Factors for selecting joint venture partner for construction project in South Africa

Abstract: The construction industry plays a vital role in South Africa’s economic and social development where this industry provides the physical infrastructure and backbone for economic activity while providing a large-scale provider of employment. In a world of rapidly increasing global competition, enterprises partake in joint ventures in order to stay competitive and strategically flexible. Even though, one of the most prevalent types of business arrangements that are being used by South Africans, in the tender environment, is Joint Venture, risks are innate in JV construction projects and lead to at least 40% to 70% of JVs failure. As a result, the success of a joint venture evidently depends on the synergy created by the individual contributions of each partner, and thus, a good joint venture management lies not only in the implementation of the project, but also a proper partner selection. Therefore, the purpose of this study is to identify the factors to select JV partner. A quantitative research methodology was adopted and the data was collected through the use of questionnaires. Key findings reveal that the selection criteria of JV partner(s) include the commitment between the partners, complementary technical skills, compatible management teams, complementary resources, commitment to joint venture objectives as well as trust between partners. Other selection criteria which appear to be neutral to respondents relate to mutual dependency and relative company size. As the study reveals these findings, interested and concerned parties (contractors, consultants, owners of construction companies) are able to improve by far the performance of JV construction projects in South Africa before signing contracts agreement