Should a Project Manager Get Involved in Contract Negotiations? | Video

Should a Project Manager get involved in Contract Negotiations?

This is the essence of a question I was asked.

I thought this was an interesting question, and that you may want to hear my response.

Which is simple…

Absolutely we should.

This video is safe for viewing in the workplace.

This is learning, so, sit back and enjoy

Contract Negotiations are for Procurement Teams?

If we leave the negotiations entirely to procurement teams, then decisions will be based on:

• Procurement rules, and 
• Simplistic measures of value like cost.

I Would Argue Project Managers should Lead the Negotiations

This leaves the procurement team free to act as enforcers and ‘bad cop’ over essential but technical details. For example:

• final price, 
• detailed Terms and Conditions, and 
• the wording of the contract. 

Things go wrong…

But we should also be ready to step in again if later stages threaten to derail an important relationship over a petty detail.

Remember, what matters is that we deliver our projects. Everything else is just process and tactics.

If I make it sound adversarial between PM and Procurement Manager, I apologize. 

You’re on one team. So, plan your procurement campaign accordingly. Each of you should play to your own expertise in the greater interests of the project and your organization or client. 

The Project Sponsor Role in Contract Negotiations

Finally, your Project Sponsor can play a valuable role in contract negotiations. Here are two valuable contributions:

1. Closing the negotiation, to get a last concession, and 
2. Handling an intransigent Head of Procurement. One who wants to put a pointless policy ahead of doing the right thing.

Context…

Now, you might argue, correctly, that this is context-dependent. Bigger, more complex negotiations are more likely to need your intervention. For basic and fairly standard contracts, you can let the procurement team rely on policy, and leave it to them.

However, in my experience, as soon as negotiations start, people focus on positions. These are often long-standing. And that can lock up the process. 

Balance…

By the nature of projects, we’re often trying to do something new. Your job is to focus on the interests of the project. It is not the role of procurement professionals to innovate, but to protect.

As in everything, the secret to success is balance, and working together is the best way to find it.

Your responsibility is simple. To deliver your project so that your organization or client can gain the benefits and value it planned for. If that means diving into the procurement process – and I believe it does – then get ready to dive.

Recommended Videos

Carefully curated video recommendations for you:

• Competitive Procurement: How to Run a Tender Process | Video
• A Fixed Price Contract for Your Project: Pros and Cons | Video
• The Project Control Paradox | Video
• How to Work with Consultants

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What Kit does a Project Manager Need?

I asked Project Managers in a couple of forums what material things you need to have, to do your job as a Project Manager. They responded magnificently. I compiled their answers into a Kit list. I added my own. 

Check out the Kit a Project Manager needs

Note that the links are affiliated.

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