Project Management Negotiation​

Project Management Negotiation is a key skill for the Project Management Expert.

A Project Manager needs to be able to negotiate with other departments, clients and stakeholders to make sure that their project will run smoothly. They need to be able to negotiate the impact that Change Requests will have on their project deadlines. It's important for Project Managers to know negotiation skills so that they can get the best possible outcomes for their projects. The details below will enable you to negotiate like a Project Management Expert.

Build commitment through choice

Some say that there are between five to seven sources of power that are recognized as a basis of influence and the source of authority. You may exert one of more of these. It is worth knowing them so that you can either leverage them to their maximum benefit or seek to increase them where you find them lacking. When working with stakeholders & team members, try to figure out where their power comes from. The sources of power are:

• Reward power: A reward can range from anything from a bonus, to a gift to a simple public or private ‘thank you’ for achieving project related tasks.

• Coercive power: You yield coercive power when you have influence over another person in the form of a punishment, sanctions or via a threat. Examples of this may be your ability to provide a bad performance review or demote someone from your team. It is the least admirable power.

• Legitimate power: This is your title as a Project Manager. This is where the company has empowered you to manage what should be done, when it should be done, defend why it should be done, but not how it should be done - leave that to the project specialists.

• Expert power: When you are recognized as having prior successful experience in your field, then you become respected as an expert. How you approach projects, tasks, communications, risks and negotiation will all bolster that perception.

• Referent power: When you are sought out to manage specific projects due to your interpersonal skills, integrity and track record then you can claim this source of power.

• Connection power. Sometimes called Power brokers, this power is the ability act as a bridge to connect people together.

• Information power: This is the ability to influence through facts and data (effectively Logos). As a Project Manager you may find that appealing to ones emotions (Pathos) works best, but you will yield Information Power when those in the room know that you can back up any claim with data, without you having to prove it. At which point you can also claim Ethos.

Multiple Equivalent Simultaneous Offers [MESO] 

• Offer alternatives – consider their ‘Interests’ as well as the ‘needs’ that they have requested.
• The goal remains the same, the process to get there is flexible.
• If the goal is 5, remember there are always multiple ways to achieve this
  • 1+4=5
  • 2+3=5

Overcome nerves

Re-frame the negotiation as if you are negotiating on behalf of someone else, such as family or your future self. Think: How much are you going to pay to avoid the discomfort of negotiation?

The Initial Offer

• If you are able to fully work out the ZOPA, then make the initial offer. If not, then wait for their offer.
• Whether you are buying or selling goods, services or a salary position, work out what the other parties Reservation Price is. Then offer a figure slightly above that point.
• You have now set an anchor. This is the point from which the negotiation will start. 
• If your offer is wildly beyond their Reservation Price then they will be insulted and may not wish to deal with you any more. This is the Chilling effect. 
• If your offer is too low & close to your Reservation Price, then you will most likely experience regret as they quickly say 'yes'. You know that you could have gotten a better deal. This is the Winners Curse.

Gain trust

Trust is built from your reliable patterns of behavior (think; tit-for-tat) through your repetitive interactions with a client or team. You can build trust through:

• Reliability
• Flexibility
• Delivering the unexpected, don’t overpromise,
• Over-communicate.

Be a trusted advisor by displaying competence, reliability & integrity.

Trust is built by adding value;

• Value-creating behaviors
• Be cooperative
• Be open and honest
• Be a clear communicator.
• Seek to find and gain common ground.
• Share information freely.
• Look for numerous options for both parties.
• Don't criticize

Types of negotiation

Only two types of negotiation can take place;

• Distributive Negotiation
• Integrative Negotiation

Distributive Negotiation

This is usually used in a short-term relationship

Parties compete over the distribution of a fixed sum of value

• Sellers Goal: Get the highest price
• Buyers Goal: Pay the lowest price

Integrative Negotiation

This is usually used during Projects (but not always).

Parties cooperate to maximize benefits by integrating their interests into the agreement.

