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, mustnít it?
Tim: Yes, youíre right. It was in February last year. Time flies, doesnít it? Anyway, thank you for submitting a tender. Unfortunately, itís 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, youíll 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, youíre 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: Weíre quite sure. The quantity surveyor has checked; ₤110,000.00 is the price weíre looking at. Is your quoted price your final offer?
Michael: Well, to be honest, Iím very interested in the work, and considering itís so close to our shop, I suppose we could offer 120.
Tim: Thatís 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. Iíd have to check this exactly, but it would make a difference of, let me think, at least two thousand. But really thatís 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, Iíll 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, Iíll be speaking to the client this afternoon, and Iíll let you know the outcome once weíve reached a conclusion. Hopefully, I can get back to you tomorrow morning.
Now, based on the conversation between the contractor, Michael Stone, and the architect whether the following statements are true or 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 architectís pressure.|
|The architect accepts the contractorís 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 architectís target price and the contractorís originally quoted price.|