Date post: | 19-Jan-2016 |
Category: |
Documents |
Upload: | nerosali6656 |
View: | 268 times |
Download: | 7 times |
MIDDLE EASTCONSTRUCTION HANDBOOK 2013
www.aecom.com
MID
DLE
EA
ST C
ON
STR
UCTIO
N H
AN
DB
OO
K
Designed in-house by AECOM’s creative marketing and communications team 2013
Middle East offices Bahrain (Manama) [email protected] +973 1 755 6452 Egypt (Cairo), North Africa [email protected] +202 2 750 8145 K.S.A. (Khobar) [email protected] +966 3 849 4400 K.S.A. (Jeddah) [email protected] +966 2 606 9170 K.S.A. (Riyadh) [email protected] +966 11 200 8686 Kuwait (Kuwait City) [email protected] +965 2 232 2999 Lebanon (Beirut) [email protected] +961 1 780 111 Oman (Muscat) [email protected] +968 2 448 1664 Qatar (Doha) [email protected] +974 4 407 9000 U.A.E. (Abu Dhabi) [email protected] +971 2 414 6000 U.A.E. (Dubai) [email protected] +971 4 439 1000
MIDDLE EASTCONSTRUCTION HANDBOOK 2013
2
1 AECOM
Global expertise ... local solutions 7
Middle East history 7
Industry awards 8
2 BUILDINGS + PLACES
Game changer 11
The bigger picture 11
3 ECONOMIC ROUND UP
Global indicators 15
Economic and construction overview 27
Country statistics 2012 38
4 ARTICLES
Business drivers and the development cycle 41
Sports sector 43
Leisure sector 55
Healthcare sector 63
Education sector 73
Asset management in the Middle East 83
Sustainability — a global understanding 87
5 REFERENCE ARTICLES
Procurement routes 91
Middle East forms of contract 94
Building regulations and compliance 99
3
6 REFERENCE DATA
Global Unite system 109
International building cost comparison 112
Regional building cost comparison 114
Mechanical and electrical cost comparison 116
Major measured unit rates 118
Major material prices 120
Labor costs 122
Building services standards 123
Exchange rates 126
Measurement formulae — two dimensional figures 127
Measurement formulae — three dimensional figures 128
Weights and measures 130
7 DIRECTORY OF OFFICES
Middle East 135
North Africa 139
Africa 140
Americas 141
Australia New Zealand 142
Europe and U.K. 143
4
FOREWORDWelcome to the seventh edition of the Middle East Construction Handbook. I hope that you will enjoy this year’s selection of articles, reference information and cost data.
As you may know, AECOM provides over 60 professional services for projects of varying scope, budget, schedule and complexity.
Increasingly, we are seeing the emergence of clients and projects that demand all of our services, brought together in an integrated way. Whether as a means to create innovative and sustainable buildings and places, drive cost efficiencies, or both, we are in a unique position to respond positively to their demands.
This year, consistent with 2012, we are seeing huge opportunities in the region that are being predominantly driven by the demands of Saudi Arabia’s increasing population and the preparation for major sporting events in Qatar. An increase in large, publicly-funded construction and transportation projects in the U.A.E. is also boosting the region’s development spend.
Overall drive to invest in education, health, sporting venues and leisure facilities remains strong and is expected to provide ample construction opportunity over the coming years. You can find in-depth analysis of each of these market sectors in the Economic Round Up section of this handbook
I hope you find the handbook of interest, assistance and value to you, your projects and developments across the region. As with previous years, we are seeking feedback to support our drive for continuous improvement in everything that we do.
Anthony McCarter Regional Business Line Leader Buildings + Places, AECOM
5
1AECOM
6
7
AECOM
Global expertise ... local solutionsFrom road, rail, energy and water systems to enhancing environments and creating new buildings and communities, our vision is to make the world a better place.
What differentiates us is our collaborative way of working globally and delivering locally. A trusted partner to our clients, we draw together teams of engineers, planners, architects, landscape architects, environmental specialists, economists, scientists, consultants, cost managers, construction managers, project managers and program managers — all dedicated to finding the most innovative and appropriate solutions and improving the quality of life.
Formed from many of the world’s finest engineering, design, construction, consulting, environmental, planning and government services companies, AECOM’s technical expertise and creative excellence combine to provide fully integrated planning, design, engineering, environment, consulting, cost management, construction management, project management and program management capabilities to a broad range of markets.
Listed as a Fortune 500 company, our 45,000 employees are based in more than 140 countries, enabling us to deliver global knowledge and expertise with an understanding of local cultures and needs.
Our adaptable and flexible approach to projects delivers consistency, longevity and high quality along with efficiencies in cost and time.
Middle EastAECOM has a long and distinguished history in the Middle East. For more than 60 years, we have been working in the region to help create a brighter future. With more than 3,300 staff located across Bahrain, Egypt, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia and the United Arab Emirates, we use our unparalleled depth and breadth of resources and local knowledge to deliver and manage projects of any type or scale.
1
8
1
Industry awardsThe consistently high standard of professional service provided by AECOM is recognized throughout the construction industry, as evidenced by the following prestigious industry awards:
Engineering News-Record AECOM is ranked No. 1 on the magazine’s list of the top 500 design firms
Ethisphere AECOM named one of the World’s Most Ethical Companies in 2011, 2012 and 2013
Engineering and Information Technology Magazine AECOM named Best Diversity company in 2008, 2009, 2010, 2011 and 2012 by readers of Diversity/Careers in Engineering and Information Technology Magazine
9
2BUILDINGS + PLACES
10
11
BUILDINGS + PLACESBuildings + places is one of four major market sectors that enhance our ability to provide a comprehensive and integrated offer to clients.
Incorporating architecture, building engineering, design + planning and economics, and program, cost, consultancy, buildings + places brings together 10,000 talented people capable of delivering the most high-profile, most complex and most dynamic projects on the planet.
Buildings + places operates in all market sectors and leads in our primary markets — commercial, sports, leisure, healthcare, education and government — and works closely with AECOM’s other practices to deliver our services in end markets such as manufacturing, transportation, water, energy and industrial.
Game changerAECOM aspires to be a game changer in the built environment. Our industry not only has significant inefficiencies, but its current fragmentation is a great barrier to innovation, a barrier to truly sustainable design for example. We can see this, and many of our clients are seeing this too. They are beginning to ask us what the answer is, what the new approach will be.
AECOM is big enough and significant enough to influence a positive change in our professions. We focus on identifying issues and encouraging our people to find innovative solutions. This approach allows our clients to assemble a business case that is well considered, technically advanced and sensitive to the local environment.
The bigger pictureIn analyzing situations where our advice has been most effective, it is in the creative application of our knowledge and experience. While our roots are in technical delivery, our clients value the fact that our offer always contains a strategic component.
Our ability to think big means we focus on the successful delivery of the project in hand, whilst also appreciating our client’s goals and objectives from a broader perspective. Our engagement with the bigger picture enables us to operate beyond project level and support long-term business strategies. It is this approach which makes us the leading consultancy we are today.
2
12
2
Page Left Intentionally Blank
13
3
3ECONOMIC ROUND UP
14
3
15
3
GLOBAL INDICATORSMixed fortunes for global constructionConstruction in many developed markets had another difficult year in 2012. In much of Europe, the combination of a weak private sector and government austerity measures have limited any demand growth for construction, while risk aversion and tighter capital control for banks have made credit harder to come by for projects. Public sector funding for infrastructure projects also remained limited in the U.S., while the private sector is recovering only very slowly. Meanwhile, reconstruction efforts in Japan have proved harder to realize than expected. Emerging markets generally continued to perform better. In Europe, Russia and Turkey were the outperformers. China showed signs of slowing in capital spending in 2012, but this highlighted opportunities elsewhere in the region, such as in Taiwan, Singapore or Hong Kong. The flow of project awards in the Middle East last year may have disappointed regional industry players, but the region still performed well compared to many other places around the world. Latin America as a whole has posted construction growth above the global average last year and this trend is expected to continue.
OutlookConstruction as a whole is expected to pick up in 2013, but the outlook for the industry remains mixed with greater recovery in some regions, while others will be slower to bounce back. Our global research examined these trends by talking to local industry decision-makers about where investment will be concentrated. The resulting Global Growth Index (depicted overleaf) encapsulates this sentiment and highlights the hotspots for growth in the medium term.
16
3
The Growth Index indicates the proportion of survey respondents anticipating construction growth in the medium term.
Can
ada
- US
$134
Uni
ted
Sta
tes
- US
$855
Sub
-Sah
aran
Afr
ica
- US$
30
Irel
and
- US
$11
Uni
ted
Kin
gdom
- U
S$18
2N
ordi
c - U
S$11
3
Cen
tral
Eur
ope
- US$
793
Eas
tern
Eur
ope
US$
114
Turk
ey -
US$
81
Rus
sia
- US$
117
New
Zea
land
- U
S$10
Aust
ralia
- U
S$11
9
Bah
rain
- U
S$2
Uni
ted
Ara
b E
mir
ates
U
S$36
Sau
di A
rabi
a - U
S$33
Qat
ar
US$
7
Chi
na -
US$
1,38
4
Hon
g K
ong
- US$
5
Viet
nam
- U
S$8
Phi
lippi
nes
- US$
26
Mal
aysi
a - U
S$26
Indo
nesi
a - U
S$86
Sin
gapo
re -
US$
18In
dia
- US$
142
Thai
land
- U
S$10
Global Growth Index
The
surv
ey w
as n
ot c
ondu
cted
in S
outh
Am
eric
aS
ourc
e: A
EC
OM
Glo
bal C
onst
ruct
ion
Sen
tim
ent
Sur
vey,
201
2, V
ario
us N
atio
nal A
ccou
nts
: Global Growth indexUS$ : Construction output 2012 estimates in US$ billion
53
35
66
*
*
-30
33
33
2664
74
72
50 76
8663
63 62
9458
13
17
50
4
74
54
74
17
3
Middle East
Construction work in the Middle East will be driven by demand from shifting population demographics, several cash-rich governments pursuing infrastructure work and the region’s global sporting events such as the 2022 FIFA World Cup in Qatar. The financial strength of Saudi Arabia, Qatar and the U.A.E. will encourage publicly financed projects. Our industry research shows that social infrastructure — considered necessary to maintain social cohesion — will be one of the biggest opportunities in the regional buildings market. Government and semi-government entities are also focusing on energy and water security, as well as transport projects to improve the competitiveness of particular regions. The recent revival in the Dubai real estate market has raised expectations of a broader pick up in the private sector sentiment across the region and a gradual resumption of stalled projects.
Key challenges for the Middle East construction industry in the medium term include an under–developed private banking sector, capacity pressures on labor and materials, and responding to imperatives toward greater resource efficiency.
Middle East — buildings market expected growth
Source: AECOM Global Construction Sentiment Survey, 2012
90
80
70
60
50
40
30
20
10
0
High growth market
Low growth market
Industrial
Percent
Retail
Office
Education
Healthcare
Tourism & Leisure Residential
Public Buildings
Existing BuildingMixed-use
18
3
Source: MEED Projects
Middle East — projects planned or underway
U.S.
In 2012, the U.S. construction sector grew for the first time after six consecutive years of decline, which had reduced industry capacity significantly. Some spending has begun to filter its way through from the private sector into construction projects and there have been gains from rock-bottom levels in the residential sector. Private investment has increased in the power sector, including oil and gas facilities; spending in this sector was 31 percent higher in 2012 than the previous year and 57 percent above the ten-year average, according to the U.S. Census Bureau. Our industry research also indicates that more sustainable energy use is a top priority for the U.S. industrial sector.
The value of projects in Saudi Arabia has risen 29% since January 2009, while U.A.E. projects have dropped 51% in value from the 2009 peak.
1,400
1,200
1,000
800
600
400
200
0
US
$ bi
llion
Jan
09
Bahrain Qatar Iraq Kuwait Saudi Arabia
Oman United Arab Emirates
Jan
11
Jan
12
Jul 0
9
Jul 1
1
Jul 1
2
Jul 1
3
Jan
10
Jul 1
0
Source: U.S. Census Bureau
U.S. constructionValue of construction put in place, annualized
19
3
Europe
Europe’s growth recovery continues to be limited by public sector austerity and private deleveraging, weak export markets and a relatively strong Euro, as well as growing concerns over a renewed escalation of country-specific vulnerabilities. Thus, while financial conditions appear to have improved and risks have diminished, the fundamental problems of the Euro zone surrounding lack of growth drivers remain.
An improvement in consumer and business confidence is expected to translate into a gradual return of spending and investment growth over the course of 2013, with a more pronounced recovery pencilled in for 2014. Construction in the Euro zone and the wider EU is expected to contract this year, but modest growth is forecasted for 2014.
In addition to energy sector activity, there are promising trends in other sectors such as manufacturing. Construction in this area increased during 2012 as older plants were replaced. Industries such as aerospace and agriculture, updated their plants to keep pace with new technologies. These investments were also driven by U.S. companies deciding to keep operations onshore due to currency fluctuations and lower transportation and energy costs in the U.S.
In contrast, the outlook for publicly financed projects remains weak, with the political scene deadlocked over spending plans. Transport is set to bear the brunt of spending cuts, despite the passing of a US$105 billion surface transportation bill in July 2012. There is an urgent need for infrastructure improvements. In 2009, the American Society of Civil Engineers (ASCE) highlighted the poor existing state of U.S. infrastructure, assigning it a cumulative D grade — defined as “poor” — and arguing that this posed a threat to the continued competitiveness of the country.
American Society of Civil Engineers Score Card for U.S. Infrastructure
Sector 2005 2009
Aviation D+ D
Bridges C C
Dams D D
Drinking Water D- D-
Energy D D+
Navigable Waterways
D D-
Rail C- C-
Roads D D-
Solid Waste C+ C+
Transit D+ D
Wastewater D- D-
Overall Infrastructure Score
D D
Source: American Society of Civil Engineers, 2009
20
3
While local private sector activity is constrained by low confidence and a lack of project finance, our industry research indicates that foreign investors still view cities such as London as a “safe haven” for long-term returns. Foreign entrants find the East increasingly attractive, according to 51 percent of our industry participants, while only 32 percent see the West gaining ground.
Looking ahead, our industry research shows the emergence of an east-west and north-south divide across the broader European region, with the best prospects in Russia, Norway, Romania and Turkey. Germany, Switzerland, Denmark and Ukraine are also forecast to see growth, but at a much more moderate pace. Across Europe, the need to upgrade vital infrastructure, such as ageing or insufficient power generation, or transport links, is expected to drive renewed growth in the construction sector.
European construction market value, 2012
Source: Euroconstruct, National Accounts, AECOM
50
250
300
EUR
bill
ion 200
150
100
0
Ger
man
y
Fran
ce
Ital
y
Uni
ted
Kin
gdom
Rus
sia
Net
herl
ands
Swit
zerl
and
Pola
nd
Bel
gium
Aust
ria
Swed
en
Finl
and
Turk
ey
Den
mar
k
Port
ugal
Cze
ch R
epub
lic
Irel
and
Hun
gary
Spai
n
Slov
ak R
epub
lic
Nor
way
Note: Central Europe covers Germany, France, Austria, Switzerland, Netherlands and Belgium. Nordic Europe covers Norway, Sweden, Finland, and Denmark. Eastern Europe covers Poland, Romania, Czech Republic, Slovakia and Hungary.
Source: AECOM Global Construction Sentiment Survey, 2012
European building and infrastructure — expected growth
There is a considerable east-west divide in future workload expectations across Europe.
Percent100
80
60
40
20
0
-20
-40
High growth market
Negativegrowth market
UnitedKingdom
East
Nordic
RussiaTurkey
Central
Ireland
21
3
Asia-Pacific
CHINADespite the recent cuts in capital spending, China’s capital expenditure plans are still significant, dwarfing all other emerging countries. At the same time, industry sources point to a rebound in residential and non-residential growth after a two-year slowdown.
China is slowly seeing a shift away from an export-driven economy to a domestic market more focused on knowledge-based industries. Their growing prominence is reflected in the above average annual wage growth in sectors such as finance, retail and education over the last decade. These growing services and other industries will change the shape of China’s cities, and will drive urban infrastructure requirements.
Source: AECOM Global Construction Sentiment Survey, 2012
European market appeal to foreign investors
Western Europe
20
40
80
100
Perc
ent o
f sur
vey
resp
onde
nt
60
0
-20
-40
IncreasingSteadyDecreasing
Eastern Europe
Openness Attractiveness Openness Attractiveness
Largest investment regionsValue of investment2012 annual growth
350
300
250
200
150
100
50
0
30
25
20
15
10
5
0
Annu
al g
row
th, p
erce
nt
Inve
stm
ent,
CN
Y b
illio
n
Jian
gsy
Sha
ndon
g
Liao
ning
Hen
an
Heb
ei
Gua
ngdo
ng
Zhe
jiang
Sic
huan
Hub
ei
Anhu
i
Source: National Bureau of Statistics, China
22
3
INDIABy 2030, India is expected to have 13 cities with populations of more than four million people and six megacities with populations greater than 10 million (McKinsey). India’s growing middle class expects more quality services, driving this is a younger aspiring population. This transformation will require greenfield infrastructure, as well as considerable investments in residential, healthcare and energy supplies, particularly in the northeast where more work will be required to raise infrastructure standards. However, India’s inadequate infrastructure is prohibiting the country to fulfil its growth potential.
Certain provinces of China are changing more rapidly than others; in the five years leading up to 2011, Jiangsu, just north of Shanghai, saw the biggest leap in its urban population. In the same period, construction in this region more than doubled in value to meet the needs of this changing economy.
In addition to the retail, residential and tourism sectors, our industry research pointed to considerable growth in road and rail, in particular in the south of the country. China has earmarked about US$85 billion for rail related projects in 2013 alone. Energy investments are particularly important in the Western regions of China Water will be an important focus in Hong Kong as it relies on mainland China for up to 80 percent of its supply and will be looking to other water security solutions in the future.
Our industry survey showed that the openness of China’s market was slowly increasing, but a significant number of participants within our industry research believe that foreign entrants still struggle with local demands, particularly in understanding regulations and the culture.
Source: National Bureau of Statistics, China
CN
Y bi
llion
Annu
al g
row
th, p
erce
nt
Other fixed investmentConstructionTotal investment growth rate (annual)
2010 2011 2012
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
25
24
23
22
21
20
19
Investment in fixed assets
23
3
India has set a massive target for doubling investments in infrastructure to INR 40.9 trillion (US$906 billion) during the Twelfth Plan period of 2012-2017. Almost a third of India’s infrastructure spending to 2017 is expected to be in the energy sector. Indian authorities estimate that commercial energy supplies will have to grow at an annual rate of 7 percent to service a growth domenstic product (GDP) growth of 9 percent.
Our industry research shows that the attractiveness of the Indian market could be more promising than China’s if the business environment improves. Steps are being taken to boost investor sentiment, for example, regulations have recently been announced to allow foreign investment in retail and aviation. However, whilst the Indian government is making some attempts to resolve the regulatory hurdles in the various sectors, it remains to be seen whether these reforms will be executed successfully. Other roadblocks are also plentiful, including finding local expertise to deliver projects and achieving a cost-effective mix of offshore and onsite resources.
AUSTRALIA AND NEW ZEALANDWhile Australia’s economy has fared better than most other advanced economies in recent years, a contraction was witnessed in 2012, particularly in the construction industry. The outlook remains constrained in 2013, but projections for GDP growth to 2015 — at an average of 3.2 percent per annum according to the International Monetary Fund (IMF) — are still more promising than the average for advanced economies globally.
However, this will depend on the size of investments in the resources sector and other sectors stepping in to contribute to growth. Uncertainty prior to the election in September 2013 may lead to investor hesitation, while others await greater surety in the labor market and a return of consumer confidence.
Source: IMF
Average annual GDP growth8
7
6
5
4
3
2
1
0
Perc
ent
Developing Asia
2010 - 12 2013 - 15
The Association of Southeast Asian Nations (ASEAN) region, an important trade partner to Australia and New Zealand, is expected to generate at least 5.7% annual growth to 2015.
Of the advanced economies, Australia and New Zealand are expected to average closer to 3% growth, compared to the average for other nations which is closer to 2%.
European Union
U.S. Australia New Zealand
24
3
New Zealand has seen growth below the annual average for advanced economies in recent years, but is forecast to achieve higher GDP growth by 2015. Much of this buoyancy will stem from developments undertaken to rebuild Canterbury and the growing significance of foreign investment to the country’s recovery.
Of growing importance to both nations is trade with Southeast Asia. Robust growth is expected across developing Asia from 2013 to 2015, such as in Indonesia (around 6.5 percent) and the Philippines (around 5 percent). Our construction industry research points to clear opportunities in the region — Indonesia and the Philippines rated very highly in terms of growth expectations, alongside the powerhouse economies of India and China in the broader Asia region.
