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Negotiation Skills

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Title: Negotiation Skills


1
Best Contracting Practices for Business
2
Unit 1 Building Successful
Partnerships in the e-Business Age
The Executives Role
3
  • Unleashing Buying and Selling Power
  • Changing Buying and Selling Processes
  • Developing an Integrated Supply Chain
  • Learning Applying Best Practices
    e-Tools from Industry Leaders

What AreWinning Organizations Doing?
Reference Text World Class Contracting, By
Gregory A. Garrett, CCH 2001, pg. 2
4
  • Pros New product and service providers
  • Wider range of products and services
  • More modular products and services
  • Improved price/performance
  • Accelerated pace of change
  • Cons
  • More complexity
  • Higher cost of integration
  • - Less reliability
  • - Accelerated pace of change
  • - Rapid Obsolescence
  • Emergence of Internet
  • architecture
  • Growth of Automated Sales Tools
  • Use of Enterprise Resource
  • Planning (ERP) Software
  • Growth of e-procurement Software
  • and Contract Management
  • Enterprise Software

Technology
  • Relaxed barriers to entry
  • Increased pricing flexibility
  • Pro-entrant incentives
  • Mandatory wholesale of unbundled
  • elements

Regulation
Increased Range of Services andProduct Choices
for End Users
5
  • Use of electronic catalogs, self-service
    internet sales, Net marketplaces, etc.
  • Use of e-sales and e-procurement tools has
    caused a revolution in the roles
    responsibilities of
  • Sales managers/account executives
  • Procurement managers/purchasing agents
  • Contracts managers/contract administrators
  • Fewer people with broader responsibilities
    requiring more education, training, and
    business skills to propose, negotiate, and
    administer complex innovative deals and
    partnerships

6
Reference Text, pg. 5
7
  • Integrated - means providing Enterprise
    Resource Planning (ERP) to ERP, core business
    transaction functionality to all participants
  • Going beyond Supply Chain Management to the
    integration of databases between companies
  • Today - large trade exchanges, built
    cooperatively by industry participants are
    changing the nature of business
  • More companies are creating shared virtual
    workspaces, with appropriate security and
    access measures.

8
Exostars Mission
To become the standard e-business platform for
everyone in the Aerospace Defense industry
Founding Members
Trading Partners
BAE Systems
Large OEMs
Government Buyers
Boeing
EXOSTAR
Lockheed Martin
Airlines
Tier 1 3 Suppliers
Raytheon
Service Providers
Rolls-Royce
9
How Forum Pass Fits
Partner A
Check-out/Check-in Via Forum Pass
https
https
Contracts
Design
PM
MFG
Virtual Mtgs.
https
https
ACCTG
Partner B
Logos obtained from Boeing website
10
  • ForumPass offers a collaboration solution to
    address the challenges of integrated project
    teams
  • Supports creation of dynamic, opportunistic
    project teams, independent of computing
    support
  • Provides a common workspace that fosters
    innovation
  • Breaks down barriers to collaboration
  • Process and schedule visibility
  • Immediate notification of changes
  • Visualization via Computer-Aided Design (CAD)
  • Balances security with access to key
    collaboration partners

11
  • Project Management and Administration
  • Document and Data Management
  • Online Meetings
  • Visualization and Mark-up
  • Workflow
  • Subscription-based notifications
  • Security and access control

12
Supplier A
Firewall
DOD
Shared Workspace
Firewall
Supplier B
Boeing
  • Project Management
  • Document Management
  • Product Data/Change Control
  • Virtual Meetings

Firewall
Supplier C
Firewall
Firewall
13
Reference Text, pg. 7
14
Reference Text, pg. 8
15
Reference Text, pg. 8
16
Reference Text, pg. 9
17
  • Divide into teams of 3 4 people
  • Select one of the four common actions that
    winning companies are taking to build
    Successful Partnerships
  • Conduct a 15 20 minute Brainstorming session,
    discussing and listing the advantages and
    disadvantages of the selected action and what
    actions you as executives should take to
    maximize success.
  • Present your findings to the class (Be Brief 3
    5 minutes)

18
(No Transcript)
19
  • The power of e-Business has been unleashed by
    the advent of new communication technologies
    and the the Need for Speed!
  • However, to achieve high performance results,
    year over year, companies must form
    successful partnerships based upon trust
  • Winning organizations are taking Four Common
    Actions to build Successful
    Partnerships (1) Unleashing Corporate Buying
    Selling Power (2) Changing Buying
    Selling Processes (3) Developing an Integrated
    Supply Chain (4) Learning and Applying the
    Best Practices e-tools from Industry
    Leaders

