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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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Rules and Principles
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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Rules and Principles
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:______________________
Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 63.
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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
Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 83.
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Importance of Price
Price
Schedule
Technology
(research and
development)
Services
Other
Products
Customer
Obligations
Contract
type
Miscellaneous
contracting
elements
Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 64.
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Objective Prioritization1.
1.
2.
3.
4.
5.
6.
7.
Date Prepared:_____________________________ Lead Negotiator:____________________________
Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 66.
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Create Options for Achieving Negotiation Objectives
Seller Objectives Possible Options Buyer Objectives
Date Prepared:_________________ Lead Negotiator:______________________
Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 67.
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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:____________________________
Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 68.
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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
Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 70.
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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:__________________________
Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 71.
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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)
Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 75.
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Offers and Counteroffers Summary
Seller Buyer
Offer Counteroffer
Offer Counteroffer
Offer Counteroffer
Date Prepared:__________________________ Lead Negotiator:_____________________
Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 81.
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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:_____________________
Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 82.
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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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Dealing with Tricky Negotiators
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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Dealing with Tricky Negotiators
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!)
PREPARE PREPARE PREPARE