Africa
African infrastructure needs are attracting significant interest from international investors, both private and public, seeking new opportunities and growing markets. China is one of the biggest sources for infrastructure financing in the region (see page 25). While investment is flowing into the region, several roadblocks still exist such as corruption, insufficient infrastructure, inefficient bureaucracies and an inadequate workforce. There is great potential, for example, in the resources sector with significant oil and gas reserves in East Africa but regulatory and infrastructure gaps are currently hindering production.
Source: World Bank
Ease of doing business ranking by region
140
120
100
80
60
40
20
0
Harder to do Business
Country Ranking
Easier to do Business
Org
anis
atio
n of
Ec
onom
ic C
o-op
erat
ion
and
Dev
elop
men
t (O
ECD
) Hig
h In
com
e
Sub-Saharan Africa is considered the hardest region to do business in, whereas South America and South Asia are considered easier places to do business.
East
Eur
o/ C
entr
al A
sia
East
Asi
a
Sou
th A
mer
ica
Mid
dle
East
/ N
orth
Am
eric
a
Sou
th A
sia
Sub
-Sah
aran
Af
rica
25
3
NIGER
ALGERIA
MAURITANIA
SUDAN
SOUTHSUDAN
NIGERIA
CHAD
SIERRALEONE
CAMEROON
GUINEA
LIBERIAGHANA
EGYPT
ETHIOPIA
KENYAUGANDA
DEMOCRATICREPUBLIC OF THE
CONGO UNITED REPUBLIC OF
TANZANIA
NAMIBIA
SOUTHAFRICA
ZAMBIA MOZAMBIQUE
ZIMBABWE
ANGOLA
ERITREA
DJIBOUTI
MADAGASCAR
Source: Stratfor
Chinese investment offers in Africa since 2010
Our industry research shows that other challenges are holding local developers back in the buildings market, such as difficulty in obtaining project funding or lack of government capability to deliver projects. However, as momentum builds, further residential and commercial development is having a knock-on effect in other sectors such as retail.
26
3South America
Economic growth in South America has been much stronger in recent years compared to the world’s advanced economies. The region has witnessed a massive increase in foreign investment and significant growth in the resources and tourism sectors. The region’s construction sectors are expected to continue to outperform many other countries over the next few years. Brazil and Argentina are by far the largest markets in the region, but others such as Chile and Peru are also buoyant construction markets. Chile’s infrastructure investments are mainly delivered by private players, while Peru’s government is the main investor in the sector. Brazil is expected to step up investments near term, as the government delivers its second growth acceleration program (PAC II), which comes to a close in 2014 along with the preparations for the 2014 FIFA World Cup.
While in many cases the domestic banking sectors are unable to support large–scale infrastructure projects, South America has seen consistent growth in private investment assistance in developing infrastructure — the value in 2011 was more than triple the level in 2003. The main destinations for these funds are Brazil, Argentina and Mexico, which are among the top five destinations for private infrastructure investment, according to the World Bank. Institutions like the Andean Development Corporation (CAF), the Inter-American Development Bank (IADB) or the European development banks, such as the European Investment Bank, are important for providing funds in smaller countries and those with less access to international financial markets, such as Ecuador and Venezuela. Public-private partnerships (PPPs) and concessions have also grown in the region, with many of the larger countries in the region planning further PPP/concession packages for 2013, while others are looking to use the model for the first time. Financing constraints, regulatory and political issues are the main obstacles to investment in the region, though the magnitude varies greatly among countries.
Foreign direct investment in regions — change 2009 - 2011
Source: IMF
Size of bubble equals the total value of investments in 2011
Rising investment
Falling investment
Change2009 - 2011
500
400
300
200
100
0
-100
-200
Perc
ent
South Amercia
Europe
Africa North America Middle
East
Central and
South Asia
East Asia
Oceania
27
3
ECONOMIC AND CONSTRUCTION OVERVIEWExpectations for the global economy turn positive
In many ways, 2012 turned out better than had been feared, with none of the worst case scenarios facing the global economy materializing — namely a Eurozone breakup, hard economic landing in China, the U.S. toppling over the fiscal cliff, or a large-scale escalation of Middle East tensions. This has raised confidence in the global outlook and expectations of firming economic activity have gathered pace since the turn of the year, despite the fact that 2013 started with many of the economic and political issues remaining unresolved.
Political issues and oil prices divide wealthy hydrocarbon exporters and poor importers
In the Middle East, political tension has become more of a constant than a variable, impacting economic performance and causing large swings in oil prices. The Arab uprisings have altered the region’s political landscape, but it is too early to assess the long-term impact they will have on societies and economies The region began 2012 with a series of historic elections in the post-revolutionary states in North Africa.
However, expectations of smooth transitions were quickly squashed, as internal division’s stunned political progress, while the civil war in Syria escalated and tensions over Iran’s nuclear program mounted.
Source: IMF, National Statistics
MENA GDP growth forecast12
10
8
6
4
2
0
Annu
al p
erce
nt
2012e
2013-15f average p.a.
Iraq
Sau
di
Arab
ia
Leba
non
Bah
rain
Qat
ar
Jord
an
Kuw
ait
Egyp
t
Om
an
U.A
.E.
28
3
Consequently, countries such as Egypt, Bahrain and Tunisia continue to seek political normality in 2013.
Elsewhere in the Middle East, economic prospects are brighter than in many other regions. Countries with oil resources and stable governments are outperforming their counterparts, supported by robust non-oil gross domestic product (GDP) growth and larger external current account surpluses. The U.A.E., Oman, Qatar and Saudi Arabia all have set out expansionary budgets for 2013, which should continue to benefit their construction markets.
The largest risks to regional performance stem from continued political uncertainty, including unresolved political issues in Egypt, succession in Saudi Arabia, ambiguity over Iran and spill-over from Syria’s war. Other risks, including further deterioration of the global economy and volatile commodity prices, also loom large.
Investment growth and prospects
There have been major differences in the performance of Middle East construction industries over the past year, both in terms of location and sectors.
A total of US$87 billion of construction and transportation projects were awarded across the Gulf Cooperation Council (GCC), Iraq and Lebanon in 2012, down from some US$106 billion in 2011. Economic uncertainty, geopolitical risks and oil price volatility, as well as bureaucratic delays, were the main contributors to this drop. In addition, governments continuing to review their strategies for implementing major development projects and investor hesitation in investing in (mega) projects weighed on the regional projects market in 2012. Against this background, construction in the region, both in the infrastructure
Source: MEED
Construction and transportation projects(Anticipated) Project awards by status in GCC, Iraq and Lebanon
300
250
200
150
100
50
0
US
$ bi
llion
Progressed
2009 2010 2011 2012 2013e
Cancelled/On hold
29
3
and building sectors were heavily contested, with fierce competition driving prices down.
Nevertheless, our industry survey shows that many construction firms saw an increase in infrastructure and building work over the past year and the region performed better than many other markets around the globe.
Infrastructure work was led by cash-rich governments pursuing ongoing spending commitments and gearing up for major global events, while building construction benefited from an upturn in general confidence. This has led to a re-start of some projects that were previously on hold/have been stalled and a renewed appetite for expansion. This has particularly been evident in Dubai where building activity has been slow for a number of years now. Survey respondents reported that the increase in their building work over the past year has been mainly driven by specific company initiatives and their ability to build on existing client relationships.
For 2013, government investment will remain the central pillar of construction activity in the Middle East. Indeed, considerable commitments by the cash-rich Saudi Arabian and Qatari governments to increase capital spending both related to internal demand pressures from a growing population, as in Saudi Arabia, or gearing up for staging major global events, such as in Qatar, are the main reasons for positive sentiment over future workload in the region. There are also signs that the Dubai real estate market is picking up and Abu Dhabi is progressing with public spending programs after a two-year hiatus. This is expected to result in increased demand for utilities, transport, housing and social infrastructure across the region.
Source: AECOM Global Construction Sentiment Survey, 2012
Workload expectations over the next three yearsBalance of respondents expecting a decrease/increase
Decreasing
Building
Infrastructure
Increasing
30
3
According to our research, construction opportunities backed by real economic, social and global event needs are the dominant reasons that attract offshore investors/businesses to the region. This is compounded by the fact that opportunities appear more limited elsewhere in the world, with investors seeking business in higher-return countries where internal capital is fueling spending on big-ticket public capital projects. A low-tax environment, relatively low regulatory restrictions and stability of countries are also cited as inducing businesses to invest.
Qatar, unsurprisingly, is seen as the major growth area over the next few years. Qatar’s infrastructure and construction growth is currently pausing to take a breath as the 10-year boom in large-scale gas-exporting infrastructure work comes to an end. Going forward, on the back of staging the FIFA 2022 World Cup, a large number of infrastructure and building projects have been announced, covering all modes of transport, as well as leisure and hospitality, commercial and fit-out projects, to gear the nation up for the big event.
In Saudi Arabia, the sharp drop in project awards in 2012 surprised most industry commentators, given the Kingdom’s large spending commitments. According to Middle East Economic Digest (MEED) Projects, Saudi Arabia awarded construction and transportation projects worth just US$17 billion in 2012, compared to US$39 billion in 2011. Anecdotal evidence suggests that leadership changes at key ministries such as the Ministry of Interior meant that major spending decisions were delayed. With more than US$100 billion of construction and transportation projects in the pipeline due to be awarded in 2013, Saudi Arabia remains the region’s largest market and expectations are that the flow of project awards will speed up this year. Social pressures have increased demand for built projects most vocally in Saudi Arabia given its relatively large
Attractiveness and openness of the Middle East to offshore suppliers/service providers
Source: AECOM Global Construction Sentiment Survey, 2012
Factors making the Middle East attractive to offshore investors
– Market demand/higher return country
– No/low taxes
– Stability of country/ Openness to trade
– Low entry barriers
– Availability of internal capital
Decreasing
Attractiveness to offshore suppliers/ service providers
Openness to offshore suppliers/service providers
Increasing
31
3
population and the perception that supply appears to be well behind demand.
Consequently, our research shows that the construction industry expects building work to outpace infrastructure projects in Saudi Arabia over the next years, with a significant increase in healthcare and education-related works, as well as residential, in particular, affordable housing projects. Infrastructure work related to transport connections, as well as water and wastewater provisions are also expected to remain in focus. In particular, the western regions of Saudi Arabia are expected to benefit from this, with the vast majority of those surveyed suggesting this will be the most active region in the years ahead.
The U.A.E. awarded the most construction and transportation contracts in the region in 2012, totalling US$24.1 billion. Dubai awarded over US$12 billion of construction and transportation projects, compared to US$4.7 billion in 2011. Indeed, on the back of a strong performance of its services, logistics and trade sectors, increased optimism in the Dubai economy has resulted in growing confidence in its real estate market, with expectations that the market will show further signs of a broad-based recovery this year.
Abu Dhabi awarded US$9.3 billion of projects in 2012, compared to US$18 billion in 2011. Encouragingly, the hiatus in Abu Dhabi’s government spending program since early 2010 appears to be coming to an end, with the government announcing a US$90 billion infrastructure spending program. While the increased market sentiment and the U.A.E.’s leadership commitment to many large infrastructure projects in 2013 are welcome, an increase in construction work will continue to depend on available financing and governments following through with their ambitious plans.
Construction and transportation projectsProgressed projects only
Source: MEED
120
100
80
60
40
20
0
US
$ bi
llion
2012
Bahrain Iraq Kuwait Oman U.A.E. Qatar Saudi Arabia
2013 anticipated
32
3
Kuwait’s project market continues to be hindered by political stalemate and uncertainty. In total, Kuwait awarded US$10 billion of construction and transportation deals in 2012, which includes the US$3.7-billion contract award for the Subiya causeway in October 2012. It is hoped that the project will give renewed impetus to other urban development projects in Kuwait City and Subiya. For 2013 and beyond, the performance of the Kuwaiti construction sector will depend on the progress of projects such as the government’s hospitals program and the Kuwait metro. At the start of 2013, it was announced that four large projects, including the metro and rail schemes, are being reviewed by the Communications Ministry, leading to uncertainty about their implementation.
As the Omani government pushes ahead with major infrastructure development plans, construction opportunities are expected to increase. Oman’s 2013 budget outlines capital projects worth US$10.6 billion for transport infrastructure, health and education, as well as water and wastewater projects. With currently US$32 billion of construction and transportation in the pipeline due to be awarded in 2013-14, the Sultanate could be an attractive market in the near term.
There is a general view that to maintain political stability Bahrain needs to invest in social infrastructure, in particular housing, while at the same time, to keep up with its fast expanding peers, it needs to invest in transport and industrial infrastructure. However, limited public finances are unlikely to be able to deliver this, hence private investment and funding support from neighboring countries is needed. In 2011, Kuwait, Qatar, Saudi Arabia and the U.A.E. pledged US$10 billion to Bahrain over 10 years to offset the costs of social unrest and help fund needed development projects.
Key drivers of construction over the next three years
– Qatar 2022 FIFA World Cup
– Social pressure for infrastructure
– Oil and gas revenues
– Reconstruction of Libya and Iraq
– Inter-regional projects, such as rail and energy networks
Key obstacles to construction over the next three years
– Regional political stability
– Slow flow of public spending
– Underdevelopment of private banking sector and fully-functioning capital markets limits private sector participation
– Delays and backlogs in tendering and construction phases due to amount of investment planned/underway
– Labor and material shortages raise the prospect of inflation
33
The funds have started rolling in the second half of 2012 with the Bahraini government signing agreements with the Kuwait Arab Economic Development Fund and the Saudi Development Fund. The government signed its most recent agreement with the Abu Dhabi Development Fund in early 2013 and it is anticipated that a similar agreement will be signed with Qatari investment funds this year. The GCC funds are expected to focus on housing, electricity, water, infrastructure and social services projects.
Market pricing
Changes in tender price trends reflect the adjustments to market and sector activity in the Middle East. Across the region, the pricing environment remains very competitive and client organizations continue to press for the best possible prices, often through negotiation. Consequently, consultants, contractors and their supply chains continue to see challenging trading conditions.
Lower demand and excess capacity continue to be evident, although regional variations exist in view of the different levels of government expenditure, and also that of the private sector. Consequently, trends in tender prices over the past year have ranged from relative stability, to a gradual drift downwards to notable falls in those countries where industry volumes remained relatively low.
Our industry survey shows that input cost inflation in the region has been mainly driven by (raw) materials prices in 2012, most notably in Qatar and Saudi Arabia, where global price pressures have been compounded by firm local demand. The vast majority of these increases have been moderate. Energy and fuel costs are judged to have exerted upward pressure on construction costs in Saudi Arabia and the U.A.E. Looking ahead to the next twelve months, raw materials together with energy costs are expected to be the main drivers of construction costs in the region. Further ahead, survey participants expect a significant increase in labor costs in Qatar on the back of strong workload increases.
34
3
Contract awards in the pipeline suggest an upturn in industry activity this year, but the industry will adopt a wait-and-see approach to whether these schemes materialize. Overall, our research shows that the industry expected to increase modestly this year — with the exception in Saudi Arabia — due to a moderate increase in tender prices on the back of a steady but slow recovery in the construction sector. Despite firm workload expectations, the majority of survey respondents expect tender prices to continue to ease in Saudi Arabia over the next twelve months, due to increasing competition and fierce project cost cutting by clients.
The construction industry across the region has consolidated significantly in recent years, meaning that competition may have reduced with the effect that pricing is less aggressive than it otherwise may have been. However, in turn this has increased the possibility that prices could come under significant pressure once large-scale programs such as Qatar’s 2022 FIFA World Cup get underway in earnest, unless there is a marked increase in contracting and materials supply capacity. Increased confidence and the psychology of pricing on the back of higher work volumes will see prices increase accordingly, though variation by market will remain.
Challenges for the regional project market
Our research shows that clients and delivery organizations cite various issues that are impacting project delivery. The main challenges are outlined below:
Government finances: The oil-exporting Middle East countries are generally cash-rich, but to varying degrees. At the same time, governments must balance their
Tender prices and profit marginsBalance of respondents reporting an increase/decrease
Source: AECOM Global Construction Sentiment Survey, 2012
60
40
20
0
-20
-40
60
40
20
0
-20
-40
Perc
ent
Last 12 months Next 12 months
U.A.E. U.A.E.Qatar
no change
QatarSaudiArabia
SaudiArabia
Tender PricesProfit Margins
35
3
expenditure against income, and for oil-exporting countries, income is determined by the global price of oil. Large swings in oil prices increases uncertainty over fiscal budgets, which could have impact on government spending. Capital spending is usually more vulnerable to spending cuts than current spending on front-line government services, such as public wages or benefit transfers.
Project finance needs diversification: Significant uncertainty over the global economic outlook and tighter credit conditions has led to a retreat of lending to the project sectors and an increase in the cost of capital. In addition, foreign banks have also been cautious given recent experience of deep haircuts and restructuring in the region, which has reduced appetite for project financing. On the back of this — and given the financial strength of the three main Middle East governments, namely Saudi Arabia, Qatar and the U.A.E. — public-financed projects continue to dominate. This trend is expected to continue. A more recent trend is that due to the scale of some projects, even those cash-rich governments in the region are looking to issue project bonds to fund key schemes, but the use of project bonds in the region is judged to be still in its infancy and a number of projects have taken a long time to structure a project bond that appeals to investors. In the longer term and with the development of regional capital markets, the role of Islamic debt finance (Sukuk) could play an increasingly important role.
Procurement of projects: Procurement is a key concern for construction project delivery in the Middle East. Our research shows a general consensus that negotiated contract (private sector), construction management and design only/then construct only would deliver the best outcome for a project on the metrics of time, cost, risk and reputation. In contrast, guaranteed maximum price, and design and construct via a novated design would yield the least satisfactory results for all project participants. According to survey participants, negotiated contracts are only available in the private sector and require strong relationships of mutual trust, something that is generally
Factors limiting project finance
– Banking/capital market maturity
– Risk appetite/project feasibility
– Global financial/banking crisis
– Change in banking regulation/requirements for project finance
– Regional political stability
36
3
lacking in the region. There is also a view that there is a lack of understanding of procurement processes and available options. In addition, the roles of contracting parties are often unclear when new or complex systems are introduced, with quality being compromised when the only incentive for the client and contractor is to reduce cost. Given the strong concerns over time, cost and quality of project delivery there are opportunities for improvement across the industry supply chain. Survey respondents feel that over the longer term, negotiated contracts and partnerships/alliances would provide more efficiency and value for owners. What is needed for this to happen is an increase in the experience of working with local clients/developers from the delivery side of the industry.
Balancing cost and quality: Contractors and consultants also see unrealistic client expectations about cost and time, as well as fees as a major issue. In turn, clients are faced with the challenge of project teams not delivering projects within budgets and schedule. Quality of work has also been cited by clients as a major concern, which has partly been explained by poor project management in some parts of the industry.
Bureaucracy and funding approvals: The delivery market cites onerous bureaucracy as a main challenge, which delays the approvals and permitting process and impacts client decision-making, which in turn affects contractors and consultants’ cash-flows, resourcing and workflow certainty. Consultants and contractors have also indicated that client payment practices are a major concern for the delivery side of the industry. Whilst public budgets are generally in order, there appears to be a lack of committed funds in certain parts of governments in the region. The private sector is facing tighter lending conditions, which impacts investment decisions.
Effectiveness of procurement method
Source: AECOM Global Construction Sentiment Survey, 2012
Poor
0% 20% 40% 60% 80% 100%
Guaranteed Maximum Price
Design and Construct via a novated design
Managing Contractor
Design and Construct
Public-Private Partnership
Partnership/Alliance
Design only then construct only
Construction Management
Negotiated contract
Program Management
Satisfactory Excellent
37
3
Considerations for project success
Uncertainty increases the need for awareness and monitoring. Some of the key issues to ensure active management of projects include:
Entry and exit prices: Lower prices can be an opportunity for clients but at the same time they introduce risk. Too much focus on achieving the lowest price should be counter-balanced by an acceptance that higher transaction costs in post-contract administration may follow.
Risk transfer: A willingness by contractors to accept a wider transfer of risk in the hope of winning work will stretch business fundamentals. In short, incentives for contractors to maximize post-contract returns because of excessive risk transfer should be minimized. It is not only in hard financial metrics where incorrect transfer of risk manifests itself — project team morale can suffer and this in turn affects project performance and quality.
Scenario planning: Uncertainty and volatility in markets require greater attention to the assessment and modeling of the financial viability of developments.
Risk management and removing sources of uncertainty: Design completion, supervision, finding the right people, procurement options and interface risks are all areas for consideration.
Contractual provisions: With heightened risks related to the supply chain’s financial standing, it is imperative to include contractual provisions that ensure the financial stability of the supply chain. Security can be achieved through adequate warranties and performance guarantees.
