A joint venture lets two businesses take on work neither could win alone. It is common in construction, in tendering, and wherever a contract is larger than one party's capacity — and it is the arrangement most often entered into on a handshake and a shared enthusiasm.

Be clear what you each bring

Usually one party brings capacity, track record or a grading, and the other brings something the first lacks — local presence, a specific skill, a B-BBEE position, equipment, or the relationship with the client.

Write both down explicitly. Most joint ventures that sour do so because one party feels they are carrying more than was agreed, and nobody ever wrote down what was agreed.

Settle these before you bid

  • Who does what, in operational detail.
  • How the money flows — who invoices the client, who holds the account, how and when the other is paid.
  • Who carries what risk, including if the project runs over or the client does not pay.
  • Who provides working capital, and on what terms.
  • Who owns the track record afterwards.
  • How disagreements get resolved, and how the venture ends.

That sixth point is easy to skip and expensive to omit. A venture with two equal parties and no mechanism for deadlock cannot decide anything the moment they genuinely disagree.

The track record point matters most for the smaller partner

If the reason you entered was to build experience you can use for your own grading or your own future bids, make sure the agreement gives you documented evidence of your role and the value of work you performed.

A junior partner who finishes a large project with no certificate naming them has gained a fee and lost the main long-term benefit.

Check who you are getting into business with

Their tax and CIPC status, their financial position, and their reputation with people who have worked with them. A joint venture frequently makes both parties liable to the client, which means their failure becomes your problem.

Do not use it as a formality

A venture assembled purely to satisfy a procurement requirement, where one party does nothing real, is a problem in several directions at once — it may amount to fronting, and it damages the relationship with a client who works out what happened.

The arrangements that work are the ones where both parties genuinely contribute and both genuinely need the other.

General guidance, not legal advice. Joint venture agreements and liability arrangements are consequential; have them drafted properly.