Construction Today - September 2016 - 49

IN THIS SECTION
Archer Western
In its simplest form, a joint venture is really just two firms coming
together for a mutually beneficial project. As with any relationship,
there are certain key factors that increase the chances of success:
* Trust: One key factor when developing trust between the firms
is the mindset and goals of the negotiators. It is important to
remember that a joint venture is not a merger or acquisition, so
it may be more important to develop an agreement that benefits
both sides, rather than one where one firm takes a dominant
position. Each firm needs to feel understood and that they are a
valued part of the venture.
* Strategic compatibility: In terms of management styles, expertise and competencies, the venture must be between firms that
create positive synergy. The specific management team of the
venture should work to maximize returns for each investor.
* Communication: From the start of negotiations, it is imperative
that the firms create an open, honest dialogue. Strong communication will help to strengthen trust, which as noted previously, is
the number one key aspect to creating a strong relationship.
* Interaction between colleagues: Whenever two firms are
joining together, no matter the scope of the project - whether
for a joint venture or a merger or acquisition - a key hurdle is
the interplay between the cultures of the respective firms. The
corporate culture of construction firms can be very different, so
it is important to assess these differences for compatibility at the
venture's outset.
In addition to these factors, a firm will need to consider the
accounting impact of a joint venture arrangement on its financial
statements. The accounting methodology could have a negative
or positive impact on the firm's financial statements, which could
impact bonding and banking terms.
It is vital that the finance team be involved in the negotiation
process to ensure that the venture relationship does not have unintended negative consequences. Depending on the structure and the
contractor's ability to influence the operations of the joint venture, a
contractor can have different options for reporting its investment in
its own financial statements.
Generally, the following accounting methods are available for reporting in the contractor's financial statements:
* Cost method: Normally used when the contractor has less than a
20 percent interest in the venture.
* Consolidation method: Generally required when the contractor
owns greater than 50 percent interest in the venture and can
exercise influence over the venture.
* Equity method: Generally required when the contractor owns
between 20 percent and 50 percent of the venture.

Jp.54
Archer Western is replacing a 2.7-mile stretch of
I-95 in Jacksonville, Fla.

Dan's Excavating,
Inc.Jp.60
Dan's Excavating is making a stretch of I-75 in
Michigan safer.
Company Profiles
50

52
54
58
60

James A. Cummings Inc. - Ft.
Lauderdale-Hollywood
International Airport
Kenny Construction
Neeser Construction & AKDOT -
Diverging Diamond Interchange
Archer Western I-95 Overland
Bridge Replacement Project
Dan's Excavating Inc. - I-75
Reconstruction

Under the cost and equity methods, the
joint venture is essentially treated as an
investment by the firm. Under the consolidation method, the firm essentially records
the full value of the joint venture's balance
sheet and profit and loss activity on its
own financial statements, and then reports
the share of these items that are owned by
outside investors.

Zach Webber is a manager at Keiter in its business assurance and advisory
services department. He is responsible for performing accounting and
auditing related tasks such as planning and preparing audits, recording
transactions in journals, reconciling accounts and preparing financial
statements. He serves clients in the real estate and construction industries. For more information, visit www.kietercpa.com.

49

SEPTEMBER 2016 CONSTRUCTION-TODAY.COM


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Table of Contents for the Digital Edition of Construction Today - September 2016

