You're dealing with unexpected contract changes from vendors. How can you secure win-win solutions?

You have to read terms of each contract and purchase order before asking someone to come to the table. Don’t assume because you’ve worked with an entity before that the contract, exclusions, inclusions and all provisions will be the same as they used to be. Do your own research first before anything else.

First, identify the cause of the change order. Was it truly unforeseen, which would mean inspector driven by interpretation of the code? This is what the contingency line item is for. OR...was it preventable on your end? Many factors are involved here. Question each and every CO. Send these to your design team for their interpretation if needed. Unfortunately, but not common, some of these are design mistakes. Hold the parties accountable as far as a prompt resolution or for the cost, or both. Did your estimator miss this on the plans, quite common these days with all the digital software. Did your onsite team miss it in the field? Regardless, these are expensive lessons to learn, but it provides immeasurable experience for your team.

First and foremost you should understand the changes and its impact. As to whether they are essential changes like supply chain disruption or changes related to quality and safety standards or they are non-essential changes not impacting the core objective of the contract. Secondly, be ready to negotiate with a perspective to balance the requirements of both the parties that might include compromises wherever they are justified. Lastly, set pro-active measures for future changes like periodic review meetings, establish clear communication channels and collaborating closely with the vendor to set structured approach to manage future changes.

I will say that you should approach the situation as a negotiation rather than a confrontation. Be willing to listen to the vendor's perspective and be open to compromise. Look for areas where you can find common ground and build on that to reach a mutually acceptable outcome.

I would recommend: Stay Calm and Professional: Keep your cool and approach the conversation professionally to set a positive tone. Listen Actively: Let the vendor explain their side without interruption. Be Transparent: Share how the changes impact your business.

Start by communicating openly and promptly with the vendor about the changes and how they impact your business. Understanding the reasons behind the changes and sharing your concerns can set the stage for a constructive dialogue.

Here is an example: If a vendor needs to delay delivery due to supply chain issues, you could explore options like splitting the shipment into smaller batches to get critical items sooner, finding temporary substitutes for some products, or adjusting your production schedule to align with the new delivery timeline.

Knowing your strengths in a contract negotiation involves assessing several key factors. Firstly, thorough preparation is essential. This includes understanding your own needs, priorities, and alternatives (your BATNA - Best Alternative to a Negotiated Agreement). Secondly, market knowledge is crucial; knowing industry standards and benchmarks helps gauge what terms are reasonable and competitive. Thirdly, consider your relationship with the other party.