Published on Friday, April 10, 2009
In Part 1 of this series, I discussed negotiations for Scope impacts on your project. I identified that issues requiring negotiations on projects usually fall into one of three main categories: Scope, Timeline, or Budget.
Unless the PM is being micro-managed from above by executive management or the PMO Director, the role of negotiator – at least from a customer-facing perspective, falls to the Project Manager. For Part 2 of this series, we’ll look closer at Timeline Negotiations and Budget Negotiations and how best to handle each type with your customer.
Negotiations on timeline issues can take on many forms. For me, the most common one has been the request for functionality to appear earlier than previously expected. While this can sometimes be a major issue depending on the project, I try to take the phased approach if it is appropriate. By this I mean, negotiating with the customer on implementing functionality in phases. To do this, I follow these steps:
So, basically my proposal is usually to restructure priorities and move the needed functionality to an earlier point in the timeline, implement it, and create later phases for the remaining functionality. It may also impact the budget, but if it gets the customer the functionality they desperately need when they desperately need it, then they’re probably very willing to accept the budget it. They always have been from my experience.
The most common budget negotiations I’ve run into have been with either higher-priced resources needed or requested on the project or the need for some unexpected customer training.
In the case of the resources, if it is warranted by the project due to some undocumented needs by the customer, then I’ve often been able to ‘sell’ the customer on the higher-priced resource. If it’s the other way around – meaning the delivery organization wrongly assessed the resource needs, then the push needs to be to get senior management to agree to give your project the more skilled resource and bill the customer the same lower rate. As the PM, you still need to explain that to the customer – never miss an opportunity to gain additional customer satisfaction by letting them know you’re always fighting for them.
In the case of the customer training – I’ve run into this several times. And it doesn’t have to be customer training – you can insert any one of a number of similar items here. But for me it’s usually been customer training. The customer hasn’t realized the need for some training (usually due to a communication issue during the sales process), but it’s still needed and it isn’t cheap. Work with the customer and determine options. For me, it’s worked well to coordinate with both the customer and the training department to price a training session onsite for the customer rather than have the customer send everyone to the training department. This results in significant customer cost savings while bringing in new streams of revenue to departments in your own organization.
For the most part in this series I’ve dealt with customer negotiations. However, the need to negotiate also comes up regularly in your own organizations as you work to obtain resources, equipment, budget, etc. The good Project Manager draws on experience from a history of customer dealings to enable them to effectively negotiate for things on their project with everyone involved in it.
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