to develop for a finite time, new assets by contributing equity. • They exercise control over enterprise and consequently share revenues, expenses and assets, technologies. • In terms of individuals when two or more persons come together to form a temporary partnership for the purpose of carrying out a particular project, such a partnership is called joint venture and the parties are called joint co-venturers. SUCCESS OF JOINT VENTURES • Joint ventures are generally small projects. • Joint venture have more success rate for small projects especially for starting projects in a business. • Joint ventures are generally adopted when cost is high when both parties can share the budget. • In a joint venture both parties must have an eye on future partnership along with present progress. • To achieve a better partnership honesty and proper communication are important. Partner selection • Screening of prospective partners. • Short listing a set of prospective partners and some sort of ranking. • Checking the credentials of the other party. • Availability of appreciated or depreciated property contributed to the joint venture. COMPANY INCORPORATION • Foreign investor buying an interest in a local company. • Local firm acquiring an interest in an existing foreign firm. • Both the foreign and local entrepreneurs jointly forming a new enterprise. • Together with public capital and/or bank debt. TYPES OF JOINT VENTURES EQUITY JOINT VENTURE The partners share profits, losses and risk in equal proportion to their respective contributions to the venture's registered capital. CO-OPERATIVE JOINT VENTURE • A Co-operative JV does not have to be a legal entity. • The partners in a CJV are allowed to share profit on an agreed basis, not necessarily in proportion to capital contribution. • A CJV could allow negotiated levels of management and financial control. MARKET INFORMATION ON CONSTRUCTION CONTRACT CONTRACT DEFINITION An agreement between two or more parties representing a promise to be performed for consideration. Necessary Parts of a Typical Construction Contract: • Parties identified. • Parties make promises that constitute an offer. • Both parties sign the contract. • Both parties receive consideration. • Parties of the contract must have the legal authority to negotiate a contract. Contractual Relationships • Agreement between the owner and contractor is the primary construction contract. Conditions of the Contract • Define basic rights, responsibilities, and relationships of the parties involved in the construction process in greater detail. Methods of Contractor Selection • Competitive Bidding. • Direct Selection. Competitive Bidding • Objective is to ensure that the cost of the project is reasonable and consistent with existing conditions in industry. • Publicly funded projects – owner required to select lowest bidder. • Private projects – owner may also consider the bidders’ qualifications, experience, financial condition, and performance history. Direct Selection • Owner, with advice from the A/E selects contractor – total price and method of payment is then negotiated. • This method is generally not allowed for public projects. 3 Decisions Made in Determining Kind of Contract. • Number of contracts. • Contract type. • Basis of payment. Number of Contracts • Single Prime Contract Most common, uses competitive bidding. • Multiple Prime Contract Owner divides the work among several contractors & has separate contract with each of them. Example: Paving, foundation. CONTRACT TYPE • Design-Bid-Build. • Design-Negotiate-Build. • Construction Management. • Design-Build. • Owner-Build. • Construction Subcontracts. • Total Project Commissioning. 3 Types of Basis of Payment • Stipulated Sum. • Unit Price. • Cost-Plus Fee. Stipulated Sum • Simplest method used. • States that the contract requirements will be completed for a given amount of money. Unit Price • Used when the extent of work or actual quantities can not be determined when bids are made (earthwork is such an example). • Many civil engineering projects use unit price type of payment. • With unit price, the owner pays for exactly what is documented as done after the work has been completed. Cost-Plus Fee • Contractor paid for actual cost of labor plus a fee for overhead and profit. • Fee may be a percentage of the labour & material cost or a fixed amount. • Cost-Plus Fee agreements may also include incentives for early completion.