38
3S
tati
stic
Bah
rain
Egy
ptIr
aqJo
rdan
Kuw
ait
Leba
non
Om
anQ
atar
Sau
di
Arab
iaU
.A.E
.
Land
Are
a, k
m2
800
995,
500
434,
300
88,8
0017
,800
10,2
0030
9,50
011
,600
2,14
9,70
083
,600
Cap
ital
Cit
yM
anam
aC
airo
Bag
hdad
Amm
anK
uwai
tB
eiru
tM
usca
tD
oha
Riy
adh
Abu
Dha
bi
Popu
lati
on, m
illio
n 1.
282
.033
.66.
43.
84.
03.
21.
828
.85.
5
GD
P, U
S$
billi
on26
.525
5.0
130.
631
.417
4.6
41.8
80.0
184.
665
7.0
361.
9
Rea
l GD
P G
row
th, %
*2.
02.
010
.23.
06.
32.
05.
06.
36.
04.
0
Rea
l GD
P G
row
th, 2
013-
2017
pa
fore
cast
2.8
5.3
10.9
4.2
3.4
3.7
3.5
6.0
4.1
3.2
GD
P/C
apit
a (P
PP
), U
S$
28,1
826,
557
4,62
06,
044
43,8
4715
,884
28,5
1210
2,76
925
,722
48,9
92
Con
stru
ctio
n O
utpu
t, %
of
GD
P6.
0**
4.6*
*4.
7**
4.5*
*1.
8**
15.0
**4.
8**
3.9*
*4.
6**
10.5
**
Valu
e of
Con
stru
ctio
n O
ut-
put*
, US
$ bi
llion
1.8*
***
11.5
****
8.8*
**1.
42.
86*
**3.
5***
**7.
224
.535
.7**
***
Pro
ject
aw
ards
, US
$ bi
llion
0.9
n/a
26.2
1.8
14.1
2.0
8.2
21.5
63.6
31.0
Con
sum
er P
rice
Infl
atio
n, %
2.8
7.2
5.6
4.8
2.9
6.6
3.0
1.9
4.6
0.7
*est
imat
e on
ly
**s
hare
in c
urre
nt G
DP
**
*201
0
****
2011
/12
**
***2
011
All d
ata
are
2012
dat
a un
less
oth
erw
ise
stat
ed. V
alue
of c
onst
ruct
ion
in L
eban
on, K
uwai
t, U
.A.E
. is
calc
ulat
ed b
ased
on
the
shar
e of
con
stru
ctio
n in
GD
P in
200
9 ap
plie
d to
201
2 G
DP
figu
res.
Sou
rce:
IMF,
Wor
ld B
ank
and
vari
ous
nati
onal
sta
tist
ics
offi
ces.
COU
NTR
Y ST
ATIS
TICS
201
2
39
4ARTICLES
41
4
BUSINESS DRIVERS AND THE DEVELOPMENT CYCLETransforming industry intelligence into effective development frameworks
The Middle East development market is driven by real economic and social demands that are unchangeable. At the same time, political instability and the region’s integration with global markets has left it susceptible to regional and global shifts in demand and resources. This brings specific business challenges and opportunities for owners, developers and operators. The first step in managing these challenges and realizing the opportunities is to understand the key business drivers in the development cycle.
We regularly engage with our clients (owners, developers and operators) through our Key Account Management program. The program is an enterprise-wide best practice approach that focuses on fully understanding the business and project needs of our clients, successfully managing our client relationships and monitoring our client’s success. It supports our commitment to our clients and communities of delivering solutions that enhance and sustain the world’s built, natural and social environments.
The latest product of the program is a set of development frameworks for assets within the education, healthcare, leisure and sports sectors. Informed by our clients’ insights, these frameworks outline growth, revenue, cost and performance drivers that contribute to the success of developments within these sectors. The full customer activity cycle review provides owners, developers and operators with a discerning yet concise overview of key factors that affect their assets.
Working together we transform our clients’ visions into profitable, sustainable, community-focused and brand building projects.
42
4
Community focused
Sustainable
Profitable
Brand builder
Growth drivers
Revenue driversCost drivers
Key macro and micro factors to consider
PreClient decides
what to build and when
DuringClient is
executing the project
PostClient is
maintaining the asset
Client activity cycle
Performance indicators measuring business and project success
Holistic understanding of the business drivers and development cycle
Source: AECOM and ©Sandra Vandermerwe
43
4
Sports sectorThe excitement generated from watching or playing sports drives demand for sports-related facilities. Public and private investors see sports as a channel to enrich the lives of community members, raise a team, a city or a region’s national and international profile, and use it as a catalyst for growth in other related sectors such as tourism, retail and healthcare. Sports facilities are also an important component of many urban regeneration programs, bringing investment and people back into previously derelict inner-city areas.
Sports facilities can take many forms, from small-scale community recreational centers and sporting facilities, to large open recreational areas such as golf courses and multi-billion dollar investments in arenas and stadiums used by professional league teams or needed to host mega events such as the Olympic Games or the FIFA World Cup.
Sport facilities built for global events present a unique set of opportunities and challenges for the host country. Apart from spectator experience, they are seen and used within the context of environmental, economic and social sustainability, development and regeneration.
Within the Middle East, Qatar is investing heavily in infrastructure and sport facilities ahead of the 2022 FIFA World Cup. The event will certainly help to raise Qatar’s international profile, accelerate growth within the country and encourage sporting involvement within the community. However, legacy planning is essential, as it will determine whether the initial investment has a positive and lasting impact on the country.
One of the major issues facing the construction of sports facilities is the question of their funding and justification for their investment. This is due to large capital costs, almost certainly with substantial public investment, and often not justifiable in a cost-benefit analysis. The hosting of mega sporting events, which require major infrastructure investments by the public sector, raises questions concerning the “multiplier” effects of a flagship project, its links and connections with the rest of the urban area or country, its social impact and its financial consequences. This is particularly true for event-specific built facilities where, in addition to the huge expense of infrastructural outlay, there is a high risk of facilities not being used post-event.
44
4
There is a trend to reduce traditional funding sources (i.e. taxes, grants, public funding) and to encourage the public sector to form partnerships with the private sector in providing services and facilities. This in turn has led to the development of a number of management and funding organizations within the private sector that are interested in partnering on facilities with revenue-generating potential.
Business and development drivers
Growth drivers — what market conditions support sport developments?
Sports and leisure facilities have multiple growth drivers, including public (local and national) investment in communities and urban regeneration, university sports, sport franchises and professional teams’ facilities requirements, or private investors seeking revenues. What is notable is that all stakeholders are increasingly adopting a more comprehensive approach to the development of sporting facilities and major events, with the focus not just on the main event itself, but shifting towards a 365-day-a-year experience and improving local communities.
45
4
Public funders undertake sport facility developments for a variety of reasons, including to help communities live healthier lives; support local athletes; host national, regional or international events that would raise the city/country’s profile; attract tourists; and encourage inward investment. These facilities are often community (or even country) specific, and factors such as demographic profile, proximity to other service providers, potential growth, available resources, etc., make the type of investments very different with respect to needs and wants. Private investments follow the same pattern, but instead of focusing on cities or countries, they typically support the needs of communities of interest or professional league teams.
Mega-sporting events, such as the Olympic Games, Commonwealth Games, or World Cups are considered one-time opportunities for cities or countries to secure resources for infrastructure development and to achieve global exposure. Developed countries/cities are using multiple events of varying size and scale to increase tourism and urban regeneration, while emerging cities/countries are using them as development catalysts and brand builders. Cities vigorously compete to host sporting mega-events as they perceive that doing so will enhance their image and stimulate their economies by attracting investment and consumer spending.
Ultimately, the deciding factor in moving a sports project forward remains in its expected return on investment. Investors and developers compare the opportunity cost of developing a sport facility with other investments.
Key growth drivers – Government expenditure
on community projects
– Urban regeneration
– Professional leagues
– Private investment in sporting sector
– Availability of credit
– Population growth/urbanization
– Increase in disposable income
– Socio-political stability
Key client insights“All stakeholders are increasingly adopting a more comprehensive approach to sporting facilities ... shifting towards a 365-day-a-year experience and improving local communities.”
“Despite attractiveness and pride associated with sporting facilities, return on investment remains the deciding factor. Opportunity cost of developing a sport facility is compared with other investments.”
46
44
Middle East Sports Sector
The two primary growth drivers within the Middle East sports sector are improving the health and living standards of local populations and achieving regional and international recognition. The Middle East has some of the highest obesity and diabetes prevalence rates in the world as a growing number of the region’s populations live sedentary lifestyles and have unhealthy diets. These factors, in turn, contribute to higher healthcare costs and burden governments to meet the required healthcare demand. To help their populations lead healthier lifestyles, governments invest in sport facilities, including women exclusive facilities — as women have the highest obesity numbers across the region. Private investments in the sector, particularly in the form of private sport clubs and gyms, have increased. Investors recognize the real demand for such facilities amongst communities plagued with unhealthy lifestyles but privileged with growing income levels.
Obesity prevalence in selected MENA countries
Source: World Health Organization
In Kuwait, the female obesity prevalence level — the highest in the region — has reached 55.2% compared to 29.6% among the male population.
60
50
40
30
20
10
0
Perc
ent
BahrainEgyptKuwait JordanU.A.E. Qatar
Males
Females
Saudi Arabia
Source: International Diabetes Foundation, 2012 estimates
Diabetes prevalence rate
World ranking
Kuwait 24 6
Saudi Arabia 23.4 7
Qatar 23.3 8
Bahain 22.4 9
U.A.E. 18.9 11
Egypt 16.6 12
Diabetes prevalence in selected MENA countries
47
44
Revenue drivers — what makes sports developments successful?
Sports facilities face challenges on the financial and commercial front, having to balance the need to maintain value for money in terms of ticket prices and rising expectations among the paying public.
The owners of sports facilities seek revenues from increasingly diversified income streams to justify capital expenditure. Revenues are not only driven by demand for the facility, effective utilization of space, prices charged to facility users and ticket sales, but also include commercial sources, such as from retail or advertising. Sport and entertainment events are increasingly being staged together, i.e. Grand Prix events now involve concerts, aimed to
raise the overall experience, increase the length of events and therefore the time people spend at the venue, which enhances commercial opportunities.
Source: MEED
While Iraq awarded the most sports projects in 2010-2012 as it attempted to rebuild the country’s infrastructure, Qatar is expected to award the highest value of sports projects in 2013-2015 as it gears up for the 2022 FIFA World Cup.
Sport sector projects award by date and country7
6
5
4
3
2
1
0
US
$ bi
llion
Bahrain
Iraq
Kuwait
Lebanon
Oman
2010 - 2012 2013 - 2015
U.A.E.
Qatar
Saudi Arabia
Revenue drivers – Government support
– Private sector investments
– Capacity and space utilization (functional use and flexibility)
– Ticket sales
– Advertising and signage
– Club boxes and concessions
– Commercial rental opportunities (retail, catering, hotel)
– Other rental opportunities (schools, universities)
Key client insights“Revenue sources are increasingly becoming more diverse with the line between sports and entertainment becoming more blurred.”
“The revenue characteristics of the sector combined with the intangible benefits driving the growth of the sector make it suitable for public and private partnerships.”
Brand building is another key driver within the sector, particularly in the form of hosting regional and global events. To date, Qatar and the U.A.E. have been the key players, hosting the highest number of events annually.
48
4
The sports sector is typically known for having low profit margins and high capital investment due to the specificity of the built structures and low facility usage fees charged to end-users. Public sports facilities in particular report minimal profits if any, as most end-users expect them to be provided free of charge or for a nominal fee. Private facilities, on the other hand, are not expected to be free and can charge more than public facilities. However, given the price elasticity of demand, end-users will only pay up to the price they deem reasonable regardless of the fluctuations in the facility’s utility or maintenance costs.
Event-driven ticket sales are the prime income source for many sports facilities. It is difficult to achieve full utilization of stadiums or arenas, as often there are space restrictions or events don’t sell out. Business plans must be based on cautious assessment of potential revenues and, as a result, it can be difficult to attract initial investment without public-sector funding. In addition to ticket sales, most sources of revenue, for example, merchandise and refreshments sales, are related to the size of the audience. Only a small proportion of income, typically related to box and season ticket sales, is fixed. Operators are seeking to increase non-ticket-based incomes by enhancing the capacity and quality of retail and catering concessions and other facilities, thereby increasing the amount of time and money customers spend there Clients agree that these defining revenue characteristics of the sector combined with the intangible benefits driving the growth of the sector make it suitable for public and private partnerships. Governments typically look for private investors to help cover construction and operational costs of the facility in return for favorable terms on property tax, subsidizing utilities and funding of surrounding infrastructure.
4
Global sports revenue
Source: PWC “Outlook for Global Sports Market”
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
US
$ m
illio
n
2006
Media Rights Merchandising
Gate revenues Sponsorship
2007
2008
2009
2010
e
2011
e
2011
e
2013
f
2014
f
2015
f
49
44
Cost drivers — what are typical investment and operating costs of sport facilities?
The end purpose and capacity of a sports facility determines the capital investment required to deliver the project. Iconic projects built for specific events will often require an investment premium that balances landmark architecture and specification with flexible space design to provide use and revenue options after the event or sporting season.
All typical operational costs, fixed and variable, come into play during the life span of the project, however, the extent of their impact depends on the facility type and usage frequency. Owners and operators need to be particularly mindful of the end-users’ requirements and usage behavior to ensure demands are met without compromising operational efficiency.
Performance indicators — monitoring the success of a sport facility
Sports facility performance indicators represent a key element of the long-term success of the facility. Assets that are closely monitored for operational efficiency, revenue generation, and quality maintenance and stakeholder satisfaction are more likely to be profitable and survive market and economic shifts. Examples of key indicators are provided in the in-depth arena review section opposite.
Sports revenue by region
Source: PWC “Outlook for Global Sports Market”
100
90
80
70
60
50
40
30
20
10
0
Perc
ent
Media Rights
Merchandising
North America EMEA Asia Pacific Latin America
Gate revenues
Sponsorship
This arrangement allows private investors to diversify their portfolio, undertake highly visible projects while minimizing operational project risk in the long-run.
50
4
Taking a closer look at arena developments
Arenas are complex buildings that provide flexible accommodation for a wide range of spectator sports, concerts, exhibitions and other events.
Revenue generation within an arena is event driven. The more events are held in the arena, the higher the number of visitors, ticket sales or advertising opportunities. Utilizing an arena all year round is a challenge as sports competitions are seasonal. Many owners and developers attempt to address this issue by building multi-functional/flexible facilities to diversify the events that can be held and improve the likelihood of having an arena occupied more often. In North America, owners and operators respond to the seasonality of sporting events by signing anchor/principal tenants to the facility. The renting fee does not cover all operational costs but ensures that the owner/operator receives a steady stream of revenue each year. In Europe and the Middle East, not all clubs own their stadiums, but pay annual rents to sports councils — a model that is deemed to be less successful in these regions. As a result, the sports arena business model has been altered to focus primarily on entertainment events rather than sporting ones. This shift allows countries to build arenas that attract world attention and help secure hosting bids for international sporting events, but at the same time incorporate legacy planning by allowing spaces to be utilized for more common entertainment events such as concerts.
Act
Venue
Third party
Fixed costs
Variable costs
Audience
Commercial rights Naming, sponsorship, advertising
$$
$$
$$
$$
$$
$$
$$
$$$$ ?
$$ Parking ?
$$ Premium seating
$$ Food & beverage
$$ Merchandising
Rent and hire charges
Promoter
Anchor tenant
Simplified revenue model for an arena
Source: AECOM
51
4
Furthermore, regardless of region, owners and operators can attract additional revenue through advertising or selling the naming rights of the facility.
Capital costs can vary significantly as there are many variables that influence size and configuration.
Selection of the main sporting event, capacity, flexibility, tier configuration, size of main event and roof span/complexity have a significant impact on the design and costs, and need to be considered in detail at an early stage to ensure that an arena proposal is feasible from both operational and economic perspectives.
Arena capacity is the principal cost driver, as the number of seats determines the size of the arena bowl, the extent of circulation and other facilities. Capacity has a major influence on other factors such as footprint, clear roof span and tier configuration. The number
of seating tiers required is determined by capacity and means of escape regulations. The size of the main event floor determines the capacity and design of the arena bowl. In general, the larger the main event floor, the larger and more costly the building, as the footprint, roof spans and the requirement for mobile seating increases.
Seating space allowance influences the quality of a spectators’ experience of the arena. Standards should be as high as possible within the constraints of the budget. Seating space standards affect the size of the arena bowl, footprint, roof span and the cost of the seat itself.
Roof span is also a significant cost driver, as above a certain size there is a disproportionate increase in the weight and cost of the roof.
KPI 1: Total revenue – revenue generated from services provided
KPI 2: Revenue split by service provided, user and event
KPI 3: Revenue development – growth of revenue (%) split by service provided and user
KPI 4: Occupancy rate of available rental spaces
KPI 5: Number of attendees by event held (volume)
Key client insight“On a spectrum that measures the size and cost of constructing a sports facility, arenas more often than not will sit at the far right representing the biggest and most expensive investments within the sector, often due to their iconic designs that make them attractions in their own right.”
52
4
From a design element, the bowl form, comfort standards, circulation provision, auditorium flexibility, special suite/luxury areas, back-of-house space and front-of-house accommodation plans need to be reviewed and evaluated carefully as they will directly impact revenue streams and operational costs. Changing any of these components after construction can be very costly.
Most arenas are U-shaped, with one end left open, providing space for an end stage for concert events. Concerts generally attract the largest audiences and it is therefore not economic to provide fixed seating across the free end of the bowl. The requirement for flexible seating is driven by the combination of events for which the arena is designed. Moveable seating costs significantly more than fixed seating and also reduces the amount of storage space available below the bowl. The loss of this space, together with the need for storage space for retractable seating, may result in a requirement either for a larger bowl footprint or extra space outside the bowl. Storage requirements for seating and track are extensive and may result in a further requirement for ancillary accommodation beyond the perimeter of the facility.
The key areas that need to be addressed in the design of the building services installation refer to health and safety and environmental conditions, i.e. fire detection or air conditioning in the arena space, which should have in-built flexibility to adjust to different densities of occupation and uses. The nature of the event determines the quality, levels, direction, color and brightness of lighting required, which should all be adjustable.
Driven by spectators’ quality expectations and demand for a wide range of services, technological requirements and integrated communication technologies (ICT) have become integral parts of any arena. Television, radio channels and websites all play a role in promoting and broadcasting an event and marketing an arena. Acoustic, visual and transmitting technologies all need to be able to accommodate media requirements. If arenas are built to host entertainment events and concerts, a higher level of technological specification and acoustic buffering is required.
In the masterplanning stage, integrating the building into existing transport routes and urban axes decreases project cost by reducing the need to build connecting infrastructure.
53
4
Key operational costs for arenas include maintenance and utility costs. Regardless of whether the facility is in use and generating revenue, the facility still needs to be cleaned, serviced and utilities would typically represent 30-60 percent of the total operational cost. Many owners and operators have adopted the use of preventative maintenance measures and use energy efficient utilities to reduce operational costs.
Back-of-house facilities in arenas include television and press facilities, function rooms and VIP areas, as well as changing areas,
and catering and administration facilities. The design of back-of-house space can have a significant effect on the quality and cost of operating the arena.
Staffing and administrative costs further impact operational costs all year round. On event nights, however, additional costs are absorbed to deliver the event, including casual staff and equipment, food and beverages, retail outlets, additional security, maintenance, ICT and cleaning staff. Staff costs can potentially be reduced by higher levels of initial investment in the mechanization of installations in the arena, such as moveable seating or the insulated floor and perimeter barriers of an ice rink. Increased mechanization also helps to reduce the down-time involved in changing the configuration of an arena thus resulting in increased revenues.
Disposal cost of sports facilities is usually limited to refurbishment or demolition as the facilities are purpose built and would require substantial investment to convert into another kind of asset.
Additional event costs Organizers/ushers
Security
Food and beverages
ICT and other event support equipment
Cleaning staff
Maintenance
Utilities
Tota
l ope
rati
onal
cos
ts
Daily costs Utility
Maintenance
Administration/staffing
KPI 6: Operating cost per service, user and event
KPI 7: Operating expense ratio — operating expense/gross operating income
KPI 8: Employee retention rate
KPI 9: Repeat business — volume of business/revenue generated from returning facility users and event organizers
KPI 10: Employee retention rate
54
4
Other sports thought leadership publications produced by AECOM:
Assessing the Opportunities of Venue Regeneration — opportunities in venue regeneration.
More than a Game — overview of developments within the sports sector.
Revitalising an Urban Asset — a review of successful examples in facility renewal and revitalization.
