6.4.6 Negotiations

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One of the most important parameters affecting the degree of success in the Contracting Authority and Contractor relationship is the way in which the negotiations between them are conducted. With the term "negotiations" we mean the open and honest discussions through which the Contracting Authority efficiently communicates its requirements to the Contractor, requests modifications of the method or scope of the work, discusses the claims that the Contractor may request or finally, presents to the Contractor its assessment regarding insufficient performance on his part and requires that corrective actions are taken.

The basic principles that must be observed for a negotiation to be successful are given below:


Table  6-5: Factors contributing to successful negotiations

The participants on the part of the Contracting Authority (members of the Project Steering Committee or/ and the Project Manager or Engineer in the case of public works) must be aware of the negotiation techniques and have the proper skills to practice them.
The participants in negotiations on the part of the Contracting Authority must be authorised by their superiors and this authority must be obvious so as not to allow for any questioning on the part of the Contractor. If for example, the Project Manager on the part of the Contractor thinks that he may discuss and negotiate a specific issue with the Project Manager of the Contracting Authority (or the Engineer in the case of public works) while in practice the Contracting Authority has delegated this responsibility to the Steering Committee, the possibilities to achieve an agreement are few since the issue must be referred to discussion in a future meeting of the two sides with a different composition of participants.
Minutes must be kept in every meeting between Contracting Authority and Contractor related with the negotiation of claims.
Before the start of the negotiation the participant representing the Contracting Authority must prepare himself properly. The usual information that he is required to collect refer to the issues of Contractor's performance, progress of the physical scope of the Project, payments and claims, legal issues and restrictions, expectation of the interested parties, etc.
The stands and positions of the Contracting Authority must be clearly expressed during the negotiations and must not allow any room for misinterpretation. The same must also apply on the part of the Contractor. If, despite all this, there are still points that are not clear, clarifications must be asked.
The Contracting Authority must, in every negotiation, evaluate what is important for itself and what is for the Contractor and furthermore, it must examine who is the one who will have the most losses in a case that things do not evolve as they should.


© 2007 Republic of Cyprus, Treasury of the Republic, Public Procurement Directorate
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