Negotiation is a discussion between two or more parties aimed at reaching agreement.
Negotiations can take place at any time in a project, programme or portfolio and may be formal or informal in nature.
Formal negotiations are typically with providers on such issues as agreeing contracts. Informal negotiations include discussions to resolve conflict, or discussions to obtain internal resources.
Negotiation skills are used in many areas of P3 management such as conflict management, contract management, requirements management and stakeholder management.
Good negotiation skills include:
- an ability to set goals and limits;
- emotional control;
- excellent listening skills;
- excellent verbal communication skills;
- knowledge of when and how to close the negotiation.
Negotiation falls within two categories:
- competitive negotiation;
- collaborative negotiation.
Competitive negotiation implies getting the best deal regardless of the needs and interests of the other party. This form of negotiation can easily become a battle where the winner takes all. While competitive negotiation should be avoided, it may not always be possible.
Collaborative negotiation seeks to create a ‘win-win’ scenario where all parties involved get part or all of what they were looking for from the negotiation. This approach tends to produce the best results, helps build long-term relationships and minimises the opportunity for conflict.
The process of negotiation can be divided into a number of distinct phases:
- planning: Prepare by gathering as much information as possible. Set goals and ensure that they accord with the tolerances which have been agreed. Investigate relevant social conventions if planning to negotiate with people from different cultures. Clarify the escalation route to use in the event of being unable to resolve the negotiation;
- discussing: P3 managers are often, but not always, required to open the negotiations by setting the scene, then explore and discuss the key issues. They must listen, probe and question, paraphrase regularly and check understanding;
- proposing: Make a proposal. Communicate clearly and openly;
- bargaining: Be prepared for trade-offs;
- agreement: There is no substitute for a written record;
- review: On resolution, the outcome needs to be communicated to all parties and the consequences incorporated within the P3 management plan.
Some of the common pitfalls associated with negotiations include:
- being ill-prepared;
- opening negotiations with an unreasonable offer;
- not taking ‘time-outs’ when the negotiations are unduly protracted;
- rushing negotiations in order to secure a quick agreement;
- failing to walk away if an agreement is not possible without breaching tolerances;
- not remaining calm.
Project managers need to apply negotiation skills throughout the project life cycle. Early on in a project, as requirements are being captured and initial plans produced, the project manager may need to balance the time, cost, quality and scope requirements of the project and negotiate with stakeholders.
As resources are mobilised or procured, the project manager will need to negotiate internally with line managers who ‘own’ the resources and conduct more formal contract negotiations with potential providers.
As the project progresses, conflicts will arise. The project manager will need to negotiate solutions to conflicts, whether they are informal or contractual.
In some environments, there may be specialist support available. It is important for project managers to know when to ask for help from, for example, the HR or legal departments within the host organisation.
The range of negotiation scenarios within a programme will be broad. The programme manager must understand when to allow negotiations to be handled at project level and when to take responsibility at programme level.
A balance must be struck between removing autonomy from project managers and gaining an advantage by collectively negotiating on behalf of the programme as a whole.
A programme includes project outputs that impose change on business-as-usual. This will inevitably cause situations where a negotiated solution is needed.
A programme is more likely to have access to specialist negotiators, but programme managers should still be skilled negotiators in their own right. Programme managers and programme sponsors are the visible leadership of the programme and may need to become personally involved to achieve a successful conclusion.
A portfolio will encompass the broadest range of negotiation scenarios and will need access to various specialists to negotiate HR, legal and internal issues. The only escalation from the portfolio is to the organisation’s managing board that must be fully committed to the portfolio’s strategic objectives and supportive in negotiations.