Combining Forces

[bphgravity]

I recently met with a local competitor of mine to discuss a bussiness alliance. Basically the idea is to bid on larger jobs that each of us individualy would normally not be able to handle and combine forces for these jobs only. This can become complicated and I am imagining all kinds of issues. Has anyone participated in this type of arrangement, and if so, how did it, or how is it working out?

[pwhite]

although i have not done this, there are some issues to be considered.

by combining forces, you enter into a mutual partnership. this partnership in other words states that you will be responsible for his debts and he will be responsible for your should either of you decide to not pay your vendors.

it goes even further, each of you also agree to be responsible for the others company debts as well (and possibly personal debts). its frustrating !

i tried to do a partnership with several individuals, only to have these rules pop up in the paper work. since they wouldn't do the paper work suggested by my laywer, i dropped it.

check with your lawyer and buisness association in regards to your states laws.

i don't mean to rain on your possible buisness venture, but i just wanted you to know the problems i had.

[electricmanscott]

Formula for disaster.

[Nick]

BP,
I have a little experience in this that may or may not be helpful. I don’t have the upper management perspective but I have worked on a project that was a joint venture.

I work for a large contractor that is a member of the Federated Electrical Contractors . This is a group of union contractors around the country that, among other things, joint venture once in a while. ( BTW-The fact that this is a union organization has absolutely no baring on what I am trying to say here so let’s not go there! :eek: )

The biggest one I worked on was a disaster. It was a $33 million hospital project. (that was the electrical contract not the whole job) Because of the size duration and the fact that it was a Government job (slow payments) joint venturing reduced the risk and cash outlay to both contractors. We, being the local contractor, provided labor, supervision, tools and jobsite equipment. The other contractor provided project management and paid for material and large equipment buyouts. The problem with this arrangement from a field stand point was the different management styles of the two companies. It ended up being more or less us against them. It was a very bad situation with all the internal fighting and disagreements about how things should be done. I could go on forever about specific things that happened but I’ll spare you the grief. Long story made short, that is the only job I have ever wanted off so bad that I seriously considered quitting.
Other joint ventures that we have been involved with have been very successful. One that comes too mined is the renovation of the LA Coliseum after the Northridge earthquake. Along with the seismic retrofitting the entire electrical distribution system was replaced on a fast track schedule. (two 12 hour shifts 7 days a week) While I did not work on this one I understand it was a successful project. So was a large chip plant in Camas Washington. It was also a $30 mil + job but only had a 12 month duration. I guess there have been more that were successful than not. I don’t know of any recent projects or any that we have now. I don’t know if that is due to lack of opportunity or a shift away from doing large jobs this way.

The moral of the story I guess is know your partner and how he conducts his business. If you do quality work and he is a trunk slammer you know it’s doomed from the start. Be careful and good luck.

[definitive]

Im not completly sure, but I think youd have to get a new contractors license to partner up with someone if your a sole proprieter.

[drscott]

I have worked with other contractors on employee loans for projects that I do not have the man power for.
Here we have an agreement with each other thru association that in order to reduce layoffs, if one contractor is busy an another is slow we may borrow thru their company employees for a certain amount of time for projects that may require more manpower. We agree on a standard hourly rate that is fair for both companies.
Now money issues for materials is still up to the contractor who has the contract for the project.