Joint Venture Agreement Between Architects

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In an increasingly globalized architecture and construction market, the number of large projects implemented as joint ventures and as part of joint venture contractual agreements is increasing, but with increasing size and complexity, risks and new challenges are added. Is your company ready to participate? In the past, Australian Architecture (JV) joint ventures have generally brought together intergovernmental colleagues to provide complementary expertise and/or proximity, or practices that combine to provide specialized buildings, or cooperations between companies of different sizes to improve capacity and expand their projects. “The issue of JVs with foreign architects – which has become a major topic in projects in Melbourne and Australia in general – is that many international companies are looking for new markets, and they are quite opportunistic in terms of public buildings and large projects,” says Peter Bickle, principal at ARM. “C105 is a standard form of agreement between the architect and another architect who provides consulting services. C105 is part of an existing owner-architect agreement, known as the Prime Agreement. B141™-1997, B141™CMa-1992, B151™-1997 and B163™-1993 are the documents most used to establish the Prime Agreement. C105 does not describe the fixed benefits for the consultant architect, but provides a place in the agreement for the insertion of a description of these services. This document can be used with a large number of compensation methods, including the multiple of direct staff costs and the amount set. (AIA.org) This was the case with the Perth Children`s Hospital project, carried out by a JOINT with JCY Architects and Urban Designers, Cox Architecture and Billard Leece Partnership with HKS Inc. The project has been delayed several times and disputes are ongoing between the owner and the lead contractor, although the architects are no longer involved. The Joint Enterprise Agreement (JVA) model has been specifically designed for architects and design professionals who wish to include a joint venture with another professional organization for a limited time and for a given project.

Pedram Danesh-Mand, director of project risk consulting at KPMG, says the risk of project failure is higher for JVs, much of which leads to litigation around the world. It cautions that the term “joint venture” does not have a regulated common law in Australia, which means that these agreements can take different forms. “They could be done through a partnership or some other form of association without legal personality or through a registered body,” says Danesh-Mand, adding that it is important to agree on an appropriate legal framework and other, perhaps less obvious, issues. “C801™-1993 will be used by two or more parties to finance their reciprocal rights and obligations when setting up a joint venture. Once established, the joint venture must enter into an agreement with the owner for the provision of professional services. The parts can be all architects, all engineers, a combination of architects and engineers or another combination of professionals. The document offers a choice between two methods of community operation. The “Division of Compensation” method assumes that the services provided and compensation received will be distributed among the parties in the proportions agreed upon at the beginning of the project. The profitability of each party then depends on the individual performance of the pre-assigned tasks and is not directly related to that of the other parties. The “Profit and Loss Division” method is based on each party that performs work and charges the joint venture at costs plus a nominal amount for overhead.

The profit or final loss of the joint venture is distributed among the parties at the end of the project, on the basis of their respective interests. (AIA.org) Of course, legal problems can arise among architects, but they still have the potential to influence a company`s brand and reputation.

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