How do you prepare for a contract renewal or renegotiation after a contract negotiation? (2024)

Any concerns regarding quality, schedule, project or program management and communications, should be addressed long before the contract renewal phase. At this point, evaluations should be focused on the market conditions and cost/benefit of continuing the relationship.

Lesson learned register from the first phase of the contract is a powerful tool to identify areas of improvement for the next phase of the contract

Client expectations for the 2nd phase of the contract is paramount. On the other hand, this is a good opportunity to reconsider the rates (some up, some down, some the same)stablished for the first phase of the contract.

When you want to communicate your intention to renew or not renew a contract, you should do so in a clear and professional manner. Here are some steps you can follow:1. In your communication, clearly state whether you intend to renew the contract or not. If you're not renewing, provide a clear explanation for your decision.2. If you are renewing, provide a timeline for when you intend to sign the new contract. If you're not renewing, indicate the date on which the contract will expire.3. Follow up with the other party to confirm that they have received your communication and to address any questions or concerns they may have.

A good plan for the 2nd phase of the contract with cross references to the elements of the first phase is very important. This will facilitate the renewal process.

Agreed. Need to explore the other party's opinion, level of satisfaction with the 1 st phase of the contract and recommendations for the2nd phase

If you know there are areas that must change or improve such as price or performance, and you also know it may be a sticking point for a vendor, you need to walk into the negotiation knowing what alternatives you have for other vendors. If someone can’t provide you what you need, but you don’t have an alternative, then you will be negotiating from an extreme position of weakness. Know who the other players are, and know what their offerings are and it will help you to negotiate what you want or be comfortable knowing someone else can/cannot offer it.

First approach should be a Draft in order to give the other party the opportunity to provide feed back. When the parties agreed , then the final proposal should be sent.

Do not get the technical people involved on the economical aspects of the renegotiation. The project sponsor is the ideal person to conduct this process with the other party. Keep as possible the same negotiator of the 1st phase of the contract.

Identify your “Zone Of Potential Agreement" (ZOPA)Create a list of interests and priorities ranking the list based on the impact and importance to your business, and then do the same on behalf of the other party. Also, think of this list in connection with any corporate strategies and objectives that you need to ensure alignment with. If compromises must be made, the list will provide clear direction on which items to exclude and why. In any negotiation, you should give up on terms that are not so important to you but may be critical to the other party to accept a deal. Use such terms as an opportunity to achieve other goals that are more important to your business.

Ask questions:During the negotiation, you may face situations where you will wonder why the other party is taking a specific position! Don't make assumptions as to why; be direct and ask the questions that add clarity to your understanding. Usually what you will learn will help you better understand their point of view and the drivers for such position. Sometimes hard positions are driven by commitments i.e. non-compete terms with other clients, or even future expansion plans, resource constraints etc. You need to seek clarity and answers rather than making wrong assumptions that may steer the negotiation in a wrong direction.