Centralia Construction Corporation

5 Pages Posted: 21 Oct 2008

See all articles by Sherwood C. Frey

Sherwood C. Frey

University of Virginia - Darden School of Business

Phil Lederer

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Abstract

This case and its companion, "Myerson Industries" (UVA-QA-0299), constitute the materials for a negotiating exercise. The exercise is a distributive-bargaining situation surrounding the negotiation of the price for the construction of a building (some minor opportunities exist for creating mutual value).

Excerpt

UVA-QA-0298

Rev. Nov. 9, 2010

Centralia Construction Corporation

As George Harman of Centralia Construction Corporation (CCC) reviewed the drawings and cost estimates for the Myerson Industries plant expansion, he wondered how aggressively he should bid on the project. The current recession had taken a huge bite out of his business, and the Myerson contract would certainly brighten his rather gloomy view of the future.

CCC was a family-run, general contracting firm specializing in the construction of commercial structures in south-central Illinois. Founded 30 years ago by George Harman's father, the business had prospered until the recent recession. For the first time in years, there was no backlog of projects, and layoffs had occurred. Although the firm was not in serious financial trouble, more work would be welcomed.

Myerson Industries was a highly successful, fast-growing firm specializing in low-cost printers for use with personal computer systems. The Myerson plant was located approximately 50 miles from CCC's offices in Centralia, Illinois. Recently, Roger Myerson had informally inquired if CCC would be interested in bidding on a contract for an addition to the Myerson facility. Harman indicated that he would look forward to the opportunity to submit a bid. Last week the architectural drawings arrived with a cover letter stating that a fixed-price contract would be preferred; that is, the contractor would be paid an agreed fixed amount for the work and would assume the risk of any fluctuations in costs.

. . .

Keywords: negotiation, pricing

Suggested Citation

Frey, Sherwood C. and Lederer, Phil, Centralia Construction Corporation. Darden Case No. UVA-QA-0298. Available at SSRN: https://ssrn.com/abstract=911840

Sherwood C. Frey (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/faculty/frey.htm

Phil Lederer

affiliation not provided to SSRN

No Address Available

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