![]() ![]() 4 For the purposes of this essay, the common purpose is the delivery of a major construction project. 3 The most basic definition of a JV is two or more entities co-operating for a common purpose. In determining whether a relationship was a partnership or joint venture, the High Court of Australia noted that key features of a JV include working towards a common aim, where the parties each contribute money, property or skill. ![]() The term ‘joint venture’ has no settled meaning in Australian law. ![]() JVs will remain a favourable method for two or more contractors to deliver major projects, as long as the risk that lies between the JV partners can be effectively managed. 2Ī JV will be successful if the parties take a balanced and considered approach to risk allocation. It further argues that parties must define and manage their economic independencies, including their respective liabilities if (and when) the need arises. This essay argues with examples from recent decisions that an integrated scope model is the less risky option for most contractor JVs operating in the construction industry. The result of this is clarity as to the scope of each parties’ obligations. In order to manage the risk of difference between the parties, JV members must engage in detailed strategy development to uncover where their interests and abilities are not aligned and how to overcome this. To be most effective, these processes must occur at the outset of the project, in the pre-tender stage. That is why JV agreements require a strategic and robust approach to risk allocation in order to avoid disaster for the parties involved. However, they have different backgrounds and skillsets which, when not managed properly, will lead to conflicts and disputes.Ī major risk in JVs is the difference between the members. The businesses expect to benefit from each other’s expertise and talents. The very nature of JVs is the union of two (or more) businesses to achieve a common goal. Secondly, there is an inherent risk within the traditional JV structure itself. It is important for contractors in the construction industry to recognise that the relationship between participants in a JV will be governed by the particular JV agreement (and often with reference to the head contract) rather than any extrinsic principles of law. Firstly, simply forming a JV with another party provides no additional risk protection from that party. However, despite the benefits, the legal risk for a contractor looms large. JVs allow contractors in the industry to broaden their horizons, learn better practices and grow by taking on projects they may have never dreamed possible on their own. 1 Joint ventures (JVs) are the predominant model for delivering major projects because the scale and complexity of such endeavours requires a combined approach to expertise and resources.Ī major benefit of JVs are the opportunities they create. Credit: Ben & Gab, CC BY-SA 2.0, via Wikimedia CommonsĬorrs Chambers Westgarth, Melbourne, majority of infrastructure projects both globally and in Australia are delivered using a joint venture structure. The Salesforce Tower, which recently became the tallest office building in Sydney, at 263m.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |