Consortia have become increasingly important instruments for undertaking large-scale and complex construction projects. This is understandable given their many commercial advantages, which may include tax and accounting benefits, access to technical expertise and new markets, the ability to share risks and pool resources, and supply chain efficiencies. The use of these commercial alliances, however, also can pose problems for owners and contractors alike. Disputes often arise, for example, when a party is not accustomed to tendering and working as part of a team, and because of the unique challenges associated with handling specific one-off projects with rights and obligations that often are not well defined.
When contracting with or participating in a commercial alliance in the construction context, there are many factors that can greatly influence the allocation of risk among the parties. Understanding these factors is essential to minimizing liability when disputes arise—regardless of a party’s role on the project. This session will address the advantages and disadvantages of using the different types of commercial alliances. This session will also explore the factors that bear on the parties’ risks and potential liability, and what can be done both before and during a dispute to protect their interests in this context.
Upon completion of this session, participants will be able to:
- Learn the difference between joint ventures and consortia, and the advantages and disadvantages of using each vehicle depending on the goals and circumstances of a construction project (including the relative costs, tax implications, liability risks, and the opportunities afforded by each vehicle to enter new markets or gain new industry expertise)
- Learn about the factors that can influence the allocation of risk when either participating in or contracting with a joint venture or consortium, and how they can maximize control over these factors depending on their role in the project—including what choices they make as to terms of the relationship, how the vehicle is structured, funded, and managed, and how responsibilities are allocated in the project contracts
- Learn about best practices for protecting themselves against liability to the extent possible when participating in or working with any type of commercial alliance, while minimizing the likelihood of disputes in this context