Construction Week - Issue 335

ANALYSIS IS THERE ENOUGH RISK MANAGEMENT IN THE GCC?

SEP 11-17, 2010 • ISSUE 335NEWS • ANALYSIS • INTELLIGENCE • PROJECTS • CONTRACTS • TENDERS

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SEPTEMBER 11-17, 2010 • ISSUE 335

CONTENTS

10 ONLINE16 EDITOR’S LETTER18 GUEST COLUMN56 FOREMAN

4 BIDS DEADLINE FOR LARGEST SAUDI GAS PLANT EXTENDEDSaudi Aramco, developer of The Wasit, has pushed back the submission date until 24th October.

8 INTERNATIONAL M&A RALLIES IN Q2 2010Cross-border construction mergers have increased, fi nds PwC.

12 SAUDI CONSTRUCTION MARKET SURGES AHEAD IN Q2The Kingdom has increased its contract awards by 175% since Q1.

REGULARS

22 RISKY BUSINESSCW looks at companies’ approaches to risk management ahead of the next stage of market growth.

ANALYSIS

INTELLIGENCE

FINANCE

ROUND UP

FACE TO FACE

26 A LESSON IN SCHOOL BUILDINGChimanlal Gangaramani of Al Fara’a Integrated Construction Group and Matthew Kennedy of Wates discuss their joint venture.

46On track?

Is the machinery sector showing signs of recovery?

TOP PROJECTS

38 JUST THE TICKETA year on, CW looks at the progress of the Dubai Metro.

SECTOR

32 SMART BUILDINGElizabeth Broomhall analyses the demand and projects in the schools sector.

MACHINES

46 HEAVY FUELSManufacturers of heavy machinery are fi nally seeing an upturn in sales.

SEPTEMBER 11-17, 2010 CONSTRUCTION WEEK 1

2 CONSTRUCTION WEEK SEPTEMBER 11-17, 2010

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Bid deadline for largest Saudi gas plant extended

Saudi Aramco, Saudi Arabia’s oil producer, has awarded a number of contracts so far this summer.

INTELLIGENCE

The deadline for contractors to bid for onshore construction packages for Saudi Arabia’s largest gas plant, The

Wasit, has been extended from September until 24th October 2010.

Industry experts have estimated that the contract, which has not yet been confi rmed by developer Saudi Aramco, could be valued at anything between $6 billion and $8 billion.

Previously, Saudi Aramco invited 12 prequalifi ed companies to tender for the project – launched after the Kingdom announced a crude oil capacity expansion plan last year that focuses on gas production and catering for increased domestic demand.

The packages include construction of a gas unit, a cogeneration power plant, a sulphur recovery unit with utilities as well as a natural gas liquids (NGL) fractionation plant.

These are in addition to offshore construction works related to the plant, for which engineering and construction companies have until 7th November to submit their bids.

To date, Canadian fi rm SNC-Lavalin has completed front-end engineering and design work for the plant, which on completion, is expected to process 2.5 billion cubic feet per day (cfd) of gas from the Arabiyah and Hasbah offshore sour gas fi elds.


INTELLIGENCE

The Royal Commission for Jubail and Yanbu is to get new headquarters in Madinat Yanbu Al-Sinaiyah.

The new 20-storey tower with two underground car-parking levels, and will be the centre of operations for the Royal Commission’s planning, development, construction, operations and maintenance services for the Jubail and Yanbu industrial cities.

The Commission issued an open invitation for contractors to express interest in the project, and a list of prerequisites that must be fulfi lled before a Request for Proposal will be issued. Deadlines for receipt of the fi nal submissions and the relevant fees (OR33,500) is 14th December 2010. The contract period is 730 days.

Yanbu Royal Com. HQ open to tender

For up-to-the-minute tenders log on to constructionweekonline.com

TOP TENDERS

Construction of Yanbu Powerand desalination Plant Country: Saudi Arabia Closes: Sep 22, 2010 Category: Power & Water Issuer: SWCC

Construction of roads in Al Shuwaikh & Al AhmadiCountry: Kuwait Closes: Sep 28, 2010 Category: Infrastructure Issuer: Central Tenders Committee

Roads and infrastructure works, North SabhanCountry: Kuwait Closes: Oct 12, 2010 Category: Infrastructure Issuer: Central Tenders Committee

Civil works for facilities & roads of Kuwait UniversityCountry: Kuwait Closes: Sep 28, 2010 Category: Infrastructure Issuer: Central Tenders Committee

