Construction Joint Ventures

by David B. Ashley, (A.M.ASCE), Asst. Prof.; Construction Engrg. and Project Management Program, Dept. of Civ. Engrg., Massachusetts Inst. of Tech., Cambridge, Mass.,


Serial Information: Journal of the Construction Division, 1980, Vol. 106, Issue 3, Pg. 267-280


Document Type: Journal Paper

Abstract: A construction joint venture is a partnership of contractors who have formed a business alliance for the purpose of undertaking a project. Motivation for such an alliance may be technological complexity, political expediancy, large size, or high risk. An analysis of the risk-sharing characteristics is presented concentrating on principles of diversification for the individual contractors and competitive advantage of the joint venture as a whole. A formulation of risk-sharing rules and basic contractor risk behavioral criteria leads to the development of a methodology for optimal joint-venture share allocation. By means of a three contractor joint-venture example the optimal allocation of shares is demonstrated, as well as a verification of principles of diversification and competitive advantage.

Subject Headings: Joint ventures | Risk management | Contractors and subcontractors | Commercial construction | Motivation | Political factors | Structural behavior | Verification

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