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How To Avoid Low Construction Budget Estimates

How many of your Clients suggest a low construction budget, hoping it will lead to more favorable design fees? 

Today I want to show you the best way to address this issue by applying a negotiation strategy called Principled Negotiation. 

Let’s start with the basics – what is Principled Negotiation?

Principled Negotiation & Construction Budgets:

The term ‘Principled Negotiation’ comes from one of the bestselling negotiation books of all time, “Getting to Yes – Negotiating Agreement Without Giving In.”

In this book the two authors, Roger Fisher, and William Ury, suggest that the best way to resolve conflict is to adopt a negotiation strategy they call Principled Negotiation.

What is Principled Negotiation?

Principled Negotiation is an interest-based approach to negotiation that relies primarily on four basic principles for a successful outcome:

• Separate the people from the problem
• Focus on interests, not positions
• Invent options for mutual gain, and
• Use objective criteria

How can Principled Negotiation help establish a realistic construction budget?

While all four principles play a crucial role in any negotiation process, it’s the fourth principle, ‘Objective Criteria’, that is of interest in this situation.

(Note: To help you with your design fee negotiations we’ve created a Fee Proposal Mini-Series that’s currently available to watch FREE of charge. Click on the image below for more details)

‘Objective Criteria’ suggest that if we rely on our own opinions, experiences and/or training to support our requests we’re far more likely to engage the ego and end-up bartering for position at the negotiation table. 

Instead, Fisher and Ury suggest that our arguments will carry far more weight if we use factual, relevant and qualified information (that’s independent from either party) to support our requests.

For example, the next time a Client presents you with an low construction budget, instead of addressing the issue by confirming your position and saying:

“… experience tells me that a building of this size and quality is going to require a much bigger budget…”

You may want to address the issue by focusing on ‘Objective Criteria’ and saying:

“I wasn’t sure how much this type of building would cost so I’ve brought along three different cost publications that present average construction costs, for your type of project, on a square foot (or square meter) basis. Would you like to take a look?”

Cost Publications:

In this situation, we’re using information that’s available in the public domain to deliver (perhaps) unwanted news. 

Focusing the discussion on factual, relevant, qualified, and (most importantly) independent information is far more productive because it avoids direct conflict… if it’s written down somewhere it must be true! 

Principled Negotiation is a negotiation strategy that’s taught in almost every business school and it’s also a subject that we discuss in detail at the Fee Proposal Workshop. 

Want Help with your Fee Proposals? 

If you’d like to learn more about how to write winning fee proposals check out our Fee Proposal Mini-Series.

It’s currently available to watch FREE of charge at the following link: