Joint Ventures in Construction: Why Consider It?
The perfect project is coming out to bid, but there are elements to it that you are unable to manage. It’s a shame to pass it up because you see potential in making a good profit.
Why not consider putting together a Joint Venture?
A Joint Venture is a combination of two or more persons coming together to carry out a single project or series of projects where the joint venture partners combine items such as property, money, skill, and knowledge.
- It allows a member to increase his or her area of operation and expertise.
- It increases your ability to bid on more or larger projects and without maxing out your bond capacity.
- It permits using a local contractor with local knowledge.
- It combines specialized abilities.
- It spreads the risk among members based on the proportion of the project each of you undertakes.
- It increases the accuracy of your bid estimates as you each compare your estimates with your joint venture partner or partners.
- It allows you to bid on projects that you could not normally bid alone.
- It increases future business opportunities between yourselves.
- It allows you to pool talent and resources, including staff, equipment, and financing.
- As a Mentor, you can help a small business. As a certified Woman Owned Small Business, Service-Disabled Contractor, 8 (a), or HUB Zone Protégé, you can bring larger government contracts to your mentor.
You probably already know a good joint venture partner, but the start of the plan is to discuss it among yourselves. Tried and true Joint Venture forms spell out who does what. By planning ahead, you are able to minimize your risks and those of your joint venture partner and equally important, to spread what risk each of you are comfortable taking among yourselves.