Portland’s New Pitch — case study on the renovating of the JELD-WEN Field.
The Rise and Rise of the Temporary Transformers — provides options and examples of successful legacy planning.
Please email [email protected] for your copy.
55
4
Leisure sectorLeisure is an important sector within any economy as it helps to attract domestic and international consumers, diversifying the income pool of a country. As well as its direct economic impact, which reflects spending on travel and tourism by residents and non-residents, and spending by governments on related services directly linked to visitors, such as cultural, such as museums, or recreational attractions, such as national parks, the industry has significant indirect and induced impacts. The indirect revenue drivers include capital investment spending by all sectors directly involved in the industry, such as transport, restaurants and leisure facilities for specific tourism use. Induced contributions relate to other supply chain effects.
Business and development drivers
Growth drivers — what market conditions support leisure development?
Demand within the sector is typically highly elastic. In a healthy economy, consumers are likely to spend on recreational and leisure activities, while in less affluent economic times, leisure-related expenses are the first to disappear from a consumer’s list of regular expenses. In addition, political events and/or natural disasters have the ability to impact the sector performance.
In general, leisure-related construction increases when three factors occur concurrently. Firstly, operating fundamentals are strong, driven by consumer demand (and business demand, i.e. in the hotel sector), measured by performance indicators, such as ticket sales, food and beverage (F&B) sales and occupancy levels. Demand growth will attract the attention of developers, lenders, operator chains and management companies.
56
4
Secondly, credit is readily available for new construction projects. Thirdly, our clients have particularly expressed that construction of new leisure facilities increases in the absence of attractive refurbishment or asset transformation opportunities. In markets with tighter credit conditions and an uncertain demand outlook, lenders are more likely to provide acquisition or refinancing loans for operating facilities with a proven net operating income history than construction financing for new projects. In addition, if market conditions are such that facilities are selling for below replacement cost, some investors may seek to acquire these assets at favorable prices and improve their value
with renovations, refurbishment and repositioning strategies rather than pursue new construction.
Key growth drivers – Economic activity
– Income growth/ urbanization
– Consumer spend
– Corporate/business travel
– Meetings, Incentives, Conferences and Exhibitions (MICE) sector
– Growth of tourism sector
– Credit conditions
– Socio-political stability
Key client insight“Construction of new leisure facilities increases in the absence of attractive refurbishment or asset transformation opportunities. Lenders are more likely to provide acquisition or refinancing loans for operating facilities with proven net operating income history than construction financing of new projects.”
Middle East Leisure Market
The leisure sector in the Middle East is primarily driven by the determination of individual countries to diversify their revenue streams, as well as religious tourism. Countries like Egypt, Lebanon and Jordan have long invested and benefited from foreign investments in the leisure sector as they have rich histories and natural attractions. The Gulf Cooperating Council (GCC) countries, although relatively lacking in natural attractions, have focused on creating man-made attractions to appeal to regional and international tourists.
The region’s geographical location — at the cross roads between the East and the West, make it easily accessible to tourists from all around the world. Major airport expansions already undertaken or planned in
Key client insight“Governments’ focus on raising its national profile through international advertising, organizing national festivals and hosting international events help attract leisure investors and consumers alike.”
57
4
many cities across the region will only help increase accessibility and boost regional and international tourism.
The leisure sector is a key development sector within most countries. However, elements such as political stability, government wealth and rising incomes have become essential growth drivers. Performance and success of the private sector will largely depend on political stability and credit availability.
Dubai is the top destination for international visitors and visitor spend in the region. Cairo’s long-standing reputation as a top international tourist destination is being challenged by political instability.
Top Middle East countries by international visitors, 2012 estimates
Source: MasterCard, AECOM
40
35
30
25
20
15
10
5
0
Visi
tors
in m
illio
ns
Dub
ai
Cai
ro
Abu
Dha
bi
Cas
abla
nca
Riy
adh
Amm
an
Tuni
s
Source: MasterCard, AECOM
Middle East top destination cities by international visitor spend, 2012 estimates
40
35
30
25
20
15
10
5
0
25
20
15
10
5
0
-5
-10
US
$ m
illio
n
Perc
ent
Dub
ai
2010 2011 2012 % Growth 2011 and 2012
Cai
ro
Bei
rut
Abu
Dha
bi
Cas
abla
nca
Amm
an
Tuni
s
58
4
Revenue drivers — what makes leisure developments successful?
Economic challenges, increased competition, rising costs, and ever changing consumer taste characterize the leisure industry. Revenues within the leisure sector depend on the ability of owners and operators to attract consumers and retailers by creating a demand for their services.
Owners and operators must maintain a firm understanding
of current and future consumer needs, behaviors and preferences to continuously develop products and services that meet consumer and retailer demand. Customer loyalty and brand awareness is a major focus as the leisure industry seeks new opportunities to build market share.
Their ability to attract multiple end-markets, individuals and businesses helps reduce project risk through revenue diversification. This is done through optimizing capacity and functionality of built spaces — incorporating services that have varying demand cycles. Clients have noted that there is a growing trend towards secondary services provided in hotels such as spas, restaurants and sport facilities which have become major contributors to the facilities top line.
Revenue drivers – Capturing and creating end-
market demands
– Capacity and space utilization (functional use and flexibility)
– Effective pricing
Key client insight“Secondary services provided in hotels such as spas, restaurants and sport facilities have become major contributors to the facility’s top line.”
Leisure sector projects by award date and country
Source: MEED
U.A.E.
Saudi Arabia
Qatar
Oman
Lebanon
Kuwait
Iraq
Bahrain
10, 000
2010-2012 2013-2015
30, 000
50, 000
20, 000
40, 000
60, 000
70, 000
US
$ bi
llion
59
4
Typical demand generators are location and infrastructure, corporate headquarters, offices and industrial parks, MICE activity, natural attractions or sporting events. These demands impact performance indicators such as ticket sales, room revenues or food and beverages revenues.
Leisure services prices need to reflect value of leisure and recreational experiences delivered. Revenue forecasts for leisure facilities in the subject market area are essential in determining the feasibility of a proposed facility or the value of an existing one.
Cost drivers — what are typical investment and operating costs of leisure facilities?
Leisure-related facilities have certain characteristics — a 24/hour schedule (hotels), diverse types of spaces, a large number of special services that the operators supply to guests, which affect capital costs, and operating costs alike. In addition, client and consumer expectations for modern facilities and latest equipment can result in high design specification and technology cost of leisure facilities. These costs need to be reviewed closely to ensure that they are in line with current consumer demands and forecasted changes within the market.
Performance indicators — monitoring the success of a facility
The necessity of performance indicators in the leisure sector is not unique compared to other sectors. However, the need is magnified considering rising consumer expectations and mounting operational costs. Owners and operators need to closely monitor their asset’s competitiveness and operational and financial efficiency to ensure they remain profitable in a highly elastic market.
Examples of key indicators are provided in the in-depth hotel review section overleaf.
60
4
Taking a closer look at the hotels and resorts sub-sector
Revenue streams in a full service hotel or resort facility are dominated by room sales, on average representing 64 percent of revenue generated. However, full service hotels tend to benefit from revenue generated from other value added services, particularly food and beverages sales which make up 30 percent of revenue generated.
Within the investment cost category, construction costs make up over 50 percent of the capital cost investment per room, regardless of hotel type. Land costs are also similar across the board, averaging around 13 percent. More variation is typically expected within the development costs and furniture, fixtures and equipment categories as they are highly dependent on hotel type and target audience — more sophisticated hotels and resorts would need to satisfy more refined client demands.
Average investment cost breakdown for hotels and resorts
Source: JLC Hospitality Consulting, HVS International
100
80
60
40
20
0
Perc
ent
% of total project cost
Pre-opening and working capital
Site improvement and building construction
Development and soft costs
Land
FF&E
KPI 1: Occupancy rate
KPI 2: Revenue per available room (RevPAR)
KPI 3: Total revenue per available room (TrevPAR)
KPI 4: Conference and banqueting revenue per available sqm (RevPAM)
Revenue breakdown
Source: Smith Travel Research (STR Global)
100
80
60
40
20
0
Perc
ent
Revenue
Cancellation Fee
Rentals and Other Income
Other Operated Departments
Telecommunications
Food and Beverage
Rooms
61
4
Operational cost is another main development success factor to consider. To effectively forecast and manage operational costs of a hotel, our clients have emphasized the importance of differentiating between operational cost types and their main drivers. Fixed operating costs such as staffing and administrative costs impact the whole spectrum of hotel and resort developments and are expected to remain almost constant throughout an operational year. Administrative and general costs, including staffing, typically make up about 45 percent of the total fixed cost of the facility. Management fees add another 16 percent on average. Together administrative and management costs make up more than 60 percent of a hotel’s fixed operational cost, making performance indicators such as employee retention and turnover important statistics to monitor.
Hotel INvestment Tool (HINT) is a unique interactive tool created by AECOM’s cost and economics experts to allow clients to balance investment with potential income.
For more details check aecom.com/HINT or contact, [email protected]
Breakdown of fixed operating costs
Source: Smith Travel Research (STR Global)
100
80
60
40
20
0
Perc
ent
Fixed operating cost
Reserve for Capital Replacement
Property Taxes
Management Fees
Insurance
Franchise Fees (Royalty)
Administrative & General
Breakdown of variable operating costs
Source: Smith Travel Research (STR Global)
100
80
60
40
20
0
Perc
ent
Variable operating cost
Utility costs
Telecommunications
Rooms
Property Operations & Maintenance
Other Operations Depts & Rentals
Marketing
Food & Beverage
62
4
Other leisure thought leadership publications produced by AECOM:
Quality Time — trends across leisure and culture developments, including hotels, theme parks and cultural buildings
The Planning Destination — incorporating sustainability into the business of travel and preserving the environments and cultures of tourist destinations. Ensuring sustainability drives all stages of resort planning.
Theme Index 2011 — annual report on the top theme parks throughout the world and global and local trends. The report is compiled by AECOM’s economics team in conjunction with the Themed Entertainment Association.
Please email [email protected] for your copy.
Operational variable costs, however, will depend greatly on capacity utilization and the ability of hotel owners and operators in creating economies of scale. Variable operating costs typically include utility costs (HVAC, water and energy costs), food and beverages, rooms, telecommunications and marketing. Maintenance, repair and replacement costs are also variable costs and are influenced by age of property and equipment, use of a preventive maintenance system, quality of initial facilities and equipment, and legislative/health and safety requirements. On average, food and beverage costs tend to exceed any other variable cost category, representing 37 percent of the total variable cost. Room costs are the second highest representing 30 percent.
An important factor to note within operational costs is that variable operational costs typically outweigh fixed costs. In our sample study, variable costs represented 75 percent of the total operational costs. Below is a comparison of major factors contributing to project success: investment, revenue and operating costs.
KPI 5: Gross operating profit per available room (GOPPAR)
KPI 6: Operating expense ratio — operating expense/gross operating income
KPI 7: Employee retention rate
KPI 8: Repeat business — volume of business/revenue generated from returning facility users and event organizers
Comparison of typical annual revenue and operating costs
Source: JLC Hospitality Consulting, HVS International, Smith Travel Research (STR Global)
Annual revenue
Annual variableoperating cost
Annual fixed operating cost
63
4
Business and development drivers
Healthcare sectorThe healthcare sector is undergoing dramatic changes in customer behavior, market dynamics and the regulatory framework, making the way healthcare is delivered ever more complex. Consumer-driven health, in which informed individuals demand greater choice and have more control over their healthcare spending, together with pressure to deliver the highest possible quality of care at the lowest possible cost, is driving the most dramatic shift in the industry. Healthcare providers have to re-evaluate products to meet increased demand and new business models to stay competitive. Healthcare facilities are diverse, ranging from hospitals, clinics and nursing homes, to high-tech diagnostic and research centers. By embracing the new competitive landscape, healthcare funders and providers will find new opportunities in both existing and new markets.
Growth drivers — what market conditions support healthcare developments?
Demand for healthcare provision is rising globally. In developed countries, demand is driven by changing demographics and epidemiological trends (ageing populations and chronic care needs) while in many developing countries the surging demand for more services is due to rising populations and income growth together with “diseases of prosperity,” such as obesity and diabetes.
64
4
Middle East Healthcare Market
Regulatory and funding reforms, together with increasing demand for healthcare services due to population and income growth, as well as an increase in lifestyle diseases, mean that the Middle East healthcare market is undergoing significant changes and major development.
With many governments planning further expansion of the sector, they are seeking increased private sector participation to fill gaps in services provision and infrastructure.
Healthcare services demands can be met through different channels, primarily public, private or charitable. Although demand for healthcare services is universal, objectives for undertaking healthcare provision varies by provider. Governments invest in healthcare to improve living standards of their populations, private investors focus on profits and charitable organizations are assumed to support community or
funders’ objectives, including religious and political. Cost pressure on governments to deliver health services for their population is leading to an increase in public and private sector partnerships, creating a global market for the private and charitable sector and helping governments provide sustainable healthcare for their citizens.
In addition, clients have indicated that the sector shift towards patient-centric healthcare delivery in many countries has encouraged growth of new market participants from industries such as travel and tourism, retail, information technology, telecommunications and health/wellness spas.
Key client insight“The proliferation of healthcare facilities built in the Middle East in association or partnership with the international healthcare industry “heavy weights” is driven by the need to build consumer confidence in local capabilities. Brand and reputation are key challenges that healthcare providers in the region need to overcome.”
Key growth drivers – Economic activity
– Government reforms and expenditure on healthcare
– Socio-political stability
– Population growth/demographic change/urbanization
– Rising income
Key client insight“The sector shift towards patient-centric healthcare delivery in many countries has encouraged the growth of new market participants.”
65
4
Supported by large budget surpluses, Gulf Cooperation Council (GCC) governments are making investments to support healthcare provision and bring the industry up to international standards in terms of bed capacity and the quality of healthcare services.
Promoting the industry to private players is a priority for all GCC governments, as it is clearly stated in their strategic and development plans.
US$10.9 billion worth of health contracts across 95 projects are known to have been awarded in 2011-12, the majority of which were in 2012.
127 projects worth US$22.5 billion are currently under construction.
62 schemes worth US$21.3 billion are currently in the pipeline to be awarded between 2013 and 2016.
Source: MEED (As of February 2013)
Healthcare project awards
Healthcare demand drivers
Size of bubble: Population growth (2012 to 2020f, absolute number in million)
MENA GDP and healthcare expenditure
Source: IMF, World Bank, AECOM
Qatar, the Kingdom of Saudi Arabia and Egypt have the highest forecast growth in healthcare spending per capita between 2012-2017.
Egypt, Iraq and the Kingdom of Saudi Arabia have the strongest projected population increase.
Saudi Arabia
Saudi Arabia
66
4
Revenue drivers — what makes healthcare developments successful?
The field of medicine is both complex and dynamic. The emergence of new diagnostic procedures, progress in surgical and non-surgical treatment methods and consumer awareness on the variety of available treatment options, add to the complexity of the healthcare sector’s dynamics. This is creating the dual challenge for healthcare providers having to keep up with a rapidly changing environment and to generate higher levels of customer loyalty.
Many patients today no longer seek medical attention solely at their local healthcare facility, but also seek second and third medical opinions from other local, regional or even international healthcare providers. This diversity in population needs is further compounded by differences in their income levels allowing for greater variability within the healthcare sector. As a result, healthcare facility owners and operators are finding that their revenue streams do not solely depend on providing good medical services but are increasingly more dependent on their ability to capture patient demand differences and to create appropriate products.
On the other spectrum of consumer-driven health is the increasing professionalization of medical care processes for an increasing number of illnesses and procedures, in which physicians and other providers are accepting and using more standardized protocols and guidelines for treating their patients.
These trends are the key drivers of overall spending in healthcare and are placing significant operational challenges on providers to improve their healthcare revenue generation. The revenues of a hospital depend partly on how many patients it can attract from its catchment area, its clinical expertise and its administrative qualities, such as facilities and process efficiencies.
Revenue drivers – Capturing target market
needs and creating suitable healthcare products
– Capacity and space utilization (functional use and flexibility)
– Intensity of non-built assets
– Effective pricing
Key client insight“Healthcare facility revenue streams do not solely depend on providing good medical services but are increasingly more dependent on the ability of owners and operators to capture patient demand differences and to create appropriate products.”
67
4
The success of a healthcare facility can be improved by creating multi-functional spaces that allow for a great level of operational flexibility, e.g. operating theaters and diagnostic machines available for rent to private consultants and physicians.
Medical procedure fees need to ever more reflect the value of the healthcare procedures/experiences delivered.
Cost drivers — what are typical investment and operating costs of healthcare facilities?
Cost control has been on the healthcare agenda for a long time, but demand surge and fiscal constraints have given the subject new urgency, favoring investment in new ways of delivering care.
Healthcare providers are facing extreme pressures to deliver
greater value — higher quality care at a lower cost — giving a focus on integrated care, capital costs, property management, streamlining administrative costs and accounting for the lifecycle cost of the facility.
Future-proofing further adds to a facility’s investment costs as owners and operators are increasingly becoming more aware of the need to create flexible spaces that can continue to operate efficiently to cope with changes in industry, patient or technology requirements.
Performance indicators — monitoring the success of a facility
Performance indicators evaluate asset and service data helping owners and operators estimate the quality of services, operational effectiveness, patient and employee satisfaction as well as the financial health of a facility or asset. As a result of professionalization of the healthcare sector and regulatory requirements imposed by healthcare authorities and certification bodies, measuring and monitoring performance indicators has become almost mandatory. Examples of key performance indicators (KPIs) are provided in the hospital in-depth review section opposite.
Key client insight“Success of a healthcare facility can be improved by creating multi-functional spaces ... e.g. by building facilities that can be rented to private consultants or physicians, you diversify your income pool and help raise your facility’s profile indirectly.”
Key client insight“In the Middle East, resourcing is a key element in the success of any healthcare facility. Lack of local and regional resources increases a facility’s dependency on foreign labor, which in turn increases operational costs associated with high staff turnover rates.”
68
4
Taking a closer look at hospital developments
Revenue sources for hospitals differ by hospital type. The revenues of public and private hospitals are primarily generated from insurance companies — whether public or private companies — with small segments coming from self-funded individuals. In countries where health insurance is not yet the norm, individuals are generally expected to self-fund their hospital visits.
Sources of revenue might be different (who pays the bill) between public and private hospitals, but the services generating the revenues are almost constant. Clients noted that medical and patient services typically accounted for over 95 percent of a hospital’s income. Other incomes usually generated from space rentals within a hospital facility, such as coffee shops and gift and flower shops, are small compared to the overall revenue.
Hospital design and resourcing is influenced by increased consumer demand, demographic changes and advancements in medicine. Best practice guidance for most hospital facilities today requires heavy capital investments in design and technology. New hospital facilities need to accommodate advancements in patient and physician behavioral research and be equipped with a high element of medical technology equipment.
Revenue by funding source
Source: Australian Government Productivity Commission Report
69
4
Excluding medical equipment and furnishings, services typically represents the largest segment of construction cost, accounting for 44 percent of the cost for district general hospitals in the Middle East. This reflects the high element of mechanical, electrical and plumbing works that need to be incorporated into a hospital’s design.
Medical equipment and furnishings also represent a substantial portion of the overall development cost. Teaching hospitals incorporating a high element of research and experimental medicine need more sophisticated medical equipment compared to other hospital types. Such hospitals can have medical equipment and furnishing costs that represent over 50 percent of a hospital’s overall capital cost.
Construction costs for iconic/landmark hospitals are generally higher than for typical district general hospitals. Unlike teaching hospitals, where capital cost increases are driven by medical equipment, higher costs for iconic hospitals are due to detailed architectural design, landscaping or furnishings.
KPI 1: Total operating revenue — revenue generated from services provided
KPI 2: Revenue split — by patient and diagnosis related group (DRG)
KPI 3: Revenue development — growth of revenue (%) split by patient and diagnosis related group (DRG)
KPI 4: Number of patients seen (volume)
KPI 5: Number of occupied hospital beds (volume)
Construction cost breakdown for a district general hospital*
Source: AECOM
*Breakdown excludes external works and services; tenant fit-out; fittings, furnishings and equipment (FF&E); professional fees
70
4
Construction costs increase with the size of a hospital but there are two key elements to note. First, operational efficiency of equipment and technology does not depend on hospital size as much as other requirements, i.e. bigger receptions and waiting areas to accommodate larger number of patients. Secondly, capacity utilization typically increases as hospital size increases. Up to a certain size, commonly 500 beds, the construction cost per bed decreases as the hospital size increases, due to economies of scale and optimizing the use of support equipment and facilities. Construction costs for larger hospitals with more beds tend to increase again as support facilities need to be larger and construction premiums associated with specialist consultants and contractor fees are added.
