Mutual Gains Negotiations
Member Login  

Mutual Gains Negotiations Exective Summary

EXECUTIVE SUMMARY

Mutual Gains Negotiations
and
the PennDOT Staff Hour Estimating Guide

Background

PennDOT and the consultant community (through ACEC/PA) have entered into a partnership to utilize a new methodology for negotiating consultant agreements.  Although new to Pennsylvania, this methodology, know as Mutual Gains, has been used by other state Departments of Transportation and their consultant business partners with great success.

Some of the benefits of Mutual Gains Negotiations are significant reductions in negotiation and associated project delivery times, and statewide consistency in negotiations. In addition, this methodology promotes a mutual understanding of expectations regarding scope, deliverables, range of hours and project complexity.  As its name implies, this approach increases the chances of arriving at a fair and reasonable price for professional services for both the consultant and the Department.

What is Mutual Gains?

  1. Mutual Gains Negotiations is a collaborative approach to negotiating contracts. Rather than the adversarial approach (win-lose) the mutual gains process involves a consensus-building, win-win approach. In order for mutual gains negotiations to be successful, the parties need to have a shared understanding of the project scope and complexity, agree to the goal of a mutually beneficial solution, and the parties must trust one another.

Mutual Gains Negotiations are based upon the following five principles:

    1. Identify Interests – each party to the negotiations should identify their own interests and try to understand the other party’s interests. Interests are defined as needs, concerns, motives, goals or objectives.
    1. Consider all Options – Be creative and consider all options to finding a mutually acceptable solution that meets the interests of both parties.
    1. Develop Standards or Criteria – Use of standards and established criteria assist with consensus building by keeping the discussions focused upon fact rather than opinion. One example is the staff hour estimating guide.
    1. Understand Your Alternatives – Each party in the negotiation should determine their best alternative to the negotiated agreement (BATNA). What is the fall back position if the negotiation fails?
    1. Build Relationships – Remove personal problems from the negotiations and focus on the business aspect. One of the goals of mutual gains negotiations is to build and strengthen relationships between PennDOT and consultants. All parties should strive for open and honest communication during negotiations. If the communication is straightforward and based upon fact, not opinion, the relationship will grow even if the negotiation fails.

In order for Mutual Gains Negotiations to be successful, both parties must work together to ensure they have mutual expectations of the scope of services, project complexity, and deliverables before staff hours and a price proposal are generated.

  1. Scope Clarification Meetings

Mutual Gains Negotiations places great emphasis upon both parties meeting and agreeing to the project complexity, scope, and mutual expectations of deliverables and plan presentation.

The first step in contract preparations is to clearly understand the level of complexity and the expectations with regard to plan preparation and deliverables. Although a standard scope of services may be outlined through the WBS codes, some aspects of the scope may be negotiable. Both Project Managers (Department and Consultant) must understand the scope and be prepared to clarify it as necessary in negotiations. A scoping meeting with all necessary technical experts will be held and all parties will mutually agree to the scope. In some cases, a field visit with key PennDOT and consultant staff prior to beginning negotiations may prove beneficial for complex projects.

  1. Scope Clarification meetings/discussions are central to effective negotiations and are to be considered a routine part of negotiations.
  1. Only after the scope is agreed to, the price will be prepared using the new staff hour estimating guide. For 80 percent of the projects, the hours for each task should fall within the accepted range as per the staff hour guide.
  1. Staff Hour Estimating Guide

The Staff Hour Estimating Guide is intended to provide uniform hour estimates for professional services contracts statewide. The initial focus will be Preliminary Engineering and Environmental Clearance Tasks. PennDOT and Consultant Project Managers will use the detailed descriptions of the work tasks covered in the Work Breakdown Structure together with the range of staff hours required to negotiate every project task that is covered in the Staff Hour Guide. This, in addition to full and consistent project scoping, will allow contracts to be negotiated in a uniform manner throughout the Commonwealth.

Simply stated, the staff hour guide provides a list of WBS Tasks, the unit of measure, the staff hour range, and the basis for the staff hour range. The unit of measure may be different for each task. Examples include the number of sheets for roadway plans, the number of noise receptors, acres of wetland, etc. The “basis for the staff hour range” provides additional details as to what is included in the task to meet the range of hours.