Explanatory notes on Joint Ventures, Design and Build and

Partnering Contracts.

Joint Ventures:
A joint venture is a general partnership typically formed to undertake a
particular business transaction or project and is intended to exist for a
limited time period. Typically, a joint venture is created with a specific
project in mind and generally dissolves once the project has been
completed. Members of the joint venture are exposed to full legal liability.
In most, if not all Contracts, parties to the joint venture are severally and
jointly liable. This would mean that a Claimant (Client) may pursue an
obligation against any one party who shall then be liable up to the full
amount of the relevant obligation.
Joint ventures can be incorporated or unincorporated. Incorporated joint
ventures involve the establishment of a company to run the joint venture
itself. The company holds the joint venture assets, levies the joint venturers
for funding contributions, pays all expenses and generally manages the
project.
The joint venturers oversee its activities through their appointees on the
board of directors, and their percentage interests in the joint venture are
reflected in their shareholdings. When the joint venture is completed the
company is liquidated and its surplus assets are sold or distributed to the
joint venturers
From this point of view incorporated joint ventures are no more than
companies and are governed by company law. Unincorporated joint
ventures, on the other hand, do not use a separate company so the
participants operate more like a partnership.
Design and build contracts
The traditional design-bid-build method of construction is a sequential
process in which the owner or developer first contracts with a design
professional to prepare a concept or basic design, then a detailed design
for construction. This includes specifications to solicit competitive bids for
construction, and finally the award of a construction contract to the lowest
bidder.
In design-build, one entity performs both design and construction under a
single contract. Often the design-build contract is awarded by some
process other than competitive bidding; thus design-build differs from
traditional design-bid-build in two ways. First, the design and construction
components are packaged into a single contract and, second, the single
contract is not necessarily awarded to the lowest bidder after competitive
bidding

When a design-build contract is awarded to a builder, he must hire all

architects and engineers required to complete design work. The owner is
still given the right to approve or reject design options, but is no longer
responsible for coordinating or managing the design team. Once the owner
approves the design, the same contractor then oversees the construction
process, hiring subcontractors as needed.
Partnering Contracts:
Partnering is a management approach used by two or more organizations
to achieve specific business objectives by maximizing the effectiveness of
each participants resources. It requires that the parties work together in
an open and trusting relationship based on mutual objectives, an agreed
method of problem resolution and an active search for continuous
measurable improvements.
Partnering can be either project specific, where the arrangement is for the
duration of an individual project; strategic or long-term where the
arrangement is for a specified period of time, normally covering a number
of projects. Strategic or long-term partnering usually provides greater
opportunity for improvement
There are four main partnering contracts:
PPC2000
Here, the Client and Constructor are naturally parties to the contract but
there is also provision for the Clients Consultants and Specialist
Subcontractors to be parties to the contract. This avoids the need for
separate appointments for the consultants and subcontracts for the
specialists
A popular feature of the contract is the Pre-possession Agreement. This
allows the Constructor to undertake activities after the contract has been
entered into, but before possession of the site has been granted
NEC Partnering Option (x12)
In like manner to PPC2000, the employer and contractor are signatories to
the Partnering Option together with the employers consultants and some
of the key specialist subcontractors. Unlike PPC2000 however, which is
multi-party, the NEC Partnering Option is an add-on to the basic Primary
Options which provide for two parties only. In entering into Option X12 the
Parties are entering into additional responsibilities. It does not create a
multi party contract.
Public Sector Partnering Contract (PSPC)
The PSPC contract in like manner to the NEC contract provides for a number
of procurement options which are designed for two parties. A Partnering
Agreement is also provided which is signed by the partnering team and
incorporates the collaborative working arrangements.
The options allow for an array of different procurement routes including
lump sum authority design or contractor design, cost reimbursable with

employers design or contractors design and term maintenance. There is

also a professional services option and a subcontract.
A Pre-start Agreement is also included, which has a similar use to the
PPC2000 Pre Possession Agreement in that it allows the Constructor to
undertake activities before possession of a site has been granted
JCT 05 Constructing Excellence
In like manner to PPC2000, the JCT 05 Constructing Excellence contract
has been drafted to adhere to collaborative working principles.
There is also a similarity with PSPC and the NEC Partnering option in that
the principle conditions are incorporated into a two party agreement with
all the partners joined as parties to a separate Project Team Agreement.
Unlike the other partnering contracts described above this contract includes
for the production of a Risk Allocation Schedule. The parties complete this
schedule before signing the contract and it becomes the foundation upon
which the extension of time allowance is built.