Business Excellence and Enhancement of ROI by Dr Punit Sethi

1. Business Excellence-Enhancing
Project Returns : Financial and
Project Management
Strategies
By Dr Punit Sethi, PhD

2. Excellence in Strategies/PM
(continuous stream of successfully managed)
 Time
 Cost/ROI
 Performance
 Customer Relation
 Internal
 Internal Metrics
 Culture
 Work Flow

3. 5Ms
 Men
 Material
 Machine
 Money
 Minutes

4. Value Engineering
 Reduce Cost
 Improving Function (improving
functionalities & performance)

5. Joint Ventures as Financial & PM
Strategies

6. Joint ventures (JV)
 to carry out a specific project or simply to
assist with the growth and continuation
of a business.
 For success and enlarging Business.
 To meet Technical and Financial
Qualification.

7. JV
 Business Agreement for finite time, a new
entity & new asset-contributing equity.
 Good JV- Comprehensive Map of duties &
obligations; minimizes complications.

8. Joint ventures (JV) are set up for many reasons: to
carry out a specific project or simply to assist with
the growth and continuation of a business.
Parties to JV.
•Individuals
•Partnerships
•Companies
•Other Organizations or Associations

9. Consideration for JV
•What is being achieved
•Exclusive Negotiation
•Confidentiality (Undertaking) ?
•Limitations of Territory
•What consents, approvals, licenses and permits are
necessary for JV to operate?
•If cross border who’s jurisdiction?
•Laws of foreign ownership and investment.
•Exchange controls, Relevant Taxes and Duties

10. Funding
•Own Resources
•External Resources
•Parties payment in cash or payment in kind such as expertise
and resources
•Must agree to percentage (%) of benefit for JV.
•Working Capital requirement.
•Any losses.
•Expansion Costs.

11. Miscellaneous Aspects of JVs
•If JV through a Company, then parties must agree to extent to
which participation in JV is transferable (In case anyone wants to
come out)
•Any prohibition (in areas, territory)
•Deadlock provisions are essential in a joint-venture agreement.
This is when the parties cannot agree on certain voting issues and
a decision cannot be taken. The joint-venture agreement must deal
with this and set up a procedure to be followed in the event of a
deadlock. For example, a voting deadlock at board level can be
solved by giving a casting vote to the chairman or by involving an

12. Miscellaneous Aspects of JVs
•The agreement must also establish the duration of
the joint venture
•How JV can be terminated. In the event of termination,
the agreement must deal with the distribution of assets,
the discharge of any outstanding contracts, and the
liabilities of the joint venture

13. Advantages : JV
•For new products and latest technology entering
into market, R & D of others
•joint venture allows two competitors to join forces,
increase their market exposure, and compete at a
higher level against other, more powerful
companies in the same industry.
•It also allows two connected businesses to
cooperate on a joint project in a certain market.

14. Advantages : JV
•In India, going for JV has become essential for most of the
Indian Companies as per Government norms/rule position
even for Pre-Qualification for qualifying to go to next stage
of bidding. Desires technical experience forces Indian
Companies to go for JV e.g Technical Capacity for purpose of
evaluation (Project experience /Construction Experience on
Eligible Projects in Highways Sector (Highways,
Expressways, Bridges, Tunnels and Airfields) or Core Sector
(Power, Telecom, Ports, Airports, Railways, Metro Rail,
Industrial Parks/estates, logistics parks, pipelines, irrigation,
water supply, sewerage and real estate development).

15. Disadvantages : JV
•Negotiating a joint venture can be complex and time
consuming. It involves thorough research of the
market and territory in which the products will be
sold or the project will be organized.
•Joint ventures can be expensive to set up initially.

16. Action Checklist
•Study any joint venture you might set up carefully.
•Obtain as much information from as many sources as you can
before committing to an expensive joint-venture agreement.
•Plan it carefully and set up a realistic business plan with your
business partner.
•Know your market and make sure that you have analyzed the
consequences for your own business of entering into a joint-
venture agreement.
•Economize by negotiating a reasonable rate with your legal
advisers, but remember that it is better to incur costs by
obtaining legal advice than to enter into a joint venture under
terms that you do not understand.

17. Dos and Don’ts
Do
Choose your partner in the joint venture carefully, as
you will be legally bound for a set period of time,
under obligations that will prove costly if they are not
successfully performed.
* Involve your solicitors in the evaluation of both
the risks and potential benefits of entering into a joint
venture.
* Negotiate your rates and make a contingency
plan for any cost over-run. Plan carefully how
the joint-venture will operate, how the profits will be

18. Dos and Don’ts
Do
* Remember to have appropriate stake in JV to
get your experience considered on your own for next
Project. (like NHAI says minimum equity of 26% for
any earlier projects to be in eligible category to claim
experience).

19. Don’t
•Don’t make the mistake of being attracted by
the idea of a joint venture that has not been
thoroughly planned and thought through.
* Don’t overlook the importance of setting
up a contingency plan in case the joint
venture will not work and the relationship
breaks down.

20. FIDIC for Financial
& PM Strategies

21. Knowledge of FIDIC
(e.g especially International Bidding; Model Concessionaire
Agreement)
•Knowledge of FIDIC. The acronym FIDIC stands for
Fédération Internationale Des Ingénieurs-Conseils, French for
the International Federation of Consulting Engineers.
•The founding member countries of the FIDIC were Belgium,
France and Switzerland Located at the World Trade Center in
Geneva, Switzerland, FIDIC aims to represent globally the
consulting engineering industry by promoting the business
interests of firms supplying technology-based intellectual
services for the built and natural environment. FIDIC is well
known in the consulting engineering industry for its work in
defining Conditions of Contract for the Construction Industry
worldwide; code of ethics-fair, unbiased, impartial.

22. FIDIC
* Companies and organizations belonging to
FIDIC national member associations are
encouraged to announce themselves as FIDIC
members and use the FIDIC logo. The use of the
logo is strictly controlled, and all FIDIC products
and services are protected by the FIDIC
trademark.

23. The backbone of the body of FIDIC's publications is FIDIC's selection of contracts and
agreements.
FIDIC publishes conditions of contract for:
EPC/Turnkey Projects
Plant and Design Build Contract (updates Yellow Book and Orange Book)
The Short Form
Construction Contract (updates the Red Book)
Works of Civil Engineering Construction (The Red Book)
Electrical & Mechanical Works (The Yellow Book)
Design-Build and Turnkey (The Orange Book)
In 1999, a suite of three new conditions of contract was published by FIDIC, following
the basic structure and wording harmonised and updated around the previous FIDIC
Design-Build and Turnkey Contract (the 1992 ‘‘Orange Book’’).
These conditions, known as the ‘‘FIDIC rainbow, were the Conditions of Con- tract for:
l Construction, the so-called Red Book, for works designed by the Employer l
Plant and Design-Build, the so-called Yellow Book, for works designed by the
Contractor l EPC/Turnkey Projects, the so-called Silver Book, for works
designed by the
Contractor

25. An English native speaker will naturally not encounter many
difficulties when reading the FIDIC forms, although of course the
wording used will sometimes be subject to interpretation. Again an
English native speaker will usually be familiar with the underlying
legal principles, which mostly derive from Common Law (ENGLISH),
despite the fact that some Civil Law (ROMAN)-inspired features
have been incorporated in the FIDIC books. Thus there is a clear
need to explain Common Law concepts and legal terms in the
context of Civil Law. This may often prove to be difficult as the very
nature of Civil Law language is in many respects different from
Common Law language. Both systems have terms which are often
difficult to translate literally because of the fact that the terms reflect
legal concepts which are unknown in the other legal world.

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