4 Steps to Effective Contract Negotiation

Contract negotiations can sometimes fall victim to becoming more complicated and confusing than they need to be. While there is never a truly straightforward approach to negotiating terms on a contract, especially if there are multiple hats in the ring, there can be a certain foundation set to help parties involved stay focused.

For those involved in the process of contracting a building, such as architects and engineers, the formula is no different. While there are many things to consider—zoning, type of structure, property—the basic outline of negotiating a contract can run the same. These negotiations should be focused on achieving the goal of making sure a contract is fair and balanced for all involved.

Let’s look at some steps to take to reach that goal of simplifying and streamlining this process.

1. Secure Insurance Coverage

An architects and engineers professional liability insurance policy is an essential first step, or even pre-step, to establish protection early on. Known as Errors & Omissions (E&O) coverage, this policy is designed to protect assets and financial integrity of architects and engineers in a contracting project. For all involved in a building project the possibility of a lawsuit emerging from failing to perform certain services are somewhat common.

Having this insurance already in play will give peace of mind when it comes to anticipating possible financial injuries.

2. Prepare as Much as You Can

You should bring something to the table besides a pen and paper. Architects and engineers should have their research already done and be knowledgeable about everything from price/cost analysis to comparisons in the market. Identify the issues that need to be negotiated first. Take notes, address all issues, and keep it simple by asking pressing questions.

Issues should be classified under categories like negotiable and non-negotiable. Negotiable issues can be flexible within certain parameters, such as certain deadlines and artistic ideas. Non-negotiable issues are those that simply cannot budge. Think of finances in this category and certain amounts of manpower to get the job done.

3. Control the Meeting

Any time parties meet to go over particulars and discuss terms in a negotiation there can be a failure to communicate. Make sure to have your research in as well as an outline as to what your expectations are.

Be friendly and reasonable, but firm and professional, notes Entrepreneur. No one wants to get tossed around and taken advantage of in a meeting, so make sure to know exactly what you’re wanting and what you’re requesting. Emotions should be kept in check, even though they can build up during a meeting. Things like lowering prices and meeting certain deadlines can be negotiated, but can often create discord in a discussion.

4. Summarize Everything

Make sure to go over everything discussed and everything put into a contract. Some of the points to summarize include payment terms, contract volume, price for contract, and when a contract will start. Once all these are written down and understood, party A can contact party B and ask for acknowledgement of an agreement to this outline.

Like any contract, keep it simple and cover your bases. By sticking to specific needs and having an open mind, confusion and distrust can either be eliminated or minimized.


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