Describe five stages in negotiation
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1) Understanding Need for Negotiation: Both parties should agree on the need for negotiation and establish / realise that there is something to negotiate about. That is important in order to reach positive contribution from both parties, which will increase the effectiveness of the negotiation. Need for negotiation may or may not be urgent. For example, a contractor and nominated supplier need to urgently negotiate to agree the scope of works and cost estimates in order to sign the agreement and proceed with work.
2) Planning / Preparing for Negotiation: PM should prepare for the negotiation by briefing his team about the objectives behind the negotiation in order to get their support. PM should try to understand what other parties really want (what is it for them – WIFT), should be prepared with alternative solutions and should be aware of his bottom lines in order to reach mutually agreed arrangement. For example PM should gather information about a nominated supplier prior to negotiation meeting in order to be aware of their actual need for the work.
3) Discussions: PM needs to observe the protocol and should be aware of the cultural issues of the other parties in order to avoid misunderstanding. PM should try to build bridge of understanding between two points in order to reach compromised solutions when needed. PM should not get dragged to say things just for being liked, and should separate the issue from emotion in order to avoid taking wrong decisions. For example PM should reject being dragged by supplier to agree on an alternative financial proposal without detailed review of the offer and the exclusions.
4) Proposal and agreement: Once reaching an agreement, PM has to make sure that all agreed points are properly and clearly documented without any ambiguity. Both parties should agree on the document that will be used as a reference later on. That is important to clarify / resolve any future disputes on what was agreed. For example agreements can be recorded in the form of minutes of meetings, memos, or official signed agreements.
5) Review and follow up: PM should follow up the execution of the agreement in order to make sure that it is being enacted as agreed. PM should update the lessons learnt with the outcome for the benefit of use for future projects. For example, updating the lessons learn with the exclusions agreed from the supplier scope that reduced both the prices and the delivery time. Excluded works can be done in house.
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