Construction Management: Risks, Bids & Negotiation

This assignment delves into the complexities of construction management. It examines the inherent risks contractors encounter when bidding on lump sum projects, particularly those involving new clients and unfamiliar urban settings. The paper outlines crucial criteria for contractors to consider when selecting projects, including delivery methods, scope definition, and RFP requirements. Finally, it analyzes effective negotiation strategies that contractors can employ during discussions with clients, emphasizing the importance of preparation, yielding, contending, problem-solving, and clear contract presentations.

Running Head: CONSTRUCTION MANAGEMENT
Construction Management
Name
Institutional affiliation

CONSTRUCTION MANAGEMENT 2
Construction Management
This research paper is about construction management. The subtopics discussed in
this paper include the risks that are faced by a contractor when bidding a lump sum job for
the construction of office building, the criteria that can be used by a contractor when bidding
on a construction project, negotiation strategies that can be employed by the contractor, and
ways of going through this conversation of negotiation.
Risks faced when bidding
Construction is a risky business because of the high number of failures that have
occurred in the construction firm on yearly basis. There are numerous risks which will be
faced by a contractor when bidding a lump sum job for the construction of an office building
in an urban setting for a private developer with who the contractor have never done any
business with. Bidding of such a project has a high degree of uncertainty making the outcome
in terms of cost and timeline of the construction of the office building to be hard to predict.
The constructor expects the timeline of bidding to be aggressive and the cost to be
competitive (Andersson, 2014).
However, unless the effect of uncertainties and potential risks is understood, it will be
impossible to determine how risky a give bid price may be in terms of making loss or profit.
There are numerous risks which will be faced by a contractor when bidding on a construction
project located in a city in which the contractor has never had a previous project. Some of
these risks include uncertainty of project safety, constructability of the project, the inability of
the owner to finance the project fully, material cost and inflation, and also water (Hall, 2011).
Criteria to be used by contractor
There are specific criteria that must be used by a contractor when making the decision
on which project to submit bids on. The first step that should be taken by the contractor when

CONSTRUCTION MANAGEMENT 3
making the decision on which project to submit bids on is to specify the project delivery
method that he is willing to use. The project delivery methods that can be implemented by the
contractor include Design-Build, Design-Bid-Build, and Construction Management. The
contractor also needs to be intricately familiar with the scope of the project as well as the
requirement of the Request for Proposal (RFP) when making the decision on which project to
submit bids on (Lewis, 2013).
A request for proposal is a type of soliciting a bid in which the organization or
companies announces the availability of the funds for a given project and the contractors can
place bids for the completion of the project. The scope of the project is the last criterion that
should be considered by the contractor when deciding which project to submit bid on. The
scope of the project involves documentation and determination of the list of specific
deadlines, tasks, functions, features, deliverables, goals, and ultimate cost of the project.
Negotiation Strategies
In case the submitted bid is too high and the owner of the commercial project who has
had previous project success request for the best and final offer, there would be need of
applying negotiation strategies when having the conversation with the client. The first
preparation before the beginning of negotiations is to making necessary preparations on
which all arguments will be based on, these facts will be important when convincing the
client to accept the price (Miles, 2015). The following are some of the negotiation strategies
that can be employed by the contractor during the conversation:
Inaction: The contractor should buy himself time to think about the proposal, decide the next
tactic, or gather extra information before resuming the conversation.
Yielding: The process of conceding a given point which may not be vital to the contractor but
is vital to the client. This is critical during the process of negotiation.

CONSTRUCTION MANAGEMENT 4
Contending: It is important for the contractor to persuade the party in which he is negotiating
with to concede to his targeted outcome (Pienaar, 2015).
Problem-solving: The parties involved in the negotiation should be committed to discussing
and examining issues when getting into an agreement that is long-term.
During the interview by the owner, the presentation is important to the contractor
while pursuing to be awarded the project. The presentation and organization of the contract
documents are important to the client when analysing the various contracts submitted. The
contractor whose specific deadlines, tasks, functions, features, deliverables, goals, and
ultimate cost of the project is more presentable will be awarded the contract (Swallow, 2012).
Conclusion
The subtopics discussed in this research paper include risks faced when bidding,
criteria to be used by the contractor when deciding which project to submit bids to, and
negotiation strategies that can be employed by the contractor.

CONSTRUCTION MANAGEMENT 5
References
Andersson, C.-A. (2014). Pricing and Bidding Handbook. Moscow: International Labour Organization.
Hall, L. (2011). Negotiation: Strategies for Mutual Gain. Michigan: SAGE.
Lewis, H. (2013). Bids, Tenders and Proposals: Winning Business Through Best Practice. New York:
Kogan Page Publishers.
Miles, M. (2015). Competitive Bidding in the 21st Century. Colorado: Master Point Press.
Pienaar, S. (2015). Negotiation: Theories, Strategies and Skills. London: Juta and Company Ltd.
Swallow, J. (2012). Presentation Planning - Second Edition - a practical guide to planning and
preparing good presentations to fast and making them effective. Michigan: Lulu.com.