Engineering Contract Negotiation

The MSA Negotiation Checklist I Use to Protect My Company. I review MSAs weekly. This checklist saves me from missing critical items. Scope and Deliverables → Define services clearly. Avoid open-ended language. → Include acceptance criteria. Know when the job is done. → Add change order process. Scope creep kills budgets. Payment Terms → Net 30, not net 60. Cash flow matters. → Milestone-based payments, not time and materials where possible. → Late fees for delayed payments. Incentivize on-time payment. Liability → Mutual indemnification. One-sided is a red flag. → Cap liability at 12 months fees. Lower for high-risk deals. → Exclude gross negligence and willful misconduct from the cap. → No liability for indirect, consequential, or lost profits. Data and Security → Define confidential information. Be specific. → Include data security standards. Reference SOC 2 or ISO 27001. → Add breach notification. 24 to 48 hours, not reasonable time. → Require data deletion post-termination. Confirm destruction. Termination → Termination for convenience. 30 days notice minimum. → Termination for cause. Define breach clearly. Include cure period. → Survival clauses. Know what outlives the agreement. IP Ownership → Background IP stays with owner. → Foreground IP goes to customer for custom work. → License back for provider to use learnings. Limited scope. Dispute Resolution → Governing law. Pick your jurisdiction. → Venue. Home court advantage where possible. → Escalation clause. Try executive resolution before litigation. Insurance → General liability. $1M minimum. → Cyber liability. $5M minimum for data-heavy deals. → Professional liability. For service providers. Final Review I read the entire document. I check cross-references. I confirm defined terms match throughout. One error in Section 12 can void your protection in Section 5. What do you add to your MSA checklist? Share below. I will add it to mine. #msa #contractnegotiation #commercialcontracts #legalops #inhouselegal #checklist

Draft. Send. Wait. Receive. Review. Edit. Repeat. Again. And again. Some contracts get stuck in this endless loop. Here’s how I break out of it and try to close deals faster. A lot of these, I have picked up from my senior in the profession. These points actually make a real difference. 1. The Deviation Matrix approach- When there's too much back-and-forth, reviewing the entire agreement repeatedly wastes time. Instead, I use a Deviation Matrix: - What’s in the agreement? - Proposed change, and reason behind it? - Counterparty’s observation? - Final decision? This shifts focus to key points, making negotiations laser-focused. 2. The “No-Redlining” rule for minor edits- Negotiations get derailed by excessive track changes and formatting tweaks. I try streamlining the process by sharing a clean draft along, keeping the focus on key terms instead of markup battles. 3. Pre-approved alternate clauses- For common sticking points (e.g., indemnity, liability caps), I keep a library of fallback clauses that are pre-approved internally. This prevents delays in getting management approvals every time. 4. Ghostwriting for the Counterparty- If I know the counterparty will push back on a clause, I sometimes draft the alternative version they would likely propose (but in a way that works for both). This saves rounds of negotiation. 5. Negotiation by concept, and not verbiage- Instead of haggling over specific words, I first align on the core principle behind a clause. Once both sides agree on intent, drafting the right language becomes much faster. 6. Highlighting ‘No-Go’ zones upfront- Instead of rejecting proposed changes late in the game, I highlight non-negotiable clauses before discussions start. This prevents wasted time on things that will never fly. 7. Ending ‘Email ping-pong’ with a Rapid-fire call- If an email thread crosses 2 replies, I prefer a quick 10-minute call to resolve all pending points. This reduces long written explanations and unnecessary delays. 8. Strategic use of E-signatures- Not just for sheer convenience, but to prevent last-minute cold feet from the other party. Once a contract is ready for signing, I send it through a CLM tool immediately, reducing the chances of sudden re-negotiations. Contracts don’t have to feel like a tug-of-war. The goal is to close the deal efficiently and not just winning the negotiation. That’s something my seniors have always emphasized, and over time, I’ve come to see the wisdom in it. #ContractReview #InHouseCounsel