Negotiation boundaries

When entering into a negotiation, its important that you do your research ahead of time. You should define the following, for both yourself and your client/competitor

• The Most Likely price or deal that you will agree.
• The Best deal that you could hope for, also called a Stretch Goal.
• The worst deal that you are willing to accept. This is your Reservation Price. Below this point, its not worth entering into the agreement.
• The BATNA (Best Alternative to a Negotiated Agreement). This is your outside option (or options), such as working with a different client, or buying different office equipment etc.

Its in your interest to find out what your competitors BATNA is and do the following;

Reframe it to look as unattractive as possible.

Provide them with a 'golden bridge' that leads away from their BATNA back to your negotiation.

What lies in the middle of all this is the ZOPA - Zone of Possible Agreement. Somewhere within this zone is where you will arrive on an agreement.

Imagine that you were to write their Victory Speech, noting how well they did in the negotiation. What would be in it? Include this in your offering and make it known. Write this victory speech for them.

Go Slow to Go Fast

Some say that there are between five to seven sources of power that are recognized as a basis of influence and the source of authority. You may exert one of more of these. It is worth knowing them so that you can either leverage them to their maximum benefit or seek to increase them where you find them lacking. When working with stakeholders & team members, try to figure out where their power comes from. The sources of power are:

• Reward power: A reward can range from anything from a bonus, to a gift to a simple public or private ‘thank you’ for achieving project related tasks.

• Coercive power: You yield coercive power when you have influence over another person in the form of a punishment, sanctions or via a threat. Examples of this may be your ability to provide a bad performance review or demote someone from your team. It is the least admirable power.

• Legitimate power: This is your title as a Project Manager. This is where the company has empowered you to manage what should be done, when it should be done, defend why it should be done, but not how it should be done - leave that to the project specialists.

• Expert power: When you are recognized as having prior successful experience in your field, then you become respected as an expert. How you approach projects, tasks, communications, risks and negotiation will all bolster that perception.

• Referent power: When you are sought out to manage specific projects due to your interpersonal skills, integrity and track record then you can claim this source of power.

• Connection power. Sometimes called Power brokers, this power is the ability act as a bridge to connect people together.

• Information power: This is the ability to influence through facts and data (effectively Logos). As a Project Manager you may find that appealing to ones emotions (Pathos) works best, but you will yield Information Power when those in the room know that you can back up any claim with data, without you having to prove it. At which point you can also claim Ethos.

Don't rush a negotiation. Relish it. However if you have a weak position, speak fast (but not too fast) to increase your chances of success.

Speak slowly and clearly when you are in solid position. Note that silence can be used as a negotiation tool.

At the start of a negotiation, speak in an abstract sense as much as possible (eg: "The team should fix the bugs"). Become more specific over time.

The same applies to rounds of negotiation. The initial offer should be rounded, with ever decreasing increments (65%, 85%, 95%, 98%, 100%). These values should then become more precise (eg: $98, 314). These two points signal that the negotiation is coming to an end and there is no change of more negotiation - all without saying a word.

Formal Negotiation Principles

The following structure works well

• Listen
• Question
• Summerize
• Build on common ground
• Build on the other party's ideas
• Summerize
• Emphasize agreement
• Describe your feelings
• Summerize

Each culture follows a different pattern. The above sequence works universally, but you can tailor your approach depending on the country & culture that you are dealing with. See National Communication Patterns for more details.

Formal Negotiations

A recommended structure for negotiations is:

• Establish the issues
• Gather information
• Build a solution

During formal negotiations, give people rituals and stick to them. Clearly call this out at the beginning of the Negotiation.  People find comfort, order and meaning in repetitive familiar activities. When the negotiation gets tough, these shared rituals will ease tensions.  

Separate the person from the problem

Think in terms of 'We' not 'I'. Don't think that I have a problem, instead think, how can we solve this problem together.

The other person is your partner in this negotiation, not your enemy.

Negotiate below the surface

Note that there is a difference between the cost of something, its value (to you, your competitor) and the price that someone is willing to pay.

• Cost is how much a concession will cost you
• Price is how much you want to charge for it
• Value is what it is worth to the other party

When the other party states something (their Position), you should always investigate the underlying Interests that caused them to raise that request and determine what the real Need is. 

Use Labels

"Can I ask you a question about this point?"

