Joint venture concept in focus at Saudi mega projects conference

RIYADH: The joint venture (JV) concept was one of the major focuses of the just concluded Saudi Mega Project Conference held in the capital that brought together international and regional experts in the field.
At a session focused on the JV concept in Saudi Arabia and GCC, panel members emphasized the importance of the compatibility of the companies, clear agreements about sharing resources, and mutual understanding on the legal basis for the relationship.
They said, partners must share high aspirations and professional values, but should have well-established contingencies if things do not go according to plan.
Answering a question on how a company could massively increase its resources, access to regional markets, and expand its pool of expertise, a panelist said: “One solution is to embark on a joint venture with a company that shares your vision and objectives but can bring a whole new skill set and customer base to the table.”
The merits and risks of this fascinating opportunity were discussed at a session of the MEED-SMP attended by representatives of Saudi companies, including Tarek Shuaib, managing partner of Pace, a Kuwaiti construction company that has made head way in the Saudi market.
In his view, Shuaib said: “A joint venture offers companies the prospect of expanding work capacity and proficiency, which in turn grants firms the capability to bid eligibly and embark upon on larger and more diverse projects, raising the entire region’s benchmark in construction and development”
He said such endeavors can only be realized through sharing access to mutual specialized knowledge and complementary abilities and resources, such as funding, distribution channels, geographic information and technology.
“On the other hand, the benefit of limiting further commitments can also be attained with a limited life span of partner in a JV,” Shuaib added.
A joint venture, however, is not always a successful marriage. The MEED session emphasized that such enterprises would eminently succeed only if designate roles and responsibilities are effectively synchronized. That should go along with common vision and setup proper safeguards if things go wrong.
Success and advancement are also guaranteed principally in the presence of a functional decision-making process, of course, with mutual flexibility and willingness to compromise.
In order to establish the relationship on a sound footing, given that risks with the venturing partner are shared, legal advice must always be sought and communicated throughout the entire duration of this partnership.
Pace has pioneered such joint partnerships in its business model. Its track record of partnerships reads like a who’s who of the global consultancy market.
Shuaib, who joined Pace in 1988 and spent a decade as the company’s managing partner, signaled that his company’s success was linked to its ability to engage with key global influencers. “This helps make available the highest levels of design professionalism and construction standards for Kuwaiti investors and purchasers,” Shuaib added.