NegotiationTips&Tricks Kibert 2006

8/7/2019 NegotiationTips&Tricks Kibert 2006

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Negotiation Tips & Tricks

BCN 4712

Leading & Managing ConstructionOperations


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Key Responsibilities of Negotiator

Act as Spokesperson Outline plan, strategy and objectives

Identify Timetable

Assert Control - Commentary Assign team duties

Obtain technical representation


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Every Negotiation Is Concerned With

Results

Relationships


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What Makes a Difference?

Optimism

Creativity Mental Outlook

Honesty

Knowledge of all parties needs


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To Achieve Your Goals

Manage the other sidesperceptions

Use problem-solving approach


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What is Negotiable? Price

Terms

Delivery

Quality

Service

Training

Resources

(people, materials, budget) Scope

Schedule


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Tough Negotiators

Know how to control the negotiation

Know how to stand their ground Know how to determine the other sides

needs in advance


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Strategic Options: Distributive

BARGAINING is a competitive, win-lose process

focused on competing interests, use when..

You have more power

The relationship is not important

When you do not trust the other party

When they are relying on bargaining To resolve simple issues


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Strategic Options: Integrative

PROBLEM SOLVING is a cooperative win/win

focused on common concerns. Use when Power is equal

You are weaker

When you trust the other party

You want a continuing relationship The opposition is using problem solving

The negotiation is complex


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Some Negotiating Facts

1 You are negotiating all the time

2 Everything you want is owned or controlled by

someone else3 There are predictable responses that you can count

on in the negotiating process

4 There are three critical factors in every negotiation:

power, information, time.5 The proper mesh of personality types is important to

the negotiating success


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Keys to Power!

Knowledge

Control


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Three Stages of Negotiation

Learning your opponents stated goals;

stating what you want

Gathering information on your

opponent and his/her needs

Reaching for compromise


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How to Negotiate an Issue

Introduce the issue

Sell the issue

Ask for their position

Allow response and listen carefully

Summarize their position and state

agreement if reached Resell if necessary


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Skilled Negotiators

Consider twice as many options and

outcomes

Spend three times as much attention on

finding common ground

Spend more than twice as much time on

long-term issues as short-term issues Set range objectives rather than single point

objectives

Discuss each issue independently of other

issues


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Keys to Persuasion

Present both sides of the issue

Limit information

Use the power of the printed word

Downplay benefits to you

Own up to any major gains Use test concessions


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Rules and Principles

Dont be the first to name a price

Position opponents for easyacceptance

Be the one who writes the contract

Make your offers low but flexible


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Rules andP

rinciples

Never reveal it if you have a deadline

Dont negotiate on the phone ( you cant read

your opponents body language).

Watch for sudden changes in body language,

rather than just the body language itself.


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Never say Yes to the first offer.

The Value principle. ( the value of services

diminishes rapidly after the services have been

performed).

Always maintain your Walk Away Power

Make a big deal of any concession you make, and

get a counter-concession for doing so.


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Never be the one to offer to split the difference. Get

your opponent to make the offer to you.

80% of concessions are made in the last 20% of the

time - so dont leave details till later.

The person under the greatest time pressure

generally loses in negotiations


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Rules andP

rinciplesWin/Win Negotiating

Never narrow negotiations down to just one

issue.

Different people want different things

Price is not always all-important


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Results of Successful Negotiations

Both sides feel a sense of accomplishment

Both sides feel the other side cared

Both sides feel the other side was fair.

Each side would deal again with the other

Each side feels the other side will keep the

bargain.


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Good Negotiators

Know that both sides are under

pressure and dont feel intimidated Want to learn negotiating skills

Understand negotiating skills

Are willing to practice

Want to create Win/Win negotiating

situations


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Where to Sit in Negotiations

When youre negotiating with two people: sit

where you can watch both.

When you have two people on your team: sitapart so you speak with two different

voices.

When you have a large group opposing their

small group: keep your group together for

power.

When they have a large group opposing your

small group: intermingle to diffuse their power


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Take Notes

Clear

Consistent Concise

Accurate

Thorough Kept in original form


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Contract Negotiation Process

Plan the Negotiation Conduct the Negotiation Document the Negotiationand Form the Contract

1. Prepare yourself and yourteam

2.Know the other party

3. Know the big picture

4. Identify objectives

5. Prioritize objectives

6. Create options

7. Select fair standards

8. Examine alternatives

9. Select your strategy,tactics, andcountertactics

10. Develop a solid andapprovedteam negotiation plan

11. Determine who hasauthority

12. Prepare the facility13. Use an agenda

14. Introduce the team

15. Set the right tone

16. Exchange information

17. Focus on objectives

18. Use strategy, tactics, and

countertactics19. Make counteroffers

20. Document the agreementor know when to walkaway

21. Prepare the negotiationmemorandum

22. Send the memorandum tothe other party

23. Offer to write the contract

24. Prepare the contract

25. Prepare negotiationresults summary

26. Obtain required reviewsand approvals

27. Send the contracts to theother party for signature

28. Provide copies of thecontract to affectedorganizations

29. Document lessons learned

30. Prepare the contractadministration plan

Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 61.


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Things to Know About the Other Party

Buyer and Seller

What is the organizations overall business strategy?

