Question

Negotiations Preparation Scenario:

Background: You and your spouse have received bids to renovate the second story of your “vintage” house. You have selected Busy Bee Construction Company as the contractor, who submitted a bid price of $45,000 with a project completion date of November 2nd. You have been friends with the Contractor for many years but have never conducted business with Busy Bee. You are meeting with Busy Bee on May 4th to discuss project cost, start date and schedule based upon the following data:

Scope of Work:

“Gut the second floor to the studs.”

Provide dumpster in the driveway to deposit construction debris.

Remove the existing second floor bedroom wood panel walls and plaster ceiling, install insulation material and replace walls and ceiling with drywall and wood trim.

Tear out two existing closets and build a walk-in closet and a cedar storage closet, both complete with shelving, electrical outlets and lighting.

Remove the existing bathroom tub, vanity, toilet, plaster walls, floor tile and wall tile. Rebuild sub-floor, install drywall, floor tile and wall tile around the tub. Replace plumbing, bath fixtures, tile and electrical fixtures with new items to be mutually determined.

Update electrical service to 200 amp service, install ceiling fans, and update fixtures to comply with current electrical codes. Fans to be provided by the owners.

Paint all walls and ceiling. Remove / replace wall-to-wall carpeting. Paint color and carpeting to be mutually determined. Haul away all construction debris.

Any “add-on scope” tasks will be handled via contract change orders.

Other Information:

Owners desire to keep all construction cost and change orders less than $50,000 and to have the work completed in mid-November in time for the Thanksgiving holidays.

The request for proposal identified a Cost-Plus Fixed Fee (CPFF) contract to control costs.

Busy Bee desires to keep its workers busy, to avoid any “hidden cost” surprises of a vintage home uncovered during the demolition phase, and to receive revenue by year end.

Both parties desire to maintain a pleasant business relationship and friendship.

Using the following Negotiations Preparation Template, your task is to prepare for this negotiations by discussing each of the following Strategic Negotiations Elements for both the home owners and the contractor:

Negotiation Element	Home Owners	Construction Contractor
People: Parties Stakeholders
Relationship Current Preferred status How to improve it?
Issues What are we negotiating for? Any problem areas?
Positions: What is each side’s stated position?
Interests What are ours / theirs?? Other stakeholders?
Options: - What are some ways to satisfy each party’s interests?
Standards: -What applies to this contract?
Alternatives and BATNA What are the alternatives for each? What is ours and theirs BATNA?		.
Communication: What is the process strategy and agenda? How do we deal with surprises?

Answer 1

Mentioned below are the Negotiation prepration templates, which will help in making this negotiation processeasy and smooth.

Negotiation Elements	Home owner	Construction company
Stakeholders.	One side is the employer party which this case is us the family who is getting our home renovated.	Other side is the company or the employee in this case the Busy Bee.
Current status and position.	Current status is Employer and friend	Current status is Employee and friend.
Issues.	The employer wants the work to finish in mid Noveber but the proposal was for the work to be completed by the november 2nd.	The employee wants to complete the work till 2nd november buthe employer wants them to finish around 15 November
Intrests.	The intrest of employer is clear they want their work to be done in mid November And want the cast to be under $50,000 only.	The intrest of the employee lies in avoiding of any hidden cost while renovating the vintage home and receive the revenue at the end of the work.
Option.	One thing can be done if they the employer can cut the other party some slack and move their desire date a little before	On the other hand employee should also try to satisfy the employer and try to do what he can match the expectations.
Standards.	The employer will pay the renovating fee plus provide the the fans and the pain will be decided mutualy	The employee will finish the work on time which is decided in the meeting on May 4th and the work will be done as the employer told so.
Alternatives	As mentioned in the start that the family received the Bids that means that there are many alternatives available to the family to choose from. And they can always call for new Bids.	The company can Back out if the negotiation does not work for them, they can always get new work and keep being just friends with the family.
Communication.	Because the work is being done on the second floor, the employer can communicate directly to the workers or they can arrange formal meetings. the process will be easy because f the old frienship between both parties	The employee will have to call directly to the employee for communication, although in these type of the formal e-mailing would be the best mode of communication, as much as the employee would like to be profesional, friendship between the patries make it impossible to be formal.
Surprise.	A surprise would not shock the employer as they have a rough idea that the Bid and the amount that they are willing to pay have a $5,000 diffrence.	A surprice in employees case would be a direct loos, as mention above clearly, the surprice hidden cost would affect the revenue of the Busy Bee