PPMP20011: Project Manager Role in Commercial Negotiation Portfolio

This portfolio assignment explores the critical role of a project manager in commercial negotiation, a vital skill in equipment and service procurement. The assignment delves into how the project manager supports the procurement team by providing project insights, which aids in more aggressive negotiations. The role's consistency across different project types, industries, and organizational levels is examined, along with its relevance to the Chunnel Project. Key concepts like Relationship-based Procurement (RBP) are defined, and the relationship between procurement and negotiation is clarified. The assignment also discusses how the project manager's engagement varies based on experience levels (1, 2, and 3). The document includes references to relevant academic literature.

(Insert Student Name) / (Insert Student Number) - PPMP20011 Unit Portfolio for Week 3
Weekly Portfolio Learning Table
Description of
topics including
reading samples
Learning
outcomes of the
unit
Learnings from your experience, this and prior unit
reading, assignments
Supporting
documentation
including your
prior learning
Week 3 Topic: The
Role of the Project
Manager in
Commercial
Negotiation.
Collaborative Project
Procurement
Arrangements
(2015) by Derek H. T.
Walker and Beverly
M. Lloyd Walker;
Commercial
negotiation is a vital
skill required by a
project tea during
equipment and
service procurement.
The negotiator is a
generally a member
representing the
procurement team
and is responsible for
negotiating the price
of the product or
service and has the
power to accept or
reject a vendor. The
project manager
serves as a guide to
the negotiator and he
is responsible for
using his experience
to influence the
negotiation on the
company’s behalf.
1. What role do you think the project manager has in commercial
negotiation?
The project manager is responsible for providing assistance to the
negotiator as and when required. The procurement team is responsible
for negotiating. However, there might be times when they would
require some project insights that would help the procurement team to
negotiate better. Providing insights to the project by the project
manager to the negotiator is vital as it aids in more aggressive
negotiation. However, there may be times when the product or service
offered by the vendor is critical for the project. Therefore, it is the duty
of the project manager to convey that information to the negotiator so
that he or she does not negotiate too aggressively for such products or
services.
2. Does that role vary according to the type of project?
The role will not vary with the type of project. This is because the
project manager is responsible for supporting the negotiator with
guidance and project insight. The negotiation is always conducted by
the person who has the power to buy. Therefore, negotiation with
anyone other than that person does not hold any value as they will
have to renegotiate the terms and conditions again in the presence of
the procurement team.
3. Does that role vary according to the type of industry or domain?
The role does not vary with the type of industry or domain as the
project manager of any domain or industry is responsible for aiding the
negotiator from the procurement team as that person has the power to
buy or reject the product or service from the vendor.
Leu, S. S., Son, P. V. H.,
& Nhung, P. T. H.
(2015). Optimize
negotiation price in
construction
procurement using
bayesian fuzzy game
model. KSCE Journal of
Civil Engineering,
19(6), 1566-1572.
Handfield, R. B.,
Primo, M., &
Oliveira, M. P. V. D.
(2015). The role of
effective relationship
management in
successful large oil
and gas projects:
Insights from
procurement
executives. Journal
of Strategic
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(Insert Student Name) / (Insert Student Number) - PPMP20011 Unit Portfolio for Week 3
Description of
topics including
reading samples
Learning
outcomes of the
unit
Learnings from your experience, this and prior unit
reading, assignments
Supporting
documentation
including your
prior learning
4. Does that role vary according to where the person is in the organisation
i.e. project manager, program manager, portfolio manager?
The role does not vary with the position of the person in the
organization as they would also be responsible for providing guidance
to the negotiator.
5. What does the material in this week have to do with the Chunnel
Project?
A huge amount of negotiation was required for the Chunnel tunnel
project. The negotiation was mostly between the government officials,
the project company and the various vendors.
6. How does this week’s topic relate to the previous weeks topics?
The week 1’s topic is about commercial project and aids in explaining
the various projects that are undertaken by different industries. The
week 2’s topic is about negotiation and the methods and techniques
that must be followed to be a better negotiator. These two topics are
directly related to the week 3’s topic as this topic aids in developing an
understanding of the commercial negotiation and how the project
manager is involved in the process
7. What is Relationship-based Procurement (RBP)?
Relationship-based Procurement is type of dealing that leads to the
mutual benefit of both the seller and the buyer. Such a type of
procurement generally taken place between two parties who have
developed a mutual understanding in the past or they have created one
in the present.
8. What does Procurement have to do with Negotiation?
Procurement is the process of obtaining supplies and services from a
vendor. However, it has been observed that the vendors tend to keep
Contracting and
Negotiation, 1(1),
15-41.
Hoezen, M., &
Volker, L. (2015).
The importance of
procurement
negotiations for
project success.
Projectie: tijdschrift
voor
projectmanagement,
2015(2).
Kerzner, H., &
Kerzner, H. R.
(2017). Project
management: a
systems approach to
planning,
scheduling, and
controlling. John
Wiley & Sons.
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(Insert Student Name) / (Insert Student Number) - PPMP20011 Unit Portfolio for Week 3
Description of
topics including
reading samples
Learning
outcomes of the
unit
Learnings from your experience, this and prior unit
reading, assignments
Supporting
documentation
including your
prior learning
their profit-margin very high. Therefore, negotiation becomes an
important tool to minimize that margin. Negotiating for a product or
service also helps to maintain the budget of the project.
9. In what way does the engagement of the Project Manager vary
according to the level (1, 2, & 3)?
The experience level of level 2 and 2 project managers are limited to
single projects. Therefore, such project managers will only be able to
engage in negotiations pertaining to their projects. Level 3 project
managers are often involved in larger or multiple projects. Therefore,
their level of engagement in the negotiation is very high.
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(Insert Student Name) / (Insert Student Number) - PPMP20011 Unit Portfolio for Week 3
References
Handfield, R. B., Primo, M., & Oliveira, M. P. V. D. (2015). The role of effective relationship management in successful large oil and gas
projects: Insights from procurement executives. Journal of Strategic Contracting and Negotiation, 1(1), 15-41.
Hoezen, M., & Volker, L. (2015). The importance of procurement negotiations for project success. Projectie: tijdschrift voor
projectmanagement, 2015(2).
Kerzner, H., & Kerzner, H. R. (2017). Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons.
Leu, S. S., Son, P. V. H., & Nhung, P. T. H. (2015). Optimize negotiation price in construction procurement using bayesian fuzzy game model. KSCE Journal of
Civil Engineering, 19(6), 1566-1572.
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