How to Win … By Losing!

Kenneth A. Catlow, PEVP – URS Corporation

My Background

• COE– Domestic– Overseas (Saudi Arabia, Germany, Korea)

• Pentagon Renovation Program (97 to 06)• Parsons• URS– Fort Meade (IC)– K Street

Education #1

• College “Drop-Out!”• BMGT, University of Maryland, University

College• MHR, University of Oklahoma• Professional Engineer (Civil)– Guam– Hawaii– Oregon– Maryland

Education #2

• Married• 2 Daughters– One finishing college– One “off the payroll!”

• Why is this important?– My most significant “education”– We take work home– We take home to work

I Held a LOT of Jobs!

• Landscaper• Survey Tech• Construction Rep• Office Engineer• Project Engineer• Resident Engineer• Area Engineer• Chief of Operations• Deputy Program

Manager

• Program Manager• Head of Contracting Agency• VP#1• VP#2• Husband• Dad

– Chauffeur– Dish washer– Painter– Plumber– Electrician– Carpenter– Laborer– Landscaper

My Way or the Highway!

• Didn’t work well in Saudi (anger / frustration / cost)• Didn’t work well in Germany (anger / frustration /

cost)• Worked better in Korea (not so much anger / cost)

– Didn’t work at all at home! (this could be really serious!)• 27 years … never won a “negotiation”• Once I “gave up, I ended up the winner!”

• Changed the “process” at the Pentagon– Began to focus on SETTLING!

• Didn’t work at URS … my new process didn’t work!

War Story #1

• Taif Saudi Arabia– Project Engineer to cross-train as a contract

specialist / negotiator– First session• Very sophisticated Korean Contractor (Hanil)• Asked my number and agreed• Welcome to the “team”• Hope you enjoyed your “gift”

• Who Won?

War Story #2

• F-15 Flight Simulator (You’re killing me …)– Project Engineer (me)– Punch-list (I was “thorough”)– 356 items– I was #357– My contractor counterpart became #358– 6 weeks after turnover (chips/marks/ gouges, etc.)– I made some enemies … – I damaged relationships …– How much is enough?

• Who won?

War Story #3

• Our Brethren on the Hill• Budget Battle– Republicans– Democrats– President

• Who Won?

War Story #4

• I have bought a number of cars (26)– What happens when you “negotiate”– How much do you save (per mile …)– Have you tried “online?”

• I’ve sold a number of cars– What happens– I don’t sell them any more– I give them away …

• Who won?

War Story #4.5

• I built a house recently– Builder’s Price $300K– Site Prep … 60K or do it yourself– I did it myself … spent 100K

• I had to “negotiate” with plumber, earth work, driveway, surveyor, geo-technician, permit expeditor …

• I spent a lot of MY TIME on this

– Modifications $300K … no negotiations allowed …– Loan carrying cost $100K– I got exactly what I wanted– Final cost of the house ~ $125 SF

Consideration #1

• What does it cost a day when you drag out a contract?– Client’s time– Your time– Subcontractor time– Database time (the bane of my existence)– Delay time– Fragnets (another bane of my existence)– Impact analysis

Consideration #2

• Average value of changes– 90% less than $25K on most jobs

• What are you willing to spend on negotiating changes … percentage wise?– Is 10% too much or too little– If you spend 10% on a 25K change that is only

$2.5K … about 25 hours … TOTAL• Run the numbers … what are you spending• Recommendation … change the process!

War Story #5Pentagon Renovation

• Basement Close Out Negotiation– $48 Million to $125 million– Close Claim $7 million

• Principal Contractors: Clark / Kirlin– Reams of paper– Lots of “fragnets” – Poor documentation

• One negotiation session: $3 million• Who Won?

Recommendation #1

• When you enter a negotiation …– Come prepared– Only after you have agreed on the SCOPE– Plan to SETTLE … no matter what– Plan to GIVE is you have to … in order to obtain a

settlement– Lock the doors!– Understand the IMPACTS of NOT settling

War Story #6

• Disappointed Subcontractor

• Early mistakes– Kick the can down the

road– … it was a long road …– Documentation was

poor …

• Client had funding challenges

• The “Request for Equitable Adjustment”

• The “Rejection”• The subcontractor

“negotiation”• The law suit• The settlement …

almost 2 years later• The damage …

Recommendation #2

• Be like “Natalio”• Settle small issues immediately … the same day

they turn up• Refuse to drag out negotiations … settle today!• Lock the doors• Keep focused on the cost of “negotiating”• Move on … forget your first number• Don’t waste your time over pennies per day

Questions?

Don’t Waste Time

And $$$$

Fighting … Negotiating

Settle TODAY!

Contact Information

Kenneth A. Catlow, PEURS CorporationPM/CM Business Development Manager2020 K Street NW, Suite 300Washington, DC 20006-1806Direct: 202-772-0646Mobile: 202-802-4295