Negotiate project contracts

2025-07-15

Applies to: Dynamics 365 Project Operations

This article provides a guide on using Dynamics 365 to negotiate project contracts, detailing the steps and best practices for effective contract negotiation. It's based on a business process that is part of the Manage project contracts business process area in the Project to profit end-to-end scenario.

In today's competitive business environment, having a streamlined and efficient contract negotiation process is crucial. This process ensures that all contractual terms are clearly defined and agreed upon by all parties involved, reducing the risk of disputes and fostering strong business relationships. Dynamics 365 offers powerful tools that enable businesses to manage these negotiations effectively, ensuring transparency and compliance.

The negotiation of project contracts should be defined at the initial stages of a business solution. This business process is closely linked with other processes such as procurement, sales, and project management. Therefore, understanding how contract negotiation will be handled in Dynamics 365 can significantly influence the configuration and customization of related modules, ensuring a seamless integration and efficient workflow.

Negotiate project contracts stakeholders

Defining project billing terms involves several key stakeholders, each playing a crucial role in the process:

Sales team: They provide insights into customer needs and negotiate contract terms, ensuring the solution aligns with sales processes.
Project managers: They define the project's scope and objectives, which are crucial for setting accurate contract terms and conditions.
Finance team: They assess the financial aspects of the contract, including payment terms and budget considerations.
Senior management: They provide strategic oversight and final approval, ensuring the solution aligns with the organization's overall goals.
Clients or external partners: Their input is essential during the requirements gathering phase to ensure the solution meets their needs and expectations.

Negotiate project contracts process flow

The following diagram illustrates the business process for Project Operations Core and for Project Operations Integrated with ERP

The negotiate project contracts business process flow diagram covers the following steps for the contract manager role in Project Operations Core and for Project Operations Integrated with ERP. Deployments with Project Operations for manufacturing are more complex as described in the section Deployment scenario 3.

Start.
Adjust contract
Review legal redlines
Apply payment terms
Obtain customer approval.
1. If the customer approves the contract, then Finalize contract.
2. If the customer doesn't approve the contract, then revise contract, and then obtain customer approval again.
End

Implementing Negotiate project contracts process

Use the following table to guide you in negotiating a project contract.

The following table shows the configurations available, and the sequence recommended for setting up the configurations from top to bottom. Use the links in the Process step column to learn more about the component. The Process stage column includes three values that are separated by semi colons (;). The first value indicates the project phase when a configuration or step should be completed. The second value indicates the type of configuration, and the third value indicates if the step is a configuration or an operational step. The Process modifiers column is used to further describe other attributes for each step. The Application: Navigation and Entity column uses abbreviations to indicate the user interface or application with the navigation path after the colon. First, we list the navigation to the relevant forms. Next comes the name of the entity for importing or exporting data in either the Dataverse (DV) or with Data Management Framework (DMF). We use the abbreviations to indicate the type of entity, followed by the name of the entity after the colon. Learn more about the terms used in the table at Business processes, steps, and how to find things.

Deployment scenarios 1 and 2

This section describes the configuration for the business process in deployments with Project Operations Core and for Project Operations Integrated with ERP.

Process step	Process stage	Process modifier	Application: Navigation and Entity
Manage Project Price List	Develop; Base; Configuration	Early; Gold; At least one	Sales: Sales > Price Lists Import Data: Project Contract Project Price List
Create Contract Lines	Develop; Fundamental; Operational	Early; At least one	Sales: Sales > Project Contracts > Contract Lines Import Data: Order Product
Create Advances/Retainers	Develop; Optional; Operational	Continuous	Sales: Sales > Project Contracts > Advances and Retainers Import Data: Project Contract Retainers

Deployment scenario 3

This section describes the configuration for the business process in deployments with Project Operations for manufacturing.

Process step	Process stage	Process modifier	Application: Navigation and Entity
Create Cost and Sales Prices	Develop; Base; Configuration	Early; Gold; At least one	FIN: Project management and accounting > Setup > Prices DMF: Project – expense cost price Project – expense sales price Project – hour cost price V2 Project – hour sales price V2 Project – fee sales price Project transfer price V2
Add additional Funding Sources	Develop; Optional; Operational	Continuous; At least one	FIN: Project management and accounting > Projects > Project contracts > Funding sources DMF: Custom
Determine additional Funding Rules	Develop; Optional; Operational	Continuous; At least one	FIN: Project management and accounting > Projects > Project contracts > Funding rules DMF: Custom
Review billing rules	Develop; Optional; Operational	Continuous; At least one	FIN: Project management and accounting > Projects > Project contracts > Billing rules DMF: Project contract lines
Add Advances/Retainers	Develop; Optional; Operational	Continuous	FIN: Project management and accounting > Projects > Project contracts > Billing rules DMF: Project contract lines

Next steps

If you want to implement Dynamics 365 solutions to assist with your Negotiate project contracts business processes, you can use the following resources and steps to learn more. (Links are added when the articles are ready.)

Develop project strategy
Manage project contracts
1. Estimate project contracts
2. Negotiate project contracts. (The article you're currently reading.)
3. Finalize project contracts
4. Maintain project contracts
5. Process project change requests
6. Define project stakeholders
Plan projects
Manage project delivery
Manage project financials
Analyze project performance

You can use the following resources to learn more about the Negotiate project contracts process in Dynamics 365.

Contributors

This article is maintained by Microsoft. It was originally written by the following contributors.

Principal author:

Lifia Tamara | Consultant

Other contributors:

Muhammad Ali Khan | Senior Consultant
Lalitha Chintamaneni | Senior FastTrack Solution Architect

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