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Article
Publication date: 9 May 2008

Dominique C. Pfrang and Silke Wittig

The paper aims at modelling a game‐theoretical framework that covers the basic mechanisms of lease contract negotiations while making allowance for relevant behavioural aspects.

Abstract

Purpose

The paper aims at modelling a game‐theoretical framework that covers the basic mechanisms of lease contract negotiations while making allowance for relevant behavioural aspects.

Design/methodology/approach

Based on a review of literature about negotiation processes the work initially models, analyses, and solves lease contract negotiations as basic non‐cooperative game situations. It develops a game‐theoretical model based on the simple bi‐matrix normal form and the Rubinstein bargaining game while successively approximating real estate practice by integrating behavioural concepts.

Findings

On a conceptual level the work demonstrates that a game‐theoretical modelling of lease contract negotiations allows for a systematic structuring of the conflict situation between landlords and tenants. Different market situations that affect the perception of utility of the negotiating parties, as well as the consequences of mutual concessions and the creation of additional negotiation subjects that enhance the perceived contract utility can be taken into account by integrating simple mental models. On a practical level the paper shows that brokers' influence on the behavior of the negotiating partners can contribute to the efficiency of negotiation processes and the perceived contract utility. It identifies mutual concessions and the creation of incentives and additional negotiation subjects as possibilities to improve the attractiveness of a lease contract and to reach more beneficial contract provisions.

Originality/value

The paper offers a systematic examination of bargaining processes between landlords and potential tenants which can help professionals to understand lease contract negotiations as conflict situations and reach more profitable and satisfying results.

Details

Journal of European Real Estate Research, vol. 1 no. 1
Type: Research Article
ISSN: 1753-9269

Keywords

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Article
Publication date: 1 June 1988

Lloyd M. Rinehart, Ernest R. Cadotte and C. John Langley

Contract negotiation demands the deliberate exercise of professional skills which extend well beyond simple bargaining.

Abstract

Contract negotiation demands the deliberate exercise of professional skills which extend well beyond simple bargaining.

Details

International Journal of Physical Distribution & Materials Management, vol. 18 no. 6
Type: Research Article
ISSN: 0269-8218

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Article
Publication date: 1 March 2004

Kai Krüger

Markets for public contracting are in the process of transition. Various public/private partnership arrangements replace conventional purchasing, especially within the…

Abstract

Markets for public contracting are in the process of transition. Various public/private partnership arrangements replace conventional purchasing, especially within the local and regional government area. Municipal entities may not be in a position to define their needs up-front because they would not have the overview of what the market may have to offer. So one should ask: Is the traditional ban-on-negotiations in mandatory tender procedures (sealed bidding) - such as it is in EU public procurement law - counter-effective to genuine best value for public money? The article displays significant differences between European Union (EU) law, U.S. law and other regimes such as United Nations Model law, The World Trade Organisation’s Government Procurement Agreement (WTO/GPA), The International Bank for Reconstruction and Development (IBRD), and the NAFTA (North American Free Trade Agreement). New avenues for public/private demand a new agenda and the recent EU 2004 directive scheme attempts to respond to the market challenges. The author accepts that the new directive on public contracting facilitates a more smooth approach than in current EU law with regard to high-tech complicated contract awards, but questions whether the ’competitive dialogue’ really can afford tailor-made solutions to cope with long-term public/private partnership arrangements of the kind now spreading all over Europe

Details

Journal of Public Procurement, vol. 4 no. 3
Type: Research Article
ISSN: 1535-0118

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Article
Publication date: 16 January 2017

Wenxue Lu, Zhi Li and Siqi Wang

Justice, although well developed in the organisational field, has not been given adequate attention in the area of construction project dispute negotiations. Based on…

Abstract

Purpose

Justice, although well developed in the organisational field, has not been given adequate attention in the area of construction project dispute negotiations. Based on previous studies, the purpose of this paper is to more elaborately discuss whether each dimension of justice (distributive, procedural and interactional) is important for negotiators to cooperate in construction project dispute negotiation and whether their impact was moderated by the completeness of construction contract.

Design/methodology/approach

A survey of 164 prime negotiators from different construction projects was conducted. A stepwise multiple regression was employed to test the impact of each dimension of justice, and then a moderated multiple regression model was used to test the moderating effect of contract completeness.

Findings

The results indicated that, while distributive justice is related to cooperative behaviours, the impact of procedural justice and interactional justice also have great impact, and even more significantly related to cooperative behaviours. Moreover, while contractual obligatoriness positively moderates the relationship between procedural justice and cooperative behaviours, the term specificity negatively moderates the relationship between procedural and interactional justice and cooperative behaviours.

