- Project plans
- Project activities
- Legislation and standards
- Industry context
Last edited 10 Jan 2018
Negotiation is a communicative process necessary in situations where two or more parties have to reach an common, agreed position. In the construction industry, negotiation is required at almost every stage of a project, from acquiring land and obtaining planning permission, to making appointments, awarding contracts, negotiating change orders and extensions of time, resolving disputes, and so on.
Skillful negotiators typically have a number of key attributes:
- A good memory.
- They are persuasive and quick-minded.
- They are able to gain the trust of the other party.
- They are good at handling stress.
- They are efficient at preparing information.
- They have the ability to listen effectively.
- They have good intuition and are able to gauge the other party’s approach and opinion.
- They are able to concede or to be flexible if necessary.
There are a number of techniques that can be used to complete a successful negotiation, which can be categorised as set out below:
This involves being able to understand the position of the other side to the negotiation:
- Seeing issue from their point-of-view.
- Avoiding blaming the other side by separating the people from the problem.
- Discussing each side’s perception openly.
- Focusing on underlying concerns rather than stated positions.
- Demonstrating flexibility and openness.
- Ensuring everyone can participate so they have a stake in the outcome.
- Making proposals consistent with the values of the other party.
- Avoiding making assumptions.
Effective negotiation techniques involve keeping a check on emotions, including:
- Recognising and understanding the emotions of all sides.
- Acknowledging when there are emotions and mentioning this if necessary.
- Allowing the other side to ‘let off steam’ if necessary, but refraining from reacting in a similar way.
- Adopting a conciliatory rather than resentful attitude.
- Not taking personally an attack by the other party on your position.
Open, honest communication is essential:
- Speaking with the intention of being understood.
- Avoiding ambiguities.
- Speaking about your own position, rather than that of the other party.
- Listening actively and acknowledging what is being said.
- Considering responses carefully rather than reacting impulsively.
- Inviting criticism and advice from the other party, rather than defending your own position.
- If you don not understand something properly, continue to question it until you do. Otherwise you risk agreeing to something you did not intent.
 Other techniques
A key component of negotiation is preparation. All variables should be considered in advance so that unexpected issues can be dealt with effectively and without weakening the negotiating position. Preparing checklists can help ensure nothing is overlooked, and keeping careful notes ensures there is a clear record of what is being agreed.
Make sure the right people are in the room, and that everyone is clear what is being negotiated, and that the objective is to reach an agreement within a specified timeframe. There is no point in negotiating with someone that does not have the authority to conclude the agreement.
Know your starting position, your ideal finishing position, and red lines beyond which you will not go. Stick to these positions, as the underlying objectives do not change, no matter how deep you get into the negotiation, or how tempting it is to go a step further than was originally considered advisable.
Everything should be kept on the table without narrowing the negotiation down to only one item, most often that of price. On the issue of price, it is possible that one party will end up with an advantage over the other, but if every facet of the negotiation is considered alongside price, there may be more of a chance that an agreement can be reached which is satisfactory to all parties.
It is important to know limits and alternatives in case the negotiation fails. This is known as ‘best alternative to a negotiated agreement’ or ‘BATNA’. This is a back-up plan that can be turned to should the negotiation be more difficult than anticipated. This means that every offer that is made can be judged against that of the BATNA.
For example, during a tender procedure, ensure there is more than one preferred bidder. Be aware however, that your negotiating position with the alternative bidder will be weakened if they are required, as there will no longer be a fall-back position, and they are likely to know this.
If the other party is unwilling to compromise then the most effective technique is simply to know when to walk away and end the negotiations. It can be tempting to force an unwise negotiation through, because so much time and effort has been invested in it. However, there is always another deal – sometimes it is best to move on.
 Find out more
 Related articles on Designing Buildings Wiki
- Alternative dispute resolution.
- Articles of agreement.
- Breach of contract.
- Causes of construction disputes.
- Conflict avoidance.
- Contract negotiation.
- Dispute resolution.
- Expert determination.
- Expert evaluation.
- Game theory.
- How does arbitration work?
- How to give professional advice to friends.
- Negotiated contract.
- Pay now argue later.
- Tender negotiations.
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