Fixed-Price contracts aren't protecting you... They're setting you up for failure! Most procurement teams think Fixed-Price = safety. Budget certainty. Risk transferred to the supplier. But here's what actually happens: → Your scope isn't as clear as you think → Requirements shift → The supplier protects themselves with change orders → You end up paying more, damaging the relationship AND... You have to spend time reopening/renegotiating contracts... I've watched this play out dozens of times. The real question isn't "which contract type is safest?" It's "which contract type matches my situation?" Here's how to actually decide: → 𝗪𝗵𝗲𝗻 𝘀𝗰𝗼𝗽𝗲 𝗶𝘀 𝗰𝗿𝘆𝘀𝘁𝗮𝗹 𝗰𝗹𝗲𝗮𝗿: Fixed-Price works. You get budget certainty and transfer delivery risk to the supplier. → 𝗪𝗵𝗲𝗻 𝘀𝗰𝗼𝗽𝗲 𝗶𝘀 𝗳𝘂𝘇𝘇𝘆 𝗼𝗿 𝗲𝘃𝗼𝗹𝘃𝗶𝗻𝗴: Time & Materials keeps you flexible. Add "Not-to-Exceed" caps to control costs. → 𝗪𝗵𝗲𝗻 𝘆𝗼𝘂 𝗰𝗮𝗻'𝘁 𝗲𝘃𝗲𝗻 𝗲𝘀𝘁𝗶𝗺𝗮𝘁𝗲 𝘁𝗵𝗲 𝗲𝗳𝗳𝗼𝗿𝘁: Cost-Plus gives transparency for R&D and innovation work. But it requires active oversight. → 𝗙𝗼𝗿 𝗼𝗻𝗴𝗼𝗶𝗻𝗴 𝗿𝗲𝗹𝗮𝘁𝗶𝗼𝗻𝘀𝗵𝗶𝗽𝘀: Master Service Agreements let you negotiate once, reuse forever while using Statements of Work (SoW) for specific work. Essential for strategic suppliers. → 𝗙𝗼𝗿 𝗿𝗲𝗰𝘂𝗿𝗿𝗶𝗻𝗴 𝗴𝗼𝗼𝗱𝘀: Supply Agreements lock in pricing and guarantee supply. → 𝗙𝗼𝗿 𝘃𝗮𝗿𝗶𝗮𝗯𝗹𝗲 𝗱𝗲𝗺𝗮𝗻𝗱 𝘄𝗶𝘁𝗵 𝗺𝘂𝗹𝘁𝗶𝗽𝗹𝗲 𝘀𝘂𝗽𝗽𝗹𝗶𝗲𝗿𝘀: Framework Agreements let you compete each project while maintaining pre-qualified vendors. Picking the right contract type is about correctly defining the rules of the game before you play it... But the rules also need to be adapted to the game! Otherwise, you're going to be bickering about the rules instead of creating value for both your organizations... Most contract failures happen because teams pick contract type based on comfort, not project fit. The visual below shows you exactly how to choose based on your situation. Would you add/change anything? Let me know in the comments 👇 _________________________ 𝗣.𝗦. I help companies choose and implement ProcureTech solutions for a living. If you're going to implement a CLM and/or an "AI Agent" to negotiate contracts, you're going to need to define your business rules for when to use which contract type in your business... Is that something you already have...? Every Sunday, I send out a free newsletter which shows you what you need to get results with technology. It's read by 10,000+ Procurement professionals (and counting...) Subscribe here for free: https://lnkd.in/eCeAcP3h

Most negotiations fail before they even begin.   Not because of bad tactics. Not because of tough opponents. But because one side walks in without a real plan.   Vague goals and wishful thinking won’t cut it.   If you want to win, you need a negotiation plan that’s SMART:   → Specific Know exactly what you want. Not just “a better deal” but a defined outcome.   → Measurable Put numbers on it. What price? What terms? What deadlines?   → Achievable Be ambitious but realistic. If your ask is impossible, you won’t get anywhere.   → Relevant Focus on what truly matters. Price, quality, service—prioritize what moves the needle.   → Time-based Set deadlines. A deal that drags on forever is often a bad deal.   Now, let’s take this a step further.   Before any negotiation, you must define three critical points:   → MDO (Most Desirable Outcome): Your ideal result. The best-case scenario if everything goes your way.   → LAA (Least Acceptable Agreement): Your walk-away point. If the terms drop below this, you leave.   → BATNA (Best Alternative to a Negotiated Agreement): Your backup plan. If this deal collapses, what’s your next move?   Here’s how it plays out in real life:   Say you’re negotiating a supplier contract for your company.   MDO: Secure a unit price of $11 with a 30-day delivery window.   LAA: You won’t go above $11.45 or accept more than a 45-day delivery time.   BATNA: If the supplier won’t meet your LAA, you have another vendor ready to step in at $11.50 with a 35-day turnaround.   Now, imagine negotiating without this clarity.   - You’d be guessing at what’s acceptable, - Making decisions under pressure, and - Likely leaving money on the table.   Top negotiators don’t guess.   They plan.   And here’s the real power move:   Subtly signal that you have options.   When the other side senses you have a strong BATNA, the dynamic shifts.   They start making concessions. You stay in control.   So before you step into any deal, ask yourself:   → Are my objectives SMART? → What’s my MDO, LAA, and BATNA?   Get clear on those, and you’ll never negotiate from a weak position again.   -------------------- Hi, I’m Scott Harrison and I help executive and leaders master negotiation & communication in high-pressure, high-stakes situations. - ICF Coach and EQ-i Practitioner - 24 yrs | 19 countries | 150+ clients  - Negotiation | Conflict resolution | Closing deals 📩 DM me or book a discovery call (link in the Featured section)

