1. © Steve TennantConsultancy Ltd2001 1
A Joint Venture: To Be or Not to Be?
That Is the Question
By Steve Tennant FInstCES

2. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 2
Mind Reader?
§ Think of a whole number from 1 to
10
§ Multiply that number by 9
§ If the number is a 2-digit number,
add the digits together
§ Now subtract 5

3. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 3
Mind Reader? (Cont’d.)
§ Determine which letter in the
alphabet corresponds to the
number you ended up with
(example: 1=a, 2=b, 3=c, etc.)
§ Think of a Country that starts with
that letter

4. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 4
Mind Reader? (Cont’d.)
§ Remember the last letter of the
name of that Country
§ Think of the name of an Animal
that starts with that letter
§ Remember the last letter in the
name of that Animal

5. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 5
Mind Reader? (Cont’d.)
§ Think of the name of a Fruit that
starts with that letter
§ Think of the Animal in the Country
eating the Fruit

6. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 6
Mind Reader? (Cont’d.)
§ Are you thinking of a Kangaroo in
Denmark eating an Orange?

7. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 7
What Is a Joint Venture?
§ An Apology to William Shakespeare
§ "To be, or not to be,-­-­that is the question:-­-­
Whether 'tis nobler in the mind to suffer
The slings and arrows of outrageous fortune
Or to take arms against a sea of troubles,
And by opposing end them?"
From Hamlet, Prince of Denmark – 1601 Act III. –
Scene 1. – Rows. 56-­61

8. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 8
What Is a Joint Venture? (Cont’d.)
§ Definitions
§ There is no generally accepted definition,
under Hong Kong Law of a Joint Venture!
§ Form
§ a group of individuals collaborating
§ one or more individuals collaborating with
one or more corporate bodies
§ a group of corporate bodies collaborating

9. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 9
Why Joint Venture?
§ Reduce Competition
§ Obtain or retain a Strategic Resource
§ Profitably utilize Byproducts
§ Overcome Market Entry Barriers
§ Prevent Entry of New Competitors
§ Share Investment Cost and Risk

10. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 10
Selecting a JV Partner
§ Do they possess required resources &
capabilities?
§ What is their position?
§ How exclusive is their access to
resources?
§ What is the extent of their capabilities?
§ What is their financial condition?

11. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 11
Selecting a JV Partner (Cont’d.)
§ Is their approach to business compatible with
ours?
§ What is their approach to business ethics?
§ Do we have an existing relationship?
§ What is their attitude to risk?
§ How do they make decisions?
§ Is the size of our business significant in relation to
theirs?
§ Do we have managerial compatibility with them?

12. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 12
Selecting a JV Partner (Cont’d.)
§ What is their motivation and
commitment to success of the JV?
§ What is their strategic benefit?
§ Will they share control over their
contributed assets?
§ What is the extent of the financial
commitment they are willing to make?
§ How hungry are they?

13. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 13
Unincorporated Joint Venture
§ Does a Partnership Exist?
§ Question of Law and of Fact
§ The Partnership Ordinance
§ Tax
§ Treatment
§ Joint and Several Liability
§ To whom?

14. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 14
Incorporated Joint Venture
§ Limit of Liability
§ Parent Company Guarantee
§ Tax
§ Treatment
§ Dissolving Company
§ Cost

15. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 15
Is a Sub-­contract a Joint Venture?
§ A Sub-­contract or a Sub-­consultancy is
a Contract for Services
§ No shared control
§ No shared risk
§ No shared profit

16. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 16
What Is Usual in Construction?
§ Employer Organizations
§ Usually Incorporated
§ Contractor Organizations
§ Usually Unincorporated
§ Consultant Organizations
§ Usually Unincorporated

17. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 17
A Large Scale Contractors JV
§ Distinction of
Roles
§ Joint
Venturer
§ Responsible
Joint
Venturer
§ Party E
Main Joint Venture
(Joint Venture Agreement)
Party
A
Party
B
Party
C
Party
D
Party
E
Joint Venture Supervisory Board
Project Management Organisation
Responsible
Joint
Venturer
A
Responsible
Joint
Venturer
B
Responsible
Joint
Venturers
C & D
Sub-­Joint Venture
Agrement
Sub-­Joint Venture
Supervisory
Board
Party C Party D
Sub-­Joint Venture
Project
Management
Organisation
Sub-­Contractors
Suppliers
Manufacturers
Plant Hirers
Consultants
Sub-­Contractors
Suppliers
Manufacturers
Plant Hirers
Consultants
Responsible
Sub-­Joint
Venturer C
Responsible
Sub-­Joint
Venturer D
Sub-­Contractors
Suppliers
Manufacturers
Plant Hirers
Consultants
Sub-­Contractors
Suppliers
Manufacturers
Plant Hirers
Consultants
Sub-­Contractors
Suppliers
Manufacturers
Plant Hirers
Consultants
Insurers
Bondsman
Other Common Services & Facilities
Sub-­Contractors
Suppliers
Manufacturers
Plant Hirers
Consultants
Other Common Services & Facilities
Joint Venturer's
Responsibilities
Responsible Joint
Venturer's
Responsibilities

18. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 18
Joint Venturer’s Role
Main Joint Venture
(Joint Venture Agreement)
Party
A
Party
B
Party
C
Party
D
Party
E
Joint Venture Supervisory Board
Project Management Organisation
Sub-­Contractors
Suppliers
Manufacturers
Plant Hirers
Consultants
Insurers
Bondsman
Other Common Services & Facilities
Joint Venturer's
Responsibilities

19. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 19
PM Organization Functions
Name
Project Director
Name
Construction Manager
(Deputy PD)
Name
Health & Safety
Manager
Name
Commercial
Manager
Name
Programming
Manager
Name
Quality Assurance
Manager
Name
Temporary Works
Manager
Name
Environmental
Manager
Name
Co-­ordination
Manager
Name
Administration
Manager
§ Preparation &
Maintenance of
Safety Plan
§ Implement Company
Safety Policy
§ Safety Training
§ Safety Inspection
§ Internal Safety Audit
§ Safety Committee
§ Job Hazard Analysis
§ Accident / Incident
Investigation
§ Safety Reporting /
Statistics to
Engineer, Head
Office and others
§ Site Hygiene
§ Training of Junior
Staff
§ Environmental
Protection
Department
Submissions
§ Monitoring and
Reporting on
Environmental
compliances
§ Environmental Action
Plans
§ Training on
Environmental
Matters
§ Training of Junior
Staff
§ Quality Assurance
Plan Implementation
§ Non Conformancy
Reporting
§ Document / Records
Control
§ Q/A Training
§ Internal Audits
§ Training of Junior
Staff
§ System Wide
Consultants
§ Interfacing CC
Contractors
§ Detailed Design
Consultants
§ Railway Operations
System -­ Wide
Contracts
§ Special Purchase
Contractors
§ Supply-­Install
Contractors
§ HKSAR Government
Departments
§ Hong Kong Railway
Inspectorate
§ Utility Undertakers
§ Traffic Diversions
§ Statutory Approvals,
Consents and
Permits
§ Training of Junior
Staff
§ Managing other
Managers
§ Preparation of
Method Statements
§ Preparation of
Materials
Submissions
§ Preparation of Sub-­
Contractor Approval
Submissions
§ Monthly Report to
Engineer
§ Setting Out
§ Management of
Contractor's Plant &
Equipment
§ Heading up of Site
Production Teams
including
Foundations,
Structures, E&M and
Architectural Builders
Works & Finishes
§ Site Security
§ Works Programme
§ 3 Month Rolling
Programmes
§ Monthly Programmes
§ Other Programmes
Schedules and
Reports as required
by Project Director /
Deputy PD
§ Progress Monitoring /
Reporting /
Forecasting
§ Payment Milestones
and Key Dates
Reporting /
Forcasting
§ Submission Status
Scheduling
§ Integration of CIP
and TRIP and other
Engineer issued
Programmes (if
issued) into Works
Programmes
§ Training of Junior
Staff
§ Payment Applications
§ Measurement &
Valuation of
Variations
§ Final Account
§ Arrangement &
Monitoring of
Insurances
§ Insurance Claims
§ Sub-­Contract Tender
Enquiries
§ Sub-­Contract
Preparation and
Administration
§ Training of Junior
Staff
§ Site Administration
§ Personnel
§ Site Purchases
§ Petty Cash
§ Book Keeping
§ Stores
§ Training of Junior
Staff
§ Design of Temporary
Works
§ Checking of
Temporary Works
Design
§ Independent
Checking Engineer's
Design Check
Certificate
§ Checking of Erection
of Temporary Works
§ Independent
Checking Engineer's
Application of Load
to Temporary Works
Check Certificate
§ Checking of Removal
of Load Bearing
Temporary Works
§ Temporary Works
Design & Checking
Submissions to
Engineer
§ Training of Junior
Staff

20. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 20
Responsible Joint Venturer’s Role
Responsible
Joint
Venturer
A
Responsible
Joint
Venturer
B
Responsible
Joint
Venturers
C & D
Sub-­Joint Venture
Agrement
Sub-­Joint Venture
Supervisory
Board
Party C Party D
Sub-­Joint Venture
Project
Management
Organisation
Sub-­Contractors
Suppliers
Manufacturers
Plant Hirers
Consultants
Sub-­Contractors
Suppliers
Manufacturers
Plant Hirers
Consultants
Responsible
Sub-­Joint
Venturer C
Responsible
Sub-­Joint
Venturer D
Sub-­Contractors
Suppliers
Manufacturers
Plant Hirers
Consultants
Sub-­Contractors
Suppliers
Manufacturers
Plant Hirers
Consultants
Sub-­Contractors
Suppliers
Manufacturers
Plant Hirers
Consultants
Other Common Services & Facilities
Responsible Joint
Venturer's
Responsibilities

21. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 21
Pre-­bid Agreement
§ Exclusivity
§ Confidentiality
§ Expenses during Tender Preparation
§ JV Leader
§ Form of JVA to be substantially as per
attached specimen
§ Agreement of Tender
§ Termination

22. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 22
Joint Venture Agreement
§ Should satisfy Requirements of Tender
Documents
§ When does Agreement become Effective?
§ Joint and Several Liability

23. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 23
Joint Venture Agreement (Cont’d.)
§ Identify Participants and Participation
§ Identify Management and Methods of
Control
§ Decision Making & Breaking of Deadlock
§ Sign or Seal

24. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 24
Common Problems
§ Battle of the Forms
§ Neutral Drafter
§ Leader or Sponsor Fee
§ What are Sponsor’s duties?
§ Decision Making
§ Unanimous?
§ Majority?

25. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 25
Common Problems (Cont’d.)
§ Dispute Resolution and Applicable Law
§ Follow Main Contract?
§ Use of JV Facilitator
§ Mediation
§ Dissolution of JV
§ Finishing off outstanding matters

26. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 26
Less Common Problems
§ USA
§ Foreign Corrupt Practices Act, 15 USC
section 78dd-­1,2
§ Prosecutions
§ Recorded against each Joint Venturer

27. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 27
Conclusion
“The Joint Venture is the most flexible
instrument for making fits out of misfits.
It will become increasingly important. It
is at the same time the most demanding
and difficult of all tools of diversification
and the least understood.”
Peter Drucker, Management: Tasks
Responsibilities and Practices 1974

28. A Joint Venture: To Be Or Not To Be?
That Is The Question
© Steve TennantConsultancy Ltd2001 28
The End
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