Land acquisition cost trends are case specific and depend on government support/subsidies, location and hospital size. Regardless of hospital ownership type (public or private) and location, fixed operational costs within a hospital typically outweigh variable operational costs.
Construction cost per bed by hospital size
Source: AECOM
Typical breakdown of operational expense
Fixed cost
Variable cost
Source: AECOM Analysis of five hospitals MHA, AGPC, Overlake Hospital FS, Cook Country Hospital FS
71
4
Despite the fact that hospitals today have a high element of technological structures that require maintenance and drive up utility costs, variable operational costs usually make up less than 40 percent of a facilities’ total operational costs. Fixed operational costs covering staff salaries and benefits make up over 55 percent of the total operational costs.
Hospital supplies are the most significant segment of variable operational costs for a hospital. Supplies correlate directly with patient treatment demands and requirements. Outsourced labor, including support nurses and personal care nurses, also make up a significant segment of variable operational cost.
Capital expenditure (CAPEX) needs have to be evaluated regularly as the growth and success of the facility depends on its ability to keep up with growing consumer demands and medical technology advancements. CAPEX requirements are divided into three categories — land, building and equipment. Land acquisition expenditures are undertaken least frequently and are part of long-term strategic growth plans. Building and equipment are more regular and can be expended on an annual basis, representing about 2.5 percent and 15 percent respectively of their original costs.
Fixed operational costs
Variable operational costs
Source: AECOM Analysis of five hospitals MHA, AGPC, Overlake Hospital FS, Cook Country Hospital FS
Utilities
Average Average
SuppliesAdministrative costs + insurance
Purchased services (incl. non-payroll staff)
Salaries and wagesMaintenanceEmployee benefits
100
90
80
70
60
50
40
30
20
10
0
72
4
Finally, refurbishment and demolition are the two main disposal cost options for a healthcare facility. Built structures tend to be highly specific and seldom provide opportunities for conversion to other uses. It should be noted that both disposal options, either refurbishment or demolition, of hospitals are expensive compared to other built structures. This is due to the high level of technology upgrades typically needed during the refurbishment process and the demolition premium resulting from complex processes involved in the safe disposal of medical and hazardous waste.
Other healthcare thought leadership publications produced by AECOM:
Ford’s Model T Solving the Healthcare Crisis — applying Henry Ford’s systemization model to healthcare.
Building Vitality — a look at AECOM’s holistic approach to healthcare project delivery.
Please email [email protected] for your copy.
KPI 6: Operating cost per patient and DRG
KPI 7: Operating expense ratio — operating expense/gross operating income
KPI 8: Case mix index — average DRG weight for a hospital’s entire patient intake (benchmark tool)
KPI 9: Medical staff retention rate
KPI 10: All staff retention rate
KPI 11: Medical staff training needs
KPI 12: Non-medical training needs
KPI 13: Patient satisfaction by DRG
KPI 14: Mortality rate by DRG
KPI 15: Complications occurrence rate by DRG
73
4
Education sectorEducation is the single largest expenditure for many governments, as investment in human capital is not only beneficial for individuals, but also to society at large as it helps to create conditions that could lead to increased economic growth prospects, productivity and technological development and adoption. Growth in education is seen as an important contributor to social mobility and the convergence in incomes, as well as a host of non-economic benefits, such as lower crime, better health and more informed citizens.
The balance of public and private funding of education is an important policy issue in many countries, particularly in those segments where full or nearly full public funding is less common, for example tertiary education. As more people participate in a wider range of educational programs offered by an increasing number of different providers, governments seek to attract private participants, forging new partnerships to mobilize the necessary resources and to share the costs and benefits. As a result, public funding increasingly provides only part of the investment in education, while the role of the private sector is becoming more important.
Globalization, integration of economies, high mobility of consumers and growing demand for product innovation intensifies demand for educational facilities in specific regions, with many governments competing to attract students. Schools, community colleges, vocational schools, colleges, universities and research centers all facilitate the knowledge acquisition and utilization process.
Business and development drivers
74
4
Middle East Education Sector
The Middle East is characterized by a young, rapidly growing population and a high rate of urbanization. These factors, combined with rising income levels and increased integration with world markets, make the region a high demand area for educational developments.
Educational developments sit high on government agendas and public spending is expected to grow as countries try to improve their economic standing by developing local skills and capabilities.
Growth drivers — what market conditions support education developments?
Demographic trends, income growth, awareness about the quality of education, government spending and private sector participation are the main drivers for education demand.
Within the sector there are two main segments, public and private education. While the former is primarily driven by government spending and development commitment, the latter is driven by the availability of a good business case — strong population demand and availability of funding for ventures. Public educational facilities are
primarily financed through government grants and hence, health of the governments’ balance sheets will heavily dictate the size and advancement of the sector. Private schools are mostly privately funded and, in addition to investor or alumni support, student tuition fees make up a significant portion of the school’s revenue.
Key client insight“In the GCC, an international school requires upfront investment of US$50-100 million, therefore building new educational facilities is primarily undertaken by high net worth individuals or entities with strong balance sheets.”
Key growth drivers – Economic activity
– Government reforms and expenditure on education
– Availability of credit
– Population growth/urbanization
– Rising income
– Socio-political stability
Key client insight“The growth of expatriate populations in the Middle East has helped boost the private education sector considerably.”
“Rising income levels of local populations and increased appreciation of education has promoted the growth of local students in private schools across the Middle East.”
75
4
The region’s positive economic activity further promotes the migration of expatriate workers and their families. This not only creates additional demand for education facilities, but further encourages a higher level of diversification within the sector, with many foreign governments and private investors seeking to develop facilities that better meet demand.
Within the Gulf Cooperating Council (GCC) countries there has also been a high proliferation of public and private investments in post-secondary institutes and tertiary educational facilities as investors recognize the population’s growing awareness of the value of education. Enrollments by foreign students, in particular from other Arab countries and Asia, have been steadily increasing in the higher education segment, mainly due to access to higher quality education and job opportunities after studies.
MENA selected countries populations by age bracket
Source: CIA Fact Book
Egypt, Kuwait, Oman and the Kingdom of Saudi Arabia have the youngest populations overall with more than 40% of their populations under 25.
Overall, GCC countries have the highest urbanization levels in the region with urbanization levels in Kuwait and Qatar already estimated to have reached 100%.
Growth in number of students by segment, GCC CAGR (%) 2011-2016f
Source: Alpen Capital
Total number of students expected to rise from 10.2 million in 2011 to 11.6 million in 2016, at a CAGR of 2.7%
Saudi Arabia (84%) and the U.A.E. (11%) account for 95% of students in the GCC
76
4
Revenue drivers — what makes educational developments successful?
Revenue drivers differ considerably by type of school, for example public, private non-profit, or private-for-profit.
Public educational facilities are heavily funded by governments and hence their revenue streams depend more on their ability to attract
more government funds rather than simply the number of students enrolled. A government sees an educational facility as a multi-faceted investment, an opportunity to build a productive workforce for the future, create jobs, improve communal ties in a neighborhood and reduce crime within a community. Governmental support for
Revenue drivers – Government support
– Gifts and grants
– Auxiliary enterprises
– Private sector investments
– Tuition fees
– Capacity and space utilization (functional use and flexibility)
Share in number of schools, GCC
Source: Alpen Capital
Total number of schools in 2016f: 51,450Number of schools CAGR 2011-2016f: 1.6%Share of private schools in 2016f: 20%
Education sector projects by award date and country
Source: MEED
Kuwait and the Kingdom of Saudi Arabia are expected to award the most education projects between 2013 and 2015. For Saudi Arabia these include two mega projects, Emaar’s Education Zone valued at US$4 billion and Al Mal’s Prince Abdulaziz bin Mosaed Economic City valued at US$1.2 billion.
77
4
public educational facilities is influenced by the number of students the facility serves, the students’ socio-economic backgrounds and the need for additional non-teaching services, such as counselling, health services and extra-curricular activities. An educational facility can secure more governmental funds by showing how valuable it is to the community it serves.
Revenue streams of private facilities are more diverse. Grants and contributions from public and private investors make up a significant portion of the revenue but so do tuition fees. A private educational facility can increase its revenue by raising its tuition fees. However, the need to reflect services provided to the consumers, while tuition fees increase may be restricted by the government to a certain extent.
In general, return on investment in education depends on the agent involved in the investment, namely individual participants (those undertaking education), funders (agencies making a financial commitment), providers (institutions/organizations delivering the service), and government/taxpayers/society (agency mandating that the service be funded and provided). Investment will only take place when at least one of these investors gains a sufficiently high rate of return.
Cost drivers — what are typical investment and operating costs of educational facilities?
The design of an educational facility and information communication technology (ICT) solutions it encompasses are key cost drivers in terms of delivering value for money and a balanced distribution of the expenditure. Although this impact is most significant during construction, it is not confined to the initial capital cost; affecting the operational lifecycle cost of the facility. The ability of the owners and developers to balance current construction designs and budgets with future requirements of the education community is needed to ensure long-term success and sustainability of the project. Multi-functional flexible spaces are typically used to future-proof against evolving teaching and learning styles.
Key client insight“In the GCC, school tuition is the main revenue source for private schools.”
“The GCC private education market is highly fragmented consisting of standalone schools owned by individual investors, this provides opportunities for existing operators to consolidate and develop economies of scale.”
78
4
Performance indicators — monitoring the success of an educational facility
Dynamic changes to end-market knowledge and skill requirements, and variations in source and size of revenue streams add to the complexity of variables to be incorporated into an educational facility’s business model. Key performance indicators need to be identified to help owners and operators evaluate asset operational and financial health, gauging operational effectiveness, quality levels, satisfaction of stakeholders and returns on investment.
Examples of key indicators are provided in the schools in-depth review section overleaf.
79
4
Taking a closer look at school developments
School revenue streams depend on the type of school and governmental support available. The revenue streams of public schools come primarily from government funds, with a small proportion of revenues generated from alternative sources such as sponsorships, donations or student tuition fees.
Private school revenues are more diverse. In countries where education is heavily subsidized, governments contribute significantly to private education. For example, in Germany government support accounts for almost 90 percent of the revenue. In the U.K., U.S. and the Middle East however, private school revenue funds are predominantly dependent on tuition fees paid by the parents.
The interaction between key development drivers such as availability of funding, source of operational revenue, facilities to be provided and segment of the education market targeted, dictates the type of school to be built and the size of capital investment needed to deliver the project.
Schools built with limited project budgets, that depend on private tuition fees for revenue typically sit at the bottom of the construction cost per student spectrum. Such private/budget schools are able to reduce construction costs by focusing on infrastructure needed for teaching purposes and reducing if not eliminating optional non-teaching support and student life enrichment facilities.
Public school construction costs per student are typically higher than private/budget schools and show limited inter-group variation. This is a result of schools being built to similar specification/facility requirements and being dependent on government funding to cover building and operational costs.
KPI 1: Total revenue — revenue generated from services provided and external funding/grants
KPI 2: Total revenue per enrolled student
KPI 3: Total operating revenue — revenue generated from services provided
KPI 4: Operating revenue per enrolled student
KPI 5: Revenue development — growth of revenue (%) split by type and number of students
KPI 6: Number of enrolled students (volume)
80
4
Operational costs of schools are unique in that regardless of school type (public/private) it is generally accepted that fixed operational costs will always outweigh variable operational costs. Staff wages and benefits represent the majority of fixed operational costs in a school —understandably since schools are part of the service sector. Therefore factors such as teachers’ pay and qualifications, class size and student-teacher ratios significantly impact a facility’s bottom line.
Private schools built under international standards, supported by private investor funding and high tuition fees can afford higher construction costs associated with providing a higher level of internal finishing and additional facilities covering a wider construction area.
Additional cost saving measures can be taken by creating multi-functional spaces and by increasing student density, such as lowering the space to student ratio.
Public school revenue by source
Source: OECD, PISA 2009 Database
Private school revenue by source
Source: OECD, PISA 2009 Database
81
4
Other key determinants of operational cost include educational level and facilities provided. Around the world, operating expenditures per student of post-secondary schools are higher than for elementary or secondary schools. Among the primary reasons for this difference are the higher educational qualifications of teaching and administrative staff in post-secondary education facilities, earning them higher salaries.
Utility and maintenance costs for schools also vary by level of specification within the facility. Schools with auditoriums, swimming pools and other student life enrichment facilities have to bare additional utility, maintenance and repair charges.
The asset lifecycle for a school can end in multiple ways. Schools share the most basic infrastructure requirements with other commercial or public assets, hence disposal options include asset conversion, refurbishment or demolition.
Construction cost per student by school type
Source: AECOM
Breakdown of total operating expenditure
Source: AECOM
82
4
Other education publications produced by AECOM:
Success — how to make the world’s best higher education campuses even better
Education space design — innovative solutions for building refurbishment
Please email [email protected] for your copy.
KPI 7: Operating cost per student
KPI 8: Operating expense ratio — operating expense/gross operating income
KPI 9: Central administrative expenditure as percent of total expenditure
KPI 10: Student to teacher retention ratio
KPI 11: Student retention rate
KPI 12: Teaching staff retention rate
KPI 13: All staff retention rate
KPI 14: Teaching staff training needs
KPI 15: Non-teaching training needs
KPI 16: Student satisfaction
KPI 17: Employee satisfaction
83
4
ASSET MANAGEMENT IN THE MIDDLE EASTObjectives and drivers of asset management
Asset management provides an overarching, multi-disciplinary and enterprise-wide perspective on the optimal long-term management of physical assets, allowing organizations to achieve their economic, social, environmental and cultural objectives.
The Institute of Asset Management defines asset management as “the systematic and coordinated activities and practices through which an organization optimally and sustainably manages its assets and asset systems, their associated performance, risks and expenditures over their life cycles for the purpose of achieving its organizational strategic plan.
Asset management layers
Source: AECOM Construction Industry Survey, 2012
To date, asset management in the Middle East is used interchangeably with facilities management and is generally not adopted as a management process.
84
4
Our industry survey revealed that there are number of drivers for organizations to adopt an enterprise-wide asset management process, including:
Regulatory Industry regulators are increasingly demanding that organizations have better knowledge of and take a longer view on system conditions
Organizational excellence
Provides a clearly documented strategy for managing assets from design to disposal at the end of useful life
Allows for making informed decisions to meet organizational objectives
Allows for optimal resource allocation
Operational cost Provides enhanced control over capital and operational expenditure
Minimizes lifecycle costs
Allows for more meaningful financial reporting
Provides clearly calculated levels of asset service, reliability and long-term funding requirements
Allows for effective identification and management of asset-related risks
Guarantees improved economic and social returns on infrastructure investments
Sustainability Regulators, operators and end users are increasingly demanding a longer-term, viable approach to assets
Asset performance
Allows for setting performance measures and performance targets
Competition Ensures service reliability
Ensures satisfied and informed customers
Meets the needs of a growing market
Asset management in the Middle East
Over the past decade, the Middle East has been one of the fastest growing construction markets globally. Consequently, research shows that physical assets in the Middle East could increase by US$1.6 trillion between 2005 and 2015, taking the stock of physical assets in the region to nearly US$200 trillion in 2015. With built assets now entering their first replacement cycle, greater focus will need to be placed on long-term objectives, not only in design and construction, but also in property management and maintenance to meet long-term organizational needs.
85
4
Developers, operators and investors in the Middle East are increasingly acknowledging the competitive advantage and benefits of adopting a systematic and coordinated approach to total asset management. However, there are a number of challenges. In particular, there is currently a substantial gap in the systematic management of built assets in the region. This is partially due to the lack of regulatory drivers that enforce the implementation of asset management, but also due to a number of market and organizational challenges.
Success factors for asset management
A number of asset management disciplines are often procured and implemented as separate services as opposed to an encompassing multi-disciplinary service. As a result of these trends, the true value of asset management as a strategic, organization-wide endeavor is not realized.
In order for the organization in the Middle East to successfully implement a true asset management approach, a number of success factors must be put in place.
Global stock of physical assets
Source: World Bank, IMF, AECOM estimate
Sub-Saharan Africa
MENA
South Asia
Europe & Central Asia
Latam & Caribbean
East Asia & Pacific
US$, trillion
Percentage growth of physical assets 2000 - 2005
by regionEast Asia & Pacific 52%South Asia 43%MENA 22%Sub-Saharan Africa 21%Latam & Caribbean 10%Europe & Central 2%
0 5 10 15
86
4
Market drivers will include regulatory requirements that support the implementation of asset management, as well as the consolidation of elements that fall under asset management as one service, which may be enforced with the market entry of true asset management service providers. These are also likely to drive the systematic and coordinated implementation of asset management in the region.
On the organizational side, organizations need to be willing to invest time and funds into the systematic and coordinated implementation of asset management, which includes, for example, linking asset management to decision making, overcoming resistance to change and building up databases and inventories of assets.
87
4
SUSTAINABILITY — A GLOBAL UNDERSTANDING According to our global industry survey, the importance of sustainability principles varies among construction industry participants in different parts of the world.
The research examined perceptions of sustainability and the practical application of sustainability principles on projects in the respective regions. Developed and developing countries alike generally place emphasis on environmental issues, such as managing impacts on scarce resources, as well as social and cultural considerations. However, in some cases there is a clear discord between participant’s understanding of sustainability and the level of consideration these principles were given on projects in their field.
Economic concerns are paramount for North American respondents, as sustainability considerations are defined by their long-term cost benefits and efficiency gains. In Europe, social issues are not as prominent. The focus is on the long-term efficiencies of an asset, energy consumption and renewable generation. In Asia-Pacific there is a strong focus on social principles — particularly in China. In the developed countries of the region, such as Australia, great importance is placed on a long-term, cost-benefit approach to project delivery, including the whole-of-life costs for an asset as imperative to sustainable practices.
A vision of sustainability — economic, environmental and social priorities
Source: AECOM Global Construction Sentiment Survey, 2012
High Economic
Priority
LowEconomic
Priority
Low Social Priority
High Social Priority
Low Environmental Priority
High Environmental Priority
North America
AustraliaEurope
New Zealand
Middle East
Sub-Sahara Africa
IndiaSE Asia
China
88
4
Generally, the construction industry in the Middle East believes that environmental sustainability issues are given high consideration on construction projects in the region. However, the picture is more mixed when looking closer at the industry, with more than a fifth of those surveyed arguing that environmental sustainability is given low priority in the region. Cultural issues are given more consideration than social consideration, which ranks relatively low on the agenda. The main topics associated with sustainability in the Middle East are energy efficiency and renewable energy, and life-cycle management of assets. Sustainable development is expected to progress in the region, with many countries already having established environmental authorities to develop policies and regulations. Others have already started implementing progressive programs, like the Estidama initiative in Abu Dhabi and the Green Building decree in Dubai, that require all developments to meet certain sustainability criteria.
The Middle East construction industry has a more conservative view of the amount of attention paid to sustainability on projects than other regions, pointing to opportunities for greater efforts as the industry believes that there is some way to go before full consideration of sustainability on projects is achieved.
89
5 REFERENCE
ARTICLES
90
91
5
PROCUREMENT ROUTESAll clients expect buildings to be delivered on time and budget, with an agreed level of quality, and with the risk rightly managed by their professional and contracting team. But which other multi-million or, in terms of the Middle East, multi-billion dollar business goes from having no staff or expenditure for the final delivery of a unique product as quickly as the construction industry? This is why the right procurement process, systems and approach are imperative.
To use an analogy, a new car model at US$50,000 has enormous planning, refinement and design occurring very early in the development process, the cost of which is in excess of the individual car. In the construction industry, we don’t have the luxury of rolling out thousands of the same product, which is why it is important we all learn from past experience and seek to understand and define what made a project successful. In doing this, we come to understand which procurement methods should be followed and why it is important to consider the structure and process for delivery from the start.
AECOM has developed strategies for the delivery of buildings that we know work, successfully delivering hundreds of projects over our long history. New and existing developers have the opportunity to learn from this knowledge and maximize the value of their time, cost and quality mix, while adhering to a process that increases the likelihood of their building being successfully procured by their team.
Studies conducted with our key clients who regularly undertake development work have shown that buildings can be delivered for 12-15 percent less cost when procured correctly, with no impact on quality or time. Buildings are more likely to be on time and meet clients’ expectations when procured correctly. So what is the right procurement approach for your building? Which funding strategy, funding partner, team behaviors, attitudes, communication channels, budget and program delivers the best approach and how can we best combine these to lead our clients to ultimate success?
92
5
Project Management
AECOM offers important advice to help determine the right procurement approach, adding the most value throughout the building process. This understanding of our clients’ time, cost and quality requirements maximizes the value we can offer. Some of the procurement strategies followed in the industry are listed below, but the real challenge is mixing the right approach for the needs of an individual client.
