Working Group and Consortium
A working group or consortium is a temporary association of legally and economically independent companies that join forces to complete a specific project, usually too large or risky for a single firm.
Definition
- Project- or task-related cooperation, ends when the project is finished
- Common in construction and large infrastructure or service projects
- Typical legal form: civil-law partnership
- Difference: a consortium is the looser form, each member provides its service independently
Working Group vs. Consortium
Although often used interchangeably, the two forms differ in their degree of internal integration:
| Aspect | Working Group (ARGE) | Consortium |
|---|---|---|
| Integration | High: resources, finances and personnel are pooled | Low: each member performs their share independently |
| Internal organisation | Joint management, common accounting | Separate management and accounting per member |
| Liability | Joint and several | Often limited to each member's own portion |
| Typical sector | Construction and infrastructure | Banking (loan syndication, IPOs), large service projects |
In short: a working group pools resources and works jointly on the inside, while a consortium presents itself jointly on the outside but each member handles their part independently.
Effect on independence
- Members remain legally and economically independent
- Each keeps its own legal form and core business
- Profits and losses are split between the partners
- A working group can be taxed as a partnership if it acts in its own name
Motives
- Carry out projects no single company could handle alone
- Share costs and risks
- Pool know-how, resources and capacity
- Strengthen competitiveness
Advantages and disadvantages
| Advantages | Disadvantages |
|---|---|
| Work, cost and risk are shared | Coordination problems possible |
| Large projects become feasible | Different partner interests |
| Use of partner know-how | Liability risk for partner mistakes |
Effects on competition
- Bundling of strengths (know-how, capital, resources)
- Possible benefits for consumers: better quality, lower prices, faster delivery
- Risk: too much market power can squeeze smaller firms and tip into a cartel-like situation
Comparison with Joint Venture
While both forms involve cooperation between independent companies, they differ in scope, duration, and structure:
| Aspect | Working Group / Consortium | Joint Venture |
|---|---|---|
| Duration | Project-bound, dissolves when the project ends | Often long-term or ongoing |
| New legal entity | No, usually a civil-law partnership | Typically yes (e.g. a jointly founded GmbH) |
| Scope | Single, clearly defined project | Broader strategic goal (market entry, product line) |
| Resources | Each member contributes independently | Jointly managed and pooled |
| Profit sharing | Split between partners per agreement | Explicitly agreed upon in the founding contract |
In short: a working group or consortium is a temporary alliance limited to one project, after which the partners go their separate ways, while a joint venture is a tighter, often permanent partnership with shared resources and frequently a newly founded company.
Examples
- A7 motorway expansion (Germany): working group of EUROVIA, ROHDE and STUTZ, six-lane extension between Bockenem and Northeim-Nord, ended 2023
- Stuttgart 21: large rail-infrastructure project with Züblin, HOCHTIEF, Deutsche Bahn and others, pooling tunnel, deep-foundation and structural expertise