Negotiation and Contracting


On completion of this course, candidates will be able to:

A) Identify approaches to achieve negotiated agreements with external organisations.
B) Recognise the use of legal terms that should regulate commercial agreements.
C) The creation of formalized agreements is a critical part of the work of personnel in procurement and supply.

This course analyses approaches to the negotiation of agreements made with external parties and the formation of legally binding contracts. After contracts have been entered into, there can be conflict over performance issues and on costs, timing and quality of supplies. This should involve negotiation to achieve required outcomes.

Who Should Attend:

• Buyer
• Procurement / purchasing executive
• Procurement specialist
• Contract officer
• Sales executive

Course Content:

1.0: Understand the legal issues that relate to the formation of contracts

1.1: Explain the documentation that can comprise a commercial agreement for the supply of goods or services

• Invitation to tender or request for quotation
• Specification
• Key performance indicators (KPIs)
• Contractual terms
• Pricing and other schedules (such as for health and safety records, details of suppliers staff, use of sub-contractors, non disclosure/ confidentiality agreements)

1.2: Assess the legal issues that relate to the creation of commercial agreements with customers or suppliers

• Invitations to treat or invitations to negotiate
• Rules relating to offer and acceptance, consideration, intention to create legal relations and capacity to contract
• The battle of the forms and precedence of contract terms
• Risks presented by contracting on suppliers terms or through oral contracts
• The Vienna Convention on the International Sales of Goods
• Misrepresentations made pre-contract award

1.3: Explain the main types of contractual agreements made between customers and suppliers

• One off purchases
• Framework arrangements and agreements
• The use of mini- competitions
• Call offs
• Services contracts
• Contracts for the hire and leasing of assets

2.0: Understand the main approaches in the negotiation of commercial agreements with external organisations

2.1: Analyse the application of commercial negotiations in the work of procurement and supply

• Definitions of commercial negotiation
• Negotiation in relation to the stages of the sourcing process
• Sources of conflict that can arise in the work of procurement and supply
• Team management and the influence of stakeholders in negotiations

2.2: Compare the types of approaches that can be pursued in commercial negotiations

• Win-win integrative approaches to negotiations
• Win-lose distributive approaches to negotiation
• Lose-lose approaches in negotiations
• Setting targets and creating a best alternative to a negotiated agreement (BATNA)

2.3: Explain how the balance of power in commercial negotiations can affect outcomes

• The importance of power in commercial negotiations
• Sources of personal power
• Organisational power: comparing the relative power of purchasers and suppliers
• How suppliers gather information on purchasing organisations
• How purchasers can improve leverage with suppliers

2.4: Analyse the different types of relationships that impact on commercial negotiations

• The relationship spectrum
• Building relationships based on reputation, trust and justice
• Repairing a relationship

3.0: Understand how to prepare for negotiations with external organisations

3.1: Evaluate costs and prices in commercial negotiations

• Types of costs: direct and indirect, variable and fixed
• Break even analysis: cost volume profit formula
• Costing methods such as absorption, marginal or variable and activity based costing
• Volumes, margins and mark ups and their impact on pricing
• Negotiating prices

3.2: Explain the economic factors that impact on commercial negotiations

• The impact of micro economics and the types of markets on commercial negotiations
• Macro economics and its influence on commercial negotiations
• Sources of information on micro and macro economics

3.3: Explain the main variables that can be used in a commercial negotiation

• Setting objectives and defining the variables for a commercial negotiation
• The bargaining mix
• Positions and interests
• Openings and presenting issues

3.4: Analyse the resources required for a negotiation

• Choice of location
• Involving appropriate colleagues
• Use of telephone, teleconferencing or web based meetings
• Room layout and surroundings

4.0: Understand how commercial negotiations should be undertaken

4.1: Explain the stages of a commercial negotiation

• Defining the stages of a negotiation such as preparation, opening, testing, proposing, bargaining, agreement and closure
• How behaviours should change during the different stages of a negotiation

4.2: Evaluate the main methods that can influence the achievement of desired outcomes

• The use of persuasion methods
• The use of tactics to influence the other party

4.3: Evaluate the main communication skills that help achieve desired outcomes

• Types of questions
• Effective listening
• Push and pull behaviours
• Nonverbal communication
• The influence of culture in commercial negotiations

4.4: Explain how to analyse the process and outcomes of the negotiations to inform future practice

• Reflecting on performance
• Opportunities for improvement and development
• Protecting relationships after the negotiation

Course Duration:

32 hrs through 4 sessions full day 8 hrs per day on Saturdays from 9:00 am to 5:00 pm