Beruflich Dokumente
Kultur Dokumente
and consortiums
Toolkit
www.belfastcity.gov.uk/consortiums
Joint ventures and consortiums Toolkit
Contents
Introduction 4
The difference between a joint venture and a consortium 4
Why form a joint venture or consortium? 5
What’s right for you? 5
Joint ventures and consortiums - advantages and disadvantages 6
Practical steps – what do I need to do? 8
Common pitfalls 10
Top 10 tips 11
Are you ready to establish a joint venture or consortium? 12
Introduction
Tendering for public sector We have designed this toolkit to
contracts can be perceived by provide practical support to help
some to be beyond their reach, you decide if joint ventures or
due to the size of contract, the consortiums are appropriate for your
range of products or services business and to make you aware of
required, or the level of the steps involved.
experience required.
Forming consortiums or joint
ventures is one way your business
can increase its capacity to
respond to and deliver public
sector contracts.
Joint ventures
– the pros and cons
To help you to consider the best option for your business, the following
advantages and disadvantages have been designed to help you make the
best decision for your business:
Consortiums
– the pros and cons
To help you to consider the best option for your business, the following
advantages and disadvantages have been designed to help you make the
best decision for your business:
Consortium Consortium
advantages disadvantages
• Easy to establish as there • It is difficult for
are no formal procedures consortium members to restrict
that must be followed. Most or limit its liability. Members may
consortiums are formed in writing even become liable to third parties
by the execution of a consortium for the non-performance of other
agreement. In addition, no members of the consortium or
capital is required to create the the debts of such members in
consortium. undertaking a common project.
• Members of the consortium • Third parties will often find it
can change their contractual difficult to enter into contract
agreement at any time to suit with a non-legal entity like a
changed circumstances. consortium. Because it is a non-
• The consortium can be set to legal entity funding is also difficult.
expire on a given date or on the
occurrence of certain events
without any formal requirements.
• The consortium is not directly
subject to taxation; however the
individual members are.
• Some of the members of a
consortium may choose to be
‘undisclosed’ in dealings with
third parties.
• The cost of running a consortium
is generally lower to that of a joint
venture.
Common pitfalls
Many joint venture and consortium approaches to tendering for public
contracts are very successful. However, some of the failures can be
attributed to the following:
• Lack of clear understanding • Time delays caused by joint
between parties as to decision making can mean that
roles, responsibilities, titles, businesses are slower to react to
commitments and requirements changing circumstances.
etc.
• Lack of appreciation of the costs
• No proper safeguards in place that can be involved in setting up
for when things go wrong. the new structure. This can also
involve significant operational
• No legal advice sought at
resources.
outset in order to agree the
nature of the partnership and • There is a significant degree
its associated structures and of trust required on all parts. If
management arrangements. the new structure or one of the
individual elements of it fails, it
• Unwillingness to compromise on
reflects badly on all parties.
the part of each or both of
the organisations.
• Inability to manage cultural
tensions and different
organisational values.
Top 10 tips
1. Trust, openness and 8. Manage risks proactively
honesty between members and monitor performance.
are essential. Clear For example, to manage
communication is required. reputational risk requires
openness between
2. Choose members carefully.
members, controls on
Look for shared values, not
who can join and robust
just skills or geographical
performance monitoring.
reach. Make sure each
member is financially sound 9. Do not neglect your own
through credit checks etc. organisation or businesses
in favour of working on the
3. Be clear on the purpose and
consortium; you will need
objective of the joint venture
to make sure that you can
or consortium. As a business,
spread your time across
what do you expect to gain
competing priorities.
from the relationship?
10. Ensure owners or senior
4. Be realistic about the risks
management are committed
and the cost involved.
to the process.
5. Take time to choose the
type of relationship: is a joint
venture or consortium the
best vehicle for your purpose?
6. Use expert help, such as legal
advice, appropriately and
consider the appointment of
an independent ‘advisor’.
7. Clearly document what is
agreed between members
including delivery roles and
responsibilities: who will do
what, when and where?
www.belfastcity.gov.uk/consortiums