January 17, 2011 by rkelly976
Last week, I posted the Top 10 Issues for Project Managers and the third issue listed was how surprised the panel was with the amount of vendor management and negotiation there was in the positions. In my company, I have a project team member focused on just this area. While he is valuable in so many other areas of our offering development initiatives (pricing, messaging, processes design….this guy is good!), Richard Strickland’s primary role is negotiating contracts and managing vendors. Unfortunately, many of you aren’t as blessed to have such a resource on your team and find yourself in uncomfortable territory. Well, this is the post for you. The following is an interview I did with Richard with regards to some basics of negotiating and what he thinks PMs should know…
Robert Kelly [RK]: Richard, thank you so much for taking some time out to speak with me today. You and I have been working together for about 3yrs now, so I know a little bit about you by now. However, in addition to being a PMP yourself can you share a little of your background with our readers?
Richard Strickland [RS]: I’m currently a Senior Procurement Manager with Lenovo supporting our Services for sell portfolio. My past work includes various roles in Production Operations, Supply Chain Management and New Product Introduction & Support with IBM. New product development is where my passion lies as I enjoy business and product start up activity which I pursue inside and outside of Lenovo. I have been PMP certified since 2002.
RK: While the PMI has an entire Knowledge Area dedicated to Procurement Management, I don’t think PMs are expected to be Procurement Professionals. With that said, there is constant negotiation between functional managers and project team members on time, priorities, etc. What are some tips you have for PMs with regards to negotiating with ‘friendlys’…those on your team and within your organization?
[RS]: I think the PM has to communicate the end game objective, why it’s important, the context of effort required to achieve and solicit buy-in from the team or at least know up front if anyone on the team will have issues with support. i.e., they are currently overloaded and can’t support your project, it’s unclear if you have a functional rep for your project that you require and so on. The quicker you can establish your core team and receive buy in for support, the easier it is to negotiate modifications to schedule, priorities, deliverables, etc. as you move forward. Outside of your core team, it’s usually a matter of priority setting. Work streams rise and fall on the priority scale, sometimes you have to escalate to others to reshape a priority if it is urgent but most everyone wants to accommodate and deliver upon your request if at all possible and reasonable.
RK: What about external vendor, does your approach change when negotiating with ‘outsiders’ or do you leverage the same techniques/approach? What are the key things you do or keep in the back of your mind?
[RS]: That’s a good question. I would not say my approach is significantly different. I am assertive in pursuing a deliverable internally or externally, especially if I have a commit date around the deliverable but I am aware of the motivational factors in play with the other party and use those to achieve my objective. For instance, a supplier is motivated to do business with us or increase the amount of business they currently do with us due to the increase in business revenue it will generate for them or if it is a start up service with low revenue opportunity, the halo affect they may receive from doing business with us. Internally, it’s a reminder of a commitment to the project and a reward or recognition system for the delivery of on time quality work.
RK: When negotiations have seemed to come to a standstill…how do you try to get the progress going again or is there something that tells you no way, this isn’t happening?
[RS]: Well, it takes two to tango, so as long as we’re still having dialogue with one another I believe we can reach a mutually satisfactory agreement. However, if the other party pulls back, shuts down, I’ll usually escalate the status to a higher management level to ensure the other side is consistent and it’s not just my primary contact getting preoccupied with other pursuits. I also recommend face to face negotiations as this speeds up the decision making process and also allows for an opportunity to know the other party on a more social level. I’ll appeal to the motivations as to why we are attempting to work together as well but at some point you will recognize or the other party will tell you, per the immortal words of Roberto Duran, ‘no mas’.
RK: Considering you have worked with a number of PMs, having negotiated with some of the world’s leading organizations, and you yourself are certified PMP, what do you wish more PMs would know or do better when it comes to the procurement/negotiations aspects of a project?
[RS]: Usually the parties underestimate the amount of time required to put the deal under contract, especially if the two companies are mid to large enterprise in size. If you have two larger companies, 60 days to complete a contract is moving at a very good pace with both sides motivated to get the deal complete and it can take months depending on the complexities of the business. Contracting schedules can be influenced by the complexity of the deal, if the parties have done business with one another before (read trust factor), size of the companies involved, their risk tolerance related to contract terms and conditions and the experience of the primary negotiators as someone new feels they have to get every single deviation approved by someone else whereas an experienced negotiator knows what is important and reviewable by others and what terms are secondary to reach agreement.
I would love to hear your thoughts on negotiation. Please send me your favorite techniques for negotiating, ask a question, or share a story with our readers. I don’t want to talk at you, but prefer to discuss with you.
Richard Strickland is a Sr. Procurement Manager supporting Lenovo’s Services Business Unit. Richard has over 25 years of experience with Lenovo & IBM in Production Operations, Supply Chain Management and New Product Introduction & Support. Mr. Strickland has also been PMP certified since 2002.