Construction of 11/132/400-kV Al Funaitees substationCountry: Kuwait Closes: Oct 10, 2010 Category: Power and Water Issuer: Central Tenders Committee

Construction of 38 housing units and mosque at Al-HawiyahCountry: Oman Closes: Sep 27, 2010 Category: Buildings Issuer: Ministry of Housing

Construction of 33 housingunits and mosque, OrabCountry: Oman Closes: Sep 27, 2010 Category: Buildings Issuer: Ministry of Housing

Supply of portable boring machinesCountry: Oman Closes: Sep 27, 2010 Category: Infrastructure Issuer: Oman Drydock Company

Temporary power services, Oman Main Interconnected SystemCountry: Oman Closes: Sep 27, 2010 Category: Power and Water Issuer: Oman Power & Water Procurement Company

Installation of 11-kV overhead lines on wooden poles Country: UAECloses: Sept 30, 2010Category: Power and WaterIssuer: DEWA

Contractors wishing to tender for work on a de-salination plant in Kuwait better get their skates on: the deadline for submis-sions closes next week.

The plant will form part of the Al Zour Southern IWPP and the scope of the work includes the supply,

Kuwait desal plant tender deadline next weekinstallation and commis-sioning of the plant.

Tender documents and submissions must be with the Central Tenders Com-mittee by 19th September.

In July the country al-located KD2.1 billion to the construction sector in its latest budget, an increase

of 66% on the KD1.265 billion for 2009.

Last month the gov-ernment signed a deal with international con-sultancy fi rm WS Atkins to develop an expansion plan for Kuwait City in line with the country’s Kuwait 2030 initiative.

The Kuwaiti government has increased its spending on infrastructure for the current fi scal year.

Oman awards $334 million in projectsOman’s tender board awarded more than $334 million in new contracts for infrastructure, social development and construction projects earlier this month.

The largest allocation was $190 million for the Nizwa–Ibri dual carriageway (second stage ) and Jibreen-Ibri road project, while $33.8 million was set aside for the construction of Titam-Qaftout road in Dhofar Governorate.

Additional funding of $11.4 million for the construction of Wadi Bani Kharous road was also approved.

It also passed $6.9 million in funding for the provision of engineering and supervisory services for the construction of silo for the strategic wheat reserves in Sohar and Salalah. A desalination plant in the Al Seel village received $2.6 million.


INTELLIGENCE

MATERIALS PRICE CHECK

$3.27Alum. profiles

Per kg

$748.67Beech wood

Per m3

$3.81CementPer bag

$32.67FF plywood

Per sheet

$4.36GlassPer m 2

$72.15MDFPer m3

$98Ready mix

Per m3

$721.45Red meranti

Per tonne

$14.97Scfldi planks

Per piece

$580 Steel

Per tonne

$10.88Steel props

Per piece

For up-to-the-minute tenders log on to constructionweekonline.com

Supply of pulse type selfcleaning inlet air fi ltersCountry: UAECloses: Sep 30, 2010 Category: Power and WaterIssuer: Dubai Electricity and Water Authority (DEWA)

Maintenance and operating services for Sultan QaboosSports ComplexCountry: OmanCloses: Oct 11, 2010Category: BuildingsIssuer: Ministry of Sports Affairs

Electrifi cation distribution works to feed Flem villageCountry: OmanCloses: Oct 11, 2010 Category: Power & Water Issuer: SAOC

Supply and installation of 2x20 MVAR capacitor banksCountry: OmanCloses: Oct 11, 2010Category: Power and WaterIssuer: SAOC

Proposed offi ces building at Bausher Airport HeightsCountry: OmanCloses: Oct 11, 2010 Category: Buildings Issuer: SAOC

Construction of 30 HousingUnits at DibbaCountry: OmanCloses: Oct 11, 2010 Category: Buildings Issuer: Ministry of Housing

Rehabilitation of Boiler (A) at Aziziah PlantCountry: Saudi ArabiaCloses: Sep 26, 2010 Category: Power & Water Issuer: SWCC

Vocational Association Buildingat Airport HeightsCountry: OmanCloses: Sep 27, 2010 Category: Buildings Issuer: Ministry of Social Development

TOP TENDERS

A consortium of Riyadh-based Al Arrab Contracting Company and Chinese fi rm SEPCOIII last week received the letter of award to construct a 2,400 MW power plant in Ras Az Zawr from the Saline Water Conversion Corporation (SWCC).

The value of the letter was US$2.419 billion, according to an Al Arrab executive.

SEPCOIII Electric Power Construction Corporation is a Qingdao-based fi rm that spans many different power projects.

