PROCUREMENT AND CONTRACT

MANAGEMENT
Prof. Dr. Sajjad Mubin
Chapter 01
Procurement
PROCUREMENT
 Procurement is the acquisition of goods, services or works,
machinery / plant / equipment etc from an outside external
source. It is favorable that the goods, services or works are
appropriate and that they are procured at the best possible cost to
meet the needs of the purchaser in terms of quality and quantity,
time, and location as required through the legal instrument of
entering into a contract.
 Corporations and public bodies often define processes intended to
promote fair and open competition for their business while
minimizing exposure to fraud and collusion.
PRINCIPLES OF PUBLIC PROCUREMENT
PROCESS OF PROCUREMENT
The process of procurement in general include following tasks:
 Prequalification of Contractors / Consultants.
 Invitation of Bids / Request for Proposals.
 Opening / Evaluation of Bids / Proposals.
 Award of Work
 Execution of Contract Agreement.
There are mandatory procedures to be followed for all government or
donor/funded procurements. The purpose of these procedures is to ensure
that all procurements are conducted in a fair and transparent manner. It also
brings with it value for money to the executing agency alongwith efficient
and cost effective procurement proceeds.
 PROCUREMENT PROCESS FLOW Prequalificatio
Advertisement n/ Publication of
Scope / Approval of Preparation of Evaluation of Shortlisting of
results of
Scope /TORs PQD Of PDQ / RFQ/ Consultants/
TORs EOI Contractors
Prequalified
EOI Notice
Firms

Preparation Debriefing to the

of Tender / RFP non-qualified
Consulting Firms

N
Issuance of
Financial Technical Opening
o Pre- Tender / RFP to
Evaluation of Evaluation of of Technical Submission of Bid Pre-qualified
Proposals Bid / Proposals Bid / Proposals Proposals Conference Consultants

Selection of Finalization of Contract

Most appropriate Managing the
Negotiation Terms & Agreement
Bidders Contract
Conditions Signing/Award
PREQUALIFICATION
 PREQUALIFICATION
 Prequalification is preliminary stage in a bidding process
where it is determined if an applicant has the requisite
resources, skills and experience to complete the job as
required.
 PPRA Rules CHAPTER-IV (Rule 16 and onward) deals with
Prequalification.
CONSIDERATIONS FOR PREQUALIFICATION

16 (3) For purposes of the prequalification of bidders, a procuring agency shall take into
consideration the following factors:
(a) qualifications;
(b) relevant experience and past performance;
(c) capabilities with respect to personnel, equipment, and plant;
(d) financial position;
(e) appropriate managerial capability; and
(f) any other factor that a procuring agency may deem relevant, not being inconsistent with
these rules. e.g.
 Market name & reputation
 Pending Litigation
16 (4) The procuring agency shall ensure that the prequalification is based on the capacity of
the interested parties to satisfactorily perform the services or works.
Prequalification Notice (Advertisement)

