Guide to negotiation in project management

negotiation guide

Project managers are professional negotiators. 

We’re negotiating constantly—even when we don’t realize it. We negotiate resources, timelines, budget, and scope every time we start a new project. We negotiate stakeholder expectations and vacation plans. We don’t just use negotiation in project management; we probably even negotiate at home: it’s fine to have burgers tonight, kiddos, but we’re getting Indian takeout on Friday. 

Unlike kids, who are quick to give sharp, definitive feedback, business negotiation is a little murkier. Most people don’t know how well they’ve actually done until after the conversation concludes. For example, a project manager may leave the conversation feeling happy with the outcome, naïve to the fact that they could have negotiated less float to hit a tight deadline. (I may or may not be speaking from a painful experience.)

Regardless of which project management methodology you use, negotiation is a critical skill for any project manager. 

If you’re looking to sharpen your project management negotiation skills, you’ve come to the right place. Below we outline why negotiation is an important skill to PMs, when project managers need to employ those skills, and which negotiation skills project managers need to master with a few helpful tips along the way. 

But before we get into all that, let’s talk about what negotiation is and the psychology behind it. 

What is negotiation in project management? 

AvatarJamie Colarossi
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Negotiation is a discussion or process of reaching an agreement. There are shorter negotiations—like discussing what you’ll have for dinner tonight with your spouse—and longer negotiations. Most negotiation in project management lasts longer than an evening. 

The negotiation process

All negotiations go through a particular process, regardless of if you’re trying to get a toddler to eat a green pea or if you’re trying to convince an engineer to stay on call over the course of a weekend. Negotiations consist of five parts: deciding to negotiate, preparing for the negotiation, negotiating, executing, and then following up. 

Let’s use that toddler example as an easy demonstration. 

1. Deciding to negotiate

When deciding whether or not to negotiate, all parties have four options: to dominate, acquiesce, avoid, or negotiate. 

In the case of the toddler, the parent could decide to dominate (pinch the kid’s mouth open and force-feed peas), acquiesce (stare at the peas remaining on the toddler’s plate and say nothing), avoid (don’t put peas on the toddler’s plate to begin with), or negotiate (prepare to work something out with a toddler). 

2. Preparing for the negotiation

Preparing to negotiate can take a long time or quick thinking on behalf of the project manager. You have to know your goals, what the other party’s goal(s) are, where you’re willing and unwilling to compromise, and what the other party is willing and unwilling to compromise. 

For example, your toddler has twenty peas on her plate. You know she is wholly unwilling to eat all twenty peas, but anything less than five peas is inexcusable to you. Your goal is to have her eat vegetables as part of a balanced meal, and her goal is to avoid vegetables because she would prefer to fill up on sweets. 

3. Negotiating

Here’s where all the project management people and negotiation skills come into play; it’s the actual process of working with another individual to develop a solution. Project managers can use their negotiation skills (and tips and tricks listed below) to reach an agreement. This process includes coming up with mutually beneficial ideas, considering alternative solutions, weighing different options and outcomes, and selecting a way to move forward.

For example, your toddler might be keener on eating her peas if she’s given an alternative: eating leftover broccoli instead. You and she both agree that if given a choice between three broccoli florets and twelve peas, she would rather eat the peas. You agree to sit with her at the table until she’s finished and that she can have some sweets right after. 

In a more formal setting, both parties might sign an agreement for how they would commit to proceeding. 

4. Executing

Executing is what it sounds like: all parties follow through on their commitments. 

You sit at the table with the toddler. The toddler is free to make faces at her peas and wait until they get cold before eating them, but the second that twelfth pea gets swallowed, she gets a small cookie. A deal is a deal. 

5. Following up

Finally, set yourself up to negotiate in the future. Relationships aren’t as simple as completing one interaction and forgetting everything that comes before or after it. Make sure the relationship continues smoothly after the deal. 

For example, you might thank your toddler for her hard work eating her peas. You can tell her how good it makes you feel when she’s willing to compromise and give her dedicated playtime before the next meal. 

What are common project management negotiation scenarios?