Al Arrab – which has a suite of subsidiary companies across the sector including an electro-mechanical arm in Dubai – has a long-established tendency to work with other contractors.

Samer Arafa, group executive vice president, said the consortium was set up a year ago. The timeframe for the project is 42 months.

Consortium wins plant contract

Saudi Arabia’s power demand is set to increase by 8% a year on the back of a swelling population.

GTCC swoops for labour house projectGulf Technical Construction Company (GTCC) Abu Dhabi – a subsidiary of Drake & Scull International – won an AED140 million turnkey project from CAMPCO Properties.

The project is a G+2 49,425 m² labour accommodation building and will accommodate 5,000 workers. It will be fi nished by November 2011.

GTCC Abu Dhabi is the main contractor and will oversee the construction of the building in Al Dhafra, Abu Dhabi.

Khaldoun Tabari, Drake & Scull CEO, said the win underlined the company’s diversifi cation and expansion strategies as well as entry into a “promising and lucrative market niche for the company”.

CAMPCO Properties LLC was established earlier this year by DSI in tandem with Buhairan Limited Company.

FINANCE


Expert Views

Al Jazeera Steel Products Com-pany manufactures galvanized and cold and hot rolled black pipes out of steel. At OR39 million the company has a much smaller capitalisation than bigger players in UAE and Saudi Arabia, and compared to Zamil it is something of a penny stock – though it does have a well-developed distribu-tion network.

Its modern plant in Sohar has allowed it to diversify its product range by installing and commis-sioning a new production unit, Merchant Bar Mill, capable of pro-ducing Hot Rolled Products like Angles, Channels, and Squares of around 300,000 MT/annum.

This year it has been a steady performer, closing last Sunday just shy of the OR0.33 in which it started the year at OR0.31. But on the 6th June the shares took an unprecedented plummet down to OR0.19 – a 37% dip in one day – only to rebound by the same amount by 7th.

Sriram Balasubramaniam of Bank Muscat remained neutral on the stock on 19th August, a more tempered assessment than that of Kuwait & Middle East Financial Investments, which declared the company ‘undervalued’ on 12th August. Ahmed Gad at EFG Hermes also remained neutral on the company in 26th August.

VERDICTBuy. Not a strong grower but the company is developing itself.

Al Jazeera Steel ProductsA steady performer except for a brief, shock dip. Which way will the analysts sway?

International M&A rallies in Q2 2010The merger of AECOM and Davis Lang-don came on the back of an increase in cross-border buy-out activity in engineering and construction during the second quarter, according to research.

PricewaterhouseCoopers, the profes-sional services fi rm, found a quarter-on-quarter increase in international mergers against local deals, up to 40.9% for Q2 against 29.1% for 2009.

Cross-border deals generally involve greater risk than local market transac-tions, the company notes in Engineering Growth Q2 2010, which had led to a greater percentage of local deals.

AECOM bought Davis Langdon last month for AED324 million.

The boost in deals “will be aided by the perceived need ... to augment slow organic growth by entering into new, fast-growing geographies and reposi-tioning product portfolios,” wrote PwC.

MERGERS

Louvre model in Saadiyat Island Cultural District. AECOM is working on the SICD.

Building a dealPercentage split of mergers across construction sectors more than $50m in value

2009 2010 Q2Home building – 11% Home building – 9%

Civil engineering

– 18%

Civil engineering

– 16%

Construction machinery and

materials – 11%

Construction machinery and materials – 7%Construction

– 31%Construction – 41%

Nonmetallic minerals manufacturing – 29%

Nonmetallic minerals manufacturing – 27%

FINANCE


TEN BIGGEST RISERSKuwait Company for Portland: +10.54%Union Cement Company: +7.09%Specialities Growth: +7.02%Fujairah Buildings Ind: +5.96%Mushrif Trading: +4.83%RAK White Cement: +4.77%Mabanee Co SAKC: +4.30%Saudi Ceramic: +3.49%Saudi Arabian Amiantit: +2.65%Abu Dhabi Nat Co: +2.38%

TEN BIGGEST FALLERSNational Marine Dredg: -5.81%RAK Ceramics: -5.32%National Cement: -4.80%Salbookh Trading: -4.58%National Ranges: -2.25%Gulf Rocks Co: -2.14%Hilal Cement Co: -2.00%Al Babtain Power: -1.75%Arkan Building Mat: -1.73%Construction Mat: -1.52%

SECTOR INDICES: Banking: +5.03 +0.58%Insurance: +6.04 +0.21%Fin & Inv : +54.20 +2.98%Real Est & Constr: +82.78 +2.81%Transportation: +3.11 +0.66%Utilities: +3.60 +0.57%Materials : 0.00 0.00%Consumer Staples : 0.00 0.00%Telecoms : 0.00 0.00%

Update

Nakheel’s decision to partly repay creditors in sukuks may revive the region’s fl agging market for Islamic bonds, according to analysts.

