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Forms of Organization

Presentation: 05-02March 19, 2003

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RAT #05-02-1 Take out a sheet of paper, put your

name on it and … Take 2-minutes to list the 4

primary risks assumed by design engineers.

Pass papers to the aisles and front.

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Purpose: Introduce Students to the various

ways to organize to reduce risk exposure.

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Learning Objectives: Students should be able to list

and/or describe the three basic forms of ownership.

Students should be able to sketch and annotate the basic forms of project organization.

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Traditional Organization

Lack of a contract between A/E and GC causes most of the conflicts. Owner is “caught” in the middle.

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Design Build

Insulates the Owner but Owner has little control.

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Traditional Owner Contractor

Owner hires a General Contractor to supervise Subs and Suppliers.

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Variation on Traditional

Owner hires a CM to advise him in managing Subs.

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Owner hires a CM to Run the Construction

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New Methods will require New Organizations.

How would you Organize this?

Traditional?

Design Build?

Partnering?

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PAT #5.2.1 Take out a sheet of paper and … Individually, take 1 minute to

Sketch a Design/Build project organization.

As Pairs, take 2-minutes to compare and discuss.

As Teams, take 2 minutes to discuss why you might use this in a “fast tracked” project.

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Three Basic Forms of Ownership

Proprietorship – An Extension of a Person and terminates with that person.

Partnership – Several Persons but terminates with the Death of a Single Partner. General Partnership – Everyone is Involved Limited Partnership with Managing General

Partner Corporation – A Legal Person with Indefinite

Life, with owners having Limited Liability

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Corporations may be: Publicly Traded – Stock Exchange Closely Held – Usually a Family Sub Chapter S – Usually Family

Members or Circle of Friends and Associates. I think that the Texas Professional Corporations are treated as Sub Chapter S’s.

REIT – Real Estate Investment Trust Joint Ventures

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What you have to consider when you pick an ownership form.

Taxation Issues Risk and Liability Issues Capital formation Continuity of Organization Administrative Flexibility Legal Restrictions

Taken fromHalpin Chapter 5.

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PAT #5.2.2 Take out a piece of paper and… Individually, list the three forms of

ownership and which one would your use to start a micro brewery.

As Pairs, take 2-minutes to discuss your solution.

Turn in your individual answers.