Business owners usually dream differently from those who don’t own a business. Likewise, owners of construction
companies often dream differently from owners of other types of businesses. They envision investments in large, earth moving equipment, and safety performance that beats their established record. And sometimes they dream about how another company’s resources could help them secure a particular contract. To give this dream a happy ending, it’s time to learn about construction joint venture basics.
Construction Joint Venture Basics: Turning an Owner’s Dream Into Reality
Bidding for a government or private contract isn’t just about offering the lowest price for the greatest value. It’s also about having the right resources to do the job and satisfy particular clauses in the client’s contract. Since investing in equipment, technology, and personnel before bidding isn’t always practical, some construction company owners opt instead to create a joint venture with another business that has resources that can flesh out all that is presented in a bid.
A joint venture is a temporary agreement to create a subsidiary that has access to the resources of each of the venture partners. Not only does a joint venture allow for the creation of a stronger entity with less equity and asset contribution from each partner than a single venture, but it also allows the partners to share in the risks faced by the venture.
What Are Tangible & Intangible Shared Assets?
The shared assets that are most valuable in a joint venture can vary widely and include:
- Intellectual property,
- Employees fulfilling affirmative action compliance goals for government contracts,
- Capital, and
So now that we’ve covered the basics, when is it best to enlist a joint venture agreement? Read “Four Times When a Construction Joint Venture Works.”