The company plans to list the Shariah-compliant bond on Dubai Nasdaq as part of a US $10.5 billion debt restructure.

The move will “generate interest and create trading opportunities for hedge funds and fi xed-income investors,” Khalid Howladar, a senior analyst at Moody’s, told newswire Bloomberg.

The developer is to pay 40% of its repayment in cash and 60% in bonds.

Last Sunday an email to Bloomberg from a spokesperson said 80% of contractors have agreed to the sukuk plan.

JP Morgan estimated that Nakheel may issue as much as $3.2 billion.

Knowledge Economic City, the investment vehicle for the development of an economic city in Madinah, has experienced a diffi cult fi rst month on the Tadawul as a listed entity.

Shares in the Kingdom’s fi rst Smart City slumped to SR8.6 per share last Sunday from its launch price of SR10.3 from its fi rst day of trading on 9th August, down 16.5%. The fall at fi rst imitated the Tadawul All-Share index, which has rallied overall since 25th August.

The KEC is a SR30 billion multi-purpose business district over 4.8 million m2, and will offer a technologically advanced business centre, along with residential, housing and hotel facilities. The listed entity has a market capitalisation of SR2.91 billion.

Moody’s: Nakheel bond may rally sector

Tough debut month for Knowledge Eco City

PROJECT TITLE STATUS VALUE / VALUE RANGE (US$)

TUBLI WASTEWATER TREATMENT PLANT Design To be confi rmed

CIVIL WORKS FOR 220-KV SUBSTATIONS - PACKAGE A2 Construction 10,000,000

CIVIL WORKS FOR 66-KV SUBSTATIONS - PACKAGE B1 Construction 11,000,000

CIVIL WORKS FOR 66-KV SUBSTATIONS - PACKAGE B2 Construction 10,000,000

DEVELOPMENT OF SEVERAL ROADS IN AL MUHARRAQ Construction 2,000,000

220-KV OVER-HEAD TRANSMISSION LINES Construction 32,000,000

CIVIL WORKS FOR 220-KV SUBSTATIONS - PACKAGE A1 Construction 18,000,000

REPLACEMENT OF STEAM TURBO - GENERATORS AT NO.2 POWER PLANT Construction 60,000,000

CIVIL WORKS FOR AL DUR IWPP AND ALEI IWPP Construction 15,000,000

PLAZA AND PLAY YARD Construction 2,000,000

Top ten Bahrain project updates

(Data accurate as of close 5th September 2010)

Knowledge economy:

percent fall in stock in a month

KEC’s number of shopping outlets

1,200

16.5%

Fixed income in a fi x:

amount (millions of US$) paid so far to creditors by Nakheel

680

percent fall in sukuk issues this year (Bloomberg data)

24


MOST POPULAR

LATEST FEATURES

SPOT POLLHow has the business climate in 2010 affected your company?

French mosqueRace to the fi nish

Profi ts are up, but only slightly

Profi ts are up and business is great

12.8% 2.6%20.5%Diversifi cation has helped us grow

25.6%We’re profi t neutral but still in business

38.5%It’s the worst year on record

IN PICTURES

A mosque under construction in Strasbourg draws closer to completion, having been started in 2004.

South Korea hosted a lavish ceremony to launch ticket sales for its fi rst Formula One race to take place October 22-24, saying the event would boost tourism and the country’s overseas image. The track sits on 172 hectares of reclaimed land beside an artifi cial seaside lake in Yeongam county, 320km south of Seoul. The fi rst demonstration races were held on September 4. Organisers of South Korea’s fi rst Formula One event are confi dent they can win a race to complete the brand-new circuit before a fi nal inspection from the sport’s world governing body. F1 safety delegate Charlie Whiting is due in South Korea to inspect the circuit on September 21, ahead of the October race date. The sport’s governing body, the FIA, says it is satisfi ed with the progress being made, despite recent reports suggesting the venue is only 90% complete just weeks before the F1 is due to arrive.

A worker carries iron pipes near the main grand stand at the Korean International Circuit under construction for the upcoming Korean Formula One Grand Prix in Yeongam.

ONLINE

Harbouring opportunitiesThe colossal Khalifa Port and Industrial Zone is set to change the face of Abu Dhabi’s economy.

