Negotiations
A negotiation is a discussion aimed at meeting an agreement for better conditions. They can take place at any time during the lifetime of a construction project; however, they frequently take place before signing a contract with a contractor.
Tim received a total of six tenders for the carcass work. He has arranged to meet the company which submitted the lowest bid, the contractor Michael Stone. He has offered to perform the job for ₤124,000.00, which is higher than the price originally estimated by the architect - ₤110,000.00. They meet to discuss the tender. Listen to the conversation and answer the question below.
Michael: Hello Tim, nice to see you again. When did we complete that office in Aylesbury? It must be 18 months ago, mustn’t it?
Tim: Yes, you’re right. It was in February last year. Time flies, doesn’t it? Anyway, thank you for submitting a tender. Unfortunately, it’s not quite as straightforward this time, and there are a few aspects I would like to take a look at with you.
Michael: Yes, certainly.
Tim: Well, for a start, you’ll be pleased to hear that yours is amongst the lowest tenders. However, the price you quoted is unfortunately still quite a bit higher than our estimate. To be precise, you’re still ₤14,000.00 above our target price.
Michael: As much as that? Are you sure that the contents of the bill are in line with your estimation?
Tim: We’re quite sure. The quantity surveyor has checked; ₤110,000.00 is the price we’re looking at. Is your quoted price your final offer?
Michael: Well, to be honest, I’m very interested in the work, and considering it’s so close to our shop, I suppose we could offer 120.
Tim: That’s better, but it still causes us a problem. Do you see any possibility to bring the price down a bit further?
Michael: You requested sandlime be used for the brickwork. A thought that did cross my mind during the estimation work was that we could save a few thousand by using vertically perforated brick instead of the sandlime. I’d have to check this exactly, but it would make a difference of, let me think, at least two thousand. But really that’s as far as we can go without making any major changes.
Tim: So that puts you at ₤118,000.00. We had hoped for rather more. Might there be a discount for early payment?
Michael: Yes, I’ll offer you a 3 % discount for payment within 10 days. And you know you can rely on us to meet your deadlines and perform high-quality workmanship.
Tim: Yes, I know, thank you. Anyway, I’ll be speaking to the client this afternoon, and I’ll let you know the outcome once we’ve reached a conclusion. Hopefully, I can get back to you tomorrow morning.
Listening comprehension
Now, based on the conversation between the contractor, Michael Stone, and the architect whether the following statements are true or false.
| true | false | ||
|---|---|---|---|
| Michael Stone and Tim Smith have never worked together before. |   | ||
| Tim tells the contractor that he has submitted the lowest tender. | | ||
| The contractor is prepared to negotiate. | | ||
| Michael Stone immediately gives in to the architect’s pressure. | | ||
| The architect accepts the contractor’s first proposal | | ||
| The contractor makes a suggestion to reduce the price. | | ||
| A 3 % discount is agreed for early payment. | | ||
| The final offer is approximately halfway between the architect’s target price and the contractor’s originally quoted price. | |
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