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Joint Venturing in the AEC Industry — Does it Make Sense?

There are numerous compelling reasons to enter a formal Joint Venturing agreement or to establish strategic partnerships with other AEC businesses.

  • Reduce risk/liability and share professional or financial resources;
  • Expand project portfolio/experience;
  • Fulfill contract requirements such as bonding capacity and MBE, WBE, or DBE quotas;
  • Establish expertise and brand in new geographic or client markets;
  • Collaborate with firms that provide essential, complementary expertise.

Historical data shows that formal Joint Venture agreements are used more widely in the General and Prime Contracting arena because there is a greater opportunity to benefit from shared risk and resources.

Strategic partnerships are more common for professional services providers such as architects, engineers and specialty consultants. During an interview for this article, Kathy Tait of DLR Group discussed the firm’s reasons for pursuing partnerships. “DLR was not widely known for expertise within the industry as an expert and did not have a strong reputation as a design firm. Our marketing and business development strategy is to demonstrate we have expertise at all levels of the clients’ needs. We are focused on providing a dynamic, holistic, creative process for the client as well as for project team members.”

Kathy also shared that the same issues which exist with an internal team frequently occur among a team of partners. She stated that “setting clear expectations and reinforcing them with frequent, unbiased communication eliminates issues related to role clarity, territoriality and control of the client relationship. Another challenge with partnering is that the partnerships tend to be project specific – they happen only once for a definite period of time – making it difficult to create and achieve certain cultural and working values.”

DLR Group’s primary reason for collaborating with partners is the meet the Owner’s demand for expertise. In one instance, DLR may possess the expertise, but lacks the local market presence, while in others DLR has an established reputation but requires specific expertise such as high-rise structural engineering.

In another interview, Karl Weissenborn of KEW Consulting Services explains that “I regularly form partnerships to pursue projects - sometimes as informal, consensual arrangements and often as formal teaming agreements. I also have over-arching teaming agreements with large regional and national firms for purposes of pursuing multiple projects within a certain time period. These are mutually beneficial and establish agreed upon roles, responsibilities and levels of commitment. Additionally, teams set expectations that are specific to exceeding the client’s stated needs – communication, efficiency, cost savings, quality/productivity goals and reduction of rework and redundancy.”

“The greatest benefit to the client is that partnered firms provide a greater range of expertise and service to clients, especially if the project requires unique or special skills that even the largest firms might not possess.”

When asked what best practices Karl considers when forming partnerships he gave what I believe to be a response that underpins all other qualifications – “I won’t partner with a firm with which I am not comfortable. I partner with firms I know because confidence and trust are essential to successful delivery of projects.”

When I contacted Rob Barse of ORB Management I knew that I would hear different responses to questions asked regarding partnering.

ORB’s partnering experience extends well beyond traditional proposal response strategies. “ORB excels at successfully blending multiple entities and agencies with the professional resources necessary to get the job done. We act as the liaison and provide coordination for projects that support a community’s vision but lack operational expertise, funding viability and means to bring everyone together.”

ORB recently worked with the City of Grand Marais, Cook County, ISD 166 and the Duluth YMCA. In this case collaboration between project stakeholders on the Client side as well as on the delivery side delivered unexpected benefits. “Projections for YMCA membership enrollment at the time of opening were 110 and the actual number of individual memberships was 800! The City of Grand Marais and Cook County entered a Joint Powers Agreement in which they will share equally in the $200,000 annual operations and maintenance costs. The Shared Use Agreement between the school and the YMCA created a $300,000 savings in renovation costs for the District and an annual savings of $40,000 for heat.”

“ORB’s marketing and business development strategy is to continue to pursue opportunities with complex, multi-entity project structures. We were recently selected to work on another YMCA project. In the Executive Director’s press release, she stated ‘ORB was selected because they have the leadership skills and ability to align multiple stakeholder groups with common, unified goals.”

Because I am familiar with these three firms, I know that partnering has become a key component in their overall marketing and business development strategies. Each continues to create a competitive advantage by collaborating with firms whom they trust and that provide valuable, complementary skills and expertise.

Karl Weissenborn, ASLA, founded KEW Consulting Services, Inc. to provide creative and sustainable project management, planning and design services for complex transportation infrastructure projects with significant social, economic, and environmental impacts.

DLR Group serves clients through integrated delivery of planning, architecture, engineering, interiors, and building optimization for new construction, renovation, and adaptive reuse. Our core areas of expertise are organized around Corporate Workplace, Retail, Hospitality, K-12 Education, Higher Education, Justice+Civic, and Sports design.

ORB provides strategic project leadership to assist in the management and administration of facility planning, development, design and construction processes. As A Compass of Endeavor, we provide a single-source of consistency, efficiency, predictability and accountability - representing the financial, operational and strategic goals of the Client.

Joy Svoboda is a Minnesota-based consultant which has held a variety of startegy, business development and marketing positions including CMO of an 8-office, full service AEC firm. She provides stragetic positioning, research and business delvelopment consulting services to AEC firms across the U.S. Joy can be reached at 612-385-7348 or viewsvaluesvisions@gmail.com.

Reprinted with permission from Business Development - Helping AEC Firms Win New Business, April 2014 Edition, www.bd4aec.org

 


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