In a typical contractor-led arrangement, the GC executes a separate subcontract with an engineering consultant for design. Streamlined communication optimizes decision-making. As such, JV’s typically have a more robust bonding capacity for larger and more complex construction projects that individual firms can’t match on their own.ģ. JVs offer additional opportunity for risk management due to the increased financial strength and security obtained by sharing economic resources of the JV members. This creates a goal-oriented environment in which all parties involved have a common interest in the project’s success. JVs serve to relieve this pressure by creating opportunities to more efficiently share the risks and rewards associated with major construction projects. It’s no secret that construction is a high-risk business the industry is heavily affected by things both in and out of the client’s control such as environmental factors, unforeseen conditions, supply chain issues, schedule delays, safety concerns, and contract disputes. JV teams generally work more efficiently and are better equipped to deliver a high-performing project on time and on budget. Shared risks and rewards elevate client interests. While sharing both risks and rewards, a JV arrangement eliminates conflicting individual interests and fosters an environment in which decisions are made based on what is best for the project.Ģ. In these cases, decisions can get murky, and differing objectives create conflicts within the team. A solution that presents the best results for the project might have negative impacts on either the GC or the engineering firm in their segregated roles. While this structure offers a collaborative environment, situations arise where project solutions impact the individual team members in different ways. Many PDB teams are comprised of a general contractor (GC) serving in the role of design-builder, with an engineering firm subcontracted with the GC to perform design-a contractor-led team. Structure promotes “best for the project” decisions. Clients evaluating bidders for stand-alone infrastructure projects or full capital improvement programs (CIP) should consider the following ways that choosing a JV team may add value to their project:ġ. In comparison to the more common contractor-led PDB teaming arrangement, JV teams can be better positioned to facilitate best-value decisions, reduce risk, streamline communication, and broaden expertise. In a fully integrated JV, the companies involved share all risks, profits, losses, assets, and liabilities-offering great value to clients using progressive design-build (PDB) to deliver a project. Joint ventures (JVs) are strategic business agreements between two or more firms to create a new entity for a specific pursuit.
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