Traditional Lump Sum: Design is completed by the client’s consultants before contractors tender for and then carry out the construction. The contractor commits to a lump sum price and a completion date prior to appointment. The contractor assumes responsibility for all financial and program risks for carrying out the building works, while the client takes responsibility and accepts the risk for the quality of the design and the design team’s performance.
Accelerated Traditional: As above, but procured in the market place before being fully designed (normally 80-85 per cent designed), leaving simple elements of the building to be procured once the contractor has been appointed. It is important to understand the way in which a client procures the remaining elements of work with a contractor under this approach and to design out those areas that carry inherent risk early in the process. It may also involve the procurement of an early works package for enabling and/or piling works.
Two-Stage: A contractor is invited to become part of the project team in the initial stage, usually by way of a pre-construction fee. They design and procure the project on behalf of the client, until such time that a second stage lump sum offer can be agreed, which should be before construction begins on site. An understanding of the original appointment and the subsequent framework under which the second stage is agreed are the important aspects of this approach, as well as working with transparency and trust preventing an early commitment to a full scheme that a client cannot afford.
Design and Build: Detailed design and construction are undertaken by a single contractor in return for a lump sum price. Where a concept design is prepared by a design team employed directly by the client before the contractor is appointed (as is normally the case), the strategy is called develop and construct.
93
5
The contractor commits to a lump sum price, for completion of the design and the construction and to a completion date, prior to their appointment. The contractor can either use the client’s design team to complete the design or use his own team. With design and build, it is important to design out or specify in detail those parts of the building the client wants to see perform a particular function or provide a particular visual impact.
Management Contract: Design by the client’s consultants generally overlaps with the construction. A management contractor is appointed early to tender and commission elements of work progressively by trade or package contracts. The contracts are between the management contractor and the trade contractors, rather than between the client and sub-contractors. The management contractor in theory assumes responsibility for the financial (and program) risks for the works, but in reality this is normally diluted by the terms of the contract so their liability is similar to that of a construction manager.
Design, Manage and Construct: Similar to the management contract, the contractor is also responsible for the production of the detailed design or for managing the detailed design process.
Private Finance: A detailed and complicated form of procurement used predominantly for public services when the private sector feels it is advantageous to design, build, finance and operate a particular service or building type. It is becoming more popular in the Middle East as a way to limit public sector spending while meeting the demands of a growing population. AECOM has been involved with private finance for over 20 years. We have successfully completed many projects worldwide and use this global knowledge to benefit clients locally.
Engineer, Procure and Construct: This form of procurement places risk in the right hands and offers solutions to clients’ engineering requirements from those specialized to meet the performance requirements set by a client team. Many of the large utility companies procure work in this way, bringing high levels of certainty from the supply chain, which helps to achieve business-critical benefits over the long term.
94
5
MIDDLE EAST FORMS OF CONTRACTThis article considers the different forms of contract used in construction across the region.
Bahrain
Government work in Bahrain is undertaken using a bespoke suite of contract forms that were issued in 2009.
Private developers predominantly use the current International Federation of Consulting Engineers (FIDIC) Conditions of Contract for Construction, the 1999 edition of the “red book,” which is well understood in the local market but often heavily amended for specific use.
Most of the work completed in Bahrain is under a traditional lump sum form of contract, where the design is completed upfront and a price agreed with a contractor before work begins on site. However, many of the new developments are looking at faster procurement routes to adapt to market difficulties that are prevalent within the Middle East. Progress is slow as Bahrain has a limited number of contractors with the capacity and capability to undertake large-scale projects. Historically it has been difficult for new contractors to enter the Bahrain market.
Design and Build, and Two-Stage procurement strategies are in use across Bahrain but are not considered to be the industry norm. As more international private developers have started working in Bahrain with time constraints as their main driver, the market has adjusted to accommodate this demand. Design and Build contracts, however, are not routine. This is largely due to the Committee for Organizing Engineering Professional Practice (COEPP) restrictions on contractors undertaking in-house design which necessitates the novation of the client’s architect or a sub-consultant appointment.
Kingdom of Saudi Arabia
Construction contracts in the private sector are generally based on Fédération Internationale Des Ingénieurs-Conseils (FIDIC) forms of contract and are amended to suit the particular conditions for each project. Employers prefer lump sum versus re-measured contracts and normally exercise great control in the administration of the construction process by imposing various restrictions
95
5
on the engineer’s (consultant) authorities under the contract. All contracts are subject to Saudi laws where Islamic Sharia is the prime source of legislation. Litigation and arbitration are both available for resolution of disputes in the private sector.
Within the public sector, however, construction contracts are based on the Standard Conditions for Public Works, which are amended to suit particular projects. These conditions are generally based on those given in the fourth edition of the FIDIC Conditions of Contract for Works of Civil Engineering Construction, the FIDIC 4 “red book,” but with greater control given to the employer for the administration of the contract. All public work contracts are given on a re-measured basis and are subject to the Saudi Government Tendering and Procurement Regulations, as issued by Royal Decree M/58 dated 4.7.1427 AH. Disputes are referred to the Grievance Board and will not be dealt with under arbitration, unless a Special Council of Ministers Resolution is issued.
Lebanon
Construction contracts in Lebanon are generally based upon the FIDIC forms of contract. Some large-scale developers in Lebanon, as well as the Lebanese Government, have promoted the development and use of bespoke forms of contract, tailored to each client. Such contracts generally use the FIDIC 4 “red book” form as a basis, amended to a greater or lesser degree depending upon the risk profile of each client.
In the public sector, all works are procured on a re-measurement basis. The private sector, however, uses either fixed-price lump sum or re-measured contracts.
It is worth noting that there is no standard method of measurement of building works for Lebanon and the RICS Principles of Measurement (International) for Works of Construction (POMI) is widely used.
Design and Build contracts are not yet popular in Lebanon. Both arbitration and litigation methods are available for dispute resolutions in the private and public sectors.
Oman
Public works in Oman are undertaken using a bespoke government contract known as the Standard Documents for Building and Civil Engineering Works, fourth edition, 1999 (Standard Documents). The document is based on early
96
5
FIDIC contracts with the fourth edition containing only minor changes from the previous third edition, 1981. The most important change is that the contract is now printed in Arabic. The Ministry of Legal Affairs is in the process of preparing a new edition but its release date is yet to be announced.
The Standard Documents facilitate both a re-measurement and lump sum contract dependant on choice of clauses, and is based upon a fully completed design, specification and bill of quantities. The RICS Principles of Measurement (International) are the most widely used method of measurement.
Infrastructure projects have their own method of measurement, as detailed within the Ministry of Transport and Communications document, Highway Design Standards.
Oman Tender Board laws require all government projects to utilize the Standard Documents on every project, without amendment. The only current exception to this law is the new Muscat International Airport project which has been procured and awarded using a series of heavily amended FIDIC “yellow book” design and build contracts.
In addition, the Tender Board facilitates all government tenders centrally through the tender board process. Only the Royal Office and Royal Court of Affairs projects are exempt from this process, although they do go through a similar internal tender process.
Standard Documents are commonly used by private sector clients in the local market, particularly for small-to-medium sized contracts. Private clients tend to prefer the third edition as this is written in English, but varies only in a minor way from the Arabic fourth edition — preferred by the government ministries. International and private sector clients with large project contracts, worth more than US$150 million, commonly use an amended version of the FIDIC “red book.”
While some of the larger integrated tourism developments have used a Design-Build form of contract, Design and Build as a procurement route is not routinely used.
Qatar
In Qatar, the most common forms for building works are those issued by the Public Works departments through the Ministry of Municipal Affairs and Agriculture (MMAA) and the Qatar Petroleum Company (QP).
97
5
These are lump sum contracts, generally using bills of quantities or specifications and drawings. These contracts are onerous and slanted towards the client, but are usually administered in a reasonable manner.
In the private sector, similar contractual arrangements are adopted. However, there are now some construction projects being undertaken using cost plus or Design and Build arrangements, although these are usually for smaller scale fitting out or highly specialist works.
The last 12 months has seen an increase in the number of FIDIC-based contracts being implemented for both private and key public sector clients. In addition, in some very long duration contracts, the government is beginning to introduce a price adjustment mechanism to allow compensation for fluctuations in market prices.
Before any contract is awarded, there are commonly a number of rounds of negotiation, during which the price and other contractual terms can be modified to respond to a reduction in contract price.
United Arab Emirates (U.A.E.)
Construction contracts in the U.A.E. are predominantly based upon the FIDIC forms of contract. The growing number of large-scale developers and major repeat clients in the region has led to the development of bespoke forms of contract, tailored to each individual client. Such contracts generally use the FIDIC 4 “red book” form as a basis, amended to a greater or lesser degree depending upon the risk profile of each client. This also applies to works procured by the Dubai Municipality. The Abu Dhabi Municipality, however, bases its contract on a modified FIDIC 3 form, taken from the third edition of the FIDIC Conditions of Contract for Works of Civil Engineering Construction.
Contracts based on the 1999 “red book” are now starting to be used in the U.A.E., but in general the market remains firmly rooted in the FIDIC 4 form.
Civil works contracts within the U.A.E. are mostly procured on a re-measurable basis, whereas building works will generally be based on a fixed-price lump sum.
98
5
However, there are exceptions. More and more clients are procuring projects using a fast-track approach and will therefore incorporate a re-measurable element, reflecting those parts of the design which are incomplete at the tender stage.
Design and Build contracts are used on some major projects, but this procurement route is not yet commonplace. The increasing tendency for clients to demand a fast-track approach to projects does require a greater design input from the contractor, but this requirement is not always formalized in the contract wording itself.
99
5
BUILDING REGULATIONS AND COMPLIANCEThis article outlines the procedures for obtaining building permission across the region.
Bahrain
Procuring a Municipal Building Permit in Bahrain is done through a three stage process.
Stage 1: Seeking the Preliminary Building Permit
This is preliminary permission sought from the Municipality of Bahrain. To complete the application it is generally sufficient to include simple outline plans, cross-sections to indicate overall heights and an area statement. The main authorities involved at this stage are the municipality, the Physical Planning Directorate and the Roads Directorate.
Stage 2: Informing the Various Directorates
This should be done in writing to the town and Village Planning Directorate, Roads Directorate, the Civil Defence and Fire Services Directorate, the Electricity Distribution Directorate (EDD), EDD Damage Protection and Control Unit, the Sanitary Engineering Operations and Maintenance Directorate, the Water Distribution Directorate and Batelco. The initial contact should be made through the Central Planning Office (CPO) of the Ministry of Works.
Copies of the title deeds must be submitted at this stage. All relevant information and documentation is given to each of the above directorates, until the final building permit is in hand.
Stage 3: Obtaining the Final Municipal Building Permit
This is the third and last stage and is processed through each of the directorates in a specific sequence. The initial contact should be made through the municipality. All documents, drawings and municipality forms must be completed and submitted together with the appropriate fees for each directorate.
100
5
Municipal charges must be paid for the following elements:
– Site sign board
– Insurance on the site sign board
– Insurance for Construction Contract (refundable)
– Fee for occupying road
If the Environmental Affairs Department is involved in the process, they will charge a reviewing fee.
Kingdom of Saudi Arabia
Obtaining a building permit in the Kingdom of Saudi Arabia varies from region to region, however, they tend to follow the same basic principles. The various procedures and approvals from the main municipality, the branch municipality and the Fire Department need to be obtained. Obtaining these approvals typically takes between three to four months depending on the nature and size of the building/project.
The following is a general outline of the steps needed to obtain a building permit.
Stage 1: Obtaining letter from the Main Municipality
A letter from the owner is submitted to the main Riyadh Municipality, along with a copy of the land deed. The municipality checks the master plan of the area to ensure the suitability of the plot for the construction of a building. The municipality then writes a letter to the branch municipality of the area where the plot is located. This process takes five days and does not incur a charge.
Stage 2: Obtaining Preliminary Location Permit from Branch Municipality
The owner submits a copy of the letter obtained previously from the main municipality to the branch municipality, requesting an inspection of the plot to ensure that the plot length, width and total area are as indicated on the deed. The branch municipality then issues an approval to use the land. This process takes five days and does not incur a charge.
Stage 3: Obtaining approval from the Fire Department
The branch municipality writes to the Fire Department, or Civil Defence, to obtain its approval of the plan submitted by the owner for the fire-alarm and fire-fighting systems.
101
5
The Fire Department approves these plans and sends them back to the municipality. This process takes ten days and does not incur a charge.
Stage 4: Obtaining a Final Building Permit
The branch municipality issues a building permit and sends it to the main municipality for approval, which is given dependent on the nature of the building. The owner can collect the permit from the main municipality after one to three months. The cost of this permit is SAR 1,200.
Lebanon
Obtaining a building permit in Lebanon requires various procedures and approvals from the Order of Engineers and Architects, the Urban Planning (Development) Department, statutory authorities and the local municipality. The time needed to obtain these approvals is typically between six to twelve months.
In general, the procedures and documents required for obtaining a building permit are the same throughout Lebanon, except for the cities of Beirut and Tripoli where the Urban Development Department is located within the individual municipality. The following is a general outline of the steps needed to obtain a building permit:
Stage 1: Obtaining Ifadat Takhteet Wa Tasneef
To obtain this, the following documents must be submitted to the Urban Planning (Development) Department:
– Real Estate Registry (Ifedeh Ikarieh) from the Real Estate Department in each Mohafaza
– Official Land Survey (Kharitet Masaha) from the Cadastre Department
– Receipt Wasel Takhteet Wa Irtifak from the municipality
Stage 2: Appointing a registered civil engineer or an architect from the Order of Engineers and Architects to finish the permit file
The engineer must submit the following documents:
– Three copies of the contract agreement between the owner and the appointed engineer
– Four copies of the preliminary design drawings
102
5
– A written undertaking from the appointed engineer to submit the execution drawings
– A contract with other engineers involved in the project
Following no objection from the Order of Engineers and Architects, the appointed engineer or the owner must pay them the building permit fees to enable them to present the building permit file to the Urban Planning (Development) Department.
Stage 3: Appointing a chartered land surveyor to prepare a topographic drawing of the land
The appointed chartered land surveyor must prepare a topographic drawing of the land illustrating the different levels of the plot and register this at the Syndicate of Land Surveyors.
Stage 4: Submitting the building permit file to the Order of Engineers and Architects for their approval
The appointed engineer must submit an application that includes a copy of the building permit file for power connection to Electricité du Liban (EDL) and for other statutory authorities depending on the region in which the building is located.
Stage 5: Study of building permit file
– Submit and register the full building permit file to the Urban Planning (Development) Department. They will inspect the property and plans to ensure they conform to construction laws and regulations and then issue clearance for the building permit.
– The Urban Planning (Development) Department calculates the building permit taxes depending on the area of the building and the region in which this building is located.
– On approval by the Urban Planning (Development) Department, part of the calculated building taxes need to be paid to the Order of Engineers and Architects. The building permit file is withdrawn from the Urban Planning (Development) Department and registered at the municipality.
– On approval of the building permit by the Mayor, the owner shall pay the building permit taxes to the municipality and the Ministry of Finance.
103
5
Stage 6: Obtaining the building permit
The applicant collects the building permit from the municipality. The appointed engineer is allowed to apply at the Order of Engineers and Architects for a letter of commencement of works following the submission of the execution file.
Oman
The following is a general outline of the procedure for obtaining a building permit in the Sultanate of Oman but there are many further obligations and procedures to be completed within each of the stages. It is generally the responsibility of the lead consultant to obtain the building permit, although all applications must be signed off and submitted by locally registered consultants.
Stage 1: Submitting concept design/master plan stage application
The applicant submits a concept design/master plan application to the Ministry of Housing — Directorate General of Planning for approval of the proposed usage. At the same time, utility requirements are identified and indicated to the relevant utility providers. If the project is tourism related, further approvals are required from the Ministry of Tourism and the Supreme Committee for Town Planning.
Stage 2: Obtaining No Objection Certificates (NOCs)
No Objection Certificates are obtained from various governmental and municipal departments, including, the Royal Oman Police; Security Department; Traffic Department; Civil Defence; Ministry of Environment; Municipality Road Department; Ministry of Transport and Communications; Civil Aviation; and many more project-specific ministry departments, such as the Ministry of Education if the project is a school or university.
Stage 3: Submitting a building permit application
The full building permit application, including all NOCs, is submitted to the relevant municipality or statutory authority.
104
5
Stage 4: Obtaining building occupancy certificate
Upon completion of the building works, it is the responsibility of the construction contractor or lead consultant to obtain the occupancy permit. This is achieved by having the building permit signed off, effectively closing it out. To obtain this closure, the contractor must obtain certificates and signatures from various government departments, including Civil Defence, Food and Hygiene, etc., prior to presenting these to the municipality or statutory authority for final approval.
Qatar
Compared with many countries, the planning and building approval process in Qatar is relatively clear and structured.
Land ownership, other than by Qatari nationals and the state, is still extremely limited. The key process in securing development rights is obtaining a land title or pin number since without it all other permits and applications cannot commence. Once the land is secured, the project master plan is submitted for approval to the Planning Department and local municipality offices.
Stage 1: Design Control Stage 1 (DC1) Approval
General overviews and strategies for the utilities and primary infrastructure are submitted to the relevant utility companies for comment. During this process each department generally issues a series of reference numbers which are then used as the file number for all future submissions. The culmination of this round of submissions is the DC1 approval.
Stage 2: Design Control Stage 2 (DC2) Approval
As the design develops, a second round of submissions is made to the same utility departments for final approval. In addition, a submission is made to the Civil Defence department who review the fire and life safety aspects of the project.
Depending upon the scale and nature of the project, separate traffic studies may be required and these would be submitted to the Road Affairs Department for approval.
105
5
Stage 3: Building Permit
Once the DC2 approval is secured a further set of standard forms are circulated with a consolidated set of documents for final signing and approval. These documents constitute the building permit.
As a general guide, the whole process usually takes at least 80 days, depending upon the quality of the submission. However, in practice it often takes much longer due to comments from different departments and progressive design revisions.
During the whole process, it is generally not advisable to revise or modify any submission as it may delay the approval process.
All submissions have to be either bilingual or in Arabic and endorsed by locally registered and approved design companies. International companies cannot make these submissions by themselves.
There are some parts of Qatar that are exempt from the building permit approval process, but these are generally related to the oil and gas production facilities.
Recently a number of revisions have been made to the design standards of buildings, in particular high-rise structures. These address issues such as fire safety, refuge areas, the use of lifts in the event of fire and the nature and extent of façade glazing.
All fit-out projects are being brought under the control of the regulatory departments, in particular Civil Defence, and all such works are now required to be submitted for approval prior to commencement. This submission must be made by a registered local consultant and failure to do this can significantly delay the approval and permitting process.
United Arab Emirates (U.A.E.)
The following is a general outline of the procedure for obtaining a building permit in the U.A.E. However, there are many further obligations and procedures to be completed within each of the stages. Building permit application stage 3, for example, requires no less than 15 different forms, documents and separate approvals to be submitted as part of the application.
106
5
It is the responsibility of the construction contractor or lead consultant, to obtain the building permit, although all applications must be signed by locally registered consultants.
Stage 1: Submitting preliminary application
The applicant submits a preliminary application to the relevant municipality or statutory authority and pays a deposit.
Stage 2: Obtaining No Objection Certificates (NOCs)
No Objection Certificates (NOCs) are obtained from various governmental and municipal departments, including Civil Defence; Fire Department; Drainage; Communication; Water and Electricity; Civil Aviation; Oil and Gas; Coastal and Military.
Stage 3: Submitting a building permit application
The full building permit application, including all NOCs, is submitted to the relevant municipality or statutory authority.
Stage 4: Obtaining a building permit
On approval, the applicant collects the building permit and applies for a demarcation certificate.
Stage 5: Obtaining a building occupancy certificate
Upon completion of the building works, it is the responsibility of the construction contractor or lead consultant to obtain the occupancy permit. This is achieved by having the building permit signed off, effectively closing it out. To obtain this closure, the contractor must obtain certificates and signatures from various government and quasi-government departments, including Civil Defence, Food and Hygiene, and the Criminal Investigation Department prior to presenting these to the municipality or statutory authority for final approval.
It should be noted that although process requirements are fairly similar for free zones in Dubai, certain entities replace others. For example, the Dubai Municipality will be replaced with Trakhees and Civil Defence will be replaced with the Environment, Health and Safety Department.
AECOM’s project management team is experienced in the procedures for obtaining building permits across the region and are able to oversee this process.
107
6REFERENCE
DATA
108
109
6
GLOBAL UNITE SYSTEMCollaboration Drives Global Knowledge for Local Projects
Capturing and storing data from cost plans gives project teams the knowledge to deliver better project outcomes and minimise project budget risks.
Project developers increasingly need to capture and benchmark cost and design parameters on projects, requiring them to manage vast amounts of data.