 Brief introduction
 Name of procuring agency
 Name of assignment
 PPRA rule under which EOI is being called out
 Place and venue for Prequalification Document (PQD)
 Deposit fee for issuance of PQD
 Prerequisite for being eligible
 Last date for submission of EOIs
SAMPLE PQ NOTICES
Prequalification Document (PQD) / Request for
Qualification (RFQ) Document
PQD / RFQ may include;
 Introduction
 Objective
 Scope of work
 Prequalification criteria which should include;
 Firm experience & Firm detail
 Human resource capacity
 Managerial capability
 Technical capacity
 Financial capacity
 Market name & reputation
 Pending Litigation
 Prequalification / Evaluation criteria
 Client detail
 Other relevant information, deem necessary
 CRITERIA FOR PREQUALIFICATION OF
CONTRACTORS
The procuring agency shall evolve a criteria keeping in view the complexity of the
Project. A general criteria merely as a model is provided for reference of the
drafters of the Prequalification Document as follows:
FINANCIAL
EXPERIENCE RECORD
PERSONNEL CAPACITY
EQUIPMENT
BIDDING PROCESS
BID DEFINITION GIVEN IN PPRA
BID means a tender or an offer, in response to an invitation, by a
person, consultant, firm, company or an organization expressing his
or its willingness to undertake a specified task at a price;
The term “BID” or “BIDDING” can also relate to the documented
Offer submitted in response to a request or invitation to Tender or
Bid.  The term “Tender” is often used interchangeably to the term
“Bid”.
BIDING DOCUMENT means a document or a set of documents
prescribing the quantity, quality, characteristics, conditions and
procedures of the transactions prior to the actual procurement and
on the basis of which bidders prepare their bids;
BID SECURITY means the bank guarantee or other form of security
submitted by a bidder together with a bid to secure the obligations
of the bidder participating in a bidding proceedings;
PPRA UNDERSTANDING ON BIDDING
DOCUMENTS
 A procuring agency shall formulate precise and unambiguous
bidding documents that shall be made available to the bidders
immediately after the publication of the invitation to bid.
 For competitive bidding, whether open or limited, the bidding
documents shall include the following:
(a) Invitation to bid;
(b) Instructions to bidders;
(c) Form of bid;
(d) Form of Contract;
(e) General or Special conditions of Contract;
(f) Specifications and drawings or performance criteria (where
applicable);
PPRA UNDERSTANDING ON BIDDING
DOCUMENTS
(g) List of goods or bill of quantities (where applicable);
(h) Delivery time or completion schedule;
(i) Qualification criteria (where applicable);
(j) Bid evaluation criteria;
(k) Format of all securities required (where applicable);
(l) Details of standards (if any) that are to be used in
assessing the quality of goods, works or services specified;
and
(m) Any other detail not inconsistent with these rules that
the procuring agency may deem necessary.
FORMS OF BIDS / BIDDING DOCUMENTS
1. Bidding Documents (BDs) for Goods
2. Request for Proposal (RFP) for Services (Non-Consultancy)
3. Request for Proposal (RFP) for Consultancy Services
4. Bidding Documents (BDs) for Works (USE PEC BDs)
STANDARD BIDDING DOCUMENTS OF
PPRA
Goods
Part I – Bidding Procedures
 Section I. Instructions to bidders (ITB)
 Section II. Bid data sheet
 Section III. Schedule of requirements
 Section IV. Technical specifications
 Section V. Bidding forms
 Bid Submission Form
 Manufacturer’s Authorization Form
 Price Schedules
 Part II – Conditions of Contract and
Forms
 Section VI. Contract Form
 Contract Form
 Performance Security Form
 Section II. General Conditions of Contract
(GCC)
 Section III. Special Conditions of Contract
Non-Consultancy Services
Part I – Bidding Procedures
 Section I. Instructions to Bidders (ITB)
 Section II. Bidding Data Sheet (BDS)
 Section III. Bidding Forms
 Section IV. Scope of Services
 Section V. Performance Specifications and
Drawings
 Section VI. Priced Activity Schedule
 Part II – Conditions of Contract and Forms
 Section VII. General Conditions of Contract
(SCC)
 Section VIII. Special Conditions of Contract
(GCC)
 Section IX. Contract Forms
 Section X. Appendices
 BIDDING DOCUMENTS
(CONTENTS AND COMPOSITION)
Part I: Bidding Procedures
Section 1. Instruction to Bidders
Section 2. Bid Data Sheet
Section 3. Evaluation and Qualification Criteria
Section 4. Bidding Forms
Section 5. Eligible Countries
Part II: Requirements
Section 6. Supply or Works Requirements
Part III: Contract
Section 7. General Conditions of Contract
Section 8. Particular Conditions of Contract
Section 9. Contract Forms
 Chapter 02
Contract & Contract Document
WHAT IS A CONTRACT?