20
Unit 2 Building Trust Managing
Expectations and Honoring
Commitments
21
(No Transcript)
22
Successful PartnershipsSimple Actions Checklist
  • Listen to the customer
  • Understand the customers needs vs. desires
  • State the obvious
  • Be Accessible
  • Return phone calls, vmails, emails in a
    timely manner
  • Provide regular communication on contract,
    program, partnership status
  • Develop a project plan for every deal (Scope of
    Work (SOW), Integrated Schedule, Work
    Breakdown Structure (WBS), Responsibility
    Assignment Matrix (RAM), and acceptance
    criteria)
  • Develop Risk Management Plan
  • Disclose problems early and mitigate negative
    impacts
  • Back up all verbal agreements and conversations
    in written documents

Reference Text, pg. 14
23
  • Develop a changes management process
  • Provide frequent communication via
    multiple-media
  • Be prepared to deliver both good and bad news
    at multiple levels, both internally and with
    customers
  • Be flexible, develop alternatives
  • Set challenging but achievable objectives
  • Demonstrate passion to honoring commitments
  • Recognize that trust is the most important
    thing in a successful business relationship
  • Learn from mistakes openly communicate Lessons
    Learned
  • Celebrate joint successes
  • Document and share best practices

Reference Text, pg. 14
24
  • Complementary Strength
  • Common Customer-base
  • Chemistry

Three Major Ingredients
Discuss Examples of Partnerships based upon each
of the above.
Reference Text, pg. 15
25
Partners Two or more People or organizations
working together toward a mutually beneficial
common goal with loyalty an a long-term
commitment to each others success.
Loyal Customer A buyer who chooses to do
business with a particular seller and
commits to buy from that seller in the
future.
Satisfied Customer A buyer who buys from a
particular seller but expects to buy
from others in the future.
26
Reference Text, pg. 16
27
  • On a scale of 1 (Low) to 10 (High), How effective
    is your organization/company in building
    long-term buyer/seller relationships? Give
    examples.
  • On a scale of 1 (Low) to 10 (High), How well does
    your organization/company manage your customers
    expectations? Give examples.
  • On a scale of 1 (Low) to 10 (high), How well does
    your organization ensure requirements and
    acceptance criteria are aligned, agreed to, and
    documented before the contract is signed?

28
Unit 3 Government Contracting and
Commercial Contracting Similarities
29
  • A process of planning, forming, and
    administering agreement(s) to buy or sell
    goods and services from or to another party
  • The art and science of managing a contractual
    agreement(s) throughout the contracting
    process

Buyer
Seller
Subcontractor(s)
Contract
Contract
30
  • Definition
  • An agreement between two or more (competent)
    parties or persons that creates an obligation to
    do or not do a particular thing
  • A contract has two aspects
  • Document Written manifestation of an
    agreement between parties
  • Relationship The personal or professional
    commitment that forms the understanding between
    people who enter into agreements, either oral
    or written

Reference Text, pg. 19
31
  • Sources of business For sellers
  • Sources of goods and services For buyers
  • Risk management tools For both buyers and
    sellers
  • Projects That must be managed by people
    from both the buyers and sellers
    organizations.

32
  • People
  • Authority Who can sign or approve?
  • Responsibilities Who does what?
  • Process The means by which goods and services
    are exchanged
  • Performance How effectively the goods and
    services are bought and sold
  • Price What determines a reasonable price? How
    do terms and conditions affect price?

Quality, cost, and schedule
33
Buyers and sellers steps
Reference Text, pg. 20
34
Similarities Include
  • (Similar CM Process) Both follow a similar
    Contract Management process.
  • (Similar CM People Skills) Both require
    well-trained and educated people with broad
    skills sets (competencies including
    Negotiation skills, financial skills, legal
    skills, interpersonal skills, communication
    skills, organizational skills, leadership
    skills, and others.
  • (Similar Performance Requirements) Both
    need to focus on delivering and/or providing
    quality products, services, and/or solutions for
    their customers faster, better, and cheaper.

