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... Introduction
In general, a joint venture in the construction industry is defined as two or more companies joining together to form a new corporation for undertaking a construction project. The joint venture is usually established in a project-by-project basis, its composition to be determined by the requirements of each project and different partners of the joint venture will have expertise in particular aspects of the projects.
There are many examples of joint ventures in Hong Kong. Examples are (i) Lantau Airport Railway-Advanced Works for Hong Kong Station Construction are carried out by a joint venture formed by Dragages-Penta-Bachy Soletanche, (ii) the construction of West Harbour Crossing is carried out by a joint venture formed by Gammon & Kumagai. Other large projects such as Lantau Fixed Crossing and East Harbour Crossing are also carried out by joint ventures.
The increasing popularity of joint ventures in Hong Kong is summarized by the following reasons: Firstly, construction projects are getting larger, more difficult and require expertise in different aspects. Forming a joint venture can provide an effective means of combining expertise and resources, which would result in higher efficiency in construction. Secondly, a joint venture means a large capital for tendering. This improves chances of winning major contracts and better cash flow during construction. Thirdly, in terms of risk control, forming a joint venture can reduce and share potential risk among participants.
Irrespective of the advantages of a joint venture, there are also some disadvantages of forming a joint venture such as the conflicts which may arise among companies in sharing of profit, responsibility and resources allocation, and problem in communication.
Approximate Word count = 1259
Approximate Pages = 5
(250 words per page double spaced)
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