SM

R E S U L T S F I R S T

Joint Ventures
Adrian L. Bastianelli, III
Paul C. Monte
Michael C. Zisa
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N E W Y O R K • N E W J E R S E Y • F L O R ID A • C A L IF O R N IA • W A S H IN G T O N , D . C . • IL L IN O IS • G E O R G IA • P E N N S Y L V A N IA • W W W . P E C K L A W . C O M
 Presenters

• Adrian Bastianelli is the co-managing partner

of P&A's Washington, DC office.
• Paul Monte is the co-managing partner in
P&A's New York office.
• Mike Zisa is a partner in P&A's Washington,
DC office.

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 Joint Ventures Generally

• Definition
• Advantages of Using a Joint Venture
• Liability of Joint Venture Partners
– Joint and Several
– Liability Between Joint Venture Partners
• Teaming Agreements vs. Joint Venture
Agreements

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 Types of Joint Ventures

• Percentage Based
• Line Item Joint Venture
• JV that Subcontracts to a Partner
• Design-Build Joint Venture
• “Silent” Joint Venture
• Small Disadvantaged Business Joint Ventures
• Pre-Bid Joint Venture Agreements

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 General Provisions

• Name
• Members
• Purpose
• Bank Accounts
• Licensing
• Duration of Joint Venture
• Ownership Interests

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 Form of Joint Venture

• Partnership
• Consortium
• Single Purpose Entity
– LLC
– Corporation

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 Capitalization

• Bidding Costs
• Initial Capital Contributions
• Additional Capital Contributions
• Failure to Meet Cash Calls
• Third Party Financing

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 Profits

• Definition of Profits
• Costs Chargeable to Joint Venture
• Repayment of Capital Contributions
• Timing of Distribution
• Books and Records

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 Management
• Managing Partner
– Removal or Change of Managing Partner
– Liability of Managing Partner
• Management Committee
– Problems with 50/50 Vote
• Day to Day Operations
– Project Manager
• Access to Information
• Audit
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 Subcontracting

• Choice of Subs
• Subcontracting to a Joint Venture Partner
– Payment
• How and When
• Retention
– Payroll
– Insurance
• Subcontracting Where Joint Venture Is a DBE

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 Manpower and Equipment

• Who Provides Manpower and Equipment

– Skilled Labor
– JV Partner Owned Equipment
• Who Provides Supervision
– Choice of Project Management and Field Supt.
• Accounting for Supervision and Equipment
– Agreed Rates
– Tracking of Equipment Usage

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 Default of a Joint Venture Partner
• Types of Default
 Breach of a Specific Joint Venture Term
o Failure to Meet a Capital Call
o Failure to Provide Resources
o Failure to Timely Perform
 Other types of default
o Failure to Meet Standard of Care
o Breach of Implied Duty of Good Faith and Fair Dealing
o Failure to Disclose
• Remedies for Default
 Notice
 Right to Cure
 Consequences of Default

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 Withdrawal or Dissolution

• Rare in Construction Joint Ventures

• Notice to Owner, Subcontractors, and Surety
• Continuing Liability of the Withdrawing
Partner

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 Insurance

• Who Provides
– Subrogation Rights
• Coverage
– General Liability
– Workers’ Comp
– Equipment
– Builder’s Risk or Completed Operations
– E&O

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 Bonding

• Underwriting Considerations
– Review of All participants of the Joint Venture
– Review of Joint Venture Agreement
– "Angel Deals"
– Additional Consideration for Certain Federal
Programs
• Limited Number of Joint Venture Contracts
• Statutory Requirements for Joint Venture
• Consequences for Noncompliance

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 Bonding

• Indemnity Requirements
– Indemnity Agreement
– Joint and Several liability
• Issuing Bonds to a JV
– Get the Name Right
• Potential Conflicts for Sureties & Bond
Producers
– Claims
– Losses
• Business disputes 16
 Disputes Between the Partners
• Disputes Between the Joint Venture and Third Parties Should
be Addressed in the Joint Venture Agreement
 Cooperate With Each Other
 How Decisions Regarding Prosecution of the Claims Will Be Made
• Disputes Between Joint Venture Partners
 Day to Day Decisions
 Interpretation of the Agreement
 Defaults
• Special Defenses
– Gross Negligence or Fraud
– Limitations of Liability

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 Dispute Resolution Between the Partners

• Types of Decision Making

 Day-to-Day Operational Decisions – Project Manager
 Normal Course of Business Decisions – Management
Committee
 Disputes Between the JV Partners
• Disputes
 Consensual Decision
 Tie Breaker Mechanism
• Mediation
• Arbitration/Litigation

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 Standard Form Agreements

• AGC
• AIA
• Other
• Most Joint Ventures
Don't Use Standard
Form Agreements

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Design-Build Joint Ventures

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 Design-Build Joint Ventures

• Designers Role
– Pre-Bid
• Reliance on Design
– Post-Bid
• Format
– Joint Venture – Partner at Risk
– Subcontract

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 Design-Build Joint Ventures

• Considerations in Selection of Designer

– Experience
– Size
– Insurance
• Designers Often Seek Limits on Liability
• Fee Structure
• Incentives

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 Design-Build Joint Ventures

• Design Obligations and Liability

• Coordinating Design and Construction
• Delay
• Licensing
• Errors and Omissions Insurance
• Sureties Liability for Design Errors

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Typical P3 Project Structure

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 Risk Transfer “Maximization”

• Political Risk
• Downstream Risk Transfer Pressure
• Design-Build +++
• Design Build Risk Assumption
– Design and Professional Standard of Care Issues
– Permits and Approvals
– Differing Site Conditions
• Utilities
• Environmental

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 Owner's Role

• ROW
• Utilities
• Site Conditions
• Permits
• Time & Scope of Design Review
– Conformity with Design Intent
– Compliance with Standard Specifications
– Nonconformance Reports

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 Warranties and Changes Orders

• Warrant Results & Success:

– Design & Performance Criteria
– Completed Operations
– Tests
• Limited Change Orders
– Impacts by Owner
– Changed Conditions
– Design Errors & Omissions

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 Your Questions?

If you do not have the opportunity to have your

question addressed during the seminar, you
may contact the presenter directly:

Adrian Bastianelli: abastianelli@pecklaw.com

Paul Monte: pmonte@pecklaw.com
Mike Zisa: mzisa@pecklaw.com

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