What is the PRAM Model
The PRAM model is a four-step model for negotiation that results in a win-win situation for both parties. PRAM is an acronym for Plans, Relationships, Agreement and Maintenance.
BREAKING DOWN PRAM Model
The PRAM model was developed to help parties deal with the entire negotiation process from beginning to end. The process was developed by author and speaker Ross Reck.
How the PRAM Model Works
The PRAM model does not treat negotiations as a zero-sum game, in which one party benefits at the expense of the other, but rather as an opportunity for both parties to benefit and satisfy their objectives. Ongoing relationship management is crucial in the PRAM model, since a mutually beneficial agreement in the first instance may ensure that both parties return to the negotiating table for more agreements in future.
The four sequential steps in the PRAM model are adequate planning, building relationships, reaching agreements and maintaining these relationships.
This is the first stage in the process. At this point, the (two) parties involved will try to figure out what they can give to each other through mutual motivation. The plans stage is the beginning of the relationship between both parties and is similar to a 100-100 proposition, rather than a 50-50 split. The latter case is normally viewed as a give-and-take situation, while the former gives each party an equal footing, with each taking part in the giving and taking. This is what results in mutual benefits.
Once the plan has been developed, both parties can now start to develop their relationship with each other. This is a very crucial phase, one that takes a great deal of time, because it relies on each party being up front and honest with the other. Here, both parties can establish trust and begin to assure each other that they will be able to fulfill the duties, responsibilities and promises outlined to one another.
Now that the relationship has been established, the two sides can determine what type of agreement they will accept. If the first two stages have been done correctly and with great care, this part of the model should be quick and easy. Working through this point should just mean that the two parties are handling the details.
This is the final stage in the process. After the agreement has been reached, the two sides can now commit to everything that they have outlined in the previous stages. In order for the model to be successful, each party has to maintain everything that came before: the plans, the relationship and the agreements.
Example of PRAM Model
Joint ventures are a great example of using the PRAM model in real life. Say, for example, a junior mining company has undertaken an exploration project for a gold venture. It can start developing a plan with a more established company, where they can determine who will take each role, what each will bring to the table and how each will benefit from the partnership. Perhaps the senior company will bring equipment and local knowledge of the laws, while providing marketing for the project, while the junior company undertakes the geological exploration and assessment by its engineering team. Next, the two companies will usually being to forge their relationship and come up with a contract. In the agreement stage, the two partners will finalize their agreements — everything that was promised to each other in the previous stages. Finally, the two companies will maintain their project and perhaps bring more people into the fold. They may even decide to take on another project together.