Our response to capturing this data and ensuring it is presented in a way that is relevant to individual projects is Global Unite, a tool we have developed to drive evidence-based decision making.
By comparing active projects, these performance indicators go beyond cost and have the potential to influence decisions through information-led design.
Parameters that define a building’s effectiveness or efficiency can be analysed instantly against local or global standards, allowing clients to make informed design decisions consistent with world’s best practice.
Insights gathered by accessing the Global Unite tool have the capacity not only to improve project outcomes for our clients but also to build knowledge and support the advancement of our industry.
110
6
Measurement
The latest measurement software allows direct measurement from the design team’s electronic drawings (2D or 3D).
Accurate cost advice can be provided faster than before and by collaborating with the design team, parameters can be set to maximise the potential cost savings.
01
02Cost
Quantities and costs are measured and compared against the Global Unite benchmark system. When the design is incomplete, Global Unite provides confidence through an extensive evidence-base.
111
6
03Global Data Warehouse
Design and cost data from over 10,000 benchmarked projects centrally stored and globally accessible*.
Automated process that captures all projects by cost management stage.
All historic costs adjusted by location and time to suit your project.
*Increasing daily with every completed cost plan globally.
Benchmarking and Analytics
Compare cost and design attributes against local or world’s best practice to better inform project decisions.
0401
University, NSW, 0.98
00
2.5
2.0
1.5
1.0
0.5
5.000 10,000 20,00015,000
Floor Area (m2)
Cost Plan Best Fit
Exte
rnal
Wal
l : F
loor
Rat
io
112
6In
tern
atio
nal B
uild
ing
Cost
Com
pari
son
(US
$/m
²) Q
4 20
12
Bui
ldin
g Ty
peSy
dney
, Au
stra
liaH
ong
Kong
Bei
jing,
Ch
ina
Sing
apor
eKu
ala
Lum
pur,
Mal
aysi
aM
umba
i, In
dia
Ban
gkok
,Th
aila
ndJo
’bur
g,
Sout
h Af
rica
New
Yor
k,
U.S
.A.
Lond
on,
U.K.
RESI
DEN
TIAL
Aver
age
Mul
ti U
nit —
Hig
h R
ise
2,85
02,
320
685
1,80
051
541
587
584
04,
000
3,33
0
Luxu
ry U
nit —
Hig
h R
ise
3,28
02,
560
1,05
03,
100
1,165
550
1,22
51,
460
4,90
04,
950
Indi
vidu
al P
rest
ige
Hou
ses
3,42
03,
990
810#
3,00
01,
045
650
1,01
01,
470
4,10
06,
930
COM
MER
CIAL
/RET
AIL
Aver
age
Stan
dard
Offi
ces
— H
igh
Ris
e3,
180
2,34
097
52,
400
825
495
790
1,100
4,25
02,
950*
*
Pret
ige
Offi
ces
— H
igh
Ris
e3,
600
2,84
01,
300#
2,80
01,
210
590
1,03
51,
420
4,80
03,
600*
*
Maj
or S
hopp
ing
Cent
er2,
540
N/A
1,08
03,
200
995
550
985
1,100
3,35
02,
200
IND
USTR
IAL
Ligh
t Dut
y Fa
ctor
y68
01,
340
N/A
1,60
048
043
563
038
01,
250
1,49
0
Hea
vy D
uty
Fact
ory
860
1,46
0N
/A1,
700
570
670
N/A
530
2,00
02,
540
HOT
EL (i
nclu
ding
FF&
E)
3 St
ar/B
udge
t3,
280
2,88
01,
205*
3,10
0*1,
625
1,58
01,
410
1,69
02,
400
2,61
0
5 St
ar/L
uxur
y4,
550
4,01
01,
950*
4,50
0*2,
485
2,76
01,
980
2,23
05,
030
5,10
0
113
6
Bui
ldin
g Ty
peSy
dney
, Au
stra
liaH
ong
Kong
Bei
jing,
Ch
ina
Sing
apor
eKu
ala
Lum
pur,
Mal
aysi
aM
umba
i, In
dia
Ban
gkok
,Th
aila
ndJo
’bur
g,
Sout
h Af
rica
New
Yor
k,
U.S
.A.
Lond
on,
U.K.
Reso
rt S
tyle
4,13
0N
/AN
/A4,
500*
1,76
01,
480
2,34
52,
670
N/A
N/A
OTH
ER
Mul
ti St
orey
Car
Par
k89
01,
000
N/A
780
310
215
370
410
1,00
065
0
Dis
tric
t Hos
pita
l4,
070
3,50
0N
/AN
/A1,
080
690
N/A
1,110
6,80
04,
400
Prim
ary
& S
econ
dary
Sch
ools
1,71
01,
700
N/A
1,40
032
053
0N
/A76
03,
900
2,01
0
EXCH
ANG
E RA
TES
AUD
HK
DCN
YSG
DR
MIN
RTH
BZA
RU
SDG
BP
US
$1.0
0 (a
s of
1 N
ovem
ber 2
012)
0.95
7.98
6.46
1.22
3.14
54.5
831
.58
8.93
1.00
0.62
Excl
uded
: ext
erna
l wor
ks a
nd s
ervi
ces;
tena
nt fi
t-ou
t; fi
ttin
gs, f
urni
shin
gs a
nd e
quip
men
t (FF
&E)
; pro
fess
iona
l fee
s; la
nd a
cqui
sitio
n co
sts;
fina
ncin
g co
sts;
Val
ue
Adde
d Ta
x (V
AT) o
r sim
ilar,
whe
re a
pplic
able
.#
Rat
e in
clud
es p
arki
ng a
nd m
inim
al e
xter
nal w
orks
* R
ate
incl
udes
FF&
E**
Up
to 1
2 st
orey
s
114
6R
egio
nal B
uild
ing
Cost
Com
pari
son
(US
$/m
²) Q
4 20
12
Bui
ldin
g Ty
peB
eiru
t, Le
bano
nR
iyad
h, K
SADo
ha, Q
atar
Man
ama,
Bah
rain
Mus
cat,
Om
anAb
u D
habi
, U.A
.E.
RESI
DEN
TIAL
Aver
age
Mul
ti U
nit —
Hig
h R
ise
1,20
01,
500
1,50
01,
300
N/A
1,36
0
Luxu
ry U
nit —
Hig
h R
ise
1,70
01,
800
2,10
01,
600
N/A
1,70
0
Indi
vidu
al P
rest
ige
Hou
ses
2,10
01,
600
1,90
01,
700
1,69
01,
250
COM
MER
CIAL
/RET
AIL
Aver
age
Stan
dard
Offi
ces
— H
igh
Ris
e1,
250
1,50
01,
800
1,170
N/A
1,50
0
Pres
tige
Offi
ces
— H
igh
Ris
e1,
600
2,00
02,
050
1,28
0N
/A1,
770
Maj
or S
hopp
ing
Cent
er (C
BD
)1,
300
1,30
01,
250
1,23
01,
300
1,35
0
IND
USTR
IAL
Ligh
t Dut
y Fa
ctor
y75
070
097
062
078
061
0
Hea
vy D
uty
Fact
ory
1,00
090
01,1
0070
091
089
0
HOT
EL (i
nclu
ding
FF&
E)
3 St
ar/B
udge
t1,
700
1,70
02,
050
1,80
01,
820
1,90
0
5 St
ar/L
uxur
y3,
000
2,65
03,
350
2,62
02,
925
2,80
0
115
6B
uild
ing
Type
Bei
rut,
Leba
non
Riy
adh,
KSA
Doha
, Qat
arM
anam
a, B
ahra
inM
usca
t, O
man
Abu
Dha
bi, U
.A.E
.
Reso
rt S
tyle
N/A
3,20
03,
750
3,20
02,
665
3,40
0
OTH
ER
Mul
ti St
orey
Car
Par
k60
060
076
062
065
082
0
Dis
tric
t Hos
pita
l2,
700
2,00
03,
590
2,45
02,
340
3,15
8
Prim
ary
& S
econ
dary
Sch
ools
N/A
1,100
1,25
01,
510
1,23
51,
430
EXCH
ANG
E RA
TES
LBP
SAR
QAR
BH
DO
MR
AED
US
$1.0
0 (a
s of
1 N
ovem
ber 2
012)
1,50
73.
753.
640.
370.
383.
67
Excl
uded
: ext
erna
l wor
ks a
nd s
ervi
ces;
tena
nt fi
t-ou
t; fit
tings
, fur
nish
ings
and
equ
ipm
ent (
FF&
E); p
rofe
ssio
nal f
ees;
land
acq
uisi
tion
cost
s; fi
nanc
ing
cost
s; V
alue
Ad
ded
Tax
(VAT
) or s
imila
r, w
here
app
licab
le.
116
6M
echa
nica
l & E
lect
rica
l Cos
t Com
pari
son
(US
$/m
2 ) Q4
2012
Bui
ldin
g Ty
peB
eiru
t, Le
bano
nR
iyad
h, K
SADo
ha, Q
atar
Man
ama,
Bah
rain
Mus
cat,
Om
anAb
u D
habi
, U.A
.E.
RESI
DEN
TIAL
Aver
age
Mul
ti U
nit —
Hig
h R
ise
343
406
365
440
N/A
410
Luxu
ry U
nit —
Hig
h R
ise
437
510
530
730
N/A
540
COM
MER
CIAL
/RET
AIL
Aver
age
Stan
dard
Offi
ces
— H
igh
Ris
e34
341
648
0N
/AN
/A45
0
Pres
tige
Offi
ces
— H
igh
Ris
e41
647
872
067
0N
/A58
0
Maj
or S
hopp
ing
Cent
er (C
BD
)34
842
632
542
032
552
0
IND
USTR
IAL
Ligh
t Dut
y Fa
ctor
y22
931
229
035
031
036
0
Hea
vy D
uty
Fact
ory
296
416
335
400
420
480
HOT
EL (i
nclu
ding
FF&
E)
3 St
ar/B
udge
t27
641
649
558
0N
/A41
0
5 St
ar/L
uxur
y67
672
81,
050
870
N/A
820
117
6B
uild
ing
Type
Bei
rut,
Leba
non
Riy
adh,
KSA
Doha
, Qat
arM
anam
a, B
ahra
inM
usca
t, O
man
Abu
Dha
bi, U
.A.E
.
Reso
rt S
tyle
754
832
1,150
1,00
094
088
0
OTH
ER
Mul
ti St
orey
Car
Par
k13
015
622
512
013
513
0
Dis
tric
t Hos
pita
lN
/AN
/AN
/AN
/AN
/AN
/A
Prim
ary
& S
econ
dary
Sch
ools
N/A
N/A
N/A
N/A
N/A
N/A
EXCH
ANG
E RA
TES
LBP
SAR
QAR
BH
DO
MR
AED
US
$1.0
0 (a
s of
1 N
ovem
ber 2
012)
1,50
73.
753.
640.
370.
383.
67
Excl
uded
: inc
omin
g se
rvic
e ut
ility
line
s an
d co
nnec
tions
; site
dis
trib
utio
n ne
twor
ks; a
ssoc
iate
d bu
ilder
’s w
ork;
and
Val
ue A
dded
Tax
(VAT
) or s
imila
r, w
here
app
licab
le.
118
6M
ajor
Mea
sure
d U
nit R
ates
(US
$) Q
4 20
12D
escr
iptio
nU
nit
Bei
rut,
Leba
non
Riy
adh,
K.S
.A.
Doha
, Qat
arM
anam
a, B
ahra
inM
usca
t, O
man
Abu
Dha
bi, U
.A.E
.
Bas
emen
t Exc
avat
ion
m³
1511
127
45
Foun
datio
n Ex
cava
tion
m³
1613
158
714
Impo
rted
Str
uctu
ral F
ill
m³
3513
3013
.511
11
Conc
rete
in P
ad F
ootin
gs (2
5 m
egap
asca
ls
(Mpa
)m
³12
512
514
012
892
108
Conc
rete
in W
alls
(32
meg
apas
cals
(Mpa
)m
³13
513
015
013
599
117
Conc
rete
in S
labs
(32
meg
apas
cals
(Mpa
)m
³12
513
015
013
510
011
7
Form
wor
k to
Sla
b So
ffits
(und
er 5
met
ers
(m) h
igh)
m²
2032
4420
1929
Form
wor
k to
Sid
e an
d So
ffits
of B
eam
sm
²23
4044
2015
29
Prec
ast W
all P
anel
Arc
hite
ctur
al w
ith S
and
Bla
st F
inis
hm
²20
020
018
520
518
917
3
Rein
forc
emen
t in
Bea
ms
kg1.1
1.2
1.4
1.2
11
Stru
ctur
al S
teel
in B
eam
s kg
3.5
44
32
2.9
Stru
ctur
al S
teel
in Tr
usse
s kg
3.5
44
33
2.9
Hol
low
Con
cret
e B
lock
Par
titio
n (2
00 m
illim
eter
s (m
m) t
hick
)m
²30
3040
3022
22
119
6
Thes
e ra
tes
(US
$) a
re in
dica
tive
and
repr
esen
t com
petit
ivel
y te
nder
ed p
rice
s fo
r ave
rage
spe
cific
atio
n w
orks
of t
he ty
pe d
escr
ibed
. Loc
atio
n fa
ctor
s sh
ould
be
appl
ied
to a
ddre
ss g
eogr
aphi
c va
riat
ions
in e
ach
coun
try.
The
rate
s ar
e ex
clus
ive
of c
ontr
acto
rs’ p
relim
inar
ies
(site
est
ablis
hmen
t, sc
affo
ldin
g, h
oist
ing
etc)
and
Val
ue
Adde
d Ta
x (V
AT) o
r sim
ilar,
whe
re a
pplic
able
.
Des
crip
tion
Uni
tB
eiru
t, Le
bano
nR
iyad
h, K
.S.A
.Do
ha, Q
atar
Man
ama,
Bah
rain
Mus
cat,
Om
anAb
u D
habi
, U.A
.E.
Alum
iniu
m F
ram
ed W
indo
w
(6.5
mill
imet
ers
(mm
) cle
ar g
lass
co
mm
erci
al q
ualit
y)
m²
250
440
255
220
273
230
Alum
iniu
m C
urta
in W
all S
yste
m
(incl
udin
g st
ruct
ural
sys
tem
)m
²70
061
560
053
554
054
0
Aver
age
Qua
lity
Stee
l Stu
d Pa
rtiti
on
(with
sin
gle
laye
r pla
ster
boar
d ea
ch s
ide)
m²
5051
9552
6039
Susp
ende
d M
iner
al F
ibre
Cei
ling
m²
3235
3648
3535
Pain
t on
Plas
terb
oard
Wal
ls
m²
108
58
47
Cera
mic
Tile
s to
Wal
ls
m²
3535
7053
2436
Aver
age
Qual
ity M
arbl
e Pa
ving
on
Scre
edm
²13
016
020
016
098
163
Anti
Stat
ic C
arpe
t Tile
s to
Offi
ce
and
Adm
in A
reas
m²
6560
7539
5651
120
6M
ajor
Mat
eria
l Pri
ces
(US
$) Q
4 20
12D
escr
iptio
nU
nit
Bei
rut,
Leba
non
Riy
adh,
K.S
.A.
Doha
, Qat
arM
anam
a, B
ahra
inM
usca
t, O
man
Abu
Dha
bi, U
.A.E
.
ORD
INAR
Y PO
RTLA
ND
CEM
ENT
In B
ags
Tn10
388
8595
9266
In B
ulk
Tn94
7880
8082
61
SAN
D
Sand
for c
oncr
etin
g m
³22
1225
2013
12
AGG
REG
ATE
19m
illim
eter
s (m
m) t
hick
Agg
rega
te
m³
1714
3425
1518
READ
Y M
IXED
CON
CRET
E
Gra
de 5
0 O
rdin
ary
Port
land
cem
ent (
OPC
) m
³97
7510
510
079
68
Gra
de 4
0 O
rdin
ary
Port
land
cem
ent (
OPC
) m
³88
7099
9074
59
Gra
de 2
0 O
rdin
ary
Port
land
cem
ent (
OPC
) m
³74
6094
8063
49
REIN
FORC
ING
STE
EL
Hig
h T e
nsile
Tn
660
690
900
800
725
680
Mild
Ste
el
Tn69
069
085
080
072
574
0
121
6
Thes
e co
st ra
tes
(US
$) a
re in
dica
tive
and
repr
esen
t sup
ply-
only
cos
ts o
f the
mat
eria
ls li
sted
. Loc
atio
n fa
ctor
s sh
ould
be
appl
ied
to a
ddre
ss g
eogr
aphi
c va
riat
ions
in
each
cou
ntry
. The
rate
s ar
e ex
clus
ive
of V
alue
Add
ed T
ax (V
AT) o
r sim
ilar,
whe
re a
pplic
able
.
Des
crip
tion
Uni
tB
eiru
t, Le
bano
nR
iyad
h, K
.S.A
.Do
ha, Q
atar
Man
ama,
Bah
rain
Mus
cat,
Om
anAb
u D
habi
, U.A
.E.
HOL
LOW
CON
CRET
E BL
OCKW
ORK
100
mill
imet
ers
(mm
) thi
ck
m²
47
918
76
200
mill
imet
ers
(mm
) thi
ck
m²
89
1020
97
STRU
CTUR
AL S
TEEL
WOR
K
Mild
Ste
el G
rade
50
to B
S 43
60
Tn1,
500
1,40
01,
540
1,30
01,
470
1,09
0
TIM
BER
Har
dwoo
d M
eran
ti m
³1,
600
732
1175
790
769
885
Soft
woo
d m
³55
043
277
539
545
444
3
FUEL
Die
sel
Litr
e0.
850.
070.
270.
270.
380.
89
Petr
ol P
rem
ium
95
Litr
e1.1
40.
160.
250.
270.
310.
47
122
6La
bor C
osts
(US
$) Q
4 20
12D
escr
iptio
nU
nit
Bei
rut,
Leba
non
Riy
adh,
K.S
.A.
Doha
, Qat
arM
anam
a, B
ahra
inM
usca
t, O
man
Abu
Dha
bi, U
.A.E
.
Conc
rete
r D
ay28
4540
2940
29
Stee
l Ben
der
Day
2850
4058
4029
Carp
ente
r D
ay37
5044
5848
31
Mas
on
Day
3250
4450
4031
Gen
eral
Lab
orer
D
ay20
2527
4627
20
Cran
e O
pera
tor
Day
6025
6684
5459
Hea
vy M
achi
nery
Ope
rato
r D
ay55
6566
7554
54
Dum
p Tr
uck
Driv
er
Day
3255
5059
3641
Plum
ber
Day
3570
5575
4844
Elec
tric
ian
Day
3565
5587
4846
Fore
man
D
ay11
090
9013
268
74
Site
Eng
inee
r M
onth
4,20
05,
000
7,00
05,
250
4,02
05,
600
Cons
truc
tion
Man
ager
M
onth
8,50
013
,000
14,0
0011
,130
11,4
0011
,200
Thes
e ra
tes
(US
$) a
re in
dica
tive
and
repr
esen
t an
all-
in u
nit c
ost f
or e
ach
of th
e di
scip
lines
list
ed. I
nclu
ded:
wag
es, s
alar
ies
and
othe
r rem
uner
atio
ns p
resc
ribe
d by
lo
cal l
abor
legi
slat
ion,
ave
rage
allo
wan
ces
for c
osts
of e
mpl
oym
ent,
recr
uitm
ent,
visa
s/pe
rmits
, pai
d le
ave,
trav
el, a
ccom
mod
atio
n, h
ealt
h an
d w
elfa
re. E
xclu
ded:
ov
ertim
e w
orki
ng, c
ontr
acto
r mar
k-up
for o
verh
eads
and
pro
fit, V
AT (V
alue
Add
ed T
ax) o
r sim
ilar,
whe
re a
pplic
able
. The
se c
ost r
ates
sho
uld
not b
e m
isin
terp
rete
d as
co
ntra
ctor
s’ da
ywor
k ra
tes.
123
6B
uild
ing
Serv
ices
Sta
ndar
dsSu
bjec
tB
CO (U
.K.)
