybe Sales told them it was included. Maybe the line was a little grey. Or maybe you can see some bigger work that is coming down the line on the project in terms of scope and now is the time to negotiate. No matter what the circumstances, it’s going to be about give and take. Most of the time on a scope issue, you’ll draw up a change order. If the customer balks, there may be some room for negotiation. You may be able to price the implementation of a new functionality but throw the training in for free. In order to be able to do this, you may need executive management approval in your own organization, which becomes another need for negotiation. You can explain to your senior management the need for customer satisfaction, retention and referral or possibly your vision for some bigger add-on work that you see coming up in the future based on some discussions you’ve already had with the customer.
Resource negotiations on the project usually involve only internal negotiations. There can be rare occurrences where you need to ‘sell’ the customer on a different resource for the project (usually due to internal availability of the promised resource but you might want to give the customer a different ‘spin’ on the reason or they will begin to feel like they aren’t your ‘important’ customer). But most often it’s because a specific resource or skill set that you need on your project – or were promised on your project – isn’t available to you.
There may be nothing you can do about it. But don’t give up there. Meet with your resource’s direct supervisor and discuss their overall availability. Sit down with them and review your project schedule. Look for opportunities to fit their tasks into the project schedule in pockets where their direct supervisor thinks they will be available. If it involves shifting your schedule around it may still require some negotiations with the customer as well, but getting the right resource on the right task and at the right time is critical - so bending a bit and getting the customer to bend a bit is likely going to be your path of least resistance. Assuring the direct supervisor that the resource will be freed up for the times they are needed on his or her tasks will be your best negotiation tactic with them. Anything you can do – or show them in terms of something like a revised project schedule – that will back up your claims of need for the critical resource will make your negotiations with the project resource’s direct supervisor a much easier and probably successful task.
Negotiations on timeline issues can take on many forms. Usually on the projects I manage it involves the customer asking for functionality to appear earlier than previously expected. This often comes from their senior management as a strategical need. While this can sometimes be a major issue depending on the project, I try to take the phased approach if it is appropriate. By this I mean, negotiating with the customer on implementing functionality in phases. Here is my typical process for handling this type of negotiation situation:
- Review the request for functionality
- Discuss with my project team experts
- Re-work 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. It may also impact the budget but that’s usually an easy sell to the customer if they are getting the necessary functionality to please their senior management when they need it. The key information to give to the customer and to show them visually with a revised project schedule is that they are still getting everything they need and requested. The end goal of the project remains the same and, usually for the most part, the cost remains about the same. Even the end deployment date may remain the same. But the critically needed functionality is now going to be available to them when they absolutely need it – and that is probably going to mean everything to your project customer. It may even save your project sponsor’s job – which ends up begin a very good feather in your cap.
Often the most common budget negotiations I’ve run into have been with the need for higher-priced resources on a project for a specific task or tasks. There can also be some cumulative issues that result in the project starting to run out of funding leaving the project manager with the need to get more money either internally from senior management or from the customer depending on the situation.
In the case of the resources, if it is warranted by the project due to some undocumented needs by the customer, then I’ve often been able to ‘sell’ the customer on the higher-priced resource. This process, of course, would necessitate a change order to document the change in resource and price – it’s always necessary to cover yourself and the project well by documenting such situations and the customer agreement so there are no questions at the end of the project.
If it’s the other way around – meaning the delivery organization wrongly assessed the resource needs, then the push needs to be to get senior management to agree to give your project the more skilled resource and bill the customer the same lower rate. Either way, it requires a sell to either the customer (justify the need for the skill set) or internally to senior management (justify paying for the higher rate out of pocket internally). As PM, you still need to explain that to the customer – never miss an opportunity to gain additional customer satisfaction by letting them know you’re always fighting for them even if it was more of an internal problem.
As you see from my experiences, many negotiations end up happening at the customer level. Those negotiations must be handled professionally and carefully because it’s all about customer satisfaction. Try to never short-change the customer…over deliver when possible and use a phased approach to get them what they need when they need it with minimal overall project affect.
However, the need to negotiate also comes up regularly in your own organizations as you work to obtain resources, equipment, budget, etc. The good project manager draws on experience from a history of customer dealings to enable them to effectively negotiate for things on their project with everyone involved in it.