A few weeks ago, I sat down with a friend who runs a mid-sized software agency. He’d just wrapped up a fixed-price project for a client. At first, everything seemed perfect: - The contract was neat. - The price was set. - The scope was clear. But halfway through, cracks began to show. The client wanted new features. “Just a small addition,” they said. Then another. Before long, the project scope looked nothing like the original plan. But the price? That stayed the same. My friend tried to manage the changes, but his hands were tied. The fixed-price contract didn’t allow flexibility. So, he had two choices: 1. Absorb the extra work and take the financial hit. 2. Push back and risk souring the client relationship. Both options were painful. By the end of it, he’d burned time, money, and trust—without turning a profit. On paper, fixed pricing sounds perfect: • Predictable costs • Simplicity • A sense of control But here’s the truth: Tech projects are rarely predictable. Scope changes, new requirements, and unexpected challenges are inevitable. A fixed-price contract locks in your costs—but it also locks in your flexibility. When the project evolves (and it will evolve), you’re left with three bad options: • Cut corners • Absorb costs • Fight over what’s “in scope” That’s not control. That’s chaos. Now the best contracts don’t eliminate risks—they anticipate change and build processes to handle it. Here’s how: 1. Define a Clear Change Order Process • Outline how changes to the scope will be handled. • Include timelines, approval steps, and cost adjustments. 2. Negotiate Flexibility from the Start • Be upfront about the potential for scope changes. • Build in buffer time, additional fees, or flexible milestones. 3. Shift the Mindset Around Fixed Pricing • Treat it as a starting point, not a cage. • Fixed pricing should provide stability—not kill adaptability. Now let’s rewind to my friend’s situation—but this time, he has a solid change order process. When the client requests a new feature, he refers to the contract: “We can absolutely add this feature. Let’s create a change order to adjust the timeline and budget.” • The client understands the process because it was outlined from day one. • The project adapts smoothly. • And my friend? He gets paid for the extra work. Now fixed pricing isn’t a bad idea, but it’s not risk-free. A great contract balances cost stability with room for adjustments. By planning for change upfront, you protect your business from surprises—while keeping your clients happy. In the unpredictable world of tech projects, flexibility isn’t optional. It’s necessary. —— 📌 If you need my help with drafting custom contracts for your high-ticket projects, then DM me "Contract". #Startups #Founders #Contract #Law #Business

