Parma
What I mean by best deals is that the parties work within the cost parameters that apply in the sector, but mutually concede things that are unimportant to them in return for things that are important to the other party. This type of negotiation comes easier if the parties have a good working relationship. For example, the negotiation could flow as follows:
- RIO: I want you quote for tasks 1, 2, 3, 4 and 5, starting at Time A, and finishing at Time B.
- NWH: That means we must spend $A hiring equipment, plus hire additional employees at a cost of $B. That will cost you $A + $B + $X. However, if we can start two months later, we can redeploy equipment and employees now scheduled to become available four months after Time A, and other things being equal, we will complete all the task four months later than Time B. We would then reduce our quote.
- RIO: We must have tasks 1 and 2 completed as per our original plan, but the final completion date can slip a few months, if you concede some of the cost. Let's talk.
- NWH: I'll need to confirm this, but I expect that we can hire what is required to meet the first two scheduled dates, and then redeploy people and equipment coming off a current contract to finish your set of tasks three months after Time B. This will reduce our costs, so we can reduce our original cost to you by circa 12%.
- RIO: That looks like a viable deal, so please submit an offer and a revised delivery schedule. Ring me if you want to discuss any issues that emerge.
Unexpected win-win results often spring from open discussion. I once cut a service deal with a company, and I soon wanted to hire my contact there, Graeme. Rather than concluding that this would be unethical, and abandoning the idea, I telephoned the head honcho and told him that without his blessing, I would not even let Graeme know I was interested in hiring him. The head honcho said that he wished I would hire Graeme, because he had taken over from a man, Cecil, who had been promoted, and could not handle his new position, and Cecil wanted to return to his old position. The upshot was a 5-way win – I got the man I needed, Graeme moved into a job that offered a higher salary and better prospects, Cecil got his yearned-for old job back, the head honcho replaced Cecil with a competent employee, and the new employee probably improved his position in life too.
The point I want to make via the above yarn is that one can create value for others in surprising ways, and this is what one should strive to do when negotiating contracts.
(20min delay)
