Concepts
Negotiation is an often-overlooked component of project management. In any project, negotiations with stakeholders, suppliers, project team members can be a deciding factor in the project’s success. Aligning the interests of different stakeholders can be a daunting task, making the approach to negotiation one of the key elements in project management.
In the context of the Project Management Professional (PMP) examination, having a deep understanding of the different negotiation strategies becomes critical. The negotiation strategies tools and techniques are vital elements in the Project Procurement Management and Project Stakeholder Management knowledge areas in the PMBOK (Project Management Body of Knowledge) Guide, which is the main reference for the PMP examination.
Defining a Negotiation Strategy
Negotiation strategies are essentially plans on how to approach negotiations with different stakeholders. This could range from deciding how to deal with a supplier on project resources to finding common ground between project team members who might hold differing views.
First, the project manager needs to ensure that all parties involved are clear about the project objectives. This means outlining the project details, the benefits and potential risks, as well as providing any additional documentation needed for clarity.
Next, the project manager needs to identify both the key and secondary stakeholders involved in the negotiation. This will influence the techniques and approach to be used. The method used for negotiating with a supplier may be different compared to negotiating with a team member or a project sponsor.
An assessment of potential negotiation outcomes is also key. One needs to determine the best and worst possible outcomes, the risks involved, and how the negotiation results would impact the project.
Types of Negotiation Strategies
While there are many ways you can classify negotiation strategies, in the context of the PMP, negotiation strategies are broadly classified into two: Collaborative and Competitive.
- Collaborative Negotiation Strategy: This strategy views negotiation as a win-win scenario where both parties emerge with their interests satisfied. This is usually the recommended strategy, particularly for building long-term relationships. It necessitates open communication, problem-solving and mutual respect. A typical example would be a project manager negotiating with a stakeholder on incorporating new features into a project, where both parties collaborate to ensure the project’s benefits while adjusting its scope.
- Competitive Negotiation Strategy: This strategy sees negotiation as a win-lose scenario, with one party asserting their interests over another. While it may yield short-term gains, competitive negotiation may damage relationships in the longer term. An example would be a project manager insisting on a strict project timeline despite reservations from the project team.
Collaborative vs Competitive Negotiation
| Collaborative Negotiation | Competitive Negotiation | |
|---|---|---|
| Approach | Problem-Solving, Win-Win | Win-Lose, Assertive |
| Relationship | Long-term, Cooperative | Short-term, Confrontational |
| Communication | Open Dialogue | Limited Information Sharing |
| Outcome | Mutual Satisfaction | One Party Benefits |
Choosing a Negotiation Strategy
The choice of negotiation strategy will depend on several factors: the relationship with the other party, the project objectives, and potential impacts of the negotiation process. A collaborative strategy is often preferred due to the win-win nature of its outcomes. However, a competitive strategy might be suitable in some instances, like when procuring goods or services in a seller’s market.
It’s important to remember that negotiation strategy management is a dynamic process and requires careful consideration of all factors. Acquiring a deep understanding of these strategies is crucial to successful project management and will undoubtedly reflect in the performance in the PMP examination.
Answer the Questions in Comment Section
True or False: Collaborative negotiation focuses on competition and winning.
- True
- False
Answer: False
Explanation: Collaborative negotiation is based on cooperation and creating a mutually beneficial outcome, not on competition or winner-takes-all mentality.
In which type of negotiation, team members can share a lot of information including objectives and constraints with the other party?
- A. Competitive Negotiation
- B. Collaborative Negotiation
- C. Compromise Negotiation
- D. Distributive Negotiation
Answer: B. Collaborative Negotiation
Explanation: In a collaborative negotiation strategy, parties share a lot of information including their objectives and constraints, which leads to a win-win outcome.
True or False: In compromising negotiation, both parties make trade-offs to reach a solution.
- True
- False
Answer: True
Explanation: In a compromising negotiation strategy, both parties compromise on certain aspects to reach an acceptable solution that partially satisfies both of them.
Which negotiation strategy is most likely to result in a win-win outcome?
- A. Competitive
- B. Collaborative
- C. Avoiding
- D. Accommodating
Answer: B. Collaborative
Explanation: Collaborative negotiations aim for a win-win situation where both parties work towards a mutually beneficial solution.
True or False: Distributive negotiation is also known as win-lose negotiation.
- True
- False
Answer: True
Explanation: Distributive negotiation is often referred to as win-lose because one party’s gain is another party’s loss.
Negotiation strategy should not be determined by:
- A. The type of relationship with the stakeholders
- B. The urgency of the project
- C. The price of tea in China
- D. The importance of the issue at hand
Answer: C. The price of tea in China
Explanation: The price of tea in China or any similar irrelevant factor has no bearing on determining a negotiation strategy.
A project manager should deploy which negotiation strategy if the long-term relationship with the stakeholder is important?
- A. Competitive negotiation
- B. Collaborative negotiation
- C. Distributive negotiation
- D. Avoiding negotiation
Answer: B. Collaborative negotiation
Explanation: In cases where maintaining a positive relationship is crucial, a collaborative negotiation strategy, which focuses on creating a win-win outcome, should be used.
True or False: Avoiding negotiation strategy is a viable choice when the issue at hand is of low importance.
- True
- False
Answer: True
Explanation: Avoidance strategy may be used when the issue is insignificant or when potential disruption outweighs the benefits of resolution.
Which negotiation type is often seen as a zero-sum game?
- A. Integrative
- B. Avoiding
- C. Accommodating
- D. Distributive
Answer: D. Distributive
Explanation: Distributive negotiation is seen as a zero-sum game because the assets are fixed and each party’s gain is other’s loss.
A negotiation strategy that is solution-oriented and focuses on the interests of the parties rather than their positions is referred to as:
- A. Competitive negotiation
- B. Integrative negotiation
- C. Distributive negotiation
- D. Avoiding negotiation
Answer: B. Integrative negotiation
Explanation: Integrative negotiation strategy focuses on the interests of the parties and is directed towards finding solutions that satisfy both parties.
True or False: Preparing and planning is one of the most crucial steps in any negotiation strategy.
- True
- False
Answer: True
Explanation: Planning and preparation allow a negotiator to understand the needs, interests, and goals, which is vital in determining a negotiation strategy.
Is it important to analyze the power dynamics while determining a negotiation strategy?
- True
- False
Answer: True
Explanation: Understanding who holds the power in a negotiation helps in tailoring the negotiation strategy to ensure maximum success.
Great article on negotiation strategy. It really helped me understand the basics before my PMP exam.
Great insights on determining negotiation strategies for the PMP exam. Really helpful!
I appreciate the detailed explanation of various negotiation tactics.
Can anyone share their experience with the ‘Win-Win’ negotiation strategy in a PMP context?
The BATNA concept is quite intriguing. How important is it during the PMP exam scenarios?
Thanks for the informative post!
It’s a bit too high-level. Could use more practical examples.
How do you handle negotiations where the other party is not willing to cooperate?