A Contract may be defined as;

“An agreement between two or more parties that is

enforceable by court of law”

A Contract is a written document describing the legal rights and
obligations of the parties to the contract .
WHAT IS A CONTRACT?
Semilegal definition of Contract
In its simplest, most essential form, a construction contract is defined as an
agreement between two or more parties that is enforceable by Court of law.
It requires a “meeting of the minds” and there must be service and
consideration. One party must agree to perform work for the other party
and receive payment (consideration) for the work. The contract must be
enforceable by law, which by all practical purposes means the contract
must for the service that is legal. Although there is no actual requirement
that a contract be written, realistically it must be. Oral contracts are
essentially impossible to enforce in construction because of the lack of the
evidence regarding the scope of the agreement. Generally, written contracts
eliminate problems by removing any doubt about the agreed-on terms.
CRITERIA FOR A VALID CONSTRUCTION
CONTRACT
For a contract to be valid and enforceable by Court of law, it must meet following
criteria.
1. There must be mutual agreement or a meeting of the minds.
2. There must be an offer. An offer can normally be withdrawn up until the time it
is accepted, except the bid documents used in public works generally state that
the bid may not be written withdrawn once submitted.
3. The offer must be accepted. The acceptance completes the meeting of the minds.
In low-bid construction, the acceptance is the award of the contract to the low
bidder.
4. There must be consideration for the service performed- payment.
5. The subject matter of the contract must be lawful. A contract to commit a crime
is not legal and not enforceable.
6. The contracting parties must have the legal capacity to enter a contract. A
contract with a minor is not lawful. Contracts are signed by representatives of
both the owner and contractor who have the legal authority to sign for their
organizations.
COMPONENTS FOR A VALID CONTRACT

To be valid, a contract must have:

(1) an offer, (2) an acceptance and (3) consideration (4) capacity

The purpose of the contract

The purpose of the contract should be produced
A quality construction project
On time
Within budget
safely
 OFFER

Offer
• ·        The offerer must be in writing and shall display intent of Offeree to
contract,
• ·        The offer must be definite and certain and
• ·        The offer must give the offeree the right or power to accept the
offer.
 ACCEPTANCE

Acceptance

Offer
·  A valid acceptance must include each and every part of the offer; if the
acceptance varies from the offer, it is termed a counteroffer - a rejection that
terminates the offer.
CONSIDERATION

Acceptance Consideration

Offer
Each party must agree to exchange something of value for a
contract to be valid and enforceable.
OTHER FACTORS EFFECTING CONTRACT
ENFORCEABILITY

Statutory or regulatory provisions like in Pakistan Contractor has

to registered with PEC.
Pre-qualified Contractors
A Class Contractors
B Class Contractors
C Class Contractors
STANDARD FORMS, CONTRACTS AND
DOCUMENTS

Standardized contracts and forms have become very important tools in

construction industry. Every construction supervisor should be familiar
with the standardized documents that are commonly used on projects.

Examples of Standard FIDIC Documents

1. EPC/Turnkey Contract 1st Ed (1999)- Grey Book of FIDIC
2. Construction Contract MDB Harmonised Ed (May 2005)
3. Plant and Design-Build Contract 1st Ed (1999)
4. Construction Contract 1st Ed (1999)
5. Services Contract
CONTRACT DOCUMENTS

1. Agreement
2. General Conditions
3. Special/Supplementary Conditions
4. Drawings
5. Technical Specifications
6. Addenda
AGREEMENT
 
Agreement is the document that represents and reflects the legal Contract between
the Owner and Contractor. It provides legal evidence and base in case of litigation
and dispute. The purpose of agreement is to record in written form those items
agreed to by the Owner and Contractor. It includes;
 Date of agreement;
 Names and Addressees of the contracting parties (inc. phone no. email add.)
 Description of scope of work;
 Contract consideration (in figures and words);
 Payment conditions;
 Reference to other documents;
 Signature.