Port projectsTen of the biggest port projects under way in the region

A century of consultancyA look at how the business of EC Harris is evolving.

For breaking news, analysis, interviews, tenders and projects, log on to constructionweekonline.com

1Mumbai’s 117-storey tower divides opinion

2Al Jaber gets US$300m for Shah Gas project

3 Nakheel announces payment of AED2.5bn to creditors

4Moonlighting workers risking their lives for cash

5Bauer completes piling for Louvre Abu Dhabi

JUN

G Y

EON

-JE/

AFP

/Get

ty Im

ages

Yasser Baaj Emirates Precast Construction

Steve Pennell Arup

Aqel AlaridArabian International Co.

Ron BrinkmanMurray and Roberts

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Professionals of various disciplines working in a construction project are faced with the challenge to communicate and agree on the design in detail. They need a tool that enables effective centralization and control of all stages. Sharing the Tekla model allows them to stay in the building information loop, real-time.

“The circuit is definitely ready but, as for the buildings, perhaps not. We may have to put up some tents.” F1 chief BERNIE ECCLESTONE on the state of readiness of the Korean F1 circuit ahead of its fi rst race in late October.


Saudi construction market surges ahead in Q2Boosted by massive government spending in infrastructure, Saudi Arabia awarded $6.5 billion worth of construction contracts in the second quarter, 175% more than the value of awards in the fi rst quarter, according to local data.

The country’s National Commercial Bank (NCB), as reported by Saudi Gazette, said that the government and private institutions had helped towards the increase, adding that the trend was likely to increase throughout the rest of the year.

The sectors that drove the growth were power (contracts worth $3.1 bn) and residential real estate ($1.6 bn).

Overall, Saudi Arabia’s construction sector is forecast to grow by 6.4% this year, giving it an overall 10.4% share in GDP. Data provided by NCB said that construction would contribute $17.1 bn to the economy in 2010.

Growth in the segment will also be greater than that in the non-

hydrocarbon sector, which is expected to grow by 4.4% this year.

Construction provides employment to 2.51m workers in Saudi Arabia, accounting for 40.4% of the workforce, up by 1.5% from the previous year.

“The increase in demand for construction labour refl ects the growing volume of work being implemented,” the NCB report stated.

“We estimate that the investments made in 2009 would have increased the size of the construction sector’s labour force by 4% to reach 2.62 millio workers.”

The value of awarded contracts was $55.2bn in 2009 and $29.6bn in 2009 and 2008, respectively. Among the projects set to be awarded in the second half are the design and construction Jizan Refi nery fi rst phase (estimated at $6.9bn), and the onshore construction package of the Wasit gas development programme (estimated at $6bn), both for Saudi Aramco.

In Quotes

CONSTRUCTION INDUSTRY

ROUND UP

“Working capital is rarely a top priority for operating managers, but at times like

these, it should be.”Arabtec CFO ZIAD MAKZOUMI says that

management needs to be more vigilant.

“If, when you talk to clients, you can make it clear that you’re here for the long term, I think it helps.”EC Harris regional managing director JOHN WILLIAMS on maintaining client confi dence.

Construction projects in KSA have surged ahead in 2010.


51

4

2

3

Kuwait residents are consuming more water than ever before, and face serious shortages if there are delays to the completion of planned desalination facilities.Newspaper reports state that consumers in the Gulf state are using an estimated 399m gallons a day, just one million gallons short of the country’s total daily production capacity.Projects with additional 40 million gallons per day by 2011, are underway - with others also planned.

Two Omani contractors have posted a major safety milestone on the Al Maabela South waste water project by recording fi ve million man hours without a lost time injury.Arab Contractors Com-pany and National United Engineering and Contract-ing company, jointly working on the project that is now 72% complete, passed the milestone earlier this week.The milestone will be marked with ceremony under the auspices of senior offi cials.

International Gulf Trad-ing Company (IGTC) Chubb Fire Qatar has been awarded a contract for the inspection, installation, and repair of fi re-safety systems in 53 schools and 26 kindergartens through-out Qatar.More than 6,000 fi re extinguishers will be replaced, serviced, orrepaired, making this one of the largest projects to date in IGTC Chubb Fire Qatar’ 28 years of operation in the country.

Bahrain’s prime minister Prince Khalifa ibn Salman Al Khalifa has ordered a review in to the Kingdom’s power stations and stability of its national power grid after a 34-hour power cut to almost 2000 homes last week left residents frustrated.

The quality of fi nishes in new Dubai properties has dropped substantially since the downturn as developers increasingly strive to cut costs and hire cheaper contractors, a Dubai-based British fi rm of chartered surveyors has said.