Spec
ifica
tion
20
09B
ahra
in S
peci
ficat
ion
U.A
.E. S
peci
ficat
ion*
Qat
ar S
peci
ficat
ion
Om
an S
peci
ficat
ion
Leba
non
Spec
ifica
tion
Net
: Gro
ss R
atio
(Typ
ical
)80
- 85
%70
- 80
%75
- 80
%70
- 80
%70
- 80
%80
- 85
%
Occu
panc
y St
anda
rds
— Ty
pica
l1:
8 - 1
:13/
m²
1:10
- 1:
14/m
²1:
10 -
1:15
/m²
1:10
- 1:
14/m
²1:
10 -
1:15
/m²
1:12
- 1:
14/m
²
Occu
panc
y St
anda
rds
— D
eale
rno
ne s
tate
d1:
7 -
1:12
/m²
1:7/
m²
1:7
- 1:
12/m
²1:
7/m
²1:
7/m
²
Occu
panc
y St
anda
rds
— To
ilets
Sing
le s
ex 1
per
son
to
12m
² usi
ng 6
0/60
mal
e/fe
mal
e ra
tio b
ased
on
120%
pop
ulat
ion
Sing
le s
ex 1
per
son
to
12m
² usi
ng 7
0/30
mal
e/fe
mal
e ra
tio b
ased
on
120%
pop
ulat
ion
Sing
le s
ex 1
per
son
to
12m
² usi
ng 7
0/30
mal
e/fe
mal
e ra
tio b
ased
on
120%
pop
ulat
ion
Sing
le s
ex 1
per
son
to
12m
² usi
ng 7
0/30
mal
e/fe
mal
e ra
tio b
ased
on
120%
pop
ulat
ion
Sing
le s
ex 1
per
son
to
12m
² usi
ng 7
0/30
mal
e/fe
mal
e ra
tio b
ased
on
120%
pop
ulat
ion
Sing
le s
ex 1
per
son
to
14m
² usi
ng 6
0/60
mal
e/fe
mal
e ra
tio b
ased
on
120%
pop
ulat
ion
Form
of A
ir Co
nditi
onin
gFa
n Co
il U
nits
, VRV
/ VR
F, VA
V, D
ispl
acem
ent,
Chill
ed C
eilin
g/Be
am,
Nat
ural
or m
ixed
mod
e ve
ntila
tion
Fan
Coil
Uni
ts, V
AV, D
X,
Cons
tant
Vol
ume
Fan
Coil
Uni
ts, V
AV,
Dow
nflow
Uni
tsFa
n Co
il U
nits
, VAV
, VA
V w
ith R
e-H
eat,
DX,
Cons
tant
Vol
ume,
pla
te
heat
exc
hang
ers
Fan
Coil
Uni
ts, V
AV,
Dow
nflow
Uni
tsFa
n Co
il U
nits
, VAV
, D
ispl
acem
ent,
Chill
ed
Ceili
ng/B
eam
Hea
ting
and
Air C
ondi
tioni
ng
Inte
rnal
Crit
eria
24o C,
+/-
2o C
(Sum
mer
) 22
o C, +
/- 2
o C (W
inte
r)22
o C, +
/- 1
o C22
o C, +
/- 2
o C22
o C, +
/- 2
o C22
o C, +
/- 2
o C22
o C, +
/- 2
o C
Fres
h Ai
r Sup
plie
s12
- 16
lite
rs p
er s
econ
d pe
r per
son
10 li
ters
per
sec
ond
per
pers
on12
- 16
lite
rs p
er s
econ
d pe
r per
son
12 -
16 li
ters
per
sec
ond
per p
erso
n12
- 16
lite
rs p
er s
econ
d pe
r per
son
12 -
16 li
ters
per
sec
ond
per p
erso
n
Vent
ilatio
n —
WCs
(Ext
ract
)no
ne s
tate
d12
Air
Chan
ges
per H
our
3 - 1
0 Ai
r Cha
nges
per
H
our
10 A
ir Ch
ange
s pe
r Hou
r10
Air
Chan
ges
per H
our
non
e st
ated
124
6Su
bjec
tB
CO (U
.K.)
Spec
ifica
tion
20
09B
ahra
in S
peci
ficat
ion
U.A
.E. S
peci
ficat
ion*
Qat
ar S
peci
ficat
ion
Om
an S
peci
ficat
ion
Leba
non
Spec
ifica
tion
Inte
rnal
Hea
t Gai
ns —
Lig
htin
g lo
ad12
W/m
²15
W/m
²12
W/m
²12
- 15
W/m
²12
W/m
²12
W/m
²
Inte
rnal
Hea
t Gai
ns —
Equ
ipm
ent
load
(Typ
ical
)no
ne s
tate
d25
W/m
²15
W/m
²15
W/m
²15
W/m
²12
W/m
²
Inte
rnal
Hea
t Gai
ns —
Equ
ipm
ent
load
(Dea
ler)
none
sta
ted
60 -
215
W/m
²45
W/m
²no
neno
ne s
tate
dno
ne
Supp
lem
enta
ry c
oolin
g al
low
ance
(e
.o./%
are
a)25
W/m
², 25
% a
rea
none
25 W
/m² t
o 25
% a
rea
none
none
sta
ted
25W
/m²,
25%
are
a
Acou
stic
s —
Offi
ces
NR
35 -
40N
R 35
NR
30 -
35N
R 30
- 35
NR
30 -
35N
R 35
- 38
Acou
stic
s —
Com
mon
Are
asN
R 40
- 45
NR
40N
R 40
- 45
NR
40N
R 40
NR
40 -
45
Prim
ary
Pow
er —
Lig
htin
g12
W/m
²15
W/m
²12
W/m
²12
- 15
W/m
²12
- 15
W/m
²12
W/m
²
Prim
ary
Pow
er —
Typi
cal
15 -
25 W
/m²
35 W
/m²
25 W
/m²
30 -
40 W
/m²
25 -
30 W
/m²
15 -
25 W
/m²
Prim
ary
Pow
er —
Dea
ler
none
400,
800
or 1
,500
W
per d
esk
800
or 1
,600
W/p
erso
nno
neno
ne s
tate
dno
ne
Prim
ary
Pow
er U
pgra
de (e
/o
pow
er/ %
are
a)20
- 25
W/m
², 20
- 25
%
area
none
25 W
/m² t
o 25
%ar
eano
neno
ne s
tate
d20
- 25
W/m
², 20
- 25
%
area
125
6Su
bjec
tB
CO (U
.K.)
Spec
ifica
tion
20
09B
ahra
in S
peci
ficat
ion
U.A
.E. S
peci
ficat
ion*
Qat
ar S
peci
ficat
ion
Om
an S
peci
ficat
ion
Leba
non
Spec
ifica
tion
Ligh
ting
— O
ffice
300
- 500
lux,
Uni
form
ity
Ratio
0.7
400
- 500
lux
350
- 500
lux,
Uni
form
ity
Ratio
0.8
500l
ux40
0 - 5
00lu
x, U
nifo
rmity
Ra
tio 0
.830
0 - 5
00lu
x, U
nifo
rmity
Ra
tio 0
.8
Ligh
ting
— S
tairs
/Circ
ulat
ion
200
- 270
lux
250l
ux20
0 - 2
70lu
x
Ligh
ting
— W
Cs21
5lux
200l
ux21
5lux
Ligh
ting
— P
lant
room
s21
5lux
150l
ux21
5lux
Pass
enge
r lift
s —
Cap
acity
and
w
aitin
g tim
es80
% lo
adin
g w
ith 2
5 se
cond
wai
ting
inte
rval
, ha
ndlin
g 15
% in
5
min
utes
. Pop
ulat
ion
dens
ity 1
:12
80%
load
ing
with
35
seco
nd w
aitin
g in
terv
al,
hand
ling
capa
city
of 1
1%
to 1
7% in
5 m
inut
es.
Popu
latio
n de
nsity
1:1
2
80%
load
ing
with
35
seco
nd w
aitin
g in
terv
al,
hand
ling
15%
in 5
m
inut
es. P
opul
atio
n de
nsity
1:1
4
80%
load
ing
with
30
seco
nd w
aitin
g in
terv
al,
hand
ling
15%
in 5
m
inut
es. P
opul
atio
n de
nsity
1:1
4
80%
load
ing
with
30
seco
nd w
aitin
g in
terv
al,
hand
ling
15%
in 5
m
inut
es. P
opul
atio
n de
nsity
1:1
4
80%
load
ing
with
30
seco
nd w
aitin
g in
terv
al,
hand
ling
15%
in 5
m
inut
es. P
opul
atio
n de
nsity
1:1
4
* S
peci
fic to
the
Emir
ate
of A
bu D
habi
(diff
erin
g st
anda
rds
in th
e se
ven
Emir
ates
). Ex
clud
es im
plic
atio
ns o
f new
bui
ldin
g co
de re
gula
tions
for t
he E
mir
ate
that
cam
e in
to e
ffec
t at t
he b
egin
ning
of t
he 2
011.
126
6Ex
chan
ge R
ates
Loca
l cur
renc
y to
US
$1.0
0
Late
st20
1220
1120
12 v
s 20
11 P
erce
nt
End
Mar
ch 2
013
Aver
age
Low
Hig
hAv
erag
e
Leba
nese
Pou
nd1,
486
1,48
71,
471
1,49
91,
491
-0.3
Egyp
tian
Poun
d6.
746.
035.
986.
165.
922.
0
Jord
ania
n D
inar
0.70
60.
706
0.70
50.
708
0.70
60.
0
Saud
i Riy
al3.
75fix
edfix
edfix
edfix
edfix
ed
Kuw
ait D
inar
0.28
40.
280
0.27
70.
282
0.27
61.
3
Qat
ari R
iyal
3.63
fixed
fixed
fixed
fixed
fixed
Bah
rain
i Din
ar0.
374
fixed
fixed
fixed
fixed
fixed
U.A
.E. D
irham
3.67
fixed
fixed
fixed
fixed
fixed
Om
ani R
ial
0.38
4fix
edfix
edfix
edfix
edfix
ed
Iraqi
Din
ar1,1
471,1
511,1
281,1
651,1
58-0
.7
Sou
rce:
Oan
da.c
om
127
6Measurement Formulae — Two Dimensional FiguresFigure Diagram Area Perimeter
Square a² 4a
Rectangle ab 2(a + b)
Triangle ½ ch a + b + c
Circle π r²¼π d²
where 2r = d
2π rπd
Parallelogram ah 2(a + b)
Trapezium ½h (a + b) a + b + c + d
Ellipse Approximatelyπ a b
π (a + b)
Hexagon 2.6 x a²
Octagon 4.83 x a²
Sector of circle
½ rb or q π r²
note b = angle q π r²
Segment of circle
S - Twhere S = area of sector
T = area of triangle
Bellmouth 3 x r²
360
360
14
128
6
Measurement Formulae — Three Dimensional FiguresFigure Diagram Surface Area Volume
Cube 6a² a³
Cuboid/ rectangular block
2(ab + ac + bc) abc
Prism/ triangular block
bd + hc + dc + ad ½ hcd
Cylinder 2π rh + 2πr²πdh + ½πd²
πr²h¼πd²h
Sphere 4πr² 4/3r³
Segment of sphere
2πRh 1/6 πh (3r² + h²)1/3 πh² (3R - H)
Pyramid (a + b) l + ab 1/3 abh
Frustum of a pyramid
l (a+b+c+d) + √ (ab+cd)
[regular figure only]
h/3(ab + cd +
√ abcd)
129
6
Figure Diagram Surface Area Perimeter
Cone πrl + πr²½ πdh + ¼ πd²
1/3 πr² h1/12 πd²h
Frustrum of a cone
π² + πR² + πh (R+r) 1/3 π (R² + Rr + r²)
130
6
Weights and Measures
Metric Measures and Equivalents
Length
1 millimeter (mm) = 1 mm = 0.0394 in
1 centimeter (cm) = 10 mm = 0.3937 in
1 meter (m) = 100 cm = 1.0936 yd
1 kilometer (km) = 1000 m = 0.6214 mile
Area
1 square centimeter (cm2) = 100 mm2 = 0.1550 in2
1 square meter (m2) = 10 000 cm2 = 1.1960 yd2 1 hectare (ha) = 10 000 m2 = 2.4711 acres
1 square kilometer (km2) = 100 ha = 0.3861 mile2
Capacity/Volume
1 cubic centimeter (cm3) = 1 cm3 = 0.0610 in3
1 cubic decimeter (dm3) = 1000 cm3 = 0.0353 ft3
1 cubic meter (m3) = 1000 dm3 = 1.3080 yd3
1 liter (liter) = 1 dm3 = 1.76 pt
1 hectoliter (hl) = 100 liter = 21.997 gal
Mass (Weight)
1 milligram (mg) = 0.0154 grain
1 gram (g) = 1000 mg = 0.0353 oz
1 kilogram (kg) = 1000 g = 2.2046 lb
1 tonne (t) = 1000 kg = 0.9842 ton
U.S.A. Measures and Equivalents
USA Dry Measure Equivalents
1 pint = 0.9689 UK pint = 0.5506 liter
U.S.A. Liquid Measure Equivalents
1 fluid ounce = 1.0408 UK fl oz = 29.574 ml
1 pint (16 fl oz) = 0.8327 UK pt = 0.4723 liter
1 gallon = 0.8327 UK gal = 3.7854 liter
131
6
Imperial Measures and Equivalents
Length
1 inch (in) = 2.54 cm
1 foot (ft) = 12 in = 0.3048 m
1 yard (yd) = 3 ft = 0.9144 m
1 mile = 1760 yd = 1.6093 km
1 int. nautical mile = 2025.4 yd = 1.853 km
Area
1 square inch (in2) = 6.4516 cm2
1 square foot (ft2) = 144 in2 = 0.0929 m2
1 square yard (yd2) = 9 ft2 = 0.8361 m2
1 acre = 4840 yd2 = 4046.9 m2
1 sq mile (mile2) = 640 acres = 2.59 km2
Capacity/Volume
1 cubic inch (in3) = 16.387 cm3
1 cubic foot (ft3) = 1728 in3 = 0.0283 m3
1 fluid ounce (fl oz) = 28.413 ml
1 pint (pt) = 20 fl oz = 0.5683 litre
1 gallon (gal) = 8 pt = 4.5461 litre
Mass (Weight)
1 ounce (oz) = 437.5 grains = 28.35 g
1 pound (lb) = 16 oz = 0.4536 kg
1 stone = 14 lb = 6.3503 kg
1 hundredweight (cwt) = 112 lb = 50.802 kg
1 ton = 20 cwt = 1.016 tonne
Temperature Conversion
C = 5/9 (F – 32) F = (9/5 C) + 32
132
6
Page Left Intentionally Blank
133
7DIRECTORYOF OFFICES
134
135
7
MIDDLE EAST
Kingdom of BahrainAECOM Al Saffar House Unit 22, Building No. 1042 Block 436, Road 3621 Seef District PO Box 21271 Manama Kingdom of Bahrain
T: +973 17 556 452 F: +973 17 556 457 Office E: [email protected]
Contact: Clarke Morton-Shepherd E: [email protected]
Kingdom of Saudi Arabia (Al Khobar)AECOM Arabia Ltd Al Khereji Business Centre, Level 1 King Faisal Road, Bandariyah District PO Box 1272 Al Khobar 31952 Kingdom of Saudi Arabia
T: +966 3 849 4400 F: +966 3 849 4411/8494422 Office E: [email protected] Contact: Fawzi Al-Malki E: [email protected]
Kingdom of Saudi Arabia (Jeddah) AECOM Arabia Ltd 7th Floor, Bin Sulaiman Center Al Rawdah Street PO Box 15362 Jeddah 21444 Kingdom of Saudi Arabia
T: +966 2 606 9170 Office E: [email protected] Contact: Andy Ritchie E: [email protected]
136
7
Kingdom of Saudi Arabia (Riyadh)AECOM Arabia Ltd 4th Floor, Tower 4 Tatweer Building King Fahad RoadPO Box 58006, Riyadh 11594 Kingdom of Saudi Arabia T: + 966 11 200 8686 F: + 966 11 200 8787 Office E: [email protected] Contact: Andy Ritchie E: [email protected]
KuwaitAECOM PO Box 29927 Safat 13160 Kuwait
T: +965 2 23 22 999 F: +965 2 23 22 990 Office E: [email protected]
Contact: Adam Ralph E: [email protected]
LebanonDavis Langdon, An AECOM Company Floor 1, Chatilla Building Australia Street Rawche, Shouran PO Box 13-5422 Beirut Lebanon
T: +961 1 780 111 F: +961 1 809 045 Office E: [email protected]
Contact: Muhyiddin Itani E: [email protected]
137
7
OmanAECOM PO Box 434 Al Khuwair, Postal Code 133 Muscat Oman
T: +968 2448 1664 F: +968 2448 9491 Office E: [email protected] Contact: Chris Beasley E: [email protected]
QatarAECOM 4th Floor, The Pearl Building Airport Road, Umm Ghuwalina PO Box 6650 Doha Qatar
T: +974 4407 9000 F: +974 4437 6782 Office E: [email protected]
Contact: Jason Kroll E: [email protected]
138
7
United Arab Emirates (Abu Dhabi) AECOM Al Jazira Sports & Cultural Club Muroor Road, 4th Street PO Box 43266 Abu Dhabi United Arab Emirates
T: +971 2 414 6000 F: +971 2 414 6001 Office E: [email protected] Contact: Stephen Gee E: [email protected]
United Arab Emirates (Dubai)AECOM UBora Tower, Level 43 PO Box 51028 Business Bay Dubai United Arab Emirates
T: +971 4 439 1000 F: +971 4 439 1001 Office E: [email protected]
Contact: Mark Prior E: [email protected]
139
7
NORTH AFRICAEgyptDavis Langdon, An AECOM CompanyGround Floor, Corner Road 23 / El Sharifa Dina Street Building 13 Maadi Cairo Egypt
T: +20 2 2750 8145 F: +20 2 2750 8146 Contact: Aly Omar E: [email protected]
140
7
AFRICABotswanaDavis Langdon, An AECOM Company Plot 127, Unit 10 Kgale Court Gaborone International Finance Park Gaborone Botswana
T: +267 390 0711 Office E: [email protected]
Contact: Fred Selolwane E: [email protected]
MozambiqueDavis Langdon, An AECOM Company Rua de Argelia, 453 Maputo Mozambique
T: +258 21 498 797 Office E: [email protected]
Contact: Elton Olivier E: [email protected]
South AfricaDavis Langdon, An AECOM Company 2nd Floor Citibank Plaza Building 145 West Street Sandton, Johannesburg 2196 South Africa
T: +27 (0) 11 666 2000 Office E: [email protected]
Contact: Indresen Pillay E: [email protected]
Also at: Cape Town, Durban, George, Pietermaritzburg, Port Elizabeth and Stellenbosch
141
7
AMERICAS U.S.A.Davis Langdon, An AECOM Company 515 South Flower Street 8th Floor Los Angeles California 90071 USA
T: +1 213 593 8100 F: +1 213 593 8178
Contact: Nicholas Butcher E: [email protected]
Also at: Boston, Honolulu, Houston, New York, Philadelphia, Sacramento, San Francisco, Seattle and Washington, D.C.
142
7
AUSTRALIA NEW ZEALANDAustraliaAECOM Level 21, 420 George Street Sydney, NSW 2000 Australia
T: +61 2 8934 0000 F: +61 2 8934 0001 Office E: [email protected]
Contact: Alan Baker E: [email protected] Also at: Adelaide, Brisbane, Cairns, Canberra, Darwin, Hobart, Perth, Sydney and Townsville
New ZealandDavis Langdon, An AECOM Company Level 2, AECOM House 8 Mahuhu Crescent Auckland 1010 New Zealand Mailing Address: PO Box 4241 Shortland StreetAuckland 1140 New Zealand
T: +64 9 379 9903 F: +64 9 309 9814 Office E: [email protected]
Contact: Trevor Hipkins E: [email protected] Also at: Christchurch and Wellington
143
7
EUROPE & U.K. Central Eastern EuropeAECOM 68-72 Strata Polona 2nd Floor Bucharest Romania T: +40 (0)21 316 11 63 F: +40 (0)21 316 11 68
Contact: Carlos Gálvez E: [email protected] Also at: Bulgaria, Czech Republic, Estonia, Latvia, Poland and Ukraine
Western EuropeDavis Langdon, An AECOM Company Calle Serrano 98 – 2nd Floor 28006 Madrid Spain T: +34 91 431 0290 F: +34 91 576 9211 Contact: Jon Blasby E: [email protected] Also at: France, Germany, Greece, Italy and The Netherlands
144
7
IrelandDavis Langdon, An AECOM Company 24 Lower Hatch Street Dublin 2 Ireland
T: +353 1 676 3671 F: +353 1 676 3672 Office E: [email protected]
Contact: Paul Mitchell E: [email protected] Also at: Cork, Galway and Limerick
United KingdomAECOM MidCity Place 71 High Holborn London WC1V 6QS United Kingdom
T: +44 20 7061 7000 F: +44 20 7061 7061
Contact: Steve Waltho E: [email protected] Also at: Aberdeen, Belfast, Birmingham, Bristol, Cambridge, Cardiff, Edinburgh, Exeter, Glasgow, Leeds, Liverpool, Maidstone, Manchester, Newcastle, Norwich, Oxford, Peterborough, Plymouth, Southampton and York
Full contact information is available on our global website www.aecom.com.
145
7