Beyond parenting, there are several scenarios where project managers have to flex their diplomacy skills. Consider the following scenarios:

1. Reining in a wild stakeholder vision

We’ve all seen it before. A stakeholder wants a brand new program that can do everything—manage itineraries, balance a budget, keep stock filled, and monitor a wireless security camera. This visionary wants the project done in 90 days with a team of three people and “as bootstrapped as possible.”

Massive projects with no sense of scope are entertaining to brainstorm and a monster to execute. As a project manager, it is your duty to protect your teams from unwieldy project expectations, which means negotiating with that stakeholder (be it your boss or a client) to figure out what is and isn’t reasonable. 

2. Keeping the schedule on track

Unfortunately, projects often experience some kind of delay. Your task estimates were off, there wasn’t enough level of effort accounted for, a team member has to take a surprise week off to deal with a family issue, or a stakeholder wants to revisit requirements. No matter the cause of the delay, it’s up to the project manager to negotiate with all affected parties how the project should move forward with its timeline.

3. Adding guide rails to a budget

Similarly, almost three in four projects experience cost overruns or unexpected costs that cause the project to exceed its budget. When it comes to the tough decision-making around what to do when the money runs out (or how to prevent cost overrun in the first place), it’s the project manager’s job to know what all parties want and negotiate how to get them there as reasonably as possible.  

4. Mending hurt egos

We have all had that team member who has decided that they know how to plan, execute, analyze, and follow up on a project better than the project manager. Egos run amok in project management. Getting team members to recognize their limits and expectations is essential for managing a team. When stakeholders, sponsors, and/or team members don’t feel respected or valued, it’s up to you to work things out. 

5. Managing team workloads

A core part of a project manager’s job is negotiating just how much each team member has to contribute to a project each week. Project managers need to balance the team’s needs—individual bandwidth, vacation time, and competing projects—with the business’ needs. Successful project managers can inspire both parties to meet somewhere in the middle. One way to achieve this is by using a resource management tool with tentative bookings and a clash management feature enabling you to plan work while you negotiate competing priorities with the relevant people. 

6. Balancing perfect, good, bad, and great

From Aristotle to Voltaire, great thinkers have formed a consensus throughout history: the pursuit of perfection undercuts the ability to act on what’s good. Project managers are responsible for quality control. When a deliverable isn’t quite up to standards, it’s up to the PM to intervene. And if a team member is fussing endlessly over her deliverable to make it as close to perfection as possible, it’s the PM’s job to say, “Stop. What you have is good enough.” 

5 negotiation skills and hacks every project manager should know

Effective project managers hone their negotiation skills to become better PMs and to help their projects run smoother. 

Below, we’ve compiled the most critical techniques project managers can use to navigate through their project’s jungle of compromise. 

1. Distinguish what type(s) of power you have

According to Harvard Law School’s Program on Negotiation, three types of power are relevant to any negotiation. 

  1. Your level of dependence on others: How much control do you have before you run into other stakeholders? The less you’re reliant on others’ approval, the more flexibility you have in the negotiation process. 
  2. Authority based on your role in the company: How much authority do you have to negotiate in the first place? The answer to this question tends to be more dependent on your company’s culture and business model. 
  3. Psychological power: How persuasive you are. The Harvard authors note, “Interestingly, being powerful and feeling powerful have essentially the same consequence for negotiations.” 

Knowing how much of which kinds of power can benefit you immensely. If you’re an intern trying to find an agreement with a CEO, you’re going to have a lot less negotiating power than the CEO. Understanding the power dynamics in your company can help you navigate how much you should be prepared to give and how much leeway you have when determining your BATNA.

2. Know your BATNA

Visual illustration of BATNA (Best Alternative To a Negotiated Agreement) and ZOPA (Zone of Potential Agreement) by Resource Guru

An illustration of the project management negotiation concept of BATNA and ZOPA (Zone of Potential Agreement).

In their book Getting to Yes: Negotiating Without Giving In, authors Roger Fisher and William Ury coined the term BATNA, or “Best Alternative To a Negotiated Agreement.” 

Your BATNA is what you’re willing and unwilling to do if negotiations fail. 

Fisher and William recommend the following steps to determine your BATNA:

  • Know which actions you could take if you can’t reach an agreement. Which alternatives are available to you?
  • Take those alternatives and brainstorm. How can you make them practical and actionable? How can you make them work for you? 
  • Select the alternative that seems best to you. 

From there, take time to figure out the lowest-quality outcome before going with the alternative. 

Knowing your BATNA sets you up to have all the information you need about what you will and won’t accept and how you will react if you can’t come to agreeable terms with a project stakeholder. 

3. Capitalize on anchoring bias

“Anchoring,” otherwise known as “focalism,” is a cognitive bias that describes the “common human tendency to rely too heavily, or ‘anchor,’ on one trait or piece of information when making decisions.” In negotiation, anchoring bias comes in the form of using the first offer as a guidepost for what future offers should look like. 

Project managers can take advantage of this human psychology fallacy by making the first offer during the negotiation process. Whether you’re trying to get someone to turn on their Zoom camera during remote daily standups or negotiating a tricky vacation request, making the first offer will set the tone for the rest of the discussion. 

Remember that you aren’t immune to anchoring bias yourself. One way to overcome anchoring bias is to identify your anchors and evaluate whether they’re the best way to evaluate a situation. As an article on anchoring from The Decision Lab points out, a study published in the journal Personality and Social Psychology Bulletin in 2000 found this strategy to be effective. They explain: 

In one study, car experts were asked to judge whether a resale price of a certain car (the anchor) was too high or too low, after which they were asked to provide a better estimate. However, before giving their own price, half of the experts were also asked to come up with arguments against the anchor price. These participants showed a weaker anchoring effect, compared to those who hadn’t come up with counterarguments.

In other words, the best way to use anchoring to your advantage is to make the first “anchoring” offer in a negotiation. And the best way to avoid anchoring bias is to evaluate your anchors—choose only to use the ones that best serve your argument. 

4. Practice patience 

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Time. It’s a resource that project managers don’t often call upon because it’s considered so scarce. Still, when it comes to a negotiation, PMs can often make good use of it, especially when dealing with project sponsors and stakeholders. 

Patience in negotiations can happen with extra seconds, minutes, hours, weeks, or even months or (rarely) years. Time during a negotiation process is relative to what’s under discussion. Sometimes even decision-making timelines can be extended to craft the proper agreement. 

According to Watershed Associates, taking your time can lead to the following benefits: 

  • It can encourage flexibility and soften expectations
  • It can promote the other parties to accept or confront challenging choices
  • It can force concessions

Whether you’re negotiating with a product owner, a third-party stakeholder, or a member of the developer team, take account of how much time you can use to your advantage. 

5. Ask open-ended questions

One of the best negotiation skills project managers can pick up is asking powerful open-ended questions. 

Open-ended questions create the opportunity to learn about the other party’s BATNA, their values, and their reasoning for disagreeing with you. These kinds of questions also allow you to use more human psychology to your advantage—people are much more likely to be agreeable if they talk more than listen in a conversation, which open-ended questions naturally invite.  

Some valuable open-ended questions include:

  • “Would you mind explaining what the goal is for this requirement?”
  • “I’m not sure I fully grasp all the intricacies in your proposed budget. Would you mind going over them with me?” 
  • “Can you tell me what’s most important to the client for this project?”
  • “Is there any reason you can’t?”
  • “What other solutions have you thought about?”
  • “What else should we consider about this project’s scope?”

One form of open-ended questions I’m particularly fond of is the mirroring technique—take a statement from the other party and turn it into a question. 

For example:

Them: This budget is unreasonable!
You: This budget is unreasonable?

There’s no “why” involved when doing this—that can come across as condescending and productive—but it also prompts the other party to consider why they’re taking their position. In a best-case situation, they may even talk themselves into seeing things your way. 

Negotiation in project management: Conclusions

Negotiation in project management is tricky. Whether project managers are navigating unrealistic sponsor expectations or convincing a team member to pick up the pace, it’s their job to find the best solution for the project. 

Luckily, project managers have several negotiation skills and hacks they can lean back on. Project managers can equip themselves to get the best outcome for all parties involved, from determining how much power they have during the negotiation to strategic mirroring. 

One of the best ways project managers can prepare for a negotiation is by taking stock of current and future project work. From exploring how resources are spending their time hour-by-hour to a month-by-month overview of which projects are due when, project managers use Resource Guru to arm themselves with all the information they need to advocate for what’s best for the project, team, and stakeholders. 

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