“Since the downturn there has been a decline in standards due to cost cutting and rushing work to complete on deadlines,” said Youcef Betraoui, managing director of Land Sterling, a property valuations fi rm based in Dubai.

He said cost cutting by developers and the use of cheaper contractors has led to a drop in the quality of fi nishes.

Around the GCC

1. UAE

Dubai developers’ quality declines during downturn

2. OMAN

Firms pass 5m hours milestone

3. KUWAIT

Water usage hits record levels

5. QATAR

School fi re safety project launched

4. BAHRAIN

PM demands blackout report

“Putting Makkah time in the face of Greenwich Mean Time, this isthe goal.”MOHAMMED AL-ARKUBI, general manager of Royal Makkah Tower Hotel, on the huge clock tower dominating Makkah’s skyline.

ROUND UP


ROUND UP

In Numbers

Million gallons of water are consumed by Kuwaitis daily

Percentage of power consumed in the Middle East for lighting

Amount, in billions USD, that Cat spent on Research and Development in 2009 399221.42

INFRASTRUCTURE

Dubai-Al Ain road completion in 2011The director of roads and infrastructure at Al Ain Municipality says that work on the motorway linking Dubai and Al Ain will be completed by September 2011.

The director also said that the 53km-long highway, will include bridges and tunnels, and would stretch from Al Ain city towards Alfuq area, with four lanes in each direction and a speed limit of 140kmh.

As part of a wider AED900m plan being launched by the Municipality to improve road and transport networks in the area, the AED780m expansion project, announced in 2008, aims to meet the requirements of the economic and social development in Al Ain.

PROJECTS

Heart of Sharjah operation startsConstruction work began last week on the fi rst phase of the major ‘Heart of Sharjah’ heritage project.

One of the largest heritage projects in the region, construction on the fi rst phase is scheduled for completion within the next two years, Shurooq said in a statement.

Announced in May this year, the project is Shurooq’s fi rst project. Last week, the

Bahrain offi cials say 200 companies were caught breaking the summer midday work ban this year and, while they’re concerned violations still occur, fi gures are better than last year.

Inspectors from the Ministry of Labour carried out more than 15,000 visits to worksites around the Kingdom during the two month ban that ended last Tuesday. The visits revealed that 98% of companies were adhering to the ban but there were those still fl outing the law.

The 200 cases involved 820 labourers which, according to the Ministry, was better than the 383 cases that involved 1,266 labourers in 2009. Com-panies caught can expect to be fi ned between BD50 – 300 for each employee caught working outside during the ban.

Labour Ministry occu-pational health and safety section head Abbas Matooq said better compliance had come through companies understanding the purpose of the ban, and its underly-ing safety concerns.

200 Bahrain fi rms busted breaking work ban

WORKERS CLEAN THE GLASS FAÇADE OF A BUILDING IN BEIJING. China’s public housing programmes have been neglected for years as local governments sought to cash in on spiralling property prices with more upmarket developments.

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ROUND UP

Sharjah Art Foundation began the renovation work, which includes “the partial demolition and adaptation of certain previously renovated historic buildings,” the statement added.

The fi rst phase of the project will include rebuilding the ruling family’s houses near the fort and rebuilding the Al Midfaa family house as a hotel; the reconnection of Saqr Souq with Al Arsa Souq and other air-conditioning and lighting works in the souqs.

MATERIALS

Canadian concrete preservation system Kryton International, the Vancouver-based concrete product manufacturer, has launched a restoration and pro-tection system for above-grade concrete structures.

The company claims the Hydrostop Restore & Protect System extends the useful life of concrete infrastructure and buildings, as well as improving the look and avoids the envi-ronmental impact of replacing the concrete.

“Replacing aging infra-structure can cost millions of dollars and be a signifi cant, unacceptable disruption to your operations as well as to the general public,” says Kevin Yuers, Kryton vice president.

“The Hydrostop System is the ideal solution.”

The new product follows a growing initiative among some parts of the GCC construction sector to build structures that will last longer and preserve existing buildings as the rate of new development remain slower than in previous years.

INDUSTRY

UK and USA fi rms brace for tough Q3The UK and US construction industries are bracing themselves for a tough third-quarter as market indicators show a marked slowdown over the past three months.

Research by the Markit/CIPS (Chartered Institute of Purchasing and Supply) construction Purchase

Managers’ Index in the UK shows growth in the market has dipped for the third consecutive month, down to 52.1 in August from 54.1 in July.

