PRAM Model

What Is the PRAM Model?

The PRAM model is a four-step model for negotiation that is intended to result in a win-win situation for both parties. PRAM is an acronym for the words "Plans, Relationships, Agreement, and Maintenance."

How the PRAM Model Works

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. 

The PRAM model allows both parties in a negotiation the opportunity to benefit and fulfill their objectives. In other words, the PRAM model does not treat negotiations as a zero-sum game where one party benefits at the expense of the other.

The model relies on relationship management, since an initial-mutually beneficial agreement helps lay the groundwork for more fruitful negotiations and agreements in the future.

Types of the PRAM Model

The four sequential steps in the PRAM model are adequate planning, building relationships, reaching agreements, and maintaining these relationships.

Adequate Planning

This is the first stage in the process. At this point, the 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. In a 50-50 split, an agreement is viewed as a give-and-take situation, whereas in a 100-100 proposition each party has an equal footing because each party is taking part in the giving and taking. This is what results in mutual benefits. 

Building Relationships

Once the plan has been developed, both parties can now start to develop their relationship with each other. This is a very crucial phase, and it takes a great deal of time because it relies on each party being upfront 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. 

Reaching Agreements

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. 

Maintaining Relationships

This is the final stage of 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 the PRAM Model

Joint ventures are a great example of using the PRAM model in real life. For example, suppose there is a junior mining company that has undertaken an exploration project for a gold venture. It can start developing a plan with a more established company. 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 also providing marketing for the project. The junior company undertakes the geological exploration and assessment by its engineering team. 

The two companies will build a relationship, potentially by describing how they will fulfill their roles in a way that will benefit both parties.

Next, the two companies will 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 continue to deliver on their promises. They may even decide to take on another project together.