Contractor relations are defined by contracts. Whether it is with the project owner or a subcontractor, a general contractor finds new construction projects to work on by bidding on them and then negotiates several subcontracts for each project.
Negotiating a fair deal for everyone involves clearly defining the problem, understanding each party’s needs and wants, and coming up with multiple viable solutions.
In a book titled “Getting to Yes”, authors Roger Fisher and William Ury, outline three principles of negotiation that can be used to develop an agreement or dispute resolution.
- Separate people and problems
When beginning negotiations, it is important to recognize that each party to the agreement is a person first. Each having emotions that will affect the negotiation. Try to see any differences from the other sides perspective as you work as a team. The goal is solving the problem together and get a win-win solution. The owners want quality work that meets their budget and schedule. General contractors want fair agreements with the project owner and their subcontractors that meet the budget and schedule. Subcontractors want fair payment terms and a clear definition of their scope of work.
- Brainstorm options before agreeing
- The key to brainstorming is to come up with as many ideas as possible, whether they are feasible or not.
- Think outside the box, the best ideas come when participants adhere to two principles: there is not single answer and no defined “win or lose”.
- Participants need to take ownership of the problem and work together to find a solution. It’s no one party’s responsibility to solve the issue.
- Base the agreement on objective criteria
Construction contracts typically involve concrete deliverables like materials and installation labor, it’s important to have a full understanding of the scope of work and the standards that will be used to evaluate the quality of that work. The criteria should be clearly spelled out in the contract documents. A contract based on nonobjective criteria can lead to disagreements and strain the relationship. Most contracts rely on arbitration or mediation to attempt to come to a resolution, going to court is a final alternative. Make sure these processes are clearly defined and that all parties agree to abide by them.