Construction Joint Ventures: A Strategic Pathway to Growth

In an increasingly competitive construction landscape, growth-minded contractors are exploring creative ways to pursue larger, more complex projects. One proven strategy: Forming a construction joint venture (JV) with another contractor. When executed thoughtfully, JVs can unlock opportunities that would otherwise be out of reach—while also introducing new challenges that demand careful planning, especially from a contractual and accounting perspective.

At Clark Schaefer Hackett (CSH), we’ve worked alongside construction leaders for decades. Our team understands the operational and financial nuances that make this industry unique—and we bring specialized expertise to help contractors structure, manage, and account for joint ventures effectively.

Joint ventures are a well-established mechanism in the construction industry. For many contractors, they offer a way to increase capacity, share risk, enhance competitiveness and build qualifications when bidding on larger opportunities such as infrastructure, industrial, or government projects. By teaming up, two firms can combine labor, equipment, bonding capacity, and niche expertise—creating a more compelling proposal than either could present independently.

But the appeal isn’t just about scale. Joint ventures also offer access to new geographies, clients, and technical capabilities—making them a smart choice for contractors focused on long-term growth.

Despite their advantages, JVs come with real complexity: How do you determine labor, fringe, burden and equipment rates? How do you handle bid costs, and insurance? That’s why the joint venture agreement is so critical. It must define how responsibilities are divided, how decisions are made, and how disputes—particularly in 50/50 ventures—are resolved. Leadership, staffing, financial controls, and governance protocols should all be clearly documented upfront to avoid future pitfalls.

A common tension arises when voting rights are split evenly. This is common even when ownership is not equal. A clear delineation of responsibilities or a slight adjustment (like a 51/49 split) can clarify authority and prevent operational standstills. However, it’s also important to recognize that in construction, a significant imbalance in roles might suggest a subcontractor relationship rather than a true joint venture.

One of the most unique—and technical—aspects of joint ventures in construction is the accounting treatment. Specifically, the option of applying the proportional consolidation method which is a practice unique to construction contractors. While many accounting textbooks treat this method as off-limits, industry-specific guidance provides exceptions that allow its use when reporting JV results.

Proportional consolidation allows a contractor to include their share of a joint venture’s revenues, expenses, assets, and liabilities directly in their financial statements. This can have strategic benefits—especially when it comes to bonding capacity and financial presentation. However, it requires a sophisticated understanding of construction accounting standards.

That’s where CSH comes in. We bring in-depth construction industry expertise. Our professionals help clients evaluate the pros and cons of different accounting treatments, optimize bonding considerations, and ensure compliance with industry-specific guidance.

Joint ventures can be a powerful growth engine for construction companies—but only when structured and managed with care. If your firm is considering a JV, or if you’d like to understand how proportional consolidation might impact your financials, we’re here to help.

Talk to your friendly neighborhood CPA—or better yet, talk to the team at CSH. We know construction inside and out—and we’re ready to help you build what’s next.