The art of negotiation for project managers

(The writer, a noted management economist and an international commentator on business and economic affairs, can be reached at m.bibhas@gmail.com)

Dr Boidurjo Rick Mukhopadhyay

(International Award-Winning Development and Management Economist)

A few common inbox messages for a project manager - "This project must be delivered by December 1st", "Remind yourself that you are limited to five resources on this project", "The budget is capped at two million dollars. This number is not negotiable". And often, the reactive responses hit back by saying, "We can't hit this given deadline even if we work 20 hrs a day", "If I don't get the additional resources, that I requested earlier, we cannot deliver this project".

This makes the ability to negotiate a key role for the success of a project and equally the project manager. If we look at certain situations where strategic negotiation becomes essential, A) negotiations with the suppliers for the execution of the project, B) negotiations with stakeholders regarding support for changes in the project, and provide new ideas to get the consent of the interested parties. C) negotiation with a possible investor in a new project.

In addition, the project manager – before and after negotiation – has to work on the following options. A) Evaluating a smarter alternative to a negotiated agreement, B) Worst possible alternative to a negotiated agreement, C) Exploring ways to find one possible and most reasonable agreement, C) Determining and also rethinking price or removal point.

So, why do we need negotiation skills in a project manager?

Fundamentally, there are three negotiation roles. The first one is negotiator, in which the project manager actively involved in the dispute resolution or resource allocation negotiations. At times, a negotiation stalls or breaks down. This is often referred to as an impasse. The other option therefore would be to involve a third party – a mediator or arbitrator - to resolve the impasse.

The mediator generally asks questions to generate dialogue. If the negotiation remains stalled, the negotiating parties each fall back to the contingency plans identified before the negotiation. The mediator is simply a facilitator, not a decision-maker which is essentially the job of an arbitrator who can serve as a judge upon listening to both parties.

A project manager can also become a mediator when he or she intervenes in the negotiation between two stakeholders. In this capacity, the project manager acts as a facilitator of the communication between the two parties and aims to find a mutually acceptable solution to a conflict. However, there is still a possibility to be at an impasse. The project manager can also take on the arbitrator role, either as a given role or if it's the last resort in a given situation. All these roles in negotiation can be therefore grouped under Planning, Engagement, and Closing.

The concept and types of negotiation

Acuff in 2008, defined negotiation as "the process of communicating back and forth to reach a joint agreement about differing needs or ideas". A work by Lax and Sebenius in 1986 however defines it as "a process of potentially opportunistic interaction by which two or more parties, with some apparent conflict, seek to do better through jointly decided action than they could do otherwise".

There is also a tactical definition by Cellich and Jain, who defined negotiation as "a mechanical exercise of offers and counteroffers that leads to a deal" and also, a strategic definition says the process of negotiation is "sharing information and developing a relationship that may lead to a deal."

There are two basic types of negotiation. The most popular one is distributive negotiation, in which the typical task is to allocate a resource, it can be a scarce resource like money or time. This type is also known as 'win-lose negotiations. This is because each party's objective is to maximize its share of the resource being allocated, so there is always a tussle for who gets how much. Naturally, it becomes tougher when the resources are given already and/or non-negotiable. Commonly in the literature, the terms 'Zero-sum' and 'fixed pie' are other names for distributive negotiations.

The second type of negotiation is integrative and has two steps. First, when people collaboratively attempt to identify additional items or resources that could be added to the overall mix of items being negotiated. This naturally can bring people and teams together while they leverage each other's strengths in negotiation and problem-solving. So, there is value in this process as there is a larger outcome to be expected that doesn't stop simply at the final result of such a negotiation scenario. The value is felt both within and outside the organization and could contribute to longer-term organizational knowledge building.

Second, integrative negotiation is by a large measure an allocation process, similar to the distributive resource allocation process in distributive negotiation mentioned earlier. If the integrative negotiation can subsequently expand the total value during its first step, both parties involved will feel like winners in the second step.

Soft skills to look for in a project manager

Judging from some of the definitions mentioned above, the soft skills required in an effective project manager could be summarised as - persuasiveness, marketing, selling, consensus-building, negotiation/facilitation skills, conflict and dispute resolution skills, also importantly mediation and arbitrator skills.

It is also equally important to understand that not every communication exchange needs to be a negotiation. Clampitt in his work published in 2001 described three overall types of communication models. A) The Arrow model is about sending a message to someone without any need for feedback. The problem with this is that the project manager doesn't know if the receiver received and understood the message. B) The Circuit model takes care of this incomplete reception problem by adding a feedback loop to the sender. This is useful, particularly in light of making communications interactive, inclusive and informative from all ends. In this context and from a negotiation perspective, the assumption works that 'understanding is the same as agreeing'.

The work of a project manager can be routine, random or sometimes rather unique. One of the core purposes of negotiation is to resolve some conflict (it could range from a budget allocation to a staff-reassignment matter), and that's the very reason why a typical project managers' schedule is seldom routine at the micro-level. The conflict, the resolution tactics, resources required, and stakeholder management for each situation could be hugely different. The project manager may also help to resolve other conflicts, including disagreements on how to resolve a problem that requires advanced conceptual and problem-solving skills.

How does a post-pandemic project manager look like?

During the pandemic, project managers have to consider the financial stability of a contract to finish a project, and risks analysis is critical during uncertain times while trying to avoid potential disruptions to productivity. These require substantial negotiation at different levels and continuously. For those dealing with supply chain management, the pandemic came with increased costs and longer lead times for products and parts. Additionally, project managers had to (quickly) learn new technologies and application of the same, for example, Artificial Intelligence to firstly, save large amounts of money and secondly, have an impact on how admin-based processes are run. Finally, project managers who have mastered hybrid project management will do well post-crisis – this includes managing remote diverse workforce and teams. Improvising some of the different types of negotiation, as discussed above, is the need of the hour. As companies become flexible, agile, pivot quickly and remain on project timelines, project managers have to remain competitive and stay on top of things in a post-pandemic world.

Pretty much like most other soft skills, knowing how to boost stimulating and meaningful conversations that result in a positive outcome for both parties are something that can always be continually improvised with practice and time. Apart from having the right technical and practical knowledge, there's also the importance of recognising structures, techniques, and some dedicated practice - a project manager will be able to demonstrate and deliver effective and timely negotiation skills to expand the outcome of a project, an organisation, and in some cases larger societal impact.