In our chapter we focus on 7 primary reasons for using a joint venture to procure and deliver infrastructure projects:
- Regulatory requirements
- Pooling of resources and/or capabilities
- Optimising the supply chain
- Boosting balance sheet strength
- Sharing risk
- Enhancing competitiveness
- Improving geographical and/or local knowledge
The benefit of pandemic hindsight reinforces our view that the reasons for joint venturing are not only constant but also more relevant than before.
Policy responses at a country level strongly influence economic performance (and in this context recovery). We know from research from Oxford Economics that spending increases are much more effective than tax cuts in supporting real growth and that a high percentage of fiscal spending goes into infrastructure which boosts competitiveness and economic performance. Said differently an economic rebound is likely to see a large rise in infrastructure projects formed over the next period to deliver the larger levels of fiscal spending. This will in turn lead to a larger than normal rise in the formation of JVs and we are already beginning to see this. Many countries across the globe have stated their intention to follow an infrastructure led economic recovery.
Graham Robinson notes that some of the larger construction markets are likely to see a drop of about 7% in construction output in 2020 and 2021 (compared to a drop of 2.9% in the Global Financial Crisis) but that in the run up to 2020 we had already experienced a significant weakening of grow in construction.