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
 What Project Managers
Negotiate-1
Cost reductions.
Youll need to negotiate if youre talking about
changing the specifications of the project or
coming up with less expensive staff to finish
the job.
Faster delivery.
Youll have to negotiate if youre going to
change product specifications, extend the
budget, or come up with new task sequences.
 What Project Managers
Negotiate-2
Adding or changing people on the team.
This goes for staff, contract employees and
vendors.
Negotiating will involve removing dead wood,
revising team roles, or getting better people.
If you get stuck with lesser skills than desired,
youll have to negotiate a new schedule, or
negotiate changes to the quality of the project,
or even both.
 What Project Managers
Negotiate-3
Delivering different product or a different
quality than originally specified.
If stakeholders change their mind about what
they want in the middle of the project, you will
negotiate to provide more or less quality,
compromise on the budget, the schedule, and
possibly even staffing resources.
Make sure this is what the client really wants
before doing anything to reduce quality. This
is your absolute last negotiating option.
 What Project Managers
Negotiate-4
Accepting the budget without looking at
the details.
Dont be swayed until you fully understand the
compromises you need to make if you take
less money than you originally asked for.
Beware of holding out too long for a better
deal. Beware of anyone who promises the
world for a reduced rate. Something that
sounds too good to be true probably is.
 Characteristics of Negotiations
They stress mutual self-interest.
Both parties want something they need in a symbiotic
relationship.
Appeal.
One party has something the other party really wants
or needs.
Power plays (use as last resort).
One side pressures and strong-arms another to join
the team.
Win-win (the ideal scenario).
Compromises are made so that each side gets
something it wants and needs.
 Prepare Yourself
If you dont know what you really want and what you can
really do without, youll never get what you really need.
Nail down in writing exactly what you are looking to
achieve.
After you understand what you want and need and would
like, then consider alternatives that would be bad, good
and better.
Decide on the most likely outcomes.
After listing the alternatives, decide which are both acceptable
and feasible.
Assess value, analyze options, and study what the other side
might bring to the table.
 Be and Act Cool
Always let time be on your side.
Go slowly.
Accommodate your people and suppliers, but
dont pay too much or look rushed because
this will affect your ability to work things out.
Keep a lid on your emotions. Poker faces are
good for more than just card playing!
 What to Do-1
Know your adversaries and your allies.
What are their credentials?
What is their reputation?
What can they contribute to your project?
Determine their worth if youll have to pay
them. This goes for internal employees,
contractors or outside vendors.
 What to Do-2
Avoid confrontation.
Be pleasant.
Listen to the other person.
Consider all arguments.
Encourage discussion.
Emphasize how you can work together.
Do not put the other party on the
defensive.
 What to Do-3
It sounds trite, but taking someone out to
lunch or dinner allows you to begin a
working relationship in a neutral, non-
threatening environment.
 What to Do-4
Be clear on your situation.
Be clear on project status.
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 arent going well.
If the other party is completely unreasonable or
confrontational, try:
Working it out
Choosing someone else
Structuring the negotiation so it can be done in writing and not in
person.
For outrageous demands and attitudes, offer the other
party the bottom line.
If that fails, walk the other party to the door.
If you must have a particular person because s/he
possesses some skill you cant find elsewhere, be
prepared to meet that persons terms.
 What to Do-6
Dont get forced into anything.
Take time to understand the ramifications
of each proposal, but not too much time.
Have an idea about each alternative
before you get into negotiating mode.
 What to Do-7
Get back to the person as promptly as
possible.
Accept only acceptable alternatives.
Refuse substandard work or contributions.
Once you have accepted any kind of work,
you have accepted it legally.
Once work is accepted, your bargaining
power is limited, and all you can do is withhold
payment.
 What to Do-8
GET IT IN WRITING!!!!!
Provide potential contributors with requests for information (RFI)
and requests for proposal (RFP).
Alternatively, potential contributors can offer a proposal drafted
from scratch without much input from you.
You will still need to negotiate the final document.
Sometimes proposals are just springboards for price
negotiations and hammering out of terms.
Read such documents carefully to understand their terms fully.
If things go south, the document could be used against your
company.
Provide a written response acknowledging terms and changes you
agree upon.
 Where to Negotiate-1
If you negotiate in your office:
Hold your calls.
Relax and treat your guest(s) to beverages.
Make the room physically comfortable.
If your office is too small, use the conference
room.
You could also take everyone out to lunch on
your tab.
 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.
Set and stick to a start and end time for the meeting.
If you cant reach consensus in an hour or two, you
might be working with the wrong people.
Laying groundwork before critical agreement
meetings saves time and nerves on both sides.
 Final Thoughts
Negotiation is a skill developed over time.
You can negotiate for almost anything in a project,
including:
Better team members
Lower prices
More realistic schedules
Know the needs and motivations of your opponent
before opening negotiations.
Getting to a win-win compromise is preferable to beating
your opponent into submission.
Take a step back in any negotiation before committing to
something you do not understand.