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What are the best practices for negotiating favorable contract terms in construction administration services?

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Negotiating favorable contract terms is a crucial skill for construction administration services, as it can affect the quality, cost, and timeline of a project. However, many construction professionals struggle with this process, as it involves balancing the interests and expectations of multiple parties, such as owners, contractors, subcontractors, suppliers, and consultants. In this article, you will learn some of the best practices for negotiating favorable contract terms in construction administration services, such as how to prepare, communicate, and document your agreements.

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1 Define your scope and deliverables

Before you enter any negotiation, you need to have a clear and detailed understanding of your scope and deliverables for the project. This means defining what services you will provide, how you will perform them, when you will complete them, and what standards you will follow. You also need to identify any assumptions, exclusions, or contingencies that may affect your work. Having a well-defined scope and deliverables will help you avoid scope creep, minimize disputes, and justify your fees.

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Maegan Spivey

Simplifier of Construction Contracts
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A tight scope is a critical part of a contract, it’s the foundation for the terms that sit on top of it. The more holes and gray areas give opportunities to hold someone responsible for more work and more liability.

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Abdul Shukoor

Results-Driven Contract Administration Expert Talks about #contractsadministration #quantitysurveying #projectmanagement #precastconstruction #uaeconstruction #ksaconstruction #uaelife
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The importance of a scope matrix in construction contract documentation becomes evident when preparing for negotiations. A comprehensive scope matrix ensures a clear and detailed understanding of project scope and deliverables, defining services, methods, timelines, and standards. It helps identify assumptions, exclusions, and contingencies, serving as a crucial tool to prevent scope creep, minimize disputes, and provide a solid foundation for justifying project's costs.

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2 Research the market and the client

Another important step before negotiating is to research the market and the client. You need to know the current trends, rates, and demand for construction administration services in your area, as well as the specific needs, goals, and preferences of your client. This will help you determine your value proposition, your competitive edge, and your negotiation strategy. You also need to assess the risks and opportunities involved in the project, such as the complexity, duration, location, and regulations. This will help you anticipate any challenges or changes that may arise during the project.

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Maegan Spivey

Simplifier of Construction Contracts
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This is also important in terms of checking out who you’re working with. Do they have good project teams? Are there payment issues due to financial troubles? Vet the people you’re working with and relying on for payment.

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3 Establish your goals and priorities

Once you have done your research, you need to establish your goals and priorities for the negotiation. You need to know what you want to achieve, what you are willing to compromise, and what you are not willing to accept. You also need to know your best alternative to a negotiated agreement (BATNA), which is the option you would pursue if the negotiation fails. Having clear goals and priorities will help you stay focused, confident, and flexible during the negotiation.

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Maegan Spivey

Simplifier of Construction Contracts
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This doesn’t just include terms and conditions from a risk perspective but also how they impact your scope and responsibilities around it. Having a contracts playbook so you can rinse and repeat based on your scope, market, and area keeps you from reinventing the wheel. Learn to identify the big issues for your company, language you can offer to align with your goals with balance and reasonableness, and reasons why they’re important to you to use as comments in the negotiation.

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4 Communicate effectively and respectfully

During the negotiation, you need to communicate effectively and respectfully with your client and other parties. You need to listen actively, ask open-ended questions, and express your interests and concerns. You also need to be polite, professional, and cooperative, and avoid any aggressive or defensive behaviors. You need to seek mutual understanding, trust, and respect, and aim for a win-win outcome that benefits both sides. You also need to be prepared to handle any objections, conflicts, or impasses that may occur, and use appropriate techniques to resolve them.

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5 Document your agreements and follow up

After you reach an agreement, you need to document it in a written contract that outlines the terms and conditions of your services. You need to review the contract carefully and make sure it reflects what you agreed upon. You also need to sign the contract and obtain the signatures of your client and other parties. You need to keep a copy of the contract for your records and reference. You also need to follow up with your client and other parties regularly and update them on the progress and status of your services. You need to adhere to the contract and deliver your services as promised, and notify your client and other parties of any changes or issues that may affect the contract.

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Maegan Spivey

Simplifier of Construction Contracts
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Another good place to check is to make sure your scope was copied completely into the contract. Exclusions, assumptions, and all.

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Peter Horvath

Commercial Manager
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This should include checking the entire contents of the conformed contract reflects the agreements made between the parties. Exhausting as this sounds, often a drawing revision can lead to a dispute down the track which could have been avoided.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Peter Horvath

Commercial Manager
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Know when to walk away - we all desire turnover but don’t be tempted to relax your minimum conditions of contracting just to secure the order. I’m sure your tendering in a highly competitive market but is it really worth giving up your margin and “must gets” just to secure a contract that may jeopardise the ongoing viability of your business? And please.. resources the project with the required personnel.

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Maegan Spivey

Simplifier of Construction Contracts
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Construction contracts, especially in a commercial environment, are not just for managing risk but also managing a project. You need to constantly ask during the project when things come up, what does the contract say? Teach your project teams how to use the contract or use Document Crunch.

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What are the best practices for negotiating favorable contract terms in construction administration services?

1

2

3

4

5

6

1 Define your scope and deliverables

2 Research the market and the client

3 Establish your goals and priorities

4 Communicate effectively and respectfully

5 Document your agreements and follow up

6 Here’s what else to consider

Construction

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What are the best practices for negotiating favorable contract terms in construction administration services?

1

2

3

4

5

6

1 Define your scope and deliverables

2 Research the market and the client

3 Establish your goals and priorities

4 Communicate effectively and respectfully

5 Document your agreements and follow up

6 Here’s what else to consider

Construction

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