Project Management process maturity and contract negotiation – Part 3

In this third part of a four part series we are going to look at Quadrant 3  in the diagram, where the project management process maturity levels are low 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.

 

Low project management maturity within the procuring organisation

When the procuring organisations project management maturity is low this could mean that the organisation is more able to adapt and change on the run, in relation to offerings proposed by the supplier organisation where they do not necessarily fit the box prescribed. The procuring organisation may be more ‘agile’ in their approach.

This will have a flow on affect in that the contracting process will be less expensive to administer.

Aids the procuring organisations negotiation process

This will have a positive impact on the procuring organisations negotiation process as it means they are more likely to take on a less expensive supplier who is more willing to work in an agile way with them.  The nature of the negotiation process may be more informal and less tied down in process.  This again ties back to the lower cost of administration of the negotiation process.

Low project management maturity processes within the supplier organisation

If there is low project management maturity within the supplier organisation this can have one of two impacts.  It may mean that the organisation is more nimble and agile and could ensure more creative ways of working with procuring organisations.

Or, it may mean that there is total disorganisation around the tendering process which means less likelihood of completeness in the process of putting together a tender or quote request.  This would be to the detriment of the supplier organisation.

Aids the supplier organisations negotiation process

Where the organisation is nimble and more agile, there is more likelihood of matching the procuring organisation and therefore ability to negotiation for stronger win/win outcomes for both parties.

There is more likely to be give and take for the procuring organisation in supplying to the contracting organisation.

Where the supplier organisations processes are immature this can leave room for manoeuvring and playing the ‘hidden’ cost card with the supplier organisation.  The supplier organisation can go into the negotiation with a base set of costs, knowing full well that full disclosure hasn’t taken place, and allows for further negotiation to take place as these costs are uncovered.

Overall outcomes

Low project management maturity processes aid contract negotiating to the benefit of both organisations where both organisations are nimble or agile and willing to work for the benefit of each.  The impact of this is that it most likely sets up a Win/Win scenario for both organisations.

Where the low project management maturity processes exist within the supplier organisation this leaves room for negotiation in favour of the supplier organisation to take place to the detriment of the procuring organisation therefore creating and Lose/Win scenario.

Karen

 

Written by Karen Munro