Critical Success Factors of Joint Ventures in the Construction Industry: Literature Review

Abstract

Joint ventures have become increasingly common in the construction industry. Even though, issues related to the formation and operation of joint ventures in construction projects have been the subject of considerable commentary, joint ventures have become a useful vehicle for collaborative housing development and future private rented sector projects, and is therefore regarded as a speculation for profit where the risks and rewards (benefits) are shared by the parties. These rewards (benefits) include the access to new markets and distribution networks, increased capacity, sharing of costs with a partner and access to greater resources, including specialized staff, technology and finance. Thus, in order to have access to JV benefits it is important to first identify the potential critical success factors (CSF) that need to be observed when involved in JV construction projects. A literature search related to success factors of JV projects in the construction industry was conducted through the use of a thematic analysis. Key findings reveal that CSF of JVs includes comprehensive and fair written agreement, mutual understanding, inter-partner trust, commitment of the partners. Other CSFs when involved in JVs comprise the co-operation between the members, the ease of communication between the partners, management control, partner experience, and commitment of the partners. The study emphasizes potential critical success factors (CSFs) that need to be implemented when involved in JV which will enable interested and concerned parties (contractors, consultants, owners of construction companies) to appreciate the importance of these success factors in order to enhance JV performance.