Negotiating Estimates

There are going to be some people who, quite properly, take exception to the title of this blog: ‘the estimate is the estimate – it is not negotiable’.

And that would be a commendable position to defend in my view; but a defence that, in some contexts, would fail. The client has their own position, just as the project planner has theirs. One is based on estimation and the other on expectation, priorities, anticipation and hope. And don’t tell me ‘hope isn’t a strategy’ – no, it’s not. But it is a very real stance many clients take.

Part of your role as project leader is to ensure that your project estimates are robust and contain prudent levels of contingency. Part of your client’s job is to screw the cost and time budget – including contingency – as much as they can… and then expect you to deliver on budget, on target and on time.

So in the real world of managing stakeholders and clients, you need a negotiating strategy that will leave you with a budget or schedule estimate that you can feel confident about. Step one, of course, is to do a robust job of figuring out your best estimate and how much contingency is really prudent, in the light of a thorough evaluation of risks.

Planned Duration or Cost

Planned Duration or Cost

Now consider your negotiating stance and add to this estimate a ‘negotiating contingency’.

Negotiating Duration or Cost

Negotiating Duration or Cost

Now, once you have done that, start your negotiation, but do not allow your first concession to exceed one half of your negotiating contingency. Likewise, never let any subsequent concession exceed half of your remaining negotiating contingency. Simple mathematics will ensure that, at the end of the negotiation, if you follow this strategy, you will always have all of your prudent contingency.

Negotiating Contingency

Negotiating Contingency

This is one of the pragmatic small-medium-sized project tips in
How to Manage a Great Project

Go to the How to Manage a Great Project website

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How to Manage a Great Project by Mike Clayton


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