International law firm Pinsent Masons have launched a resource to help the infrastructure sector to better deliver global mega infrastructure projects through Joint Ventures (JVs).
The number of global mega projects, such as HS2 in the UK, is set to increase - with scale and stimulus measures likely to be driven by China – and research shows that 8% of global GDP is spent on global mega projects.
Infrastructure sector specialists at Pinsent Masons say the Joint Ventures: Delivering Global Mega Infrastructure Projects guide will help JVs deliver more consistently, more efficiently and more sustainably than ever before.
Pinsent Masons partner Vincent Connor, said: "The stability of the world's economy relies on enhanced infrastructure which is increasingly being delivered by JVs. However, JVs in the infrastructure sector are more often than not formed due to the capacity to deliver projects, rather than the best capability to do so.
“The capability of businesses to deliver these projects is increasingly under pressure due to their increased scale, complexity and the integration of technology. Often, there is less consideration of the inherent conflicts within JVs or the opportunities arising from getting the JV better structured, more efficiently engaged and better incentivised."
At a time when global mega infrastructure projects are consistently costing more and taking longer to deliver than initially approved, this first-of-its-kind resource outlines best practice for JVs. It gives parties the tools to develop successful structures, plan their tax and shareholder arrangements, consider regulatory issues across jurisdictions such as competition law and financial crime, build partnerships for success through leadership and cultural considerations, and to plan sensibly for the worst case by addressing termination provisions and how best to handle disputes between JV partners.
Vincent Connor added: "The proportion of disputes involving a JV where the dispute is caused by a JV-related issue is over 40% of cases in both the Asia Pacific and the Gulf Region and 30% in the UK. Common factors for disputes include poor leadership, data ownership, and a lack of common identity and willingness to embrace a new culture. These are areas where thoughtful, well-advised and long-term planning can bring greater outcomes for JVs and project owners alike."
The guide has been developed following extensive engagement with stakeholders across the firm's global infrastructure network including clients and industry bodies. The research confirmed that there was a desperate need for such a resource and a universal willingness to learn and put its principles into practice. Many of those stakeholders have contributed to the guide and their advice and commentary have been included within it.
Ian Laing, global head of infrastructure at Pinsent Masons, said: "As governments around the world are embarking on significant infrastructure spending programmes, it is a critical time for the future success of JVs. Similarly, as the sector looks to evolve and develop new organisational models based on alliancing and collaboration, such as Project 13 in the UK, Construction 2.0 in Hong Kong, and Integrated Project Delivery in Australia, there has never been a more important time for the sector to draw upon and apply such a resource to their JVs."
The guide is the first time that Pinsent Masons has produced a resource derived from their team across Europe, Africa, the Middle East, Asia and Australia – with some 70 authors of its 10 modules - and will continue to be developed and added to base on future industry trends, changes to regulation, and further engagement with the infrastructure sector.
Vincent Conner