Session 6 – Introduction to Breakout Group Workshops Topic B – “ Dealing with Joint Ventures - Issues, Risks and Possible Solutions ” Group 2 Facilitator / Presenter : Michael Burch, KBR Group 2 Recorder : Tony Winstanley, ECRI (Breakout Group Allocation in Handout Packs) ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 1
Session 6 – Introduction to Breakout Groups Topic B – Dealing with JV’s Again quite high on the concerns ranking, based upon 2017 Survey Feedback With continuing reports of under-performance by JV Partners A new set of factors has emerged stemming from the fairly recent increase in North American projects with Foreign Companies positioning for market access : -- Buy US Firm or Merger with another Foreign Firm for access -- Or, Form JV with a US Company Worth recalling, From our Lessons learned Data Base that the fundamental problems encountered with JV’s are : -- Lack of Trust among JV Parties -- Meeting Ethical & Safety Standards you require / Reputation ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 2
Session 6 – Introduction to Breakout Groups Topic B – Dealing with JV’s -- Cultural / Language / Appetite difficulties -- Inability of one Party to Perform -- Different / Incompatibility of Quality, Processes, Procedures and Systems -- Contractor / OEM JV is a high-risk structure And, issues do rise exponentially with the number of Parties In Fact, our almost overriding observations are : -- Picking the right Partner is 80% + of the Battle -- The JV might be governed by signed formal documentation but in practice, it only works successfully through positive cooperation between the key people of the Parties ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 3
Session 6 – Introduction to Breakout Groups Topic B – Dealing with JV’s The task for this Breakout Group is therefore : “ With the possible route into North American work by a Foreign Co. In JV with a US Company, in mind – What circumstances or structure have Worked or Failed ?” ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 4
Session 6 – Introduction to Breakout Group Workshops General : Two other basic Questions should be considered by each Group : 1. What does the Team consider to be the Key Issues in these areas and Why ? 2. What Avoidance or Mitigation Strategies and Ways Forward are proposed ? AND 3. We should avoid “So What” type of feedback which states the issues without suggesting considered steps and measures in response to the issues ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 5
Session 8 – Topic B, Group 2 Feedback Topic B – “ Dealing with Joint Ventures – Issues, Risks and Possible Solutions “ Group 2 Feedback Presenter – Michael Burch, KBR ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 6
Session 8 – Topic B, Group 2 Feedback Formation of JV-Drivers. Client driven or contractor decision Tailored to fit the circumstances Better chance of meeting project objectives Spread financial risk. Financial integrity of partner. Cultural issues critical Partners to agree ‘upfront’ on type of formation (Leadership, Risk, Profit, Contingency, work split etc) Alignment. Make sure expectations are clear/understood Less partners better. Works best with only two. Proposal development ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 7
Session 8 – Topic B, Group 2 Feedback Execution. Formation of JV Board. Governance. Drive JV culture. Team Building Management tools. How to chose. Best systems to suit project. Financial management practices. 1 book? Performance problem resolutions. Avoid by continuous monitoring Project ‘close out’ to be agreed upfront. ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 8
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