The Advantages and Disadvantages of Joint Ventures in Construction
When two or more individuals or entities want to complete a specific project together, they can form a strategic alliance known as a joint venture. Typically, joint ventures are beneficial to both parties but can also come with some disadvantages. We’ll share some of them in this article.
Generally, smaller companies will join forces with larger companies for various reasons. Both companies benefit because risks and costs are shared. To ensure your risks are balanced, we advise you to contact an Orlando construction attorney to have your joint venture contract drafted. Where a project may have been impossible for a party to complete alone, the combined synergy makes it more feasible. Smaller companies benefit by gaining access to the credibility and financial stability that larger companies carry. In exchange, smaller companies may offer larger companies a specific set of skills that can improve the quality and efficiency the project.
While joint ventures have many benefits, construction professionals can experience some hiccups along the way. Different cultures and values can impede a project. Communication and decision-making can be stalled since more people are involved. If the objective of the venture is not clearly communicated and understood, if there are different management styles, or if the level of expertise and investment are out of balance, parties will run into more difficulties.
What Makes a Joint Venture Successful?
A successful joint venture is one where parties share and understand the vision of the project. Trust must be established between partners and strong and effective leadership must be in place. Collaboration is needed to build solid relationships and managing resources and people is the key to success.
An Orlando construction lawyer can help you decide if a joint venture is right for you.
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Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.