35
  • An immense increase in knowledge workers and a
    decrease in manual workers.
  • Contract Management professionals are knowledge
    workers. Individual effectiveness and
    collective growth required
  • Reasonable empowerment (Autonomy to act is
    essential).
  • Opportunities to apply innovative judgment
    (strive to improve the deal).
  • Continuous learning for growth (no other useful
    option).
  • Biggest mistake of our time treating knowledge
    workers as a cost rather than as an asset.

36
  • Demographics and work environments relate
  • In millions of cases, the knowledge worker is
    not dependent on a single employer for a
    career.
  • The knowledge workers professional
    capabilities and skills are portable.
  • The high likelihood exists for knowledge workers
    to pursue three or four successful growth jobs
    over a career. Many people will be
    crossing-over between either buyer or seller
    roles and/or government and commercial
    contracting sectors.

37
  • Recent research (1999 and 2000) by CMI and ISM
    relates for every 100 surveyed
    contracting/purchasing professionals concerning
    their roles
  • 90 indicate more time sensitive
  • 85 indicate more responsibility
  • 85 indicate more team-oriented
  • 85 indicate more strategic
  • 60 indicate less clerical
  • Performance metrics are increasingly tied to
    strategic rather than transactional business
    measures

The Contract Management Institute (CMI) is the
research arm of the National Contract Management
Association (NCMA). The Institute of Supply
Management (ISM) was formerly the National
Association of Purchasing Management (NAPM).
38
  • Performance Metrics for the Contract Management
    Discipline a survey.
  • Senior contracting/purchasing personnel
  • 3,180 surveys distributed 872 returned 27
    percent response rate.
  • Public sector (35) private sector-government
    (37) private sector-non-government (21)
    educational, not-for- profit, other (7).
  • Three quarters at least 15 years experience
    more than half over 20 years.
  • Education high school (1) some college
    (10) undergraduate degree (33) masters
    degree (46) post- graduate degree (9).

39
  • Which metrics are currently used by your
    organization to evaluate personnel?
  • Top 10 choices
  • 1. Responsiveness. 6. Human/interpersonal 2.
    Integrity/ethical standards relations. 3.
    Timeliness. 7. Process focus. 4. Written
    communication. 8. Education. 5. Oral
    communication. 9. Customer service
    (internal). 10. Accountability

40
  • Which metrics will be used in the next 3 to 5
    years?
  • Top 10 choices
  • 1. Business Judgment. 6. Integrity/ethical
    standards. 2. Decision making 7.
    Education. 3. Problem-solving ability 8.
    Human/interpersonal 4. Negotiation skills.
    relations. 5. Customer service (external). 9.
    Responsiveness 10.
    Communications

41
  • Some bottom lines
  • The contract and purchasing management function
    is evolving toward a strategic business
    management focus.
  • Performance evaluation metrics increasingly
    assess results not just activity.
  • Employees are motivated to perform when they
    are measured about things they have control
    over.
  • Performance evaluation systems should be
    pervasive across an employees career path
    (i.e., recruitment, hiring, placement,
    training, evaluation, promotion, rewards, and
    compensation).

42
  • Does your organization/company have a
    well-defined ContractManagement (CM) process,
    which is documented, understood,and followed by
    everyone in your organization/company?
  • What is the role of the Contract Manager in your
    organization/company?
  • What is the Executives role in the CM process?

43
Unit 4 Contract Management
What Executives should Know Do!
What is the role of the Executive in the CM
Process?
44
  • In most organizations/companies the success of
    winning and executing contracts will determine
    the entire future of the enterprise
  • Business opportunities and risks are managed via
    the contract
  • Growth via changes management and follow-on
    contracts
  • Contract performance is typically inconsistent
  • Some do well, but most do not
  • Very team dependent
  • Managing contracts is difficult
  • Complicated and not well understood
  • Requires broad set of management skills
  • Poorly implemented internally and externally
  • Traditional management incentive structures
    usually at variance with successful contract
    management

45
  • Contract management teams are often formed of a
    diverse temporary group of talented
    individuals
  • Usually not well trained in contract management
  • Little previous experience working together
  • Expected to immediately be proficient
  • There is often a negative bias against contract
    management
  • Personnel are unfamiliar and untrained
  • Prior experience with contract management has
    been unsuccessful
  • Technical personnel typically look down on
    contract management and the people that
    attempt to manage contracts
  • It is not uncommon for the very best contract
    management techniques to be disliked by the
    team
  • It is sometimes viewed as non-producing overhead
  • People often do not want to follow a disciplined
    and documented process

