Project Management process maturity and contract negotiation – Part 4

This is Part 4 in a series of posts looking at how project maturity impacts on the contract negotiation process.
In this final of thet series we are going to look at Quadrant 4 in the diagram, where the project maturity process levels are high and it aids the contract negotiation process.

In each part of this series I discuss one of the four quadrants in the diagram including both perspectives from the procuring organisation as well as the supplier in the negotiation process, as there are different impacts depending on which perspective you are.
It is also worth noting that the way that each organisation – procurer or supplier are perceived may also be different based on the industry in which the organisations operate. The size, stability and tenure of the organisation will play a part in the maturity of its processes.

High project management maturity within the procuring organisation
When the procuring organisation has mature project management processes it ensures that requirements will be fully documented and scope fully understood. This allows for a much tighter and inclusive procurement process and has the procuring organisation in a strong place of understanding what their needs are.
They have strong governance in place, fully understand the business drivers and have strong outcome based project initiation.

Aids the procuring organisations negotiation process
This project management process maturity aids the procuring organisation because they have a strong position to commence negotiations from. It means that there is less likelihood of contingency being allowed, especially a large amount.
The procuring organisation is in a strong position to negotiation for their desired outcomes from a solid starting point.

High project management maturity processes within the supplier organisation
If the supplier organisation also matches the same high level of project maturity they are thorough in their own definition and ability to respond to tender or quote requests. They will be comfortable with their costing models and their ability to deliver knowing that their process maturity allows them to be confident with their timeframes and costs.

Aids the supplier organisations negotiation process
This then aids the supplier in the negotiation process as they have a strong understanding of their own ability to negotiate. It possibly does not allow them much room to move in negotiations though, which means that they will be confident in their costing model and what is being negotiated. They will feel confident that there will be not hidden out of pocket costs arise.

Overall outcomes
High project management maturity processes aid contract negotiations for both parties. The impact of this is that it most likely sets up a scenario where by there is little negotiating that actually takes place.

Karen

Written by Karen Munro