• How will the costs of preparing the bid be allocated between the joint-venture partners? Will each party bear its own costs or will it be allocated based upon participation percentages?

• Who will be the joint-venture manager who is responsible for the day-to-day management of the joint venture?

• Who will be the project manager who is responsible for day-to-day construction of the project?

• How will the project be insured? (i.e., each party with separate liability insurance policies) How will Builders Risk Insurance be purchased? Whose insurance agency will be used?

• What are the financial arrangements?

• How will profits and losses be allocated?

• How will initial contributions be determined?

• How will additional capital contributions be handled? (For example, is a unanimous vote required?)

• What if a party fails to make additional contributions?

• How will reimbursements be handled?

• How will cash disbursements be made?

• How will disputes be handled?

Brian Moore is a principal with construction industry management consultants FMI Corporation, focusing on strategic, organizational and operational issues. Contact at (919)785-9269 or bnmoore@fminet.com.

Go to our digital edition at betterroads.com to read (page 33a) about a contractor (actually Equipment World magazine’s Contractor of the Year) who started a new business to get through the recession.