46
  • Requires a broad set of skills
  • Business, legal, financial, interpersonal,
    leadership, team building, negotiation,
    multi-cultural
  • Rare to find personnel with this broad
    capability
  • Contract management is complex and is difficult
    to describe succinctly
  • Makes it difficult to convey to others and
    install as a culture
  • Personnel believe that it is just paperwork
    anyone can do it

47
  • Contract management appears overbearing to the
    uninitiated
  • Falsely appears to stifle creativity
  • Falsely appears to slow things down
  • Falsely appears to be bureaucratic
  • It is not uncommon for management to only give
    contract management lip service (Dont walk the
    talk)
  • Lack of understanding Lack of support

48
  • State of the Art
  • Most available models are over-simplified and
    inadequate
  • Henry Fayols Planning, Organizing, Staffing,
    Directing, Controlling falls short in todays
    environment
  • Many models confuse and intermix sequential
    activities and on-going processes
  • Communication Without a well-defined contract
    management process in place
  • It makes it difficult to convey to the team how
    the contract will be managed
  • It makes it difficult to communicate with others
    about the health and progress of the contract
  • Execution A well-defined contract management
    process is mandatory because
  • Continued growth of contracts as a result of
    increased outsourcing
  • It is impossible to install a culture if it
    cant be described
  • It is difficult to install a culture even if it
    can be described

49
  • Create a clear vision, mission, and goals.
  • Establish lines of authority whos in charge
    of what?
  • Create lines of communication How to get work
    done!
  • Facilitate communication methods and structure
    Make sharing info easy!
  • Set expectations of each other Clarify roles
    and responsibilities to to ensure teamwork!
  • Develop escalation processes When problems
    arise who do you contact!
  • Ensure employee feedback/performance evaluation
    process is regularly conducted
  • Create a shared reward and recognition process
  • Create and follow a Code of Conduct

50
  • Communication stops
  • Information is withheld
  • A climate of suspicion and distrust exists
  • Counterproductive subgroups and cliques form
  • Fear-of-Failure causes individuals to avoid
    making decisions
  • Complaining is prevalent

Separateness and distrust prevail
51
  • Spontaneous, positive interpersonal interaction
  • The collective energy level of the team is high
  • A positive cooperative climate prevails
  • Information flows freely between team members
  • No work is considered beyond an individuals
    job description (If it needs to be done,
    someone is doing it)
  • Complaining is almost non-existent
  • The coffee pot is never left empty for other
    team members

Separateness and distrust prevail
52
  • Be able to communicate your vision and the
    contracts role in achieving it.
  • Understand stakeholder expectations and
    conflicts.
  • Listen to your team members speak of their
    teammates and notice the vocabulary and
    mood.
  • Encourage respect and business like interaction
    among the team members
  • Get involved if adversarial relationships
    emerge.
  • Ensure that rewards and incentive structures
    acknowledge team performance.
  • Look for, and encourage your Contract Managers
    to provide evidence of teamwork with
  • Users
  • Customers
  • Supporting organizations

53
  • Understand and use the correct CM
    terminology yourself.
  • Demonstrate your understanding of the CM process
    through your actions.
  • Fund and support development of a glossary of
    common CM terminology, used in you industry,
    organization, and contracts.
  • Produce electronic copies and see to it that all
    Team members have the glossary of CM terms
    as a resource.
  • Insist that all team members faithfully use the
    approved CM process and terminology

One thing said, ten things understood
54
  • Ensure that time and money to plan is provided
    for.
  • Require an internal Contract Kick-off Meeting to
    review the plan.
  • Review the contract risks and how they will be
    managed.
  • Establish Executive Management Milestones
    reviews.
  • Define the business aspects you need to review
    and approve.
  • Set the schedule and measure performance against
    it.

55
  • Encourage everyone to identify potential
    opportunities and risks.
  • Require that tailoring of procedures and
    templates be accompanied by risk assessment.
  • Require and review opportunity and risk
    assessments throughout the contract
    management process.
  • Require the planning and execution of approved
    risk mitigation and opportunity enhancement
    actions.
  • Stay cognizant of the high risks and the
    progress toward mitigation.

