Adrian L. Bastianelli, III Paul C. Monte Michael C. Zisa Joint Ventures 1

Presenters Adrian Bastianelli is the co-managing partner of P&A's Washington, DC office. Paul Monte is the co-managing partner in P&A's New York office. Mike Zisa is a partner in P&A's Washington, DC office. 2

Joint Ventures Generally Definition Advantages of Using a Joint Venture Liability of Joint Venture Partners – Joint and Several – Liability Between Joint Venture Partners Teaming Agreements vs. Joint Venture Agreements 3

Types of Joint Ventures Percentage Based Line Item Joint Venture JV that Subcontracts to a Partner Design-Build Joint Venture “Silent” Joint Venture Small Disadvantaged Business Joint Ventures Pre-Bid Joint Venture Agreements 4

General Provisions Name Members Purpose Bank Accounts Licensing Duration of Joint Venture Ownership Interests 5

Form of Joint Venture Partnership Consortium Single Purpose Entity – LLC – Corporation 6

Capitalization Bidding Costs Initial Capital Contributions Additional Capital Contributions Failure to Meet Cash Calls Third Party Financing 7

Profits Definition of Profits Costs Chargeable to Joint Venture Repayment of Capital Contributions Timing of Distribution Books and Records 8

Management Managing Partner – Removal or Change of Managing Partner – Liability of Managing Partner Management Committee – Problems with 50/50 Vote Day to Day Operations – Project Manager Access to Information Audit 9

Subcontracting Choice of Subs Subcontracting to a Joint Venture Partner – Payment How and When Retention – Payroll – Insurance Subcontracting Where Joint Venture Is a DBE 10

Manpower and Equipment Who Provides Manpower and Equipment – Skilled Labor – JV Partner Owned Equipment Who Provides Supervision – Choice of Project Management and Field Supt. Accounting for Supervision and Equipment – Agreed Rates – Tracking of Equipment Usage 11

Default of a Joint Venture Partner Types of Default  Breach of a Specific Joint Venture Term o Failure to Meet a Capital Call o Failure to Provide Resources o Failure to Timely Perform  Other types of default o Failure to Meet Standard of Care o Breach of Implied Duty of Good Faith and Fair Dealing o Failure to Disclose Remedies for Default  Notice  Right to Cure  Consequences of Default 12

Withdrawal or Dissolution Rare in Construction Joint Ventures Notice to Owner, Subcontractors, and Surety Continuing Liability of the Withdrawing Partner 13

Insurance Who Provides – Subrogation Rights Coverage – General Liability – Workers’ Comp – Equipment – Builder’s Risk or Completed Operations – E&O 14

Bonding Underwriting Considerations – Review of All participants of the Joint Venture – Review of Joint Venture Agreement – "Angel Deals" – Additional Consideration for Certain Federal Programs Limited Number of Joint Venture Contracts Statutory Requirements for Joint Venture Consequences for Noncompliance 15

Bonding Indemnity Requirements – Indemnity Agreement – Joint and Several liability Issuing Bonds to a JV – Get the Name Right Potential Conflicts for Sureties & Bond Producers – Claims – Losses Business disputes 16

Disputes Between the Partners Disputes Between the Joint Venture and Third Parties Should be Addressed in the Joint Venture Agreement  Cooperate With Each Other  How Decisions Regarding Prosecution of the Claims Will Be Made Disputes Between Joint Venture Partners  Day to Day Decisions  Interpretation of the Agreement  Defaults Special Defenses – Gross Negligence or Fraud – Limitations of Liability 17

Dispute Resolution Between the Partners Types of Decision Making  Day-to-Day Operational Decisions – Project Manager  Normal Course of Business Decisions – Management Committee  Disputes Between the JV Partners Disputes  Consensual Decision  Tie Breaker Mechanism Mediation Arbitration/Litigation 18

Standard Form Agreements AGC AIA Other Most Joint Ventures Don't Use Standard Form Agreements 19

Design-Build Joint Ventures 20

Design-Build Joint Ventures Designers Role – Pre-Bid Reliance on Design – Post-Bid Format – Joint Venture – Partner at Risk – Subcontract 21

Design-Build Joint Ventures Considerations in Selection of Designer – Experience – Size – Insurance Designers Often Seek Limits on Liability Fee Structure Incentives 22

Design-Build Joint Ventures Design Obligations and Liability Coordinating Design and Construction Delay Licensing Errors and Omissions Insurance Sureties Liability for Design Errors 23

Typical P3 Project Structure 24

Risk Transfer “Maximization” Political Risk Downstream Risk Transfer Pressure Design-Build +++ Design Build Risk Assumption – Design and Professional Standard of Care Issues – Permits and Approvals – Differing Site Conditions Utilities Environmental 25

Owner's Role ROW Utilities Site Conditions Permits Time & Scope of Design Review – Conformity with Design Intent – Compliance with Standard Specifications – Nonconformance Reports 26

Warranties and Changes Orders Warrant Results & Success: – Design & Performance Criteria – Completed Operations – Tests Limited Change Orders – Impacts by Owner – Changed Conditions – Design Errors & Omissions 27

Your Questions? If you do not have the opportunity to have your question addressed during the seminar, you may contact the presenter directly: Adrian Bastianelli: Paul Monte: Mike Zisa: 28