When negotiating on a particular point, this phrase achieves two goals

• You are humbly asking permission to question what has just been said. They will now feel more obliged to answer than if you had not have asked.
• You are calling attention to the fact that an important question is about to be asked. This will be more memorable.

By labelling a proposal as a 'proposal' it carries more weight and is harder to ignore.

Note: Do not label a disagreement as a disagreement, as it brings it into focus.

Note: Do not label as negotiation as a negotiation, as the other party may take a stricter negotiation stance.

Proposal & Counter Proposal

Never negotiation with yourself.

If you have made a proposal, give the other side time to respond. Do not discount yourself without a response.

Any discount should be given with justification. This will limit future requests for discounts.

When you get a proposal, do not counter propose. The other party has stopped listening. They are awaiting your review. Prod their proposal and has them to explain how certain sections/clauses would work in practice.

C-Suite

Prepare for the next step

So, you have mastered the art of negotiation, now figure out what the other people in the room are thinking.

Identifying dirty tactics

Its an unfortunate fact that sometimes the reason why a negotiation is difficult is due to the fact that your counterpart may be using a dirty tactic against you.  This is designed to occupy and distract you. Knowing this in advance will allow you to better deal with them. Here are just some to look out for.

• Snowballing. You are asked to do loads of unnecessary work to distract you from preparing properly. Countermeasure: Use the Eisenhower Matrix to determine what is important and what is not.

• Switching barriers. Multiple different 'issues' arise, one after the other. Countermeasure: At the beginning of the process ask about any potential barriers. Openly and honestly mention possible possible issues. If they are not issues at the beginning then they can't be raised during the process.

• Defense in Depth. The person who you are currently negotiating with does not have the authority to make an agreement. Their purpose is to get you to concede before the real negotiation begins. Countermeasure: Ask if they are the final decision maker.

• Moving goalposts. A milestone or goal is changed so that it becomes harder to achieve. Countermeasure: Define and document the goals and milestones at the start of the negotiation.

• Bogey – The other party pretends that an issue is important to them, so that when they concede its seen as a big 'win' for you, only for you to then concede on the real issue. Countermeasure: Define and document the goals and milestones at the start of the negotiation.

• Good cop / bad cop. Where one person doesn't act in good faith and the other does. Countermeasure: state that the 'bad cops' actions represent the team as a whole. Ask for their behavior to be brought into line.

• False deadlines. Most concessions happen near to the deadline. By placing a false deadline you are put under unnecessary pressure to make an agreement. Countermeasure: Do not state your internal deadline. Always have a contingency plan (eg. a later flight)

• Inflated usage forecasts. Real data is increased by a certain percentage.  Countermeasure: Do your own research. Ask them to walk through their forecasts and provide evidence about how they were constructed.

• False data – false statistics to back up their position. Countermeasure: Do your own research. Ask them to walk through their forecasts and provide evidence about how they were constructed.

• Intimidation. The use of organizational power to gain concessions. Countermeasure: Know your ZOPA, Reservation Price and be willing to walk away, if you need to.

• Left at the alter / Withdrawn offer. This is where they say they will back out of deal, to gain concession. Countermeasure: Know your ZOPA, Reservation Price and be willing to walk away, if you need to.

• Teaming up – 2 strong people from their side ganging up on 1 person from yours. Countermeasure: Know your ZOPA, Reservation Price and be willing to walk away, if you need to. Also, it helps if you get up from the table and walk around the room. This shows that you are not as intimidated as they would like you to be.

• Gifts. Gifts create a sense of obligation and illicit repository. Countermeasure: As tough as it may be, never accept gifts. They will always undermine your position.

Break deadlocks

• Break deadlocks and disagreements with contingency clauses in a contract.
• If neither side can agree, then ask open questions to find out the interest underlying their position. Open questions are ones where the answer can never be 'yes' or 'no'.
• If the disagreement stems from the fact that you both believe that the future will be different (and you may not believe that their concern is valid) then write a clause into the contract which only comes into effect if that event happens.
• This will lead you to close the deal faster.

Address

Dublin, Ireland

Contact

[email protected]

Menu

Follow me