Conditions are worse in the US where a cut in construction spending for July, coupled with a slump in housing demand as the government’s homebuyer tax credit stimulus incentive comes to an end this month, means construction fi rms are fi nding it diffi cult to make ends meet, despite record-low mortgage rates.


COMMENT

The moment you step outside the airport terminal it starts. Egypt’s entrepreneurial individuals direct market their products and services

right at the customer coal face. I had to admire their persistence, despite the massive quantity of competition and a lack of consumer confi dence.

Away from Cairo’s busy airport, where a people mover to ferry passengers between terminals is the latest addition under construction, the scale of the urban sprawl quickly becomes apparent. The city may contain the largest number of unfi nished buildings I’ve ever seen, whether on their way up, or slowly coming down.

Those responsible for maintaining the place give every appearance of fi ghting a losing battle: whether an occasional and beleaguered street sweeper, or some higher municipal power. The frustrated citizenry have clearly been forced to improvise solutions for themselves, which in some cases just exacerbate the problem: probably why the locals seem to prefer to walk on the road, rather than bother with the assault course that the average footpath represents.

Infrastructure development is on the agenda. We’ve written before about the number of projects on the drawing board – 47 is the number quoted by Egypt’s Government Authority for Investment – and their $25 billion price tag. The need for private enterprise to take up the development gauntlet is clear; sheer scale means it will be the only way to get things done.

New Cairo, a development emerging on the edges of the city’s crowded core may point the

way ahead, but this kind of private development needs to be supported by accompanying infrastructure too. As the giant villas and apartment blocks start to emerge, it’s clear new and bigger roads will be needed too.

Beyond Cairo, in main centres such as Luxor and even Aswan, private development is focused on the returns offered by the tourism sector. However, big money investment in this area creates tough competition for local businesses, clamouring for a foreign dollar or two.

These businesses have already taken the battle to the streets and the constant call of ‘hello, my friend’ reminds visitors that local commerce is competitive. Package tours keep the pampered away from the hustle and bustle, thus leaving touts to battle for the considerably smaller private tourist dollar.

Outside these main centres the most obvious work is on the long road network. Even in the August heat teams were working to resurface sections of battered desert road, in what must be a perpetual project.

In the oases the issue of water distribution is moving from government hands to local private enterprise. These geothermal springs are being lightly developed to provide rest spots for those willing to take the long drives and profi ts are being used to improve the distribution networks.

On the whole, it’s a more laid-back version of the private enterprise that hits you at the airport. The public and government will is there, as are the natural resources, now all it needs is a bit more cash.

Hello, my friend!Private enterprise and private cash are needed to further Egypt’s development

In the oases the issue of water distribution is moving from government hands to local private enterprise.

STUART MATTHEWS

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Siwa oasis: light development at oases is driving money into the local economies.


COMMENT

DOUG LANGMEAD

Practical incompletionDoug Langmead looks at a contractual basis for the rationalisation, hibernation and revival of stalled projects

A TYPICAL CONSTRUCTION PROJECT starts with the contract award, reaches the milestone of ‘practical completion’ at the time of hand

over, and ends with the conclusion of the ‘defect liability period’.

There are well known forms of contract and project management processes to deal with the construction process, but virtually none to deal with a project that is suspended for long periods. For most stalled projects in the region contractors have remained on the job, but with little or no cashfl ow.

Few companies had contingency plans for the downturn and the response to the drying up of both funds and demand was to cease activity, in the hope that the crisis would be fl eeting.

Normality is nowhere in sight, uncertainty prevails, and the status of many contracts is compromised. Most contractors have notifi ed intent to claim, but few have done so. Many projects have stalled completely, many more are on trickle-feed. The consequences of this ‘do nothing’ approach have yet to be fully realised. What is lacking is the ability to rationalise and understand the present situation, and thereby develop strategies to hibernate projects until they can be effectively and profi tably revived.

In the absence of effective hibernation strategies, incomplete or unoccupied buildings are at severe risk. Contracts have

lost their validity, warranties have been voided, information is at risk of being lost, and many elements and components of stalled projects run the risk of losing value.

What’s more, there are no real contractual measures to deal with the situation. Langmead Associates has developed a corporate governance process, branded as Hybern~8, to deal with the period from when a project stalls, to its eventual restart. As the duration of hiatus is unknown, a three step approach is recommended: rationalisation, hibernation and revival (RHR).

The RHR concept deals with the hibernation period as a subset of a typical contract. It starts with ‘practical incompletion’, but in the case of hibernation, the project is handed over, not to an end user, but to a caretaker – this could still be the contractor, or it may be a facility management company.