56
  • Define the changes management process that must
    be used on all contracts.
  • Be an advocate of contract changes, as
    appropriate.
  • Constructively challenge informal contract
    changes at your initial reviews with team
    members.
  • Constructively challenge the effectiveness of
    the contract changes management at program
    reviews.

57
  • Ensure that corporate information systems
    benefit the teams and provide Contract
    Managers with contract-level information
    necessary to manager their contracts.
  • Share as much company information as possible.
  • Eliminate barriers to sharing information.
  • Create a method for exchange of lessons learned
    between contracts and programs.

58
  • Ensure that all contracts are properly planned.
  • Ensure that you receive status on all contracts
    and related projects.
  • Do not allow activity reports to substitute for
    status reports.
  • Do not substitute paper optimism for
    intelligent, perceptive judgment.
  • Verify that the reported status is consistent
    with contract results.
  • Focus on corrective actions in status meetings.
  • Ask how you can help in the corrective action
    process.
  • Be sure that you are not a bottle-neck to
    required resources.

59
  • Ensure your managers have the correct corporate
    and contract management vision.
  • Know your managers and their leadership styles.
    Provide training or counseling to correct
    deficiencies.

60
  • Publicize expectations that contracts be
    technically compliant, completed on time, as
    as much under budget as possible.
  • Require the use of Action Item Registers to
    drive corrective actions to closure.

61
  • Individually, review charts all of the previous
    charts in this unit, which contain
    boxes.
  • Place a check in each box, which you
    consider yourself and/or your
    organization/company executives do well.
  • Count up the number of checked boxes you
    have on the previous charts in this unit.
  • Executive Assessment
  • Excellent 45 to 50 Good 39 to
    44 Average 34 to 39 Below Average 28 to
    33 Poor 27 or below

62
  • Contract Management is a complex process,
    difficult to install as a corporate culture.
  • Exceptional Contract Managers may institute
    sound practices in spite of the prevailing
    corporate culture.
  • Most Contract Managers will take their guidance
    from the prevailing culture.
  • A non-supportive or misinformed Executive
    Management will generally lead to ineffectual
    Contract Management practices.

Organizations that routinely execute contracts
successfully usually have a well understood and
practiced Contract Management culture backed by
strong, knowledgeable, Executive Management
Support.
63
Unit 5 Pre-Award Phase Best Practices
64

Reference Text, pg. 79
65
(No Transcript)
66
  • Is the process of identifying which buyer needs
    can be best met by procuring products or
    services outside the organization
  • Involves the buyers consideration of
  • Whether to procure (make-or-buy decision)
  • How to procure (contracting method)
  • What to procure (products and services needed)
  • How much to procure (quantity desired)
  • When to procure (delivery schedule)

67
Reference Text
68
  • Involves preparing the documents needed to
    support the solicitation

Reference Text, pg. 86
69
  • Involves obtaining information (bids and
    proposals) from perspective sellers on how
    project needs can be met
  • Types of solicitations
  • Request for proposals (RFP)
  • Request for tenders (RFT)
  • Request for quotations (RFQ)
  • Invitation for bids (IFB)
  • Invitation to bid (ITB)
  • Types of information-only solicitations
  • Request for information (RFI)
  • Request for information and qualifications
    (RFIQ)

70
Reference Text, pg. 88
71
(No Transcript)
72
  • Is the process of early involvement with
    potential buyers, understanding and
    influencing their needs, plans, and
    expectations

Reference Text, pg. 90
73
  • Is the process of evaluating risks vs.
    opportunities and making an informed and
    intelligent decision

Adapted from Reference Text, pg. 93
74
Reference Text, pg. 95
75
Adapted from Reference Text, pg. 97
76
Adapted from Reference Text, pg. 97 - 98
77
Unit 6 The Award Phase Best Practices
78
Reference Text, pg. 132
79
  • Buyers Step
  • Source selection is the process of applying
    evaluation criteria to bids or proposals to
    select a supplier
  • Price may or may not be the primary determinant
  • Other criteria may be used technical, past
    performance, quality, schedule, reputation,
    management, and so on
  • A weighting system may be used to select a
    source or to rank all proposals to establish a
    negotiation sequence

80
  • This process may be simple to very complex
  • May involve one person or a large team
  • May use a screening system, establishing
    minimum requirements of performance

81
Reference Text, pg. 133
82
  • Process of comparison and decision
  • Informational prerequisites
  • Knowledge of required goods and services
  • Knowledge of industry
  • Knowledge of market practices
  • Selection criteria elements
  • Attributes of interest
  • Standards
  • Weights

