HKSM

A contract where two or more parties team up to execute a project's work and agree to share the resulting revenues or other benefits, ensuring each party receives a return on investment.

Key Points

• Parties jointly perform the work and share profits, benefits, and often risks and liabilities.
• Defines each partner's contributions, governance structure, and decision-making authority.
• Specifies how costs are allocated and how profits or benefits are distributed.
• Useful when combined capabilities are needed to win or deliver the project.

Example

A software vendor and a systems integrator form a joint venture to build a citywide ticketing platform. They pool staff and funding, deliver the system together, and split subscription and maintenance revenues based on a pre-agreed formula.

PMP Example Question

A sponsor proposes that a product company and an implementation partner collaborate to deliver a national platform and share the subscription income. Which agreement best fits this situation?

1. Fixed-price incentive fee contract between buyer and seller
2. Joint venture contract between the partnering organizations
3. Time and materials contract with a not-to-exceed cap
4. Non-disclosure agreement

Correct Answer: B — Joint venture contract

Explanation: The scenario describes partners performing the work together and sharing resulting revenues, which is characteristic of a joint venture contract.