Purchasing and Negotiation Training

Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

The first half of my career was invested in the engineering and construction industry.  I graduated as a Civil Engineer and promptly went into business as a general contractor  self-performing several tradition sub trades .  This was followed by service as a Construction Manager (CM) for Fee Only.   All of this was very satisfying work, particularly the CM work which was far less price focused and more skills, services, and value oriented.  While I did not know it at the time, this experience was a real life laboratory for developing negotiation skills.  Since transitioning to the speaking, education and training industry, the experience and expertise gained in construction has accrued to the benefit of my construction industry clients.  Here is a partial list of construction industry client associations and individual companies. 

List of Construction Industry Clients

ASSOCIATIONS

• CFMA        Construction Financial Management Association
• SWRI          Sealant, Waterproofing and Restoration Institute
• CPCI           Canadian Precast Prestressed Concrete Institute ‎
• ICPI             Interlocking Concrete Pavement Institute
• NPCA          National Precast Concrete Association ‎
• MCPX         Manufactured Concrete Products Expo         ‎
• PCI               Precast/Prestressed Concrete Institute‎
• NUCA          National Utility Contractors Association
• SMACNA    Sheet Metal and Air Conditioning Contractors’ National ‎
• DASNY       Dormitory Authority of the State of New York ‎
• PCA             The Portland Cement Association
• PAMCANI  Plumbing and Mechanical Contractors Authority of Northern Illinois

COMPANIES

• ·         World of Concrete                            ‎
• ·         Fabcon                                               
• ·         Heidelberg Cement Group             ‎
• ·         Mack Industries                               
• ·         Energia Petrobras                           
• ·         Schlumberger                                  
• ·         Reynolds, Inc.                                 
• ·         Woodworkers Supply                     

One common thread that runs throughout the construction industry as concerns negotiation is that of price.  It is a price dominated industry.  In many bid situations, particularly publicly bid work, price is the only criterion.  Even though all units of government allow themselves the “out” of language such as “lowest responsible bidder”, it is very rare that a low bidder will be thrown out, largely due to the risk of inviting lawsuits that stop the project in its tracks and ultimately increasing the price once litigation is resolved.  Curiously, the end result is not much different in many private bid situations.  The focus on low price even is so strong, that even when the low bidder is notorious for its poor performance, the awarding authority (owner, general or sub-contractor) usually resorts to the tired tactic of trying to force competitors to chase the bad number of the irresponsible bidder because the “price was on the street”.  This means that the low price was carried in order to win the job.  We call this the Hot Potato tactic in negotiation. 

 In future posts, we will discuss specific situations and possible solutions, including partnering.