83
  • Sellers step
  • The process of having your bid or proposal
    evaluated by the buyers, anticipating and
    responding to questions the buyer may have,
    negotiating, and forming a contract between
    the parties

84
Reference Text, pg. 142
85
  • Successful negotiators must
  • Have the ability to perceive and comprehend
    factors shaping and characterizing the
    negotiation
  • Exhibit behavioral and analytical skills to
    diagnose problems and adapt winning strategies
  • Understand their own personalities and personal
    ethics and values
  • Know their products and services, desired terms
    and conditions, and pricing strategy

86
  • Personal Family and friends
  • Professional
  • Internal Organization
  • External Buyers and subcontractors
  • Question How well do you negotiate?

87
  • Intuitive approach
  • Nonstructured
  • Informal not written
  • Inconsistent results
  • Process approach
  • Structured, planned
  • Documented actions
  • More consistent results

88
  • Political and legal issues
  • International monetary factors
  • Foreign governments and their bureaucracies
  • Potential instability and sudden change
  • Cultural diversity
  • Export/Import regulations

89
  • Preparation and planning
  • Effective planning
  • Negotiation skills
  • Effective follow-up documentation

90
  • Getting past no
  • Getting around yes, but
  • Focusing on common interests not positions
  • Use of joint problem solving
  • Internally
  • Externally
  • The right solution is a matter of perspective
    buyer or seller

91
  • Acquire necessary supplies and services of the
    desired quality, on time, and at the lowest
    reasonable price
  • Establish and administer a pricing arrangement
    that results in payment of a fair and
    reasonable price
  • Satisfy needs of the end user (customer)

92
  • Profitability (long-term vs. short-term)
  • Market share
  • Satisfy needs of the customer

93
Adapted from Reference Text pg. 145
94
(No Transcript)
95
Schedule
Technology(RD)
CustomerObligations
Price
Type ofcontract
Services
Ts and Cs
Miscellaneous
Products
Adapted from Reference Text pg. 147
96
Payments
Inspection andacceptance
And so on
Deliveryterms
Financing
Ts and CsCost, Risk,and Value
Obligations
Warranties
Spares
Taxes
Exchange rate
Guarantees
Indemnityand liability
Adapted from Reference Text pg. 148
97
(No Transcript)
98
Adapted from Reference Text pg. 149
99
(No Transcript)
100
(No Transcript)
101
(No Transcript)
102
(No Transcript)
103
(No Transcript)
104
  • Capability of sellers accounting system
  • Uncertainty in the cost estimate
  • Type and complexity of the requirements
  • Urgency of the requirement
  • Marketplace and competition
  • Sellers technical capability
  • Administrative costs to both parties
  • Size and amount of the contract

105
Reference Text, Pgs. 118-119
106
(No Transcript)
107
For about 15 years of my life, I watched
negotiators I was trying to learn from and
finally come to the realization that they did not
know what they were doing. If something went
wrong and I asked, Well, why did it go wrong?
they could not tell me. If I asked, What did
you do right? they could not tell me. The
insight I got was that no one knew. You can
assemble a group of great people who have taken
part in great negotiations for a discussion, and
they all come up with completely different
reasons for why the negotiation was successful
and how it worked. - GERARD I. NIERENBERG
108
Adapted from Reference Text, pg. 155
109
  • When does the negotiation begin?
  • Who is normally the chief negotiator?
  • Are you aware of any executives within your
    organization who makecommitments before the
    contract is negotiated?

110
  • Do you require and review prenegotiation plans
    and objectives?
  • Have you ever walked away from a multi-million
    dollar deal becausethe risks outweighed the
    benefits?

111
Unit 7 Post-Award Phase Best Practices
112
Reference Text, pg. 159
113
The principal objective of contract
administration for both the buyer and the seller
is to ensure fulfillment of contractual
obligations by all parties to the contract.
Reference Text, pg. 158
114
Reference Text, pg. 159
115
  • Compliance with terms and conditions
  • Effective internal and external communication
    and control
  • Effective control of contract changes
  • Effective resolution of claims and disputes

116
  • The six great excuses
  • I never saw the contract.
  • I didnt have a chance to read the contract.
  • I didnt understand the contract.
  • I thought the contract was wrong.
  • Thats not what the contract says!
  • What contract?

