[Student Number]
[Project Number]
Part A
Negotiation is an unavoidable truth; generally as humans cannot exist without communicating. Negotiation is a fundamental method for getting what one party needs from another; it is a trade of information through communication. The informationtransacted is framed as strategies and techniques. These techniques and methods begin from the negotiation relationship between the parties, and they additionally serve to proceed with or end the relationship. As the amplification of conflict becomes apparent in the world whether it is political or commercial issue, the essentialness of negotiation cannot be underestimated.Similarly, the role of an engineer in commercial negotiating is sublime in providing ground values to the negotiator leader.
This section entails essential rules for negotiation which are necessary to capitalize. Moreover, various issues and feasibilities that the commercial engineer should bear in mind are also summarized. These rules include ensuring credibility, developing multiple contacts and realistic expectations, neutralizing competition, room to maneuver, pricing parameters, deciding to “go first” or “not” and most importantly to how to prepare thoroughly for negotiation.
Personal Experience
Prior in my career working as project engineer, I recall accepting a call from one of my most essential clients. He needed to check various insights concerning the estimate for the accompanying year. The client was the head of generation, so I had anticipated that the discussion will be about specialized technical issues. This regularly happened consistently around the same year, yet this time was distinctive. It turned out he needed to examine terms, conveyance, and financing. He likewise had other official colleagues on the call. I wasn't arranged and wound up entering into an uncomfortable assertion. I was irate. I was snared! There was no chance I could have realized that the production manager needed to examine terms, conveyance, and financing with me. He ordinarily never does that until the end of the year. What I later came to acknowledge is that I ought to have begun the conversation by asking, "What are we going to discuss, and who will be at the gathering?" If I had done this, I would have been readied. On the off chance that I was not prepared to negotiate, I could have requested more of an opportunity. Time is debatable – we could have booked a catch up require the following day after I had sufficient energy to survey the certainty. Therefore from this personal experience what I could infer is that:
“You cannot ‘deal’ with negotiationswithout the rules of the game”
The Rules of the Game directs how meetings are going to negotiate. They must be verbalized and consented to before any discussion plugs-in with respect to the benefits of the matter to be chosen or the arrangement to be made. Who are the groups? What are the guidelines of play and the conditions for end? This methodology can be lengthy and eventually takes more time than actual negotiation. Anyhow creating the standard procedures before initiation of the negotiating spares a considerable measure of time, keeps away from mistaken assumptions, and upgrades the prospects for participation.In successful negotiations, it is necessary to focus on other parties’ need not their stated position.The whole rules of negotiations revolve well around the Karrass model incorporating Maslow hierarchy of needs respectively and are shown in figure 1 (). The other elements of worthmentioning are that the negotiation must be relationship oriented and goal oriented and both parties must have to compromise so that the good deal principles could be observed.Building the guidelines for negotiation is a discriminating venture in setting the stage for an effective negotiation. Since negotiation principles may contrast from individual to individual or from association to association, it is of principal imperativeness that the negotiators setup a typical skeleton, particularly when there are ethnic differences(Jensen, 2013).
Also obeying the leader orders and sticking to the plan are equally significant. Moreover, we can say that the how business and technical features of business understandings are nearly interconnected; and things that professionals say and do (with the best aims) which welcome business debacle (Boyce, 2001).
Part B
The supplier had arranged a meeting with the customer to discuss a potential order for a range of products, which the customer had bought previously from the supplier. The nature of the work was relatively involved and included elements to be supplied by several major subcontractors. There were many issues to be discussed, including the question of where certain risks were to be carried.
The supplier's aim was to establish the principle that as, between himself and the customer, he, the supplier, carried the risk. This was an important point as the price to be agreed would be linked to, amongst other things, the level of risk inherent in the job.
At the pre-meeting it was agreed that the project engineer would support the commercial manager and answer only those questions, which the commercial manager put directly to him. At the meeting with the customer the supplier put forward the various relevant arguments to sustain the principle that he was proposing. As a natural part of the process the commercial manager gave examples of how in practice a real problem would fall to his account since he carried the risk. At the worst possible moment the project engineer interrupted to say that in the examples given, that was not how the problems had been dealt with in previous contracts. The interruption was in part made in frustration, through his not understanding the significance of the apparently irrelevant principles.
This statement caused the negotiation to take five steps backwards from the point of view of the supplier. Once again some basic rules had been overlooked in the heat of the moment:
What mistakes were made and which rules broken?
Common mistakes were that related work information was not selected for proposing
principles. This was purely based on relevant information. Secondly, oneshould avoid discussing the matter of price during the process of negotiation.
The negotiation clearly shows the inability of project engineer to listening or
following the commercial manager pre-meeting defined rules. Not sticking to the
plan or following the leader is the major rules, which were broken.
The supplier and customer had been involved in a long running argument over whether the supplier's proposed design met the requirements of the contract. The customer had steadfastly maintained that the design was not sufficient and that the supplier must change the design at his own cost. The supplier was in a diametrically opposed position. It had proved impossible to resolve the issue on purely technical grounds as these aspects were extremely complex and the issue hinged on differing interpretation and differing expert opinion on the two sides.
Whilst arbitration and recourse to the courts was of course open to the two sides, it was in either’s interest to follow such a course of action. To do so would have meant the customer tolerating unacceptable delays in delivery -there being no practicable alternative method available to him. The supplier would have been starved of cash-flow for an extensive period of time.
In an attempt to move forward, the supplier and the customer had agreed without prejudice to each other’s position that the supplier should put forward a change to the design and a price quotation for the additional work. It was quickly agreed that the change was desirable and that it would correct the perceived weakness in the design. This of course did not settle the question of who should pay.
The customer called the supplier to a meeting at the customer's premises, which were geographically considerably distant from those of the supplier. The commercial manager and project manager had a pre-meeting at which it was agreed that if the customer was not preparing to alter his stance he would have communicated the fact by telephone or in writing. Thus it was a good sign that the customer sought a face-to-face meeting, particularly in view of the distance involved, as at the very least the customer was known not to waste people's time capriciously. The plan for the meeting was that a compromise on possible splitting of the costs would be acceptable, albeit that it would be a hard slog fought for inch by inch.
The prediction about the meeting proved to be accurate and the customer repeatedly came down heavily with his much-stated view that he carried no liability whatsoever for additional costs. Nevertheless, slowly but surely progress was made towards a compromise settlement until, in nothing short of exasperation, the supplier's project manager blurted out the question, 'if you're not liable, then you won't pay and why have you called us to the this meeting'.
What mistakes were made and which rules broken?
Common mistake that was done during the negotiation to go with the serious
issue of delivery or redesigning it. This should be avoided in most cases until one
must have related information and fully aware of his needs respectively.
The negotiation clearly shows the inability of both parties to infer one of the
fundamental rules of negotiations. This negotiation can be seen with an eye of a
pitched battle. The following rules were broken (1) Don't compete with the
customer. It says that negotiations are attempts to reach an agreement, not a
challenge to see who can win. Make the relationship so paramount that its value
the additional exertion, on both sides, to make sensible concessions (Geoffrey,
2011). (2) Do notchicken out. Customers will sometimes take negotiating positions
that simply does not make any sense for your firm. When this happens, you have to
put best efforts, even if standing firm kills the deal (Geoffrey, 2011).
The company had arranged a meeting with three other companies to negotiate the essential features of a teaming agreement. The features were the scope of work, volume of effort and applicable prices -these three variables being interdependent. The nature of the overall job was such that each of the four companies would wish to secure a wide scope of work, a sizeable volume of effort and, not surprisingly, high prices. The lead company needed to settle a compromise of these 12 variables between the four organizations within an overall ceiling value.
A preparatory meeting was held although the project manager was unavailable. The agreed tactic was to concentrate on the arguments which would be put forward by the other three, each in defending its own position, and to leave the company's own contribution to last in the probability that it would go through almost on the nod.
The negotiation started well, with close adherence to the plan. However, the company could not escape having its own contribution interrogated. Choosing his words carefully the lead negotiator asked his project manager to describe the technical nature of the work (as opposed to asking him to defend the level of effort proposed). The project manager replied by saying that the leader was probably not yet aware of some paper in the system that conveyed a large reduction in the company's planned amount of effort.
What mistakes were made and which rules broken?
In the light of importance of negotiation, the availability of all participants is
essential to support the lead negotiator. And during the pre-meeting, it is the
responsibility of the leader to communicate with his companions of his thinking
what he is going to table during the negotiation and himself also needs to stick to
the plan. Equally important is the role of project manager. First the leader must
be fully aware of additional information needed to consider while negotiating. So,
project manager must have to get in knowledge of commercial manager, when
he is deviating from the plan. Unfortunately project manager was absent on that
day, which is a complete disaster.
The customer wished to place a contract for the supply, installation and commissioning of electronic equipment. The scope of the work was not fully defined and some actual development work would also be necessary. The key features of the customer's needs were that the requirement could only be satisfied by a single supplier and that delivery on time was absolutely crucial.
The supplier was in a very good position to negotiate a favorable contract. He decided that in the particular circumstances his optimum method for exploiting the opportunity in terms of increased profitability was to negotiate a bonus scheme for timely delivery rather than, for example, attempting to charge high prices. The negotiation plan was thrashed out and centered on two key principles:
1) The supplier would formally table a programme of work and delivery dates, which clearly showed that under a conventional contract the customer's vital date would be missed.
2) Outline details would be proposed for a cash bonus scheme that would indicate a high probability of meeting the vital date.
The supplier's negotiation team would be lead by the commercial manager with the project manager in support. A preparatory meeting was held and the role of the project manager was defined as being to provide technical arguments and reasons to explain why the work was difficult, why delivery could not be brought forward under a conventional contract, and the special measures that could be taken if a bonus scheme were to apply. Crucial to the success of the strategy would be resistance to pressure from the customer to improve delivery with no bonus scheme.
The negotiation meeting commenced and, exactly as predicted in the pre-meeting, the customer's angle was:
a) The importance of timely delivery.
b) His wish to place a contract quickly.
c) His difficulty in acquiring authority to include a bonus scheme.
The supplier stuck to his line until in desperation the customer said: 'Look, if we place a conventional contract with you, can you advance the delivery plan you've offered?' The supplier's project manager leapt in with words equivalent to 'of course'.
What mistakes were made and which rules broken?
Before starting any project it is necessary to devise actual working plan and
scope of work respectively, which shows a clear mistake before making contract.
There was a need of sticking to the pre-meeting plan, don’t losing sight of the
objectives and don’t volunteer information but meticulously all of this went in vain
in a single word “of course”. Although the supplier had identified the difficulty of
their opponent but could not get benefit of their optimum desires of getting bonus scheme.
References
Boyce, T. (2001).The commercial engineer's desktop guide. London: Thorogood Publications
Geoffrey, J. (2011, November 17). 15 Simple Rules for Customer Negotiations | Inc.com. Retrieved from http://www.inc.com/geoffrey-james/15-simple-rules-for-customer-negotiations.html
Jensen, K. (2013, March 9). You Can't 'Win' Negotiations Without Rules Of The Game - Forbes. Retrieved from http://www.forbes.com/sites/keldjensen/2013/09/03/you-cant-win-negotiations-without-rules-of-the-game/
