How important is contract negotiation in engineering consultancy and how is it approached?

Jason Rudowski

Supply Chain Management: Negotiation

Contents

Mott MacDonald Ltd

Contracts

Negotiation strategies

Strengths & Weaknesses

Conclusion

Mott MacDonald Global engineering & management

consultancy

Buildings, communications, environment, health, oil and gas, power, transport, urban development & water

Revenue of over £1bn

References: http://www.mottmac.com/aboutmottmac/; http://www.mottmac.com/projects/?id=88116

Contracts Clients

Tender Report/Presentation Bespoke projects

Suppliers Tender price Conversation (phone) Monitor quality of product

References for images: http://www.northent.com/pictures/tyne_bridge.jpg; http://2.bp.blogspot.com/_wOjmEAl3o-I/Skz9lz1o33I/AAAAAAAAElM/qYMkr4Szfzs/s400/Sage1a.jpg; http://us.123rf.com/400wm/400/400/dolnikow/dolnikow0907/dolnikow090700061/5243325-electric-power-lines-on-the-blue-sky.jpg

Negotiation Strategies Collaborative, integrative, win-win approach

required

Improving relationships

Projects with a shorter timeframe more profitable

If win contract, further details are negotiated

Negotiation Style Model

Low High

Low

High

Concern for Substance

Con

cern

for

Rela

tion

ship

N3ACCOMMODATEBuild friendly relationship

N2COLLABORATECreative problem solving

N1DEFEATBe a winner at any cost

N5COMPROMISESplit the difference

N4WITHDRAWTake what you can get

Reference: Dr Dawei Lu, MSc Supply Chain Management moduleLett

ing

th

em

get

wh

at

they w

an

t (T

hey

win

)

Getting what I want (I win)

Negotiation Analysis

Strengths Weaknesses

Good relationships

Constant stream of projects for clients

Monitor suppliers to assess their quality improve negotiations

Well defined contracts

Increased costs to maintain relationships

Bespoke project which may change in scope are hard to price

Large projects are less profitable

Conclusion Contract negotiation is critical for this industry

Bespoke projects

Anticipate changes to the project specification and include suitable clauses in the contracts

It is approached using the collaborative, win-win technique

Questions?