Reasons for a negotiation 

As we now aware that negotiation is a process, we will now learn the reasons for which the negotiation plays a crucial role.  

Detailed negotiations may not be warranted for standard products or services of low value and those which are widely available or have established standards. For such requirements, the competitive bidding process is invariably adequate. When issues other than just price and delivery time become important in a project, receiving and reviewing competitive bids will need to be followed up with competitive negotiations.  

The other issues may pertain to some of the following: 

•   Quality of the deliverable  -  stage wise and final inspection of the deliverable before accepting the deliverable. 
•   Technology support and assistance. 
•   Mode of shipping/transportation and responsibility for the same.  
•   Transit insurance, project insurance. 
•   Non-performance penalties. 
•   Protection of proprietary information. 
•   Payment terms. 
•   Warranties and performance guarantees. 
•   Resolution mechanism for contract disputes. 
•   Progress reporting methodology.