Tuesday, January 25, 2011

Program Management in Negotiations

Every Negotiator Needs To Be a Good Program Manager. Negotiators seldom have all the knowledge needed to be able to negotiate a major contract. They need input from users, technical experts, engineering, finance, sales and marketing and the business to define what’s needed, what’s important and what’s acceptable.  Agreements frequently are made up of a number of documents and many of need to be prepared by others. Most purchases face certain schedules or deadlines that must be met and to meet those scheduled or deadlines the negotiator needs to manage their own team and the supplier’s team to meet their commitments or deliverables when they are needed for the negotiation.   

Here are the types of program management tasks that negotiators need to be able to do:
  1. Define the scope of the negotiation activity. What are you buying?  What do you need the supplier to do and what will you do?
  2. Identify necessary resources. This means identify the people, equipment, materials that are necessary to support the negotiation.  It also means getting internal commitments that they will provide the support when needed.
  3. Identify the tasks, responsibilities, critical dependencies that will be necessary to reach agreement. This is a list that will grow as the negotiation continues.
  4. Implement a process to manage the schedule by identifying work breakdown, tasks, durations, whether activities must be performed serially or may be performed in parallel. Identify all tasks or deliverables that would be on the critical path to completion.
  5. Implement a process to manage change.
  6. Implement a process to manage cost / budget.
  7. Know how to use tools to manage performance.
  8. For products or services that require development, the Negotiator also needs to know what performance management tools are needed to be included in the contract.

For managing change and managing cost and budget the key element is evaluating and managing any potential tradeoffs that may need to be made. Scope, Cost, Schedule, and Quality are usually interdependent and a change to one may require a change to others. For example, a change to the scope, such as an increase or modification can cause the need for a change to the cost, a change in the delivery schedule or it can also impact the resulting quality. If you want to change the scope, but not the quality, that will impact the cost or schedule or both.

For deliverables by either party you want to identify the 4W’s & a H
  1. Who is responsible to provide it?
  2. What are they responsible to provide?
  3. Where will they provide it?
  4. When will they provide it?
  5. How will they provide it?

Each task and each deliverable then needs to be included on an “action item list” that gets reviewed by the team. The action item list for each task or deliverable would then include:
  1. Description of the task
  2. Responsible party
  3. Committed date
  4. Status as of the date of the review (early, on-time, late)
  5. Open issues, dependencies or problems   

At the end of every negotiation session you would update the list to add new tasks or or any new deliverable that were agreed. Then you go through the list to summarize what’s still open and what’s been closed. Having a structured, documented process helps remind and incent people to close on their open items and provides documented status to update your management or escalate problems with Supplier management.

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