Claims Negotiation elements consist of three key aspects that affect the outcome of negotiations:
Construction project elements
Claim items
Negotiation participants
The outcome of negotiations is also influenced by background information. For instance, any arbitration or court decisions that are relevant to construction claims are important because they highlight the path to be taken in case negotiations fail and litigation needs to be sought.
This is important for parties who prefer ending the negotiations with conflict.
In order to resolve disputes outside courts, negotiations remain an extremely powerful tool if conducted professionally and effectively. Construction claims consultants offer expert services for all types of dispute resolution whether in court or outside.
The text below highlights the elements of a negotiation
1) Project Elements
Project data is critical because it provides a background for the claims and also an external constraint for resolving negotiations. A combination of two elements is considered essential:
Social, economic sphere and the natural environment of the project
The contracts of the project and the procurement system; standard conditions of the contract being adopted along with the structure of the organisation doing the project.
Project information (project’s nature, design quality) and expectation of parties (status requirement, time and quality of project)
These factors are important because they help decide the possibilities regarding nature, future aspects of claims along with the frequency, influencing the interests and attitude of this participant negotiation and ultimately the outcome of negotiation.
For Example:
In case of an increase in the labour market locally, the labour cost claims may be assigned a higher weight by the contractor
In the case of a different set of contract conditions or procurement systems adopted by the project, the claim procedure will also be different.
In case the project has time constraints, more weight will be given to time-related issues by client party.
Also, in case a party realises the frequent nature of a claim incident, more weight is considered for that particular incident even if minor at the initial stage
2) Claim Elements
Claim factors are critical because they disclose the nature, cause, scope and stage of claims. Since they are quantifiable and have the ability to be quantified, they are the hard variables of negotiation — for example; compensation, the extension of time, or the loss in productivity due to a differing thickness of a concrete wall.
The content of clam elements is up for negotiations and is usually represented by the offers made by one party and the counteroffer made by the other party.
These items can be further classified into two groups:
Practically speaking, the significant portion of differences between the estimates of the quotation of contractors and the engineer’s estimates is directly related to practical issues such as a change in scope, labor wage rates, material pricing costs of equipment and unit prices. Due to the factual nature of these elements, the examination of facts remains easier for both parties and reaching an agreement is also easier.
Once the factual issues have been worked out, issues having great uncertainty are then referred to, for example, the productivity of labor, indirect costs and the loss of revenue. These appear to be the most argued points by both parties, and they also reflect the expectation from these claims by both parties.
For instance, a contractor may present exaggerated demands relevant to the items mentioned and the engineer may not be willing to accept any reasonable risk recognition.
Practically speaking, standard estimating guides may fail to address the actual situation and need readjustments when the assumptions are not compatible with the change. Which is why a compromise may be necessary in order to cater to any uncertainties involved.
3) Participant Elements
This section refers to the different interests, attitudes and expectations of the participants of the project in the claims because of the different roles and positions of these participants in the project.
Interest
Interest refers to the fundamental interests negotiating parties carry to the negotiating tables determined by the project and claim factors and can be specific to the project, professional or a person.
Being the soft variable of the process of negotiation, carry a more qualitative aspect of the overall description of the participant. The interest of negotiators goes to determine their expectations and attitudes.
Expectations
Also referred to as soft variables of negotiations, they determine the strategy that the negotiator will be using in the talks. The expectation of the negotiator can be determined by identifying utilities assigned to different negotiating items by the negotiator.
Attitudes
Refers to the participating party's' willingness to reach an agreement through negotiation. Although such a variable does not provide any stresses on other existing facts of negotiations it may affect the way negotiations are conducted.
The attitude of participants also determines the type of a negotiator they might be, established by the type of strategies and tactics used.
Conclusion
Whether it's an out of court negotiation or an in court litigation, the whole process becomes streamlined in the presence of a knowledgeable, well-reputed construction claims consultant, as they have the required expertise and the knowledge about the claims process from start to finish.