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Step-by-Step Negotiation

This presentation contains the basics
on how to negotiate with potential
vendors, contractors and employees.

Negotiation = Compromise
• Goals for negotiation for a project:
– Establish realistic pricing
– Prompt payment
– Appropriate resources
– Extend deadlines
– Agree on terms of project success

extend the budget. . • Faster delivery. – You’ll have to negotiate if you’re going to change product specifications. – You’ll need to negotiate if you’re talking about changing the specifications of the project or coming up with less expensive staff to finish the job. or come up with new task sequences. What Project Managers Negotiate-1 • Cost reductions.

contract employees and vendors. revising team roles. What Project Managers Negotiate-2 • Adding or changing people on the team. – This goes for staff. or negotiate changes to the quality of the project. . or even both. – Negotiating will involve removing dead wood. or getting better people. you’ll have to negotiate a new schedule. – If you get stuck with lesser skills than desired.

. compromise on the budget. This is your absolute last negotiating option. and possibly even staffing resources. – If stakeholders change their mind about what they want in the middle of the project. What Project Managers Negotiate-3 • Delivering different product or a different quality than originally specified. the schedule. – Make sure this is what the client really wants before doing anything to reduce quality. you will negotiate to provide more or less quality.

Something that sounds too good to be true probably is. • Beware of holding out too long for a better deal. What Project Managers Negotiate-4 • Accepting the budget without looking at the details. . – Don’t be swayed until you fully understand the compromises you need to make if you take less money than you originally asked for. Beware of anyone who promises the world for a reduced rate.

. – Compromises are made so that each side gets something it wants and needs. • Win-win (the ideal scenario). • Power plays (use as last resort). Characteristics of Negotiations • They stress mutual self-interest. – One party has something the other party really wants or needs. – One side pressures and strong-arms another to join the team. – Both parties want something they need in a symbiotic relationship. • Appeal.

analyze options. good and better. – After listing the alternatives. – Assess value. and study what the other side might bring to the table. decide which are both acceptable and feasible. • After you understand what you want and need and would like. . – Decide on the most likely outcomes. Prepare Yourself • If you don’t know what you really want and what you can really do without. you’ll never get what you really need. • Nail down in writing exactly what you are looking to achieve. then consider alternatives that would be bad.

Be and Act Cool • Always let time be on your side. – Keep a lid on your emotions. but don’t pay too much or look rushed because this will affect your ability to work things out. – Accommodate your people and suppliers. – Go slowly. Poker faces are good for more than just card playing! .

This goes for internal employees. What to Do-1 • Know your adversaries and your allies. . contractors or outside vendors. – What are their credentials? – What is their reputation? – What can they contribute to your project? – Determine their worth if you’ll have to pay them.

What to Do-2 • Avoid confrontation. . • Listen to the other person. • Be pleasant. • Encourage discussion. • Emphasize how you can work together. • Do not put the other party on the defensive. • Consider all arguments.

but taking someone out to lunch or dinner allows you to begin a working relationship in a neutral. What to Do-3 • It sounds trite. non- threatening environment. .

• Be clear on project status. . What to Do-4 • Be clear on your situation. • Everyone involved in the negotiation must be fully up to speed on the project and must know what the negotiation is about.

. What to Do-5 • Slow down if things aren’t going well. • If that fails. try: – Working it out – Choosing someone else – Structuring the negotiation so it can be done in writing and not in person. • If you must have a particular person because s/he possesses some skill you can’t find elsewhere. walk the other party to the door. • If the other party is completely unreasonable or confrontational. offer the other party the bottom line. be prepared to meet that person’s terms. • For outrageous demands and attitudes.

but not too much time. . • Take time to understand the ramifications of each proposal. • Have an idea about each alternative before you get into negotiating mode. What to Do-6 • Don’t get forced into anything.

and all you can do is withhold payment. – Once you have accepted any kind of work. – Once work is accepted. • Accept only acceptable alternatives. What to Do-7 • Get back to the person as promptly as possible. . you have accepted it legally. – Refuse substandard work or contributions. your bargaining power is limited.

• Provide a written response acknowledging terms and changes you agree upon. • If things go south. . What to Do-8 • GET IT IN WRITING!!!!! – Provide potential contributors with requests for information (RFI) and requests for proposal (RFP). potential contributors can offer a proposal drafted from scratch without much input from you. the document could be used against your company. – Sometimes proposals are just springboards for price negotiations and hammering out of terms. • Read such documents carefully to understand their terms fully. – Alternatively. – You will still need to negotiate the final document.

Where to Negotiate-1 • If you negotiate in your office: – Hold your calls. – If your office is too small. – Make the room physically comfortable. – Relax and treat your guest(s) to beverages. use the conference room. . – You could also take everyone out to lunch on your tab.

– If you can’t reach consensus in an hour or two. – Laying groundwork before critical agreement meetings saves time and nerves on both sides. Where to Negotiate-2 • If you negotiate in a conference room with parties from all sides: – Have an agenda so everyone sticks to the topics at hand. . you might be working with the wrong people. – Set and stick to a start and end time for the meeting.

including: – Better team members – Lower prices – More realistic schedules • Know the needs and motivations of your opponent before opening negotiations. . • You can negotiate for almost anything in a project. Final Thoughts • Negotiation is a skill developed over time. • Take a step back in any negotiation before committing to something you do not understand. • Getting to a win-win compromise is preferable to beating your opponent into submission.