117
  • Contracts are relationships
  • Relationships are not cast in concrete-they
    change with circumstances
  • Contractual relationships are dynamic
  • Communication is essential for effective
    responses to change
  • Sharing information is necessary, but not
    sufficient?

118
  • Analyze obligations, assign responsibilities,
    and set performance goals
  • Observe, document decisions and events, and
    report performance
  • Identify and analyze variances
  • Take corrective action
  • Follow up
  • Manage changes and disputes
  • Close out contract

119
  • Read all terms and conditions
  • Separate into technical and administrative
    requirements
  • Develop contract work breakdown structure to at
    least three levels
  • Identify who is responsible for work elements

120
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121
  • Discuss requirements with affected managers
  • Determine
  • Who
  • What
  • When
  • Where
  • How
  • Seek agreement and/or commitment

122
  • Meeting between buyer and seller
  • Held before start of performance
  • Review contract terms and conditions
  • Establish administrative procedures
  • Establish communication protocols
  • Keep and distribute meeting minutes

123
  • Official copy of contract and modifications
  • Conformed working copy of contract
  • Correspondence file, log or index, and suspenses
  • Telephone log
  • Records of deliveries, inspections, acceptances
  • Progress and surveillance reports
  • Property administration records
  • Invoice and payment records

124
  • May be oral or written
  • Include observations and conclusions of others
  • Present information that is not real time
  • Afford opportunities for errors
  • Accuracy
  • Objectivity
  • Honesty
  • Timeliness
  • Competence of observer

125
  • Subject Matter
  • Contents
  • Raw data
  • Analyses
  • Conclusions
  • Combination of above
  • Frequency and timing
  • Format
  • Address(es)

126
  • Main purpose Reduce reliance on human memory
  • Efforts must be thorough and consistent
  • Essential for
  • Proof of performance
  • Management of changes
  • Proof of claims
  • Evidence in case of arbitration or litigation

127
Contract
128
  • Changes modify contract requirements, terms,
    and conditions
  • They add, delete, or both
  • They affect the triple constraints
  • Performance
  • Schedule
  • Cost

129
  • Modifications are inevitable
  • Change provides an opportunity for additional
    sales
  • Management objectives include
  • Control
  • Customer Satisfaction
  • Cost recovery
  • Schedule adjustment
  • Profit

130
  • Ensure that only authorized representatives
    make, accept, or negotiate contract changes
  • Add the appointed representatives to the
    contract
  • Change orders in writing, when possible
  • Confirm oral changes in writing

131
  • Notify other party of actions or inactions that
    are changes, such as constructive change
  • Notify promptly, in writing
  • Provide full description and explanation

132
  • Contract agreements are not perfect
  • Misunderstandings are inevitable
  • Claims and disputes
  • Are a normal part of contracting process
  • Must not be allowed to disrupt performance
  • Must be resolved promptly and dispassionately

133
  • Negotiation, compromise
  • Arbitration
  • Submission of dispute to disinterested person
    or persons for final decision
  • Objective is final disposition in inexpensive,
    expeditious, and less formal manner
  • A substitute for litigation
  • Litigation

134
  • Buyers and sellers steps
  • Contract closeout involves both product
    verification and administrative closeout

Reference Text, pg. 182
135
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136
  • Termination by mutual agreement
  • Termination for cause or default
  • Termination for convenience (most widely used
    in government contracting)

137
Adapted from Reference Text pgs. 188-189
138
Adapted from Reference Text pgs. 188-189
139
  • What is the purpose of contract administration?
  • What are the main tasks of contract
    administration?
  • How important is change management to the
    successof your business?

140
  • How should contract disputes be resolved between
    the buyer and the seller?
  • How important is it to enforce the terms and
    conditionsof your contracts?
  • How important is it to document and share
    lessonslearned and best practices?

141
  • Contributory and knowledgeable team members
    throughout the contract management process.
  • Innovative thinkers for strategic decision
    making, business alternatives, and partnering.
  • Useful knowledge of multiple markets and the use
    of market research.
  • Strong internal and external communication and
    facilitation skills.
  • Proven skill in using computer-based programs
    and e-business media.
  • Staying connected through an organizations
    digital nervous system.
  • Customer-service attitude and results.
  • Concern for quality whatever the assignment.
  • Continuous learning through professional
    certification.

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