Mastering Construction Contract Negotiations: 4 Essential Tips for Success (Full Transcript)

Speaker 1: Negotiation is an unavoidable part of construction. Whether you're a subcontractor, main contractor, or client, being able to negotiate is vital for the success of a project. Negotiation isn't just about achieving the best outcome for your party, it's about achieving the best outcome for the project you're working on. In this video, we'll explore four tips for negotiating construction contracts. Before we begin, if you enjoy watching these videos, why not consider subscribing and clicking the notification bell? This way, you'll get notified when we upload a useful video like this every week. Tip one, prepare before negotiation. Preparation is key to successful construction contract negotiation. This includes identifying your desired outcome, understanding the scope and requirements of the project, and considering potential solutions that work for both parties. It is essential to have a clear understanding of your objectives and to approach negotiations with a flexible mindset. To prepare effectively, you should research the other party, their objectives, and their negotiation style. You should also identify your strengths and weaknesses and consider potential areas of compromise. By preparing in advance, you can anticipate challenges and develop a strategy to achieve your desired outcome. Tip two, allocate risk and responsibility appropriately. Risk allocation is a critical aspect of construction contract negotiation. Unallocated risk can cause problems down the line, and it is essential to identify potential risks and allocate them appropriately. It is crucial to consider who is best suited to hold the risk and to ensure that the risk allocation is fair and reasonable. For example, holding the design risk with a client on a design and build contract would be a poor negotiation outcome. To allocate risk appropriately, you should identify potential risks, such as delays, design challenges, and unforeseen costs. You should then consider which party is best equipped to manage those risks and develop a plan to allocate them fairly. By allocating risk appropriately, you can minimize potential conflicts and build trust with the other party. The same can be said for responsibility. You should ask yourself who is best equipped to hold the responsibility for each project element. All projects are different, and there's never a one-for-all solution. Tip three, persuasive traits in negotiation. Negotiation requires a combination of skills, including being a good listener, being respectful, articulate, assertive, and patient. These traits can help you build rapport and trust with the other party, understanding their needs and objectives, and articulate your own position effectively. Being persuasive in negotiation requires a combination of empathy and assertiveness, and the ability to communicate your position clearly and confidently. To be persuasive in negotiation, you should listen actively to the other party and demonstrate respect and empathy. You should also be prepared to compromise and develop creative solutions that meet both parties' needs. By being persuasive in negotiation, you can build stronger relationships with the other party and achieve a successful outcome. Tip four, teams or in-person. With the increasing prevalence of remote work and virtual meetings, it is essential to understand the differences between negotiation on a virtual meeting versus in-person. Remote negotiation places greater emphasis on words, tone, pitch, and volume, whereas in-person negotiation places greater emphasis on expressions, gesture, and posture. It is essential to adapt your negotiation style to the specific setting and to be aware of different social cues. Someone who may have been a great negotiator before COVID-19 may now be wondering why their negotiation style has slipped. Perhaps they aren't adjusting their style to meet the new negotiation environment. Matrone, a commercial hub to your business.