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This is an arrangement for building procurement which has develop- ed out of the increasing complexity of construction projects, often with unorthodox methods or sequences of construction. It is appli- cable to large-scale projects of, say, £5m value or more, where there is a higher than normal proportion of engineering and other spe- cialist services. It has been defined as follows:

A partnership between two or more companies covering building, mechanical and electrical engineering, or other specialist services for the purpose of tendering for, and executing a building or civil engineering contract, each of the participating companies having joint and several liability for their contractual obligations to the employer.16

The basis of such projects is a single contract to which all the partner companies to the joint venture are signatories. Any of the standard forms of contract in current use may form the contract document, and in the publication just quoted the NJCC recom- mended the use of JCT standard forms for projects not primarily of an engineering nature. Modifications will need to be made to cover joint and several liability of the participating companies and to provide for any performance warranty which the Employer may require.

Joint venture has the effect of making specialist contractors, who under more orthodox arrangements would be sub-contractors, partners with the building contractor. This does not preclude the use of sub-contractors (whether, named or listed), a role which is filled by secondary specialist contractors who are not partners in the joint venture.

Advantages

1 The combined resources of participating companies result in greater economy in the use of specialist manpower, design and equipment.

2 There is a greater degree of unified action between the con- tracting parties.

3 Lines of communication between the Employer’s professional advisers and the building contractor and specialist contract- ors are shorter and better defined.

4 Improved integration of work sequences results in a shorter contract time and fewer management problems.

Disadvantages

1 If one JV partner withdraws, the remaining partner or part- ners must accept total liability to complete the project. 2 A separate, unified JV bank account must be arranged and

maintained by all the partners.

3 Separate insurance policies must be taken out on behalf of all the JV partners, specifically for the proposed project. 4 A board of management with a single managing director needs

to be appointed jointly by the JV partners to ensure unified actions.

The pattern of relationships in a Joint Venture project and the lines of communication between the parties are similar to those illustrated in Figure 2.2, but with the JV partners together ful- filling the role of ‘Contractor’.

Contractual links exist between (i) the JV participating companies;

(ii) the Employer and the JV partners collectively; (iii) the Employer and each of his professional advisers; (iv) the JV partners and each of the sub-contractors.

Bibliography

1. CLAMP, H., and COX, S., Which Contract? (London: RIBA Publications, 1989).

2. CHAPPELL, David, Which Form of Building Contract? (London: ADT Press, 1991).

3. TURNER, Dennis, Building Contracts: A Practical Guide, 5th edition (London: Longman, 1994).

References

1. DAVIS, LANGDON and EVEREST, Contracts in Use (London: RICS, 2003).

2. PSA Schedule of Rates for Building Works, 2005 (London: HMSO, 1985).

3. National Schedule of Rates for Building (Aylesbury: NSR Management, 2005).

4. Prime Cost Building Contract (London: Sweet & Maxwell Ltd, 2005). 5. Definition of Prime Cost of Daywork Carried out under a Building

Contract, 2nd edition (London: RICS Books, 1975).

6. McCANLIS, E. W., Tendering Procedures and Contractual Arrange-

ments (London: RICS Books, 1967), p. 10.

7. Contracts in Use, op. cit. 8. ibid.

9. Achieving Excellence in construction Procurement Guide 06: Procure-

ment and Contract Strategies (London: Office of Government

Commerce, 2003), p.4. 10. ibid.

11. PFI: Meeting the Investment Challenge (London: HM Treasury, 2003), p 2.

12. ibid.

13. PFI: Construction Performance (London: National Audit Office, 2003), p. 6.

14. Achieving Excellence in Construction Procurement Guide 06, op. cit., p. 10.

15. Code of Practice for Project Management for Construction and

Development (Englemere: CIOB, 1992).

16. NJCC, Guidance Note 1 – Joint Venture Tendering for Contracts in

Introduction

It is normal, but not essential, for standard forms of contract to be used as the basis for an agreement between a developer and a con- tractor. The complex nature of construction, together with the high levels of risk often involved, usually mean that the use of a stand- ard form of contract is advisable, certainly for all but the smallest of projects. Standard forms of contract offer the advantages of being carefully drafted by experts, being tried and tested and therefore ‘known quantities’, and being recognized by both the industry and the courts. Although such forms may have their individual weak- nesses, it is often safer to rely on the ‘devil you know’!

Surveyors must have a working knowledge of the availability and suitability of the various standard forms of construction con- tracts. Familiarity with one standard form of contract should not be a reason for surveyors always recommending the use of that form for all the projects they are involved with. It is imperative, if clients’ interests are to be safeguarded, to recommend the form of contract most suited to each set of project circumstances. In this respect, it is incorrect to suggest that one form of contract is always better than another – the various standard forms have been drafted for use in specific circumstances. Using an inappropriate standard form of contract for a project is dangerous. It will often mean that objectives, in terms of time, cost and quality, are not fully realized and that the likelihood of disputes will increase. It is therefore essential for surveyors to develop effective contract selection skills. This chapter identifies and explains the commonly used stand- ard forms of construction contract. It considers the suitability of

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