A joint Venture often termed as JV is a term that is used when two or more entities or parties collaborate towards a common objective or a goal. It is an arrangement where the given parties agree to form a new venture which is independent of their own businesses and the complete functioning of the new venture is handled by the parties which are involved in the Joint Venture. The complete roles and responsibilities of all the partners are defined in the Joint Venture Agreement which is necessary to form the JV.
Consortium on the other hand is a type of arrangement where different parties come together for a common objective, but they don’t form a new entity and operate with their existing businesses with a set of informal agreements. The main objective of both Consortium and JV is the same with a little difference in their structures.
How does it work in the case of Tenders?
Government agencies and private firms often release tenders for specific tasks which they want to outsource to various firms, SMEs, and individual contractors. These are published on their individual websites, newspapers, and other sources such as BidAssist.
There are various criteria based on which tender is awarded and the winning agency has to fulfill all the criteria to get the tender. Sometimes the value of the tender is also very high in the range of crores and it is not possible for one firm to win the tender with its existing resources.
The JVs and Consortium options comes very useful in this case and they can be a boon for the businesses. BidAssist platform has an option for forming JVs and Consortium where if an individual firm is not able to get a contract on its own then with the help of these services, they can find the right partners with whom they can collectively bid on the tenders.
Suppose there is a tender of valuation 6 Crores. And three individual firms with a limit of 2 crores each want to bid on that tender. Individually they won’t be able to win that tender but with the help of JV & Consortium options on BidAssist, these individual firms can form a JV and bid on the tender and get the contract. This will be helpful for all three firms together.
Another example can be that there is a tender that involves construction, electrical fitting, and water pipelines. Now, this is a huge task that would require a lot of manpower and resources. A firm that just deals with construction won’t be able to win this tender. The same is the case with electrical firms and firms which work with water pipelining they can’t participate in this bid alone. But if these three entities come together, they can work on the arrangements and with their combined pool of resources and manpower can participate in the bid and probably win it.
Hence, if used wisely these options can definitely be quite beneficial for the SMEs and help them participate in a greater number of Tenders with added resources and expertise of their partner firms.
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