Prior to entering into negotiation, the participants must be clear on the strengths, weaknesses and objectives of the negotiation, including full visibility on the effect any decision may have on all interested parties and any associated third parties. Negotiators on all sides of the dispute need to be appropriately empowered to resolve the disputed matter. If a negotiator on any side of the dispute is not sufficiently empowered, an agreement on a settlement may not be possible, or such agreement may not take proper effect due to a lack of the requisite authorisation. The ultimate decision in terms of overall commercial settlement will typically rest with the most senior member of the Procuring Authority's contract management team. However, in some instances, approval may also be required from the relevant line ministry and/or finance ministry.
The Procuring Authority needs to ensure that appropriate skills are available and it may need to engage the use of external legal, financial, technical, insurance, tax and/or other advisors. One objective will be to reach consensus on the underlying cause of the problem, including any associated technical issues. The commercial aspects can only be fully evaluated once the technical issues have been clarified and the underlying cause of the disputes has been identified and agreed upon. However, there will be circumstances where there is simply not enough information available or the cost implication of fully understanding the underlying issue is so great that the most cost-effective option is for the parties to make commercial decisions and reach a settlement based on the information available. Though it is preferable to make a fully informed commercial decision, the more cost-effective approach may be to make a decision based on the information available to avoid wasting time and to maintain a good relationship between the parties.
To assist a Procuring Authority in entering into a negotiation to settle a disagreement or a dispute the Attachment (Dispute negotiation checklist) to this section sets out a checklist that can be used as a guide to prepare for a negotiation.