Introduction
Negotiation is an exercise involving two or more parties who hold opposing viewpoints. The people concerned try to reach an agreement by changing their original positions. Typically, reaching a satisfactory arrangement takes arbitration, which does not involve one side attempting to take advantage of the other (Cunha & Dias, 2021). The purpose of conciliation should be to establish a commercial connection with the other party and construct a contract that assists both groups in attaining their individual business objectives.
Negotiations
The goal of contract negotiation is to clarify all of the main contract provisions and outline the products and services included in the contract. The negotiators also discuss price in unambiguous terms that clarify key issues such as payment timelines and financing terms. Other important elements are relevant dates, such as the day the contract goes into force, the contract’s expiration date, and any prospective renewal dates. It is vital to identify and manage any risks and obligations that the contract may entail. Finally, it is important to define the scope of work as anticipated by the parties in the agreement in its present form and for the future.
The aforementioned traits are evident in a case that Cunha and Dias (2021) describe involving a private power transmission company and a cleaning services contract with a specific contractor. The deal was for BRL 41.5 million (roughly $8 million) for a three-year contract in Southeastern Brazil (Cunha & Dias, 2021). The clarification of goals and attention to detail saved the contract from imminent collapse.
Preferred Provider Lists
A preferred provider list is beneficial in contract negotiations for a variety of reasons. First, it allows individuals to access the costs each provider is likely to ask for and use the information to negotiate ideal terms. Second, preferred provider lists generate opportunities for research into specific provider strengths and weaknesses, which may be leveraged during the negotiating process. Finally, lists allow negotiators to access an organization’s history of contract fidelity, which may be pivotal during negotiations.
There are, however, some disadvantages to using preferred provider lists during negotiations. For instance, providers with preferred terms may be omitted from the lists because they are new to the industry or the creators of such lists do not favor them. It is also worth noting that preferred provider lists may include unscrupulous organizations that use unorthodox tactics to get listed, which significantly increases the degree of risk associated with contract negotiations.
Tools and Techniques
A variety of tools and techniques are often employed to manage the relationship with sellers. The first strategy is the assessment of potential risks and liabilities through risk shifting (Singh et al., 2020). It is critical to develop strategies for dealing with concerns such as unplanned costs, regulatory infractions, and contract worker insurance coverage. It is vital to consider what may go wrong and the safeguards that must be put in place to deal with them.
The second tactic is concession-making, which entails modifying the plan so that it benefits the opposing side more than the project. One may agree to implement the required adjustments without incurring more costs or delaying the project’s completion deadline. The final strategy is problem-solving, which entails attempting to reach solutions that are advantageous to both sides (Singh et al., 2020). Project managers can openly discuss their goals and priorities, and a resolution may be arrived at through the exchange of budget and deadline information.
Conclusion
The purpose of contract negotiation is to explain all of the major terms and conditions, as well as to describe the goods and services covered by the agreement. A preferred supplier list is helpful in contract negotiations because it gives the parties involved in contract negotiations access to critical information that can be utilized to broker favorable terms. However, provider listings may exclude suppliers with better terms. Assessing possible risks and liabilities, resolving issues, and concession-making are all strategies for managing relationships with sellers. It is vital to apply specific tools and strategies that guarantee the best possible outcome during negotiations.
References
Cunha, C.N. & Dias, M.D. (2021). Contract negotiation: When the detail saved the day. Noble International Journal of Scientific Research, 5(1), 1-12. Web.
Singh, S.K., Marinova, D., & Singh, J. (2020). Business-to-business e-negotiations and influence tactics. Journal of Marketing, 84(2), 47–68. Web.