When to negotiate in a project

When might a project manager need to negotiate? It might be easier to ask when do they NOT need to negotiate! Project managers will find themselves negotiating to define scope, agree on timelines, get resources, secure contractors, and equipment, agree on changes and resolve various conflicts throughout the project.

This article will clarify how to negotiate successfully and give you some practical tools, it will also cover some key concepts for those preparing to take a project management exam like APM’s Project Management Qualification (PMQ).

What does “winning a negotiation” mean?

If you’re a fan of 90s Wall Street Films you might have an idea of victory in negotiation as to when you crush your opponent, trick them, bully them or otherwise bend them to your will and take whatever they have.

This is NOT what negotiation should be about so please put the pinstripe suit and hair gel back where you found them.

The APM describes negotiations as “a discussion between two or more parties aimed at reaching agreement” (APM Project Management Qualification Study Guide 7th ed, p 139) where the emphasis is on reaching an agreement. This means you cannot go into a negotiation with the aim of defeating your opponent – you need to enter into it with the aim of seeking an agreement that both parties are happy with, a win-win situation if you wish.

Negotiation must be conducted in a way that fosters continued collaboration and good relationships between parties. What would be the point in pushing a supplier or customer to a point where they may no longer want to work with you? Better to seek mutually beneficial agreements that help both parties!

How to prepare for a negotiation

The key to finding and creating win-win solutions is to prepare.

  1. Identify your own objectives and how far from them you are able to stretch (BATNA)
  2. Identify potential concessions or things you can offer the other party to create the win-win situation
  3. Define limits for how far you can stretch, what you can give up etc

Preparing for a negotiation requires a good understanding of your own needs and goals, but you also need to understand the other party. A bit of research might be necessary. Even though you might need to ask the other party questions during the negotiation to gain a deeper understanding of what they want and need the more you can prepare in advance the better you will do.

The other party is likely to recognise any efforts you have made to see things from their point of view, and this will help build your relationship and establish trust.

Negotiation

Sounds like we have a stalemate on our hands and it would be tempting to say there is no point in negotiating at all. But if both parties walk away without even trying to negotiate it means You do not spend money but you do not get a chair (which you need) and the seller does not get any money at all. This is a bad solution for both of you.

So let’s look a bit further into our options. You still desperately need your chair so you do some market research and find out that you can get a similar chair, but the cheapest alternative is £105. This is your BATNA – or the best alternative if you do not negotiate with your preferred supplier. This gives a framework for your negotiation: as long as you can agree on a price below £105 you were better off negotiating – even if you do not get your initial price of £75.

Your supplier needs to sell the chair quite quickly and they have one other potential buyer who is offering £90. This is the seller’s BATNA – as long as they can agree on a price of more than £90 with you they will have been better off negotiating with you.

By identifying the two BATNA’s we now have an overlap where if we can agree on a price anywhere between £90 and £105 both parties would be better off having negotiated than by going with their BATNA. This overlap is called the ZOPA – or Zone of Possible Agreement.

(BATNA is not just for negotiating cost, it could also be for time or quality aspects of the project!)

BATNA and ZOPA – what on earth are those?!

You might have come across the terms BATNA and ZOPA before, or this might be the first time you hear about them. They sound very strange indeed but are quite straightforward – and they are really helpful in planning and approaching a negotiation.

BATNA stands for “Best Alternative to Negotiated Agreement”. This means that when preparing for your negotiation you should identify how far you can stretch/ compromise before you reach a point where you would have been better off not negotiating at all.

For example: Say you have to buy a new chair (not buying one is not an option, you have to have a new one). You have a list of criteria for what your chair has to look like, its function etc and you have set your budget at £75.

You have found someone who makes exactly the chair that you want. They’d like to get £125 for it.

Zopa Negotiation

As long as our agreement falls somewhere in the ZOPA we will have created a win-win situation where both parties are better off having negotiated with each other.

Key skills in negotiations

Empathy: to be successful you have to try to understand the other party and their point of view

Ability to listen: listen to understand what they are telling you, not listen to think of clever things to say to show them how they are wrong

Resilience: we’re looking for a win-win situation here, not a “you lose and they win” situation. Once you understand your boundaries you need to stand by them, not surrender at the first sign of resistance!

Summary

Negotiations are about finding a win-win situation for two or more parties. Win-wins can be achieved when both parties understand their goals and boundaries.

APM Accredited Project Fundamentals Qualification (PFQ)

This qualification is ideal for anyone looking to gain professional recognition for their project management knowledge, whether they are new to the role or have years of experience. We deliver this course with a keen eye for practical application of tools and techniques; from building a plan to assessing risks and engaging stakeholders.

Learn More

APM Project Management Qualification (PMQ)

This qualification is ideal for those looking to build on their practical project management experience or PFQ. We deliver this course with a keen eye for practical application of tools and techniques; from building a plan to assessing risks and engaging stakeholders.

The APM Project Management Qualification is the blue ribbon certification for professional Project Managers.

Learn More