Are you a skilled negotiator? Does negotiating make your hair stand up on end or does it drive something in you?
In Part 1 of this series, I discussed negotiations for Budget and Timeline impacts on your project. I identified that issues requiring negotiations on projects usually fall into one of three main categories: Budget, Timeline, or Scope.
For this article, let’s look closer at Scope negotiations and how best to handle them with your customer.
We all know that scope issues can abound on any given project – especially if some loose ends weren’t properly tied up during the sales process. I think the Project Manager should be involved in at least a portion of the sales process. When I worked at Rockwell Collins (RC) in the late 90’s and early 2000’s, all the projects were internal for in-house business units – I WAS the sales process. As was the case with all the PMs at RC, I handled:
- Meeting with the customer
- Documenting the business need
- Pricing the engagement
- Finalizing with the customer
- Presenting the proposed solution to a technology council for approval
Sorry … enough plugging for the PM role in sales … for now.
Back to reality. Scope issues are a fact of life, they will always happen. When the customer says, “but I thought that was included,” you have to look at it from their side as well as your own. Do some investigation. Maybe Sales told them it was included? Maybe the line was a little gray? Or maybe you can see some bigger work that is coming down the line on the project in terms of scope and now is the time to negotiate.
At any rate, it’s about the give and takes. For most scope issues you’ll:
- Draw up a change order
- Identify the budget and timeline hits
- Present the customer with the cost factor for adding the extra scope
If they balk, there may be some room for negotiation – for example, price the implementation of the new functionality but throw the training in for free. Of course, you may need senior management approval for this – another form of negotiation, possibly. Explain the need for customer satisfaction, retention, and referral, or possibly your vision for some bigger add-on work that you can see in the offing.
Another issue that can lead to major scope concerns and the need to negotiate is the lack of previously defined customer business processes or poorly defined customer requirements. As the Exploration Phase gets underway, this issue really can come to light – if it hasn’t already. As the PM, this is when I look for the opportunity to negotiate with the customer in terms of creating additional revenue for the delivery organization in the form of a Change Order.
It’s obvious at this point of the project that (for example) a two-week Exploration Phase is not going to cover everything that is needed. You’ll need to explain to the customer that:
- More time and effort dedicated to Exploration is needed. These additional hours and $$ should be in the form of a Change Order to properly record requirements and create a meaningful:
- Business Requirements Document (BRD)
- Functional Design Document (FDD)
- Technical Design Document (TDD),
- That the increased effort added up front helping the customer define their business processes and requirements will result in a more solid solution being deployed to the customer at the end of the project.
It shouldn’t be too hard of a ‘sell’.
Summary / Call for Input
I’m not sure any of us really thought we’d be negotiators when we entered into the PM field. But it seems to come up regularly on projects. We’ve examined Scope Negotiations in detail here.
Readers – what are your thoughts on negotiations? Are you good at it? Have you found yourself in the negotiating role with your project clients from time to time?