Research limitations/implications

First, the authors aimed to test the effect of justice on cooperative behaviours in construction dispute negotiations originally, but did not determine whether their relationship is mediated by any other factors. Second, contractual governance was chosen as the moderator; other factors may also influence behaviours in project dispute negotiations.

Practical implications

First, project dispute negotiators should not focus their attention solely on the distribution of the negotiation issues. For a cooperative approach, negotiators should also give strong consideration to whether their offers reflect procedural justice and whether their opponents are being treated fairly. Second, while contractual design may affect the frame surrounding the negotiations to help negotiators achieve an integrated outcome, they should give more attention to certain forms of justice.

Originality/value

In contrast to previous studies, the authors defined all three forms of justice in project dispute negotiations, and by adding all three forms of justice into the model, the authors attempted to investigate whether distributive, procedural and interactional justice were all related to cooperative behaviours in project dispute negotiations and to ascertain the extent to which each form of justice is important. Furthermore, the authors explored variations in the importance of each form of justice in negotiations under different contractual conditions.

Details

Engineering, Construction and Architectural Management, vol. 24 no. 1
Type: Research Article
ISSN: 0969-9988

Keywords

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Article
Publication date: 1 March 2006

Federal agencies can directly purchase more than 8 million commercial products and services through the General Services Administration’s (GSA) multiple award schedules…

Abstract

Federal agencies can directly purchase more than 8 million commercial products and services through the General Services Administration’s (GSA) multiple award schedules (MAS) contracts. Over the past 10 years, MAS contract sales have increased dramatically--with sales jumping from $4 billion to $32 billion. In addition to simplifying the procurement process, the MAS program is designed to take advantage of the government’s significant aggregate buying power. While GSA seeks to negotiate best pricing for its MAS contracts by analyzing vendor-provided information--such as discounts given to other customers and recent sales data for the same or similar items--past reports have found that GSA has not always used pricing tools effectively and that management controls for better ensuring fair and reasonable pricing had been reduced. This report discusses GSA’s process for negotiating most favored customer prices for MAS contracts and its efforts to improve the overall quality of negotiations. Contract negotiators at the four MAS acquisition centers that GAO reviewed use a variety of tools for obtaining most favored customer pricing--that is, the prices vendors offer their best customers. However, the GAO analysis of GSA’s review of selected fiscal year 2004 MAS contract files found that nearly 60 percent lacked the documentation needed to establish clearly that the prices were effectively negotiated. Specifically, the contract documentation did not establish that negotiated prices were based on accurate, complete, and current vendor information; adequate price analyses; and reasonable price negotiations. GSA’s efforts to ensure most favored customer pricing have been hindered by the significant decline in the use of pre-award and postaward audits of pre-award pricing information, two independent pricing tools that have helped GSA avoid or recover hundreds of millions of dollars in excessive pricing. In fiscal year 1995, GSA conducted 154 pre-award audits; by 2004 the number of pre-award audits fell to 40. Postaward audits--which resulted in an average annual recovery of $18 million in the early 1990s--were discontinued in 1997 when GSA revised its MAS contract audit policies to increase the use of pre-award audits--an increase that has not materialized. In March 2003, GSA established the Acquisition Quality Measurement and Improvement Program, initiating the use of prenegotiation panels and postaward quality reviews of contracts. However, the effectiveness of these initiatives has been limited due to insufficient oversight. For example, three of the MAS acquisition centers that GAO visited had not reported the results of their 2003 prenegotiation panels--information needed by management to identify problems and make needed improvements. Moreover, the fourth acquisition center--which accounted for about 56 percent of the fiscal year 2004 MAS sales--has yet to hold a panel. While the postaward quality reviews--the second program initiative--have identified deficiencies in contract file documentation, they did not determine the underlying causes of these deficiencies or prescribe actions needed to address them. As a result of these weaknesses, GSA cannot be assured that fair and reasonable prices have been negotiated for its MAS contracts.

Details

Journal of Public Procurement, vol. 6 no. 3
Type: Research Article
ISSN: 1535-0118

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Article
Publication date: 9 February 2015

Ramaraj Palanisamy, Jacques Verville and Nazim Taskin

As the wrong Enterprise Software (ES) acquisition can lead an organization with chronically exceeded budgets and settling for minimum returns, so can an unfavorable…

Abstract

Purpose

As the wrong Enterprise Software (ES) acquisition can lead an organization with chronically exceeded budgets and settling for minimum returns, so can an unfavorable contractual agreement. Often the acquiring organizations become vulnerable to risks and mistakes as the software contracts are habitually written using legal terminologies and mainly to the advantage of the vendor. To avoid costly ES contracting mistakes, the purpose of this paper is to empirically identify the critical success factors (CSFs) of contracting in the context of ES acquisition.

