Effectiveness of Joint Venture for Local Contractors in a Mega Project Construction

Dagninet Cherinet

doi:10.11648/j.ajce.20200804.13

Abstract

Mega Construction Projects are defined as a very large investment construction project, or aggregate of projects, characterized by magnified cost, extreme complexity, increased risk, lofty ideals, and high visibility, in a combination that represents a significant challenge to the stakeholders, a significant impact to the community and pushes the limit of construction experience. The main objective of this study was to assess effectiveness of joint venture for local contractor to construct a mega project construction. The specific objective of this study was to determine the effective way of formation and implementation procedure, to determine legal procedures and steps of joint venture between local contractors, to analyze different kinds of joint venture among local contractors and to analyze risk of joint venture among local contractors to construct a mega project construction. The study used both qualitative and quantitative research, and data collection method used was interview, close ended questionnaires’, different books, articles, and web sites. The study uses also purposive sampling technique. The study revealed that the most motivation factor and reason to form a Joint Venture in construction is to obtain technology transfer, the most selection criteria to select a construction JV partner is ability, experience and skills of JV partner and to succeed in JV performance a JV management should be strong. The study indicated that some of the articles form the commercial code explains about JV need an amendment. The study also indicates legal issues should be considering in Ethiopian commercial code to facilitate formation construction JV. This study also revealed the best JV type suitable for local contractors to establish domestic JV is a contractual JV type. Finally, the study shows that the most factors to create a problem in construction JV is unclear partner roles and the dominant risk factor associated with construction JV is partner parent company in financial problem. Also, the study came up with conclusion that the existing legal norm context about CJV should be revised with amendment of some of the articles from the existing commercial code of Ethiopia.

Highlights

In Ethiopia the sector has registered a remarkable growth, over the last 11 years there has been increased investment on the development and expansion of various infrastructure projects
In this research detail assessment were made on motivation factor and reason to formation of JV, JV partner selection factor, JV success criteria, existing legal norm about JV, and contents of JV agreement, types of JV and risk factors associated with JV
The above assessments were examined for effective way of JV formation and implementation procedure to encourage a domestic JV among local contractors

Summary

Introduction

In Ethiopia the sector has registered a remarkable growth, over the last 11 years there has been increased investment on the development and expansion of various infrastructure projects. Among the major development’s construction of road infrastructure, real estate developments, and condominium housing projects are some of the examples. Public infrastructure development projects by ministry of Education and Health and road infrastructure projects accounts the significant portion of the investment outlay on construction activities [15]. One of the most recent mega project constructions in Ethiopia is Ethiopian Grand Renaissance Dam, Gilgel Gibe I, II, III, Ashegoga Wind Power Project and etc. The Ethiopian Ministry of Urban Development and Construction [15]) states that promote meaningful joint ventures and other forms of strategic alliances with foreign partners to ensure effective participation of local players in construction projects

Objectives

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Discussion

Conclusion