Contents
Construction Today - September 2016 - Cover1
Construction Today - September 2016 - Cover2
Construction Today - September 2016 - 1
Construction Today - September 2016 - Contents
Construction Today - September 2016 - 3
Construction Today - September 2016 - 4
Construction Today - September 2016 - 5
Construction Today - September 2016 - 6
Construction Today - September 2016 - 7
Construction Today - September 2016 - 8
Construction Today - September 2016 - 9
Construction Today - September 2016 - 10
Construction Today - September 2016 - 11
Construction Today - September 2016 - 12
Construction Today - September 2016 - 13
Construction Today - September 2016 - 14
Construction Today - September 2016 - 15
Construction Today - September 2016 - 16
Construction Today - September 2016 - 17
Construction Today - September 2016 - 18
Construction Today - September 2016 - 19
Construction Today - September 2016 - 20
Construction Today - September 2016 - 21
Construction Today - September 2016 - 22
Construction Today - September 2016 - 23
Construction Today - September 2016 - 24
Construction Today - September 2016 - 25
Construction Today - September 2016 - 26
Construction Today - September 2016 - 27
Construction Today - September 2016 - 28
Construction Today - September 2016 - 29
Construction Today - September 2016 - 30
Construction Today - September 2016 - 31
Construction Today - September 2016 - 32
Construction Today - September 2016 - 33
Construction Today - September 2016 - 34
Construction Today - September 2016 - 35
Construction Today - September 2016 - 36
Construction Today - September 2016 - 37
Construction Today - September 2016 - 38
Construction Today - September 2016 - 39
Construction Today - September 2016 - 40
Construction Today - September 2016 - 41
Construction Today - September 2016 - 42
Construction Today - September 2016 - 43
Construction Today - September 2016 - 44
Construction Today - September 2016 - 45
Construction Today - September 2016 - 46
Construction Today - September 2016 - 47
Construction Today - September 2016 - 48
Construction Today - September 2016 - 49
Construction Today - September 2016 - 50
Construction Today - September 2016 - 51
Construction Today - September 2016 - 52
Construction Today - September 2016 - 53
Construction Today - September 2016 - 54
Construction Today - September 2016 - 55
Construction Today - September 2016 - 56
Construction Today - September 2016 - 57
Construction Today - September 2016 - 58
Construction Today - September 2016 - 59
Construction Today - September 2016 - 60
Construction Today - September 2016 - 61
Construction Today - September 2016 - 62
Construction Today - September 2016 - 63
Construction Today - September 2016 - 64
Construction Today - September 2016 - 65
Construction Today - September 2016 - 66
Construction Today - September 2016 - 67
Construction Today - September 2016 - 68
Construction Today - September 2016 - 69
Construction Today - September 2016 - 70
Construction Today - September 2016 - 71
Construction Today - September 2016 - 72
Construction Today - September 2016 - 73
Construction Today - September 2016 - 74
Construction Today - September 2016 - 75
Construction Today - September 2016 - 76
Construction Today - September 2016 - 77
Construction Today - September 2016 - 78
Construction Today - September 2016 - 79
Construction Today - September 2016 - 80
Construction Today - September 2016 - 81
Construction Today - September 2016 - 82
Construction Today - September 2016 - 83
Construction Today - September 2016 - 84
Construction Today - September 2016 - 85
Construction Today - September 2016 - 86
Construction Today - September 2016 - 87
Construction Today - September 2016 - 88
Construction Today - September 2016 - 89
Construction Today - September 2016 - 90
Construction Today - September 2016 - 91
Construction Today - September 2016 - 92
Construction Today - September 2016 - 93
Construction Today - September 2016 - 94
Construction Today - September 2016 - 95
Construction Today - September 2016 - 96
Construction Today - September 2016 - 97
Construction Today - September 2016 - 98
Construction Today - September 2016 - 99
Construction Today - September 2016 - 100
Construction Today - September 2016 - 101
Construction Today - September 2016 - 102
Construction Today - September 2016 - 103
Construction Today - September 2016 - 104
Construction Today - September 2016 - 105
Construction Today - September 2016 - 106
Construction Today - September 2016 - 107
Construction Today - September 2016 - 108
Construction Today - September 2016 - 109
Construction Today - September 2016 - 110
Construction Today - September 2016 - 111
Construction Today - September 2016 - 112
Construction Today - September 2016 - 113
Construction Today - September 2016 - 114
Construction Today - September 2016 - 115
Construction Today - September 2016 - 116
Construction Today - September 2016 - 117
Construction Today - September 2016 - 118
Construction Today - September 2016 - 119
Construction Today - September 2016 - 120
Construction Today - September 2016 - 121
Construction Today - September 2016 - 122
Construction Today - September 2016 - 123
Construction Today - September 2016 - 124
Construction Today - September 2016 - 125
Construction Today - September 2016 - 126
Construction Today - September 2016 - 127
Construction Today - September 2016 - 128
Construction Today - September 2016 - Cover3
Construction Today - September 2016 - Cover4
http://digital.construction-today.com/nxtbooks/knighthouse/ct_vol17issue5b
http://digital.construction-today.com/nxtbooks/knighthouse/ct_vol17issue5a
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http://digital.construction-today.com/nxtbooks/knighthouse/ct_vol17issue1
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http://digital.construction-today.com/nxtbooks/knighthouse/ct_vol16issue1
http://digital.construction-today.com/nxtbooks/knighthouse/ct_201712
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http://digital.construction-today.com/nxtbooks/knighthouse/ct_20161112
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http://digital.construction-today.com/nxtbooks/phoenix/ct_20150910
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http://digital.construction-today.com/nxtbooks/phoenix/ct_20140708
http://digital.construction-today.com/nxtbooks/phoenix/ct_20140506
http://digital.construction-today.com/nxtbooks/phoenix/ct_20140304
http://digital.construction-today.com/nxtbooks/phoenix/ct_20140102
http://digital.construction-today.com/nxtbooks/phoenix/ct_20131112
http://digital.construction-today.com/nxtbooks/phoenix/ct_20130910
http://digital.construction-today.com/nxtbooks/phoenix/ct_20130708
http://digital.construction-today.com/nxtbooks/phoenix/ct_20130506
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http://digital.construction-today.com/nxtbooks/phoenix/ct_20130102
http://digital.construction-today.com/nxtbooks/phoenix/ct_20121112
http://digital.construction-today.com/nxtbooks/phoenix/ct_20120910
http://digital.construction-today.com/nxtbooks/phoenix/ct_201208
http://digital.construction-today.com/nxtbooks/phoenix/ct_201207
http://digital.construction-today.com/nxtbooks/phoenix/ct_201206
http://digital.construction-today.com/nxtbooks/phoenix/ct_201205
http://digital.construction-today.com/nxtbooks/phoenix/ct_201204
http://digital.construction-today.com/nxtbooks/phoenix/ct_201203
http://digital.construction-today.com/nxtbooks/phoenix/ct_201202
http://digital.construction-today.com/nxtbooks/phoenix/ct_201201
http://digital.construction-today.com/nxtbooks/phoenix/ct_201112
http://digital.construction-today.com/nxtbooks/phoenix/ct_20111011
http://digital.construction-today.com/nxtbooks/phoenix/ct_201109
http://digital.construction-today.com/nxtbooks/phoenix/ct_201108
http://digital.construction-today.com/nxtbooks/businessmedia/ct_201107
http://digital.construction-today.com/nxtbooks/businessmedia/ct_201106
http://digital.construction-today.com/nxtbooks/businessmedia/ct_201105
http://digital.construction-today.com/nxtbooks/businessmedia/ct_201104
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http://digital.construction-today.com/nxtbooks/businessmedia/ct_201012
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http://digital.construction-today.com/nxtbooks/schofield/ct_200912
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