Design/methodology/approach

A questionnaire survey was conducted to gather the data for this study. Statistical analysis conducted for this study include descriptive statistics, factor analysis with reliability and validity tests and nonparametric test.

Findings

The five key factors are: contractual assurance, forward compatibility and licensing; right to use, own and use of own, confidentiality and payment; software acceptance; license assignment; and vendor obligation for intellectual property. The research and managerial implications of these factors are given in discussion.

Research limitations/implications

As with most empirical studies, the subjectivity of the opinion of respondents from only two industries presents some limitations to generalization. Another limitation is the respondent has been asked for the degree of criticality for each of the contracting issue given in the questionnaire. There could be critical issues other than the listed ones which are more specific to the organization.

Practical implications

The results can be used by managers to improve their understanding on the critical contractual issues in ES acquisition negotiations.

Originality/value

The significant value of this study identifies the CSFs for ES contract negotiations while acquiring the software.

Details

Journal of Enterprise Information Management, vol. 28 no. 1
Type: Research Article
ISSN: 1741-0398

Keywords

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Article
Publication date: 1 March 2011

Timothy G. Hawkins and Jeffrey R. Cuskey

Alpha contracting is a collaborative effort between a buyer and supplier during contract formation to maximize efficiency and effectiveness. Collaborative efforts between…

Abstract

Alpha contracting is a collaborative effort between a buyer and supplier during contract formation to maximize efficiency and effectiveness. Collaborative efforts between the United States Department of Defense and its suppliers have recently been scrutinized. Although several benefits of Alpha contracting are identified within the literature, the phenomenon is not ubiquitous nor is it well understood. Using the case study methodology, this research explores Alpha Contracting to define success and to identify its contributing factors. Additionally, this research identifies antecedents for and consequences of use, variations of the processes employed, and some misuse. The study culminates in the development of a conceptual model of collaborative pricing, and provides five recommendations for enhanced use.

Details

Journal of Public Procurement, vol. 11 no. 2
Type: Research Article
ISSN: 1535-0118

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Article
Publication date: 1 March 2007

Wendell C. Lawther

The effectiveness of innovative procurement practices, illustrated at the US federal level by Performance Based Service Contracting and other best value approaches…

Abstract

The effectiveness of innovative procurement practices, illustrated at the US federal level by Performance Based Service Contracting and other best value approaches, depends upon changes in the public procurement organizational culture. These changes require agency officials to establish new relationships with contractors, as the challenges of acquiring complex as well as highly customized goods/services is best met through flexibility and negotiation throughout the life of the acquisition. Using procurement approaches that provide maximum flexibility provide challenges to public managers, as choices regarding negotiation include the content as well as the intensity and duration of negotiation sessions. The use of the Invitation to Negotiate (ITN) approach by the State of Florida is one example of an approach that allows flexibility and facilitates different relationships with contractors. Two case studies, from the Departments of Transportation and Management Services illustrate the use of ITN.

Details

Journal of Public Procurement, vol. 7 no. 2
Type: Research Article
ISSN: 1535-0118

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Article
Publication date: 1 January 1975

Knight's Industrial Law Reports goes into a new style and format as Managerial Law This issue of KILR is restyled Managerial Law and it now appears on a continuous…

Abstract

Knight's Industrial Law Reports goes into a new style and format as Managerial Law This issue of KILR is restyled Managerial Law and it now appears on a continuous updating basis rather than as a monthly routine affair.

Details

Managerial Law, vol. 18 no. 1
Type: Research Article
ISSN: 0309-0558

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Book part
Publication date: 14 December 2018

Katsuya Hihara and Naoki Makimoto

The relationship between airline and airport is complex, fascinating, and wide open for new research endeavors. In Volume 6 of the series, we conducted the analyses of…

Abstract

The relationship between airline and airport is complex, fascinating, and wide open for new research endeavors. In Volume 6 of the series, we conducted the analyses of risk-sharing contract between airline and airport from numerical risk balance assessment and incomplete contract theory perspectives based on an interesting real example of risk-sharing contracts, the Noto Airport Load Factor Guarantee Mechanism (LFGM) contract in Japan.

In this chapter, we further advance the analyses of risk-sharing contracts, based on the real example of Noto LFGM contract, from the perspectives of game theory and principal-agent theory. The risk-sharing arrangements, such as LFGM contract, are relevant to the rapidly changing business environment in Asia’s aviation industries.

We conduct a two-stage game analysis. The first phase is the contract negotiation phase and the second phase is the effort-making phase after signing the contract. We show that the two parties can attain a Pareto optimal utility level by bargaining a simple linear risk-sharing contract in the contract negotiation phase based on the equilibrium effort levels in the effort-making phase.

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