Joint Venture: A Reward or a Curse
Firms join hands together on a project for one of the following reasons:
1. More resources, e.g., people, funding, bonding, relationships, etc.
2. Specialized skills, e.g., tunnel experience, airport experience, etc.
3. One firm may be known to the client for its reputation and performance
4. The other firm may have the expertise required for the project
5. The firm may want to diversify or expand
6. Opportunity to work on a larger project together and reduce the risks
Most of the items listed above are a benefit of the JV. However, there are many risks associated with a JV, and the parties must understand these before signing the agreement. The most common risks are listed below:
1. Different priorities or goals
2. Different culture and management style
3. Personalities - attitude & ego
4. Lack of trust, not informed of changes in advance
5. Project records that are not complete or inaccessible to all partners
6. Client coordination can become a challenge
The JV partners must review the language, roles, exposure, and financial health of the other partners before considering the JV agreement. Your attorney must review all JV documents before you agree to sign.
Infrastructure Business Advisors, LLC can help you find a good partner for your next project. Give us a call for your consulting meeting with us. The first meeting is free of cost.