All the processes and mechanisms of ‘practical completion’ need to be observed, so that an interim ‘practical incompletion certifi cate’ can be issued and the original contract can be wound up or suspended.

On the basis of this information, the status of the project at the time of suspension can be rationalised. Information can be captured and stored, the status of contracts, orders, warranties, insurances, materials stored on and off site, local authority permits et cetera, can all be rationalised so that the developer understands its

current situation practically, legally and commercially, and the contractor has a clearly defi ned role.

With this information, Hybern~8 can then model the consequences of doing nothing, and compare a variety of what-if scenarios, based on identifi cation of elements at risk, determine cost-effective stasis management strategies for the project, and implement all the elements of a typical facility management contract. The possibilities for recommencement or redevelopment can be periodically assessed, and the project can be revived when conditions are right.

During hibernation, all the checks and balances of a typical maintenance contract will apply, with a defi ned scope of works, assignment of equipment and resources, benchmarks for quality and safety, security, et cetera. The hibernation period would end with ‘project revival’, a milestone where the hibernation contractor would hand over to the main contractor, following renegotiation or a re-tender of the construction contract to complete the project.

The benefi ts of the RHR approach to stalled projects are risk mitigation for owners, and effective management of stalled projects, giving credibility to developers and a clearly defi ned and properly managed role for contractors.

Douglas Langmead is managing director of Langmead Associates, Business Consultants.


ONLINE COMMENT

it slowly. Nakheel payments will attract contractors to Dubai again. JAVED

RE: OMAN OFFICIALS ANNOUNCE FURTHER RAIL PROJECT PLANS

I am happy to see the prog-ress of Oman, as I contrib-uted my share in the progress between 1983-1985 in the [Sultan Qaboos University]. The qualifi ed students from the above university are now part [of the] progress of their country. VIVEK KAPOOR

RE: FIVE NEW MUSEUMS UNDER CONSTRUCTION IN SAUDI

The historical importance of [this] is huge. I sincerely hope that all the construction and renovation of the museums will preserve the history and cultural heritage of the area where museums are now. I hope to see its [new] look after the construction work.MARIA REUTOVA

RE: MUMBAI’S 117-STOREY TOWER DIVIDES OPINION

I am sure it will create 117 stories to tell everyone. Mum-bai is a premier city of India, there is no need to create one more icon. I love Mumbai because of its diversity, busi-ness and the opportunity it provides for everything. But I hate Mumbai equally because of the dirtiness around ev-erywhere, barring a few posh areas recently developed by some developers. Mumbai’s main concern should be how to make it cleaner, because as of now, it is the dirtiest city. MOHAN N KUNTE

To submit a letter, write to [email protected] or by post: Construction Week, PO Box 500024, Dubai, UAE. Please provide your full name and address. Letters may be edited for space and style. Submission constitutes permission to use. You can also log in to www.ConstructionWeekOnline.com to join the conversation.

RE: Arabian Nightmare

RE: HEART OF SHARJAH GETS GO AHEAD

When scores of expats grap-ple in the darkness without electricity in the summer in most parts of Sharjah, I feel more priority should be given for uninterrupted power sup-ply. The basic amenities have to be addressed fi rst and then think about extravaganzas.KIRAN

Millions visit Makkah every year to worship in the holy mosque. Building high rises hides the main view people come for: the Ka’ba in the holy masjid. Not only do these kinds of buildings hide the beautiful view of haram, but they also divert one’s at-tention. The same is true for Madinah. UBAID

As a 35 year veteran of the Middle East, I fully support Sami Angawi’s position. There is absolutely no need for much of the modern construction which lies out of context with the climate and culture. Would a monstrosity like the clock tower in Makkah be allowed in any European city? Absolutely not. Biggest is not best and in many cases is certainly not required. If you see a man walking around shaking his head it may be me expressing disbelief and disappointment at what I see.DAVID CHADDOCK

I would appreciate it if this money was spent on the infrastructure of roads and power in the emirate. NAIM

RE: NAKHEEL TO RESTART WORK ON SIX PROJECTS

We are happy to hear the good news. Dubai is making me sleepy with these crises. Maybe it helps to be taking

The world’s largest clock, in Makkah, has attracted a mixed response from observers.H

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22 CONSTRUCTION WEEK SEPTEMBER 11–17, 2010

ANALYSIS

Risky businessFor the second in a three-part series looking at whether or not contractors are prepared for a possible industry resurgence, CW investigates the extent to which contractors are investing in effective risk management policiesBy Elizