Joint Ventures, Always Risky

Joint ventures often appear attractive as a path to growth, but in construction they rarely reduce risk and usually amplify it. Contractors form joint ventures to pursue larger projects, expand into new markets, or add unfamiliar types of work. Yet these are the very factors most often linked to business failure. This chapter explains why joint ventures are inherently risky, showing how partners remain jointly liable for 100% of losses regardless of fault. Real-world examples reveal how even experienced contractors with prior joint venture successes have been driven into bankruptcy by a single failed venture. Differences in company culture, key personnel, and financial practices further compound the risks. The author emphasizes that joint ventures do not create qualifications, expand capacity, or truly share risk. Joint ventures simply multiply exposures. No matter how appealing they look from the outside, joint ventures are a gamble contractors should avoid.