Joint Ventures in Construction: Why and How They’re Used for High-Stakes Projects

Billion-dollar projects come with billion-dollar risks.

For many owners and GCs, the solution is a joint venture: a way to share exposure, combine expertise, and scale up for projects no single organization could realistically take on alone.

And they’re not rare — far from it. Nearly 40% of surveyed engineering and construction firms report using joint-venture agreements for larger projects.

But scale introduces friction. Multiple companies mean multiple systems, processes, teams, and assumptions all trying to act as one. Aligning on a single direction isn’t just a legal exercise. It’s operational, cultural, and increasingly, technological.

So the real question isn’t whether joint ventures matter. They already do.

It’s: How do we use software to make them work better?

Here, we’ll explain the inner workings of a JV and how modern tools are changing how mega projects are delivered as one team.

What is a joint venture in construction?

A construction joint venture (JV) is a strategic partnership between two or more general contractors where they combine their resources, expertise, and capabilities to deliver a specific project.

Unlike traditional partnerships, joint ventures are typically project-specific where all partners share the upside and the risk. 

This is a fundamentally different dynamic than subcontracting or traditional partnerships. If the project succeeds, profits are distributed proportionally. If it struggles, losses are shared according to ownership percentages. 

Joint ventures also require explicit governance from day one: Who can make X decisions? Who can commit to scope changes? Who approves subcontractor selections? 

It’s a lot of alignment — and it’s even more communication. 

Why use a joint venture on a construction project?

As mentioned, one of the biggest reasons an owner chooses the joint venture path is risk mitigation.

This is crucial on multi-billion dollar projects where cost overruns or delays could be enough to devastate a single contractor. By spreading exposure, each firm protects its balance sheet and the owner protects the project’s viability.

Other reasons folks choose to use a JV include:

• Access to specializations. Each partner can use their unique skills and talents. For example, when a regional contractor partners with a healthcare expert, they get local insight on one side, technical depth on the other.
• Market reach. Partnering through joint ventures opens the door to new geographic markets, project types, and existing relationships.
• More bonding capacity. By combining their bonding limits, partners can qualify for projects that would be out of reach individually. This makes joint ventures a path to competing for larger work.

Real-world scenario

Consider what it would take to build a $1.7 billion data center. 

Advanced electrical systems, large-scale concrete construction capabilities, mission-critical cooling infrastructure — the whole nine yards.

Perhaps, a regional electrical contractor has done high-density power work for years, but they’ve never managed a project anywhere near this size. Meanwhile, a national GC has the crews, the scheduling horsepower, and the concrete capabilities — but not the electrical expertise the design requires.

So they team up. 

The electrical contractor handles the power and cooling systems they’re known for. The GC manages the structure, logistics, and scope coordination. Together, they take on a job neither could individually deliver, sharing the risk and the reward that comes with it.

Types of joint ventures in construction

There are a few different ways an owner might choose to structure a joint venture.

Integrated joint venture

This is where partners create a brand-new legal entity (usually an LLC or corporation) specifically for the project. Each partner puts resources into the new entity, and that entity signs the contract with the owner. It offers the cleanest separation from each company’s day-to-day business and gives everyone strong liability protection. 

Best for: Large, complex projects requiring significant capital investment and clear liability separation. Common in public infrastructure and design-build projects.

Contractual joint venture

Here, partners simply sign an agreement to work together without forming a separate company. It’s lighter, faster, and focuses on defining who does what, how decisions get made, and how profits are shared. Everyone keeps their own identity and operations; they’re teaming up, not merging.

Best for: Shorter-duration projects or situations where partners want maximum flexibility with minimal administrative overhead.

Divided scope joint venture

This structure lets each partner handle a distinct piece of the project on their own, while still coordinating as a JV. It works well when the job naturally breaks into clear buckets of work, so each firm can focus on what it does best.

Best for: Projects with easily separable scopes, such as a facility where one partner handles the building envelope while another manages interior systems.

What it takes to run a successful joint venture project

Ultimately, joint venture success depends on the tools you use to plan it…

Creating a single source of truth is the biggest challenge

Joint ventures can turn into a quiet tug-of-war over whose version of the truth gets used.

And because costs shift fast, delays in alignment compound the problem. When people can’t see when or how changes in the estimate happen, everyone ends up reacting to outdated info. 

Senior Estimator Prashant Sharma from DPR has seen both sides — cloud-based collaboration and traditional spreadsheet estimation — and describes the difference simply:

“When changes happen live [in the cloud], I can see them as they occur. Then, we can give feedback instantly rather than waiting weeks to review a final draft.”

What you need on the backend for a successful JV

Practically, what does your team need to do a JV the right way? Here’s our take:

• ‍A cloud-based platform. The cloud is the new standard in construction. A cloud-based environment ensures every partner has access to the same data, the same estimate, and the same updates, no matter where they are or which organization they belong to.
• Real-time collaboration capabilities. Multi-user collaboration is non-negotiable. Without live presence indicators and change tracking (similar to Google Docs), joint venture teams could waste countless hours working on something that’s already been changed. 
• Project tracking with Milestones. Milestones help teams find and align on the most relevant, most recent estimates by design stage. By anchoring estimates to specific milestones (SDs, CDs, DDs), joint venture partners can see a linear narrative of the cost evolution of a project. (Sneak peek of how Ediphi is using this concept to create a cost trendline 👀)‍
• Data integration and reporting. Every partner, client, and owner cares about different data. It’s important to have an Excel integration linked to your preconstruction tool that pulls owner bid forms, executive summaries, and custom reports into a usable format (without the manual data entry).

As one senior estimator notes, "Owner bid forms are a pain and preconstruction is left with figuring out all of this information in the last mile. The Excel Add-in is a snappy workflow that keeps everything synchronized."

Best practices for joint venture project management

James Pease is an expert in the setup and structure of large-scale projects. He has seen many succeed — and many fail.

“In one of the large projects I’ve worked on, we had a cost consultant uncover $50 million in inconsistencies, double-ups, and unnecessary items, directly tied to inefficiencies in the preconstruction process," he tells us.

With the right planning, $50M is an avoidable mistake. 

• Select compatible partners. Successful joint ventures are culturally and technologically compatible. It can be helpful to conduct pilot projects or smaller collaborations before committing to major joint ventures to test compatibility.
• Make rules operational. Decision making that’s clear and sticks lives inside the project workflow: approval thresholds tied to cost packages, comment trails linked to estimate revisions, and an audit trail that shows what changed, when, and by whom.
• Create high-fidelity estimates early on. Put as much detail into the estimate to qualify your assumptions as early as possible; that way, cost informs the design decisions, and not the other way around.
• Invest in new tools. Dedicate real resources to experimenting with new tech. Simply put: the cost of experimenting with new solutions is minimal compared to the long-term risk of staying stuck in outdated processes.

The future of joint venture construction

Joint ventures don’t fail because the builders are inexperienced. They fail because the teams never truly become one. 

Firms still relying on desktop estimating tools, spreadsheets, and manual reporting will struggle to maintain real-time alignment, and out of the 40% of joint ventures that fail.

The firms that choose to treat collaboration as a technical problem to solve? They will run faster, build smarter, and win the projects everyone else can’t manage.

Ediphi's collaborative estimating platform is designed specifically for complex, multi-stakeholder projects. Request a demo and we’ll show you.