Category: Contracts & management
Prepared by Eng. Ahmed Fathy, Projects Manager ·
Definition
A joint venture is an agreement between two or more companies to bid for and deliver a project together, pooling experience, classifications and financial capacity, with each party's share of work, profit and liability to the owner set in a written JV agreement.
Why it matters on a project
It lets mid-sized firms enter projects larger than they could alone. But liability to the owner is usually joint and several, so each party carries the other's failures.
Common mistake
Entering a joint venture without a detailed agreement on responsibilities, payments and disputes, so partners fall out during the works.
Frequently asked questions
Are joint ventures accepted in government tenders?
Yes under each tender's conditions and procurement law, with a documented JV agreement.
What does joint and several liability mean?
The owner can hold any party to the full obligation, and the parties then settle between themselves per their agreement.
Related terms
- SubcontractorA contractor who carries out part of the works for the main contractor.
- Tender documents (conditions)The documents defining tender conditions, specifications and evaluation criteria.
- Performance bondSecurity the contractor gives the owner against failure to perform.
- FIDIC contractsInternational standard forms of engineering contract defining rights, notices, claims and change management.
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