When participating in joint ventures (JVs), accurately calculating and attributing experience can be crucial. Here, we delve into common practices for JV experience attribution and offer recommendations based on project complexity.
Methods for JV Experience Attribution
1. Equal Share (100% each partner): This straightforward method attributes 100% of the experience to each partner. While simple, it fails to reflect the individual contributions of each partner.
2. Proportional Share (based on JV agreement): This method allocates experience based on the ownership structure outlined in the JV agreement. Although it reflects the formal agreement, it might not accurately represent each partner’s actual involvement in the project.
3. Activity-Based Share (based on JV information forms): The most precise method, it assigns experience based on detailed information from the JV. However, it requires comprehensive documentation and data from the JV.
Recommendations for JV Experience Attribution
- Complex Projects: For more intricate projects, consider using the activity-based share method to ensure a more accurate assessment of each partner’s contributions.
- Simpler Projects: For less complex projects, the proportional share method based on the JV agreement may be sufficient.
Regardless of the method chosen, it is essential to clearly state the selected approach in the solicitation documents to prevent any misunderstandings.
Calculating Construction Turnover
Calculating construction turnover can be nuanced, and several factors might be considered.
Here are four potential inclusions:
1. Physical Infrastructure: This is the standard inclusion, reflecting direct construction experience.
2. Consultancy Services: Depending on the project, including design, supervision, and other consultancy services related to physical infrastructure might be relevant.
3. Public Funds: Including payments from contracts funded by public funds can be considered. However, it’s advisable to specify that only relevant construction-related projects should be included to avoid overly broad calculations.
4. Physical Services: Similar to consultancy services, consider including relevant physical services directly related to construction projects.
Recommendations for Construction Turnover Calculation
For clarity and to ensure all parties have a mutual understanding, it is vital to clearly define the scope of “construction turnover” in the solicitation documents. Specify whether consultancy services, involvement of public funds, or physical services are relevant for experience calculation. This approach helps set clear expectations for both procuring entities and JVs submitting bids.
By following these guidelines, you can ensure a more accurate and transparent process for JV experience attribution and construction turnover calculation, benefiting both the procuring entities and the JVs.