Let’s Get Together

Building strategic partnerships that work – for both of you

Contractors are, out of necessity, seeking work outside of their traditional markets.

These economy-driven moves require changing strategies to win and successfully complete projects that might be in a new place and/or in a new market type. There can be both risks and rewards when a company leaves its comfort zone, which is why a highway/civil construction firm must first consider how these new markets or larger projects will fit into the company’s current strategy.

For instance, a strategy of just “get more work” or “keep everyone busy” can quickly lead to a waste of time estimating and bidding everything out there, or worse, winning the work and losing your shirt. The response to these difficulties might be, “OK, then we will find a partner to work with to assure we have the capabilities and capacity to do the job.”

Problem solved? Not quite.

Although building collaborative relationships is one of the most successful trends for completing large, complex projects these days, there are many different forms of collaboration, teamwork and partner relationships.

The recession has caused many companies to reduce their workforce and often their capabilities for certain work in order to return to their core competencies. However, this may also mean the company can no longer compete for certain types or sizes of projects. Company management might consider forming some type of temporary partnership with a firm that has the capabilities it lacks. But joining with a partner has several different approaches — which also means there are different levels of legal and financial responsibility and risk involved. A partnership should not be construed as “buddying up” on a project. All have contract implications, and failed relationships can be costly. At the same time, all of these collaborative approaches are being used to great advantage by many companies for a number of reasons.

Joint relationships

Joint ventures are one of the least understood, yet often the most effective approaches to forming temporary partnerships for the duration of a project or selected projects.

 Although joint ventures are considerably more common on large, technically complex projects, they also appear on small and relatively straightforward projects. Companies pursue joint ventures for a variety of reasons. Among them are to:

• expand market penetration by tapping into another company’s expertise. Companies often seek to take advantage of a joint venture partner’s local knowledge, familiarity with subcontractors, customer understanding or other market expertise.