Surety Bond Quarterly - Spring 2016 - (Page 12)

2016 NASBP Annual Meeting Session PRACTICAL INSIGHTS: WHAT YOU NEED TO KNOW Joint Ventures in CONSTRUCTION BY MICHAEL C. ZISA The following is an introduction to the continuing education (CE) course for bond producers that will be held at the NASBP Annual Meeting & Expo and NASBP Regional Meetings. A JOINT VENTURE is a partnership between one or more companies to take on a commercial enterprise. Joint ventures have been used in the construction industry for years but have become increasingly common as projects continue to become larger, more complicated, and more specialized. There are a number of reasons joint ventures are appealing in today's construction market-joint ventures allow companies to share risks, resources, knowledge, and expertise and increase bonding capacity and market reach. For example, a large construction company may have the experience, resources, and bonding capacity to perform a megaproject but have concerns because the project is located outside of its typical geographical market. A smaller contractor may have knowledge and experience regarding the local market but not the experience, resources, or bonding capacity to compete for the megaproject on its own. A possible solution: a joint venture that allows the contractors to partner and pool their respective strengths to pursue the megaproject. While the opportunities presented by joint ventures are enticing, contractors (and sureties providing bonds to the joint ventures) must understand and carefully consider a number of factors before taking the leap into the world of joint ventures. At NASBP's Annual Meeting & Expo in May in Colorado Springs, CO, a panel of attorneys from the national construction law firm of Peckar & Abramson will 12 SURETY BOND QUARTERLY | SPRING 2016 draw on our experience to discuss what contractors and surety professionals need to know about joint ventures. Specifically, the interactive presentation will identify the different forms of joint ventures, explain advantages and disadvantages associated with each, and discuss the liability between the partners to the joint venture. We will also explain the distinctions between a joint venture agreement and a teaming agreement. The panel will also discuss the essential terms of the joint venture agreement-from basics such as members, purpose, ownership, and duration to more complex issues and terms involving capitalization, management, profit sharing, default, indemnification, and dispute resolution. How will the joint venture be financed at the outset and during performance? Who will serve as the managing partner and who will manage the day-to-day operations of the joint venture? What are the voting requirements for different types of joint venture action? How and when will profits and losses be shared? What happens when one of the partners is in default under the terms of the

Table of Contents for the Digital Edition of Surety Bond Quarterly - Spring 2016

NASBP Upcoming Meetings & Events
2015-2016 Executive Committee
From the CEO – It’s Spring and a Season of Change for Surety
Practical Insights: What You Need to Know – Joint Ventures in Construction
Making a Difference: NASBP Members support Breakthrough in Trauma Treatment for Vets
Susan Hecker Recognized for Contribution to Heavy-Construction Industry
Evolving Compliance Requirements: Addressing Human Trafficking
Subcontractor Surety Bonding and Default Insurance
Managing Subcontractor Risks of Non-Performance and Financial Failure
SDI Insured Must Shoulder Burden to Pursue Claims Against CGL Policy
One Contractor’s Transfer Preference: Subcontractor Bonds
Facilitating International Commercial Surety

Surety Bond Quarterly - Spring 2016