Two weeks before contract signature, my incumbent supplier added £240,000 to the price. And I was meant to be on a flight to Spain. 9 months of procurement work Countless stakeholder workshops. A high-profile transformation hanging in the balance Now, my “done deal” had just exploded in cost Egg about to be smeared all over my face My CIO was saying: “We can’t delay. Just make it happen.” Instead of wine with my husband and parents in Alicante, I was pacing my flat in Manchester. Back then, I had plenty of negotiation tactics in my head. But my “strategy” was really just random acts of tactics. A push-back here A vague threat to re-tender there An awkward silence for good measure There was no system No process Just grasping Since then, I’ve built a step-by-step procurement negotiation framework I use whenever a supplier tries to move the goalposts. Here are my first 4 with real procurement examples: 1️⃣ Re-anchor to value before price Suppliers want you focused on the increase. You want them focused on the deal. "Before we talk numbers, let’s recap what’s on the table so we’re aligned." Spend 3-4 minutes on: 🔹The business problem 🔹Why they were selected (unique capabilities) 🔹The agreed scope 🔹The business impact if delayed Example: "This upgrade eliminates £500k a year in manual workarounds and is on track for a Q4 launch, which is critical for your client references in this sector." Now a pure “price increase” conversation is twice as hard for them to win. 2️⃣ Get all the asks on the table When you re-anchor, they’ll hit you with one demand. Example: "We need two extra consultants to meet your timeline." Don’t solve it yet. "If we worked with you on that, what else would be in the way of moving forward?" Keep asking until they say: “Nothing else.” Then confirm: "So if we resolved X, Y, Z, there’s nothing else stopping us from signing?" 3️⃣ Stack rank their demands Suppliers will give you a laundry list, new resources, extended payment terms, travel expenses.... Make them prioritise: "Which is most important to you, and which least?" Now you can decide where to give a little to protect what really matters. 4️⃣ Uncover the real driver If you negotiate only on what they ask for, you’re bartering. You need the why. Example: "What’s driving the need for two extra consultants?" 🔸Maybe they’re short-staffed 🔸Maybe it’s risk avoidance 🔸Maybe they’ve overpromised internally Once you know, you can: 💠 Offer your own project resources for certain tasks 💠 Shift non-critical deliverables to phase two 💠 Negotiate a capped rate for the additional consultants That 2016 project? The supplier walked away with scope they could deliver comfortably. We walked away £180k under their revised ask. And I still caught the last two days with my family in Spain. -- Enjoyed this? I write more Procurement stories in my newsletter. Link in my highlights.

I've seen contractors walk away from multi-million-pound projects. And it's not because of the Scope or because of the price. It's because of a single clause buried in the design obligations. FIDIC Clause 4.1 creates what I call the "fitness for purpose trap." And it's costing contractors millions in the Middle East. Here's what most people miss: When a Contractor designs any part of the works under FIDIC, they accept absolute liability. The works must be fit for purpose. Period. It doesn't matter if you: • Followed industry best practice • Used the most experienced designers • Had independent peer reviews • Met every technical standard If the design fails to achieve its intended purpose, you're liable. Compare this to NEC4 Option X15: Design liability is limited to reasonable skill and care. You're only liable if you were professionally negligent. This is the same standard that applies to consulting engineers. Real example from a project I worked on: A contractor designed temporary works for a bridge construction under FIDIC Red Book. The works were built exactly to specification. Every calculation checked. Every standard met. But ground conditions varied slightly from the site investigation. The temporary works settled more than anticipated. No safety issue. No collapse. Just performance below the intended standard. Under FIDIC: Full liability. The contractor paid AED 8.2M (£1.8M) for remedial works and delay. Under NEC4 with X15: Likely no liability. They exercised reasonable skill and care. The ground variation was unforeseeable. Here's what makes this critical in 2026: Most UK public sector NEC contracts mandate Option X15. It's become standard practice. FIDIC offers no equivalent protection by default. You have to negotiate it into the Particular Conditions. And in the Middle East, where FIDIC dominates, many Employers resist this change. They want the Contractor to carry absolute design risk. I've watched this single clause determine whether projects proceed: → Contractors price in massive contingencies (15-25% on design elements) → Or they walk away entirely → Or they accept the risk and face catastrophic losses later When I review tenders now, I flag Clause 4.1 immediately. If the Contractor has any design responsibility, even temporary works, we model the exposure. We quantify what "fitness for purpose" could cost if things go wrong. Then we decide: negotiate X15 equivalent protection, price the risk properly, or decline the work. The contractors who understand this difference survive. The ones who don't are the ones I see in adjudication three years later, fighting over design liability they never properly priced. If you're working on FIDIC contracts with design elements, this isn't a legal technicality. It's a commercial decision that can make or break your project. ♻️ Repost if this helps your network understand FIDIC design risk 💬 What's your experience with Clause 4.1 negotiations?

