The service contract case II

General information for both parties

  1. Two months have passed since the Phase I negotiation. Changes and problems have arisen. Haley is behind schedule due to normal startup delays and some unforeseen events. Haley has started work on twelve apartments in the two months. In each, only the tile in the kitchen and entry remain undone.
  2. Amicale wants Haley to propose a price for two changes before negotiation starts.
    1. Upgrade from 2 coats to 3 coats of paint in each apartment.
    2. Upgrade for underlay of cork for kitchen and entry tile areas in all 100 apartments.
  3. Amicale believes that deluxe rental apartments need a low noise level and a first class paint job. Hence, the third coat of paint and cork underlay.
  4. Amicale and Haley have agreed to negotiate changes and problems now, before they get worse.
  5. Both parties have 10 minutes to plan and 15 minutes to negotiate

Private Information for the Buyer: Amicale – Phase II

  1. This job has not gone according to plan and the completion schedule upon which you agreed may be in serious jeopardy unless things are worked out very quickly.
  2. The European Master Painters you were promised have quit and gone into business for themselves. The substitute 23-year old painters are slower and less meticulous; lots of empty beer cans litter the site.
  3. Your Project Manager has reported that Haley’s Project Manager rarely visits the jobsite, and as a result there is a lack of coordination among Haley and other contractors. This has led to conflicts, especially between Haley and the plumber and electrician. They all want to use the elevator at the same time, and each is blaming the other for holding up their work.
  4. You’ve heard that Haley is saying that you are responsible for delays to the project. They claim you are making the schedule completion date harder to reach and inflating their costs. They are also complaining that they have received no payment thus far.
  5. Your Project Manager has insisted, and you have agreed, that there are two essential changes to the project. The apartments will need a third coat of paint to be classed as “luxury,” and the tiled areas need a cork underlay to muffle the sound of footsteps.
  6. You have asked Haley for pricing information on those two upgrades:
    1. a firm quote to apply 3 coats of paint instead of 2 in all 100 apartments;
    2. a firm quote to underlay cork under the tile (500 square feet of kitchen and entry tile in each).
  7. Your own estimate for these changes, based on your experience with other projects, is that the third coat of paint should cost you between $550 and $750 for each apartment. And the cork underlay should cost you between $350 and $500 per unit.
  8. You will now receive a price quote from Haley. You’ve asked Haley to quote on each of the two upgrade items separately, and not lump the two together. Fill in the following price data:

3rd coat (per apartment)

  1. Your planned opening offer
  1. Your target price
  1. The most you can pay

Cork underlay (per apt)

  1. Your planned opening offer
  1. Your target price
  1. The most you can pay

After settling those price issues, go on to other issues separating the parties.

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