Authors: John Dipple, Randy Brunet, Q.C., Matt Barnes
GETTING READY NOW
The Saskatchewan government recently announced a $7.5-billion program to invest in infrastructure over the next two years and to help stimulate the province’s economic recovery post COVID-19.
According to the government’s announcement, this stimulus package recognizes the need for both smaller, short-term projects to jump-start economic activity and longer-term, large-scale projects over the next several years. If the Saskatchewan government is to achieve its economic stimulus goal, a wide range of Saskatchewan-based contractors, suppliers and consultants will need to compete for and win their share of these projects.
Small and medium-sized firms located throughout the province may find many of the projects beyond their traditional capacity or outside their normal geographic market. To overcome these limitations and secure opportunities to take part in Saskatchewan’s recovery, firms need to find new ways to collaborate with one another to compete for these projects. Combining resources with one or more other firms — either as part of a joint venture, teaming agreement or other arrangement — is an effective way for small and medium-sized firms to bid for and win projects they could not do on their own.
Selected Planning Issues:
If you are interested in pursuing a particular project in co-operation with other firms as part of a joint venture or other arrangement, there are a number of issues identified below you will need to consider and resolve prior to submitting the joint bid.
- Defining each joint venture partner’s roles and responsibilities for completing the project/work.
- Determining how each joint venture partner will be paid for their share of the work.
- Deciding what the bid price should be, and how the project contingencies and profit pool should be established.
- Defining how cost overruns and other project risks (such as delays and deficiencies) will be shared and managed.
- Deciding how project profits and unused contingencies will be shared.
- If the owner withholds payment, determining how the payment shortfall will be allocated.
- Deciding how expenses in developing a bid will be shared if your bid is unsuccessful.
- Establishing a project management committee, and determining what decisions require unanimous approval.
- Determining who will be the project lead for overseeing and co-ordinating the overall project.
- If contract negotiations are permitted/required, deciding how those will be managed.
- Deciding how change orders and potential construction claims will be managed and approved.
- Determining how questions or disputes between the joint venture partners will be resolved.
- Defining how the project banking and accounting arrangements will be handled.
- Establishing appropriate project reporting between the joint venture partners.
- Deciding what subcontractors should be engaged and how project risks and contract terms will be passed through to subcontractors and suppliers.
- Locking up joint venture partners so they don’t bid against the joint venture on the same project.
- Determining how the joint venture will satisfy any required project bonding requirements.
- Protecting your employees from being recruited by the joint venture partners.
- Identifying and protecting each joint venture partner’s intellectual property and confidential information.
Getting Ready Now:
Using joint venture structures and other collaborative arrangements can give small and medium-sized Saskatchewan-based firms the opportunity to compete for and win projects they would otherwise be unable to secure on their own.
To be ready to take part in Saskatchewan’s economic recovery, you need to start planning now by finding both the projects your firm is best positioned to handle and other like-minded Saskatchewan firms you can partner with to support your bid.
If you are planning to participate in a joint venture, the construction team here at MLT Aikins LLP can assist you in planning and implementing your joint venture strategy.
For more information about the trade agreement compliance implications of the province’s economic stimulus package, read our “Can Saskatchewan’s $7.5B Infrastructure Investment Balance Economic and Community Benefits with Trade Agreement Compliance?” blog post.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or options. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.