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Procurement Perspectives: Reaching advantageous agreements

Stephen Bauld
Procurement Perspectives: Reaching advantageous agreements

A great deal of my time is spent with contractors and municipalities trying to resolve conflicts related to work in progress, as well as contract issues. Even if a person is 75 per cent in the right, he or she is still 25 per cent wrong.

No one should ever lose sight of this fact when negotiating with an adverse party over a matter in dispute. However, one should never assume that the other party is prepared to admit to being in the wrong. Conflict cannot always be resolved through negotiation, even if a party goes in with a truly open mind and the best will in the world. Conflict resolution is a two-way street.

One of the most common fallacies about negotiation is the belief that it is possible to come to a mutually advantageous agreement with any adversary on any issue. In many cases, unless one side is prepared to make massive concessions, agreement is not possible.

The belief that a fair settlement can always be reached is founded partly upon the dubious premise that all sides are likely to have at least some claim of right on their side. The second dubious premise underlying the fallacy is that in any given dispute each party can be expected to want a fair negotiated settlement. Unpleasant as the realization may be, some people are devious, deceitful, unreasonable and callously indifferent to the welfare or suffering of others. Furthermore, some people are unable to understand when they have been offered a good deal, or even who their real friends are. It is difficult to reach an agreement when the person one is dealing with lacks the capacity to make a proper assessment. A person who enters into negotiations should always make clear to the other party that negotiations can proceed only if they are carried forward on a reciprocal basis. A process of unilateral concession may seem like a way to get things started, but rarely does it have this effect. Unilateral concessions create unrealistic expectations. A better approach is to offer a concession, but to make clear that it will only be available if fair value is offered by the other side. It is not necessary to state in advance what the fair value must be, but it must be clear that the other party needs to offer an equivalent concession in return in order to secure what is on offer. Negotiations are intended to lead to win-win results. They cannot do so if one party makes all the concessions.

While a professional approach to negotiations may facilitate the settlement process,one should understand that it is not always possible to settle disputes through negotiation. The biggest source of power that a party enjoys when negotiating is the ability to walk away from further discussion. This choice should never be made, however, unless the net benefit derived from doing so is at least equal to the benefit of continuing discussion. Effective negotiation requires co-operation. If one party is behaving irrationally, the other may attempt to cajole a more co-operative approach, but is highly risky to offer concessions in the hope of effecting such a change. Working together towards a common goal usually creates the best results.

Stephen Bauld is a government procurement expert and can be reached at Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.

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