What is its reputation?

What is its current company business environment?

Who is the lead negotiator?

Who are the primary decision makers?

What are their key objectives?

What are their overall contract objectives?

What are their personal objectives?

Who or what influences the decision makers?

What internal organization barrier do they face?

Seller Only

When does the buyer need our products or services?

How much money does the buyer have to spend?

Where does the buyer want our products and services delivered?

What benefits will our products and services provide?

What is our companys past experiences with this buyer?

Date Prepared:____________________ LeadNegotiator:______________________



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Essential Contract Elements Checklist

Project Name Prepared by (Print) Date Prepared

Customer Telephone/Fax e-mail

Deliverables and prices (provide a listing of deliverables and their prices)

Deliverable conformance specifications

Requirements in statement of work (determine SOW requirements not listed as deliverables)

Delivery requirements (list delivery requirements, deliverable packaging and shippingrequirements, and

service performance instructions)

Deliverable inspection and acceptance

Invoice and payment schedule and provisions (include in contract tracking summary)

Representation and certifications

Other terms and conditions



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Importance of Price

Price

Schedule

Technology

(research and

development)

Services

Other

Products

Customer

Obligations

Contract

type

Miscellaneous

contracting

elements



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Objective Prioritization1.

1.

2.

3.

4.

5.

6.

7.

Date Prepared:_____________________________ Lead Negotiator:____________________________



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Create Options for Achieving Negotiation Objectives

Seller Objectives Possible Options Buyer Objectives

Date Prepared:_________________ Lead Negotiator:______________________



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Objectives and Alternatives Worst Case, Most Likely, and Best Case

Objective:

Worst Case Most Likely Best Case

(Plot your most likely position)

Date Prepared:_______________________ Lead Negotiator:____________________________



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Sample Negotiation Planning Summary

Negotiation Information

Location Date Time

1 1 1

2 2 2

3 3 3

Key Objectives (Plot your most likely position)1. Price Worst Case

Best Case

$10.5M$12.0M $12.5M

2. Payments Worst Case

Best Case

After Delivery Progress paymentsAdvance payments

3. Warranty Period Worst CaseBest Case

36 Months18 months 12 months



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Sample Negotiation Planning Summary contd.

Possible Tactics and Countertactics

Objective Planned Tactics Buyer Planned Countertactics Seller

Contract Price

Range

Best Case

Most LikelyWorst Case

Date Prepared: ___________________________________ LeadNegotiator:_________________________

Approved by: ___________________________________ DateApproved:__________________________



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Negotiation Agenda

Contract

Title Date

Location Time

Topics of Action Time

Introduce team members

Provide overview and discuss purpose of negotiation Exchange information on key interests and issues

Quantity of products

Quality of products and services

Past performance

Delivery schedule

Maintenance

Training

Have a break

Review agreement on all key interests and issues

Agree on detailed terms and conditions

Agree on price

Review and summarize meeting

___________________

____________________________________________

_____________________

_____________________

_____________________Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 73.


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Negotiation Zone

HIGHLOW

(Seller's C rice Range)

LOW HIGH

(Buyer's rice Range)

LOW

LOW HIGH

(Seller's B rice Range)

HIGH

(Seller's A rice Range)



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Offers and Counteroffers Summary

Seller Buyer

Offer Counteroffer

Offer Counteroffer

Offer Counteroffer

Date Prepared:__________________________ Lead Negotiator:_____________________



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Negotiation Results Summary

Contract Title Date of Contract

Parties Involved Date(s) of Negotiation

BriefProduct/Service Description Location

Agreed to Price

Key changes from Approved Proposal

Date Prepared:______________________ Lead Negotiator:_____________________



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Dealing with Tricky Negotiators

How do you respond to: Exaggerated Bluff You cant be

serious!!!

The Invisible Competition Yourcompetitor quoted lower.

No-way Jose Its against our agency

policy.

Salami (a thin slice at a time)

Deadline Dilemma (using delays and

deadlines)


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How do you respond to: Blowing Hot and Cold (Initial

enthusiasm, sudden cooling off)

Columbo Just one last thing. Family Discounts Look how much Ive

done for you? (presenting concessions

as a personal favor) Its none of my business but

(complaints about your agencys serviceor attitude)


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How do you respond to: I dont have the authority. (need to

refer to the decision maker)

All Change (new faces, predecessor hadno authority)

Raising the Roof (each concession

followed by a raised demand) My Way or the Highway And thats my

final offer!

Over My Dead Body -

refusal/preconditions


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Negotiation Tips

Time and Timing the party with the tighttime frame is at a disadvantage Who can wait it out?

Who needs who?

Information Gather as much information about any and

everything as possible Power

Even if you do not feel you have the power, act asthough you do.

Limited Authority Buys time


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Negotiation Tips

Recognize tactics

What are they trying to get you to do?

Yield Grudgingly

Chart concessions

Listen and pay close attention

Avoid splitting the difference

Be willing to give on some things


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Negotiation Tips

Reserve judgment be open minded

Ask questions prepare a list

Build trust with shared values, views,attitudes, experiences, and interests

Convince the other party that youhave other options (even if you dont!)

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NegotiationTips&Tricks Kibert 2006