How to Negotiate A Contract No algorithm, chart, or model can generate an exact formula for contract negotiation. The process requires understanding the goals and motivations of another person—it's both science and art. Many see contract negotiation as stressful, but I encourage people to reframe it as an opportunity to set the foundation for a long-term business relationship. This is the time to understand your counterparty beyond surface-level business interactions, and this is how I approach the process: 1. Before any negotiation, prepare deliberately. Study the particulars of the contract, understand standard industry terms, and anticipate points of contention. Going in with a plan always beats improvisation. 2. Know yourself. Identify your non-negotiables, your flexible points, and what you're willing to walk away from. This overall list should be very short; I always keep it under 6-8 points, total. 3. Create the right environment for productive discussion. Consider whether in-person or virtual is more effective, whose office to meet in, and who should be present—these seemingly small details can significantly impact outcomes. After setting your preferences, ensure the other person is comfortable too. This applies to everything from the physical environment to your communication style. Remember that negotiation is a two-way street. 4. Pay attention to rapport building. The most successful negotiations occur when both parties feel heard and respected. Again, check yourself, and strip away the adversarial mindset. Remember that you're both seeking a mutually beneficial outcome. 5. Focus on intentionality. In a process open to human irrationality, having clear objectives helps maintain control of outcomes. Know your purpose for each conversation and keep steering back to it. I always write down 2-3 main points ahead of a negotiation meeting, and I refer back to them throughout the conversation. 6. Finally, be gracious throughout. The person sitting across from you has more in common with you than things that set you apart -- and if you truly don't believe that, think again. Finding common ground builds the foundation for not just this contract, but potentially many future ones.

Your prospect won’t commit to a multi-year contract. You could back down—or you could try this: Prospect: “We’re not sure about a 3-year contract.” You: “Mind if I ask what concerns you?” Prospect: “Most of our contracts are for 1-year.” You: "If you don’t mind me asking, what worries you most about long-term contracts? Prospect: "We see the value, but it’s a big commitment and investment on our side." You: “Understood. Could I walk you through a few reasons why it might help your business?” Prospect: “Sure.” You: "1. Price lock-in You mentioned a phased rollout across your organization. With a multi-year contract, your seat price stays locked in for the entirety. That helps you budget for growth with no surprises. 2. Protection from price increases Not sure if you've seen a price increase at renewal time, but it can happen for lots of reasons—product updates, market shifts, etc... Pricing decisions are above my pay grade, but a longer term protects you from increases. So you’ll know exactly what you’re paying each year. 3. Fewer contract negotiations How many vendor contracts do you manage?” Prospect: “Around 8 to 10.” You: “That’s 8 to 10 negotiations every year—and I’m sure you know how time and resource consuming it can be for you and your procurement team.” Prospect: “yes, it’s a not the most exciting part of my job.” You: "With a longer-term contract, you can skip that hassle for a while— saving time and making life easier for your procurement team. Summary: • Lock in seat prices • Avoid potential price increases • Skip annual contract negotiations" Prospect: “That’s actually helpful. I’ll discuss it with my team and get back to you.” You: “Great. I’ll send a quick recap in writing. In the meantime, rather than go back and forth via email, can we pull up our calendars to lock time in the next couple of days once you’ve spoken to the team? I’d also recommend having your procurement lead join so we can iron things out and ensure we’re all aligned. Sound fair?” ........................................................ When objections come up, understand the why. Then tackle them as needed—(contract terms are no exception!)

Key Procurement Negotiation Strategies 1. Zero-Based Costing (ZBC) Concept :- You start from zero and build the total cost from the ground up analyzing every cost component rather than relying on past prices or supplier quotes. Objective :- Challenge every cost element (material, labor, logistics, overheads) to identify unjustified markups. 2. Should-Be Cost (SBC) Concept :- A data-driven benchmark cost model that estimates what the product should cost based on market data, technical specs, and process efficiency. Objective :- To develop a negotiation baseline independent of vendor quotes. 3. Total Cost of Ownership (TCO) Concept :- Negotiation isn’t just on unit cost — it’s about end-to-end lifecycle cost, including maintenance, downtime, energy use, warranty, replacement, and service. Objective :- Reduce the overall cost impact rather than just the initial purchase price. 4. Landed Cost Approach Concept :- Focuses on all costs incurred until goods reach your facility — including duties, freight, insurance, taxes, and handling. Objective:- Understand the true delivered cost rather than just the ex-works price. 5. Volume Leverage / Consolidation Concept:-Combine multiple zone requirements (North, South, East, West) or similar items across departments to achieve economies of scale. 6. Payment Term Optimization Concept:- Negotiate cost reduction via payment cycle optimization — shorter terms for discounts or longer terms for working capital benefits. 7. Value Engineering (VE) Concept:-Collaborate with vendors to redesign materials/specs/processes to achieve cost reduction without quality compromise.