WHY DO JOINT VENTURE PARTICIPANTS ENTER INTO AN AGREEMENT?

Why do joint venture participants (contractors, consultants or employers) enter into joint ventures in the first place? According to Rob Morson, a partner at Pinsent Masons, there are two broad categories or Infrastructure participants. They are either joint ventures to procure or deliver infrastructure. In other words, they either play a developmental or execution role. There are seven (7) primary drivers that drive the process, these could be;

  1. Regulatory requirements 
  2. The ability to pull resources or capabilities 
  3. Optimising the supply chain 
  4. Boosting balance sheet strength
  5. Sharing risk 
  6. Enhancing competitiveness 
  7. Improving geographical or local knowledge

According to Rob, he hardly ever see’s any joint venture based on a single driver rather the relationship is driven by multiple drivers not necessarily in balance. Joint ventures parties are sometimes motivated more by the desire to secure a contract than the object of delivering it. Far too often joint ventures are formed in a haste without appropriate consideration for the delivery objective. The ultimate aim is that joint ventures deliver on their third party obligations. 

 

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PICTURE SOURCE: Pinsent Masons

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