Project Profitability: Successful negotiating skills for project managers

By Howard Birnberg

 “I need to talk to my manager. I want you to be satisfied. Give me a minute, I’ll be right back.”

Ninety minutes later, the car salesman returns. In the meantime, you have read every issue from 1974 of Better Tires and Transmissions in the showroom including the feature on new eight-track tape players for 1975. You’ve looked at the sticker on the window of each car in the showroom and even wandered out to the service area to watch repair work being done on all of those expensive late model vehicles the dealer sold. The television in the waiting area is tuned to the “Ellen DeGeneres Show” and is airing an old program about people who went to buy a new car and were never seen again.

When the salesman finally returns, he is waving a sheet of paper and carrying on about selling you the car below the price the dealership paid the manufacturer. After all, he seems to imply, they are in business to sell as many cars at a loss as they can. He shows you the “actual invoice from the manufacturer” for the car that interests you. “If you are still undecided,” he says, “I’ll throw in the undercoating at no charge.”

If this sounds familiar, you’ve been at the receiving end of Negotiating 101. Every auto dealer provides this training for their sales staff. The better ones are so smooth you don’t even know you’re being played. These techniques are consistently used in an attempt to level the playing field with customers. In reality, the auto salesperson has a weak negotiating position. You have the strong position in that you can choose not to buy a car from him or her. You can choose to buy a car somewhere else. You can decide what the car is worth to you. You have power. Learn how to use it. This is the essence of negotiating.

Some ideas to keep in mind include the following:

Do your homework — Bill Richardson, former governor of New Mexico, former U.S. ambassador to the United Nations, and renowned negotiator, is a strong advocate of preparation. In a 2003 New York Times Magazine interview, Richardson commented, “I study everything I can about my adversary, talking to people who have seen him (or her) most recently. I read about the person, look at his (or her) public statements, try to find out the person’s weaknesses, what he (or she) likes, sports, try to find out his (or her) family situation. When I go in, I go knowing almost everything about the person’s character and policies.” While project managers are not negotiating with a head of state, preparation is still key.

Information is power — Far too many project managers are inadequately prepared for a negotiation session. They are busy people and often fail to thoroughly prepare by assembling budget, cost, financial, schedule, or a wide variety of other important information. Avoid giving away information needlessly. You do this by answering a question with a question when circumstances require.

Have staying power — It is important to allow time to achieve an acceptable result from a negotiation. Crisis managers lack this time and often concede simply to end the negotiation. Often, they pay the price with inadequate budgets, time schedules, and so on. Take your lead from labor negotiations. These are often marathon endurance sessions where each party has made it clear they will take as long as necessary to conclude an agreement.

Have a floor or walk-away price — At some point during the negotiation it may become apparent that you will not be able to achieve an acceptable agreement on price, schedule, scope, or other factors. You have to be willing to get up from the table and tell your opponent you are no longer interested in concluding an agreement. If you are not willing to do this, you will have a significantly weaker negotiating position. This is the power of “No.”

Be aware of nibbles — This is the practice of asking your opponent for more even after you have concluded an agreement. For example, your client has accepted your price and scope proposal, but happens to mention on the way out the door that he or she still needs senior management’s approval. Inevitably, a request for a change, or a request for a minor tweak will occur. This is a nibble. If you are being nibbled, obtain something in return.

Concede slowly — If you are willing to concede a point or a price, do it reluctantly and make sure your opponent knows you are making a concession. Don’t hesitate to remind him or her of your previous concession and ask for one in return. Bill Richardson has noted, “You cede what you consider (the) easy territory” (New York Times Magazine, 2003).

Negotiations are not a game — Too many negotiating experts treat the process as a game. They say silly things like, “Assume everything is negotiable” or “Never accept the first offer.” While most things are negotiable, it may be counterproductive or an inefficient use of time to undertake the negotiation. Accepting the first offer may be reasonable if it achieves your goals.

Remember Richardson’s Negotiations Rules — Make friends, define your goal, shrug off insults, close the deal, and always show respect.

Howard Birnberg is executive director of the Association for Project Managers (https://www.apminfo.com). He may be reached at 312-664-2300 or hbirnberg@gmail.com.