SAMPLE AGREEMENT (AIA)

GENERAL CONDITIONS
They describe the general guidelines that will be used in the contract
administration. Various different general conditions are developed by different
organization based on project/construction field experience for the use of
Owner and General Contractor (e.g. FIDIC, AIA, PEC). AIA general conditions
contain these items:
 Definitions
 The Owner
 The Contractor
 Administration of Contract
 Sub-contractors
 Changes in Work
 Time
 Payment and Completion
 Security / Protection of Person and Property
 Insurance and Bonds
 Misc. Provisions
 Termination and Suspension / Cancellation of Contracts
SPECIAL OR SUPPLEMENTARY
CONDITIONS

Special Provisions of the contract are specific requirements for a project

that are unique to it, specifically tailored for a particular project. Special
Provisions may include:
• Survey information to be provided by Owner;
• Changes in Insurance requirement;
• Site visits;
• Performance measurement and Schedule reporting;
• Traffic control, traffic handling provisions and street cleaning requirement;
• Site Office and utilities;
• Responsibilities of testing of Material;
• Action to be taken in case of discovery of historical asset or natural resources;
• Disputes, conflicts, LDs.
COMPARISON OF GENERAL AND
SUPPLEMENTARY CONDITIONS
General Conditions
 Establish a common basis for
relationships on the job
 Classifies and clarifies duties
 Help to avoid disputes
 Guide contractors in the execution of the
project
 They’re often a standardized document
Supplementary Conditions
 Provides information that is specific
to the project
 Immediately follow the general
conditions in the specifications book
 Are also referred to as special
Conditions
 Should be reviewed and discussed
prior to starting the job
DRAWINGS
Drawings are the means (2-D or 3-D) by which designer conveys the
physical, quantitative, and visual description of project to the
contractor.
• Architectural Drawing
• Structural Drawings
• Mechanical Drawings (HVAC, Fire Protection, Smoke Extraction)
• Electrical Drawings
• Public Health (water supply, sewerage) Drawings
• Site Drawings
SPECIFICATIONS
Specifications are Technical Provisions. They are written instruments to
be used in conjunction with drawings. Specification with drawings
fully describe and define the scope of work and contract requirement.
They guide bidders in proposal preparation as well as in execution of
work. Specifications provide information regarding:
• Quality of material;
• Quality of workmanship;
• Construction and installation method;
• Testing and inspection requirement.
ADDENDA

Addenda is the formal document that changes the original bid

documents and becomes a part of Bid Package. At the time of bid
opening, bidders must acknowledge all addenda Typically addenda
may be issued to change the opening date, to modify the original
design, to delete of add some item to correct some errors. Addenda
may not issued within about five days of bid opening, unless the
bid date is also expended.
 Chapter 03
Bonds and Insurance
 BONDS AND INSURANCE
1. Bond A bond is a guarantee by a third party, usually a bank or an insurance
company, acting as a surety. In bonds there are three parties,
• Principal (contractor)
• Surety (bonding company) and
• Obligee (owner).
Some commonly used bonds are:
- Bid Bond
- Advance payment Bond
- Performance Bond
Bond Type Purpose
Bid Ensures the low bidder will accept the contract if offered and will submit the
required payment and performance bonds.
Payment Guarantees the contractor will pay the subcontractors and suppliers.

Performance Guarantees the contractor will complete the work in accordance with the
plans and specifications.
BONDS AND INSURANCE
Bid Bond have two purposes:
1. Guarantee the contractor will enter into a contract, if selected as a
lowest bidder.
2. Guarantee the contractor will provide the required payment and
performance bond and insurance policies.
3. When the performance bond is submitted the contractor is
released from bid bond obligations.
BONDS AND INSURANCE
Performance Bond
 They guarantee the performance of contractor will be according to contract
schedule and terms and conditions. The surety is in a position of being asked
to guarantee the contractor’s performance. Therefore, the contractor must
demonstrate an ability to perform so that surety may issue payment and
performance bond to the contractor.
 List of work completed contracts
 Organizational chart and responsibility of Key Staff
 Resume of key personnel
 Business continuity plan
 List of current contracts
 Progress schedule of work
 Financial information of the company
BONDS AND INSURANCE
Payment Bond guarantees the contractor will pay the subcontractors and
suppliers.
Bonding Limit
Bond cost about ¾% to 4% of the contract amount, so the failure rate must be kept
very low. The cost is a function of risk assumed by the surety. There is not enough
premium in bonds to cover the potential exposure of risk. Therefore, surety
evaluate contractors very carefully. As a rule of thumb, contractor can be bonded
up to an amount 10 times their working capital (WC=Current Assets-Current
Liabilities) or 4 times their net worth.
BONDS AND INSURANCE
2. Insurance the parties of the construction contract have purchased
insurance that will pay, either partially or fully, losses that occur during the
construction process.
The project owner seeks to enhance over project safety and risk. Therefore,
contractors are bounded to have certain insurance to protect against certain
events and risks.
BONDS AND INSURANCE

Types of Insurances:
1. Builder’s Risk / Contractor’s All Risk Insurance
2. Worker’s Compensation
3. Contractor’s Auto Liability
4. Excess Liability
5. Pollution Liability
6. Design Professional Liability
7. Design-Build Errors & Omissions
8. Railroad Protective
9. Marine
10. Tools and Equipment
BONDS AND INSURANCE
Certificate of Insurance Most clients require “Certificate of Insurance” from
contractor. The GC must ensure subcontractors have Certificate of Insurance or the
GC will be liable for the subcontractor’s losses.

Type of insurance Coverage

Worker’s compensation Pays claimant in case of injury, disability, or death of employees resulting from work on the
job.
General liability Protects the owners and the contractors from the financial consequences of various risks,
such as hazardous operations, or accidents during construction and after work is
completed. The insurance pays for a variety of benefits, including legal defense, injuries to
people, and damage to property.
Builder’s risk Pays for damages and losses to a project that occurs while it is being built.
Excess liability An umbrella policy that pays for losses that exceed primary policy limits, such as general
liability, automobile liabilities, and employer’s liability on workers’ compensation.

Pollution liability Pays for environmental losses associated with accidental chemical spills and the leakage or
disbursement of dangerous vapors.
 BONDS AND INSURANCE
Type of insurance
Design professional liability
Design-build errors &
omissions
Railroad protective
Longshoremen/maritime
Automobile liability
Tools and equipment
Coverage
Pays for architects’ and engineers’ professional liability for errors and omissions. This
coverage is usually purchased by the architectural and engineering firms but could be
included under wrap-up insurance for a design-build project.
For companies working in the design-build arena, provides coverage for contractor
errors.
Liability insurance coverage for railroads, purchased by those who conduct operations
(construction) on or adjacent to railroad property.
Liability insurance similar to workers’ compensation that provides coverage for
workers, including construction workers, on the water (working on barges) or those
working over water.
Pays for damage caused by the policy holder’s vehicles. Also pays medical costs of
persons injured in or by the vehicles. This insurance is typically not included in wrap-
up insurance because vehicles are operated outside the confines of the project.
Pays when a contractor’s tools, equipments, field offices, or other property are
destroyed, damaged, or stolen. This insurance is not included in wrap-up insurance
because these items are considered mobile and therefore difficult to manage. In
addition, the premium costs for these policies are not material and would be difficult to
isolate from bids.
 Chapter 04
Contract Administration
 Contract Administration

Pre-conference Meeting
Pay Estimates
Change Orders
Claims
Dispute Resolution
Submittals
Sub-Contractor Management
Documentation
 Contract Administration

Pre-Conference Meeting
Nearly all construction projects begin with a pre-
construction meeting. It’s main purpose is to open the line
of communication between owner and the contractor. This
is formally a meeting with an agenda distributed by owner
before meeting. Attendees include owner’s representative,
general contractor, sub-contractors, authorities, utilities
companies and emergency organization. Meeting is used to
review policies such as critical dates, restrictions safety
programs etc. Technical issues are also discussed and
queries of GC are removed.
 Contract Administration

Pay Estimates
Contractors are normally paid on monthly basis, however, the detail
of payment plan is enclosed in contractual terms and conditions.
For payments, contractor prepare monthly pay estimates or bills (for
the work performed in a month), which is submitted to client along
with bill for verification and payment. After verification of client
consultant, GC are paid fully or partially depending upon terms and
condition of retention money.
One of the client’s reputation is the time require to process
contractor’s monthly bill.
 Contract Administration
Change Orders
• Any modification to the contract documents that take place after the contract
has been signed. Change orders changes quantities of work, detail of
materials or methods required to do work, addition of new items, delete
some portion of work.
• Change orders are part of every construction contract because each job is
unique.
• Change orders don’t change the scope of work. Change orders outside the
scope of work, supplementary agreement should be signed.
• Change orders must not be verbal and issued by proper issuing authority.
• Contract doesn’t allow contractor to refuse change order, but it does entitle
the contractor to additional time and compensation for work.
• Change order work is more expensive than original contract work
 Contract Administration
Claims
Claims are the unfortunate result of change order that cannot
resolved or agreed by owner. Often claims result from a
disagreement on the meanings of the terms and conditions of
contract. The contractor cannot refuse to proceed with work that
is with in original scope of work, but it is sometimes difficult to
determine whether work is with in the original scope of work.
Successful settlement of claims depends upon adequate
documentation.
WHAT IS DOCUMENTATION?

Anything tangible that serves a good record of what existed,

happened, didn’t happen, was represented or was said during the
life of the project.
TANGIBLE EVIDENCE CAN TAKE MANY
FORMS

In addition to the contract documents, project documentation

includes such things as:
- schedules
- notes of site visits
- memoranda of telephone conversations
- minutes of job meetings
- all correspondence relating to the project
- job diaries
- job logs
- project time cards
- job progress photos
WHY IS DOCUMENTATION SO IMPORTANT?
To resolve a dispute or settle a claim, contractors must be able to
present facts and figures that support their position.
If documentation is not sufficient to prove a case in an
administrative hearing or before a judge, the documentation is
inadequate.
DOCUMENTING MEETINGS

Meeting notes or Minutes of meetings may have a significant effect

on the contractor’s future rights and liabilities on the project.
JOB DIARIES

The single most important documentation on a job is the field

supervisor’s daily report or job diary.
Job diaries, especially those that keep track of daily
production, are important in construction claims situations
because they can give credibility to project cost figures.
JOB / CORRESPONDENCE LOGS

They provide a complete, up-to-date record of each item of

documentation sent and received during the life of a project.
THE CHANGES CLAUSE

The Changes Clause allows both the Owner and the Contractor
to make changes in the scope of a construction project without
having to negotiate a new contract.
REVISION TO CONTRACT DOCUMENTS

Change directives:
Change directives and field orders are used when there are strong
reasons for immediately proceeding with the revised work. A
field order becomes basis of a change order.
Change directives are also used when there is a lack of consensus
on whether a change is covered by the contract documents.
Change directives are usually issued by the designer or A/E.
SITUATIONS THAT NECESSITATE CHANGES

Owner’s requested change:

Usually caused by new information or requirements after
construction has begun.
Designer’s requested change:
Usually the result of more definitive explanation of what is
desired by the owner or having overlooked something when
preparing documents.
SITUATIONS THAT NECESSITATE CHANGES

Contractor’s requested change:

Due perceived omissions in the documents. This usually
results from Request for Information RFI or TQ.
Recommendations:
By sub-contractors, material suppliers or vendors based on
their experience.
Requirements:
By a government inspector if something in the contract does
not meet applicable codes / standards.
 Chapter 07
Resolving Issues
CONTRACTS, DISPUTES AND CLAIMS

Contract documents generally have clauses dictating how

claims and disputes are to be filed. If a claim is denied, then
it can go through various levels of appeal such as mediation,
arbitration, appeal boards and then, finally, the courts.
As disputes gather momentum and as they require more
people to resolve, the cost and time to resolve them increase
rapidly.
ALTERNATIVE DISPUTE RESOLUTION
LITIGATION

ARBITRATION

MEDIATION

NEGOTIATION
ESCALATING
TIME
& PREVENTION
COST

DISPUTE RESOLUTION STEPS

DISPUTE SHOULD BE RESOLVED AT THE LOWEST
POSSIBLE LEVEL
ALTERNATIVE DISPUTE RESOLUTION

Alternative Dispute Resolution (ADR) is emerging as a

process of dispute resolution that seeks to resolve conflicts
before they get to court.
PREVENTION AND NEGOTIATION

Resolving a problem through negotiations, at the lowest

level, is the best possible scenario.
THE ART OF NEGOTIATION

Effective negotiations often take 6 steps to resolution.

1. Statement of Position
The first step in negotiating is let everyone know what your
position is and to understand the positions of other participants.
Request that the other state their position and listen carefully
without interrupting as they voice their position.
It is very important that you be a good listener so you
understand exactly what the other party wants to convey. By
carefully listening to and trying to understand the other party’s
position you will also set a positive tone for negotiation.
THE ART OF NEGOTIATION

2. Statement of difference
Once you have listened carefully to other party’s position and
have made your position known, the next step is to outline
differences. Explain exactly how you view the differences
between your position and theirs. Try also to outline points that
everyone agrees on.
Then, ask your opponent in the negotiations to either confirm
the statement of differences. Once this step is complete, you
should know exactly where the problems lie and would be better
able to deal with them.
THE ART OF NEGOTIATION

3. Suggestion of alternatives
There are many ways to solve problems and you should make
a list of all the different alternatives without judging them.
Save evaluation of alternatives for the next step. The longer
your list of alternatives the better chance you have reaching a
satisfying conclusion to the negotiations.
THE ART OF NEGOTIATION

4. Evaluation of alternatives
Once all the alternatives have been stated, evaluate them.
List the advantages and disadvantages of each solution to the
negotiations.
THE ART OF NEGOTIATION

5. Reach an Agreement
This is the point in negotiations where you should be able to
choose one of the alternatives as the conclusion of your
negotiation. Usually one alternative is the apparent best
choice. The selection of alternate should be mutual.
THE ART OF NEGOTIATION

6. Obtain commitment
The final step is to make sure you have a commitment from
all parties to pursue the agreed upon alternative. The best
way is to have an agreement in writing e.g. through minutes
etc.
MEDIATION

If negotiations fail, alternatives that are less costly and time

consuming than arbitration should be in place. One alternative
is to use a neutral party to mediate between adversaries. The
mediation process is informal and non-binding.
ARBITRATION

Arbitration settlements are binding and usually upheld when

challenged in a court of law.
DISPUTE REVIEW BOARDS (DRB) / DISPUTE
ADJUDICATION BOARD (DAB

Another alterative to arbitration is to use dispute review boards.

Clauses requiring use of these boards should be written in the
contractual agreement.
The rulings of DRB/DAB may be either advisory or binding,
depending on the terms of agreement.
MINI-TRIALS

A mini-trial is an abbreviated trial. Each party is given the

opportunity to present its position using witnesses or oral
presentations. The process is presided over by a so-called judge
or referee.
The decision is however non-binding.
LITIGATION

When all else fails, the claims and disputes end up in court. As
stated earlier resolution by busy courts of law may take several
years, cost many thousands of dollars and end up with
everybody feeling like they lost.
Thank you