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The ability to negotiate is recognised as an invaluable skill in project management. But where contractual conflict arises, I often encounter the disappointing reality that only a few construction and engineering professionals have any formal negotiation skills training.

Where negotiation fails to resolve differences amicably the parties often become adversarial, and when differences become disputes these have traditionally been resolved through arbitration or litigation and, more recently, with temporary finality through adjudication. Negotiated settlements have many benefits: they not only avoid the uncertainty of an imposed decision but the destruction of relationships, the “limited remedy” nature of third-party determination and the possibility of damaging admissions or finding of fact. They also reduce expense such as the cost of expert witnesses, legal fees, and lost time.

Even in arbitration and litigation the parties are still negotiating with each other and with the arbitrator or judge to get the decision that they want. But the introduction of lawyers transforms the “negotiation” itself into “legal negotiation” and this creates a boundary role conflict. Are the lawyers employed to give undivided loyalty to clients’ interests to obtain the most favourable settlement possible, or is their professional obligation to pursue settlements that are just and fair to both parties?

In any event, who decides what is right or wrong good or bad? The last thing you will want to hear is your barrister saying, after a bad day before the tribunal: “My advice is to settle this matter on the best terms possible.” These words are usually very, very expensive.

Principled negotiation moves the focus from what the parties would like to why they want it – the interests that lie behind the demands

For many, the starting point of modern negotiating theory is the 1981 text Getting to Yes: Negotiating an Agreement Without Giving In by Roger Fisher and William Ury. Fisher and Ury say negotiation is either positional or principled. The former is where one party adopts a position and tries to conclude an agreement as close to that as possible. This mode of negotiation is characterised by aggression and extreme opening positions. It does not lend itself to creative solutions and even if the parties do reach agreement, their relationship may be damaged.

Principled negotiation moves the focus from what the parties would like to why they want it. Often they are able to meet each other’s interests imaginatively and create value by matching what is low cost to them with what is high in benefit to the other. Modern mediation practice and procedure has principled negotiation embedded into it; the mediator will encourage cooperation and information sharing.

In arbitration and litigation, costs can quickly exceed the amount in dispute. This is mostly because few construction and engineering professionals view legal negotiation as a project. They forget the basic project disciplines: identifying the objective(s) what is to be achieved; the approach and methods – how is it to be achieved; the location where is it to be achieved; and the allocation of responsibilities – what is to be done by whom and identifying, monitoring and controlling the budget.

Negotiating is not arguing, it does not require aggression and it is not manipulation. It is not quick and it is not easy. It takes creativity, hard work, preparation and analysis. The crux of it is the setting of objectives (this is not the same as bottom lines), developing a strategy, and thorough preparation, which includes a people plan as well as a content plan. With all of this in place you are ready to negotiate.