A guide to creating a joint venture consortium

The number of partners

Deciding on the number of senior partners and partners that is right for your consortium package requires some thought, all must have something constructive to do, but should not be a task too large to be able to be done part time, either in their leisure time or alongside other activities. The skills that they will need to acquire should be something that you can train them in, or that they can acquire by other means, that you can suggest in a very short time, so that you can empower them to run this enterprise. 

As you are unable to influence who takes up these opportunities, you cannot pre define that certain skills are required, although basic skills like the ability to communicate in English,  to write, add up, and that at least some will be able to operate a computer and drive can be assumed. You can overcome many of the shortfalls by arranging either commissioning or options where the consortium can take up some commissioning arrangements to meet other skill needs. 

Some skills are included within the consortium manual that all new consortium members, get so the basics  such as understanding different company and similar structures, roles of directors, cash flow etc are all covered, as well as some others. After basic approval, you can submit a contents list to PCI, who will mark up the items covered already in the syndicate manual, which may cut down the work you need to do.

The temptation is often to go for too few people, as this would mean that the consortium could be up and running faster, when it might operate better if it had a few more members. Of course the reverse can also present a problem in that a very large committee will make slower progress, but if the design involves teams taking on tasks then you can involve more people without running into the committee problem.

Mistakes in business usually occur because something is overlooked, and this is often either because the decision makers are doing too much or that they have not considered some of the risks. Business is largely about overcoming and avoiding problems and most businesses will from time to time experience some. A single problem rarely brings a business down, but a series of problems in the wrong combination can. The consortium design should allow  small groups to look at  all areas, and where a task is delegated to a person they at least have to define what they are doing, why and the risk to another who will look for potential difficulties. There is enormous strength within a consortium in this respect, and it should be a far safer business to be in, than any conventional business with decision makers, who have to make snap decisions and take on far too much, to fully look at the options and consequences.

The balance between senior partners and partners, also needs to be considered, you need enough senior partners to make decisions and move the project ahead, you also need to have formulated the package so that the costs are recovered within their recruitment. On the other hand you want to keep the number of senior partners reasonable as they all need to have been recruited before the project can start, and no return will be released by the stake holder to you until the consortium starts to operate, which may mean that the number of partners has to be adjusted downwards, for it to proceed, if finding people interested takes too long. 

Who should decide if the number of partners is a topic worth discussing. You could as the package developer set the initial number and allow them to increase it further,  this has the advantage of senior partners being able to see how the project will develop. You may decide that they have a number of optional routes and that the decision as to when and how many partners to add would be better left to the senior partners.

In some cases dilution is considered a problem, by this I mean too many people sharing the pie leaves each with too small a slice. In practice as it becomes a small slice of a pile of pies, the amount each ends up with can be considerably larger by working as a group. However some may see this as not reflecting adequately their personal involvement, but just the average of the partners as a whole. This can sometimes be overcome by structuring the return so that it reflects a combination of personal activity and a group share, but this does require quantifiable gains as in the case of a sales related operation, and may not adequately reflect the value of non sales work undertaken.

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  of articles on joint venture consortiums and the organization behind them.