In my opinion one of the most important parts of the negotiation (and often the most overlooked) is the pre-negotiation preparation and planning phase. Understanding your priorities and the priorities of the other side, knowing what your constituents want, knowing your walkaways, identifying value creation opportunities, and having an overall strategy are keys to a successful negotiation. With that said, IACCM research shows that many negotiators fail to plan properly or plan at all. In 2009 we did a comprehensive negotiation benchmark study that showed 74% of the 124 companies benchmarked did not use any formal negotiation planning tools. You can imagine how much more successful you will be if you’ve done your homework before the negotiation begins, particularly if the other side hasn’t done their planning. The flipside would be that they’ve prepared and you haven’t. I’m sure you don’t want to find yourself in that situation.
A couple of other suggestions for you: If you aren’t already enrolled, you should consider signing up for the IACCM Managed Learning and Certification program. There are several modules in the curriculum that specifically address negotiation topics. IACCM also has a Negotiation Community of Interest you can join to seek help and advice from other IACCM members. You can also search the IACCM Library for articles, presentations, Ask the Expert recordings, templates, etc. related to the topic of negotiations.
• TECHNIP INDIA LIMITED
My experience shows what Katherine has told is one of the best approaches you have. Pl. get hold of IACCM expertise & for sure, you will succeed.
Thanks & Regards,
You need to anticipate the other sides's likely demands and to have a plan to deal with their demands. This includes consensus in your organization on what your desired position is and what your walk-away position is. Part of your plan will also be to decide who leads your team at what points and on what issues. You must appear united and knowledgable.
Another key issue is authority. You need to have the authority in your team to make decisions. But also make sure that the other side has authority, otherwise you are not really negotiating.
Look for trade-offs. You will have a negotiation agenda, but do not just operate point by point - that leads to compromise or impasse. Try to work on relative value items. For example, maybe you really want good payment terms; maybe the customer really wants extended warranty. Perhaps you can make a trade and both get what you want. But if you have not understood your own areas for their importance and have not gathered that data about the customer, you will miss opportunities.
There is so much more - but maybe these early tips will help you.
Firstly, leave your ego outside of the room. Do not be so attached to your own values. Focus on what the task in hand is, not what the agendas are (yours, or theirs). Do not be positional, for example do not get straight into a horsetrade based on what you think they want, as others suggest. Allow space for you, and for them. Try to ask open questions to explore and clarify what the task REALLY is about. Finally, keep an implementation mindset and ask "what if..." i.e. if we do X, then what happens (cause and effect).
If you can do all of these consistently you will be successful, and if you do then please let us all know!
One of the keys to success in Oil and Gas contract negotiations is the utilization of internal (and to the extent that internal is lacking) expertise. In some instances, one might become intimidated by all of the phrases and acronyms being said at the negotiation table. Keep in mind that information is power, and if the other side feels that they can gain concessions through the use of industry specific words and phrases...they will. Bring your experts to the table and this advantage will be neutralized, or even reversed. This set of comments is usually more relevant in positional negotiations.
Hence, strive for principle based negotiations and you might find the negotiation to be more productive and effective. The IACCM on-line learning modules, as well as many materials in the IACCM Library, cover these two negotiation approaches.
In terms of the 8 different payment schemes I was specifically referring to what we call 'payment curves' (see attached graphic) as opposed to payment regimes such as cost+ (time and material), fixed price, cost + fixed fee, etc. In this light these are grouped into 5 main families with a couple of variations inside each. These are as follows:
- 'all or none' payment curves
- Linear payment curves
- Non-linear payment curves
- Alternative payment such as demerit point and visual payment curves
- Matrix payment curves
The intent of this discussion is to simply highlight that the choice of payment curve, similar to the choice of performance measure and level, can have a significant impact on the success (or otherwise) of the overall performance management framework. My blog (www.performancebasedcontracting.com) has 3 posts specifically on this topic including the graphics.
I hope this helps and answers your questions. However, please let me know if you have any further questions.
Whilst it's the way that a lot more suppliers seem to be going, if you think about this in with your procurement hat on - and that is what's going to happen at the end of 3-5 years - it's tough to see you doing anything but just rolling this over (and over and over again) as someone else has all of your data on their server.
At the risk of being awfully contentious, my own experience is that in a lot of circumstances, there's little consideration of whole of life costs - especially with that thinking about what's to happen in 3-5 years. Right now, many of these purchases done right now are flying under the radar of procurement teams because they're below procurement limits or just being called operational expenditure within business delegated authorities.
That said, one of the benefits that I've also seen is that upgrades happen automatically on the server of the host without the business having to create teams to do this, especially where there was a major upgrade - which were previously a big financial impact on many businesses.
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