A joint venture is a general partnership typically formed to undertake a particular business transaction or project and is intended to exist for a limited time period. Typically, a joint venture is created with a specific project in mind and generally dissolves once the project has been completed. Members of the joint venture are exposed to full legal liability.
In most, if not all Contracts, parties to the joint venture are severally and jointly liable. This would mean that a Claimant (Client) may pursue an obligation against any one party who shall then be liable up to the full amount of the relevant obligation.
Joint ventures can be incorporated or unincorporated. Incorporated joint ventures involve the establishment of a company to run the joint venture itself. The company holds the joint venture assets, levies the joint venturers for funding contributions, pays all expenses and generally manages the project.
The joint venturers oversee its activities through their appointees on the board of directors, and their percentage interests in the joint venture are reflected in their shareholdings. When the joint venture is completed the company is liquidated and its surplus assets are sold or distributed to the joint venturers
From this point of view incorporated joint ventures are no more than companies and are governed by company law. Unincorporated joint ventures, on the other hand, do not use a separate company so the participants operate more like a partnership.
Design and build contracts
The traditional ‘design-bid-build’ method of construction is a sequential process in which the owner or developer first contracts with a design professional to prepare a concept or basic design, then a detailed design for construction. This includes specifications to solicit competitive bids for construction, and finally the award of a construction contract to the lowest bidder.
In ‘design-build’, one entity performs both design and construction under a single contract. Often the ‘design-build’ contract is awarded by some process other than competitive bidding; thus ‘design-build’ differs from traditional ‘design-bid-build’ in two ways. First, the design and construction components are packaged into a single contract and, second, the single contract is not necessarily awarded to the lowest bidder after competitive bidding
When a design-build contract is awarded to a builder, he must hire all architects and engineers required to complete design work. The owner is still given the right to approve or reject design options, but is no longer responsible for coordinating or managing the design team. Once the owner approves the design, the same contractor then oversees the construction process, hiring subcontractors as needed.
Partnering is a management approach used by two or more organizations to achieve specific business objectives by maximizing the effectiveness of each participant’s resources. It requires that the parties work together in an open and trusting relationship based on mutual objectives, an agreed method of problem resolution and an active search for continuous measurable improvements.
Partnering can be either project specific, where the arrangement is for the duration of an individual project; strategic or long-term where the arrangement is for a specified period of time, normally covering a number of projects. Strategic or long-term partnering usually provides greater opportunity for improvement
There are four main partnering contracts:
Here, the Client and Constructor are naturally parties to the contract but there is also provision for the Client’s Consultants and Specialist Subcontractors to be parties to the contract. This avoids the need for separate appointments for the consultants and subcontracts for the specialists
A popular feature of the contract is the Pre-possession Agreement. This allows the Constructor to undertake activities after the contract has been entered into, but before possession of the site has been granted
NEC Partnering Option (x12)
In like manner to PPC2000, the employer and contractor are signatories to the Partnering Option together with the employer’s consultants and some of the key specialist subcontractors. Unlike PPC2000 however, which is multi-party, the NEC Partnering Option is an add-on to the basic Primary Options which provide for two parties only. In entering into Option X12 the Parties are entering into additional responsibilities. It does not create a multi party contract.
Public Sector Partnering Contract (PSPC)
The PSPC contract in like manner to the NEC contract provides for a number of procurement options which are designed for two parties. A Partnering Agreement is also provided which is signed by the partnering team and incorporates the collaborative working arrangements.
The options allow for an array of different procurement routes including lump sum authority design or contractor design, cost reimbursable with employer’s design or contractor’s design and term maintenance. There is also a professional services option and a subcontract.
A Pre-start Agreement is also included, which has a similar use to the PPC2000 Pre Possession Agreement in that it allows the Constructor to undertake activities before possession of a site has been granted
JCT 05 Constructing Excellence
In like manner to PPC2000, the JCT 05 Constructing Excellence contract has been drafted to adhere to collaborative working principles.
There is also a similarity with PSPC and the NEC Partnering option in that the principle conditions are incorporated into a two party agreement with all the partners joined as parties to a separate Project Team Agreement.
Unlike the other partnering contracts described above this contract includes for the production of a Risk Allocation Schedule. The parties complete this schedule before signing the contract and it becomes the foundation upon which the extension of time allowance is built.
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