A Joint Venture (JV) is defined as a contractual agreement joining two or more parties for the purpose of executing a particular commercial project, however, each retains their individual distinct identities. Each party shares a vision of how the project will roll-out, taking into account the risks and rewards. The purpose is to formalise an ad hoc association with a view to combining expertise, capital, property, skills and knowledge, in order to execute the specific requirements of a specific targeted project. A JV is considered, in law, as a partnership, whereby parties are jointly liable for acts, neglects and omissions of this partnership.
JVs are general initiated under the following circumstances:
- The scale of a particular project is too large and/or complex to be undertaken by one organisation alone, due to limited resources available.
- Project requirements specify specialist skills and/or abilities, which are not available within a specific organisation.
- Established organisations develop the skills and provide expertise for emerging organisations. The Construction Sector Charter makes specific provision for skills transfer and development of Enterprise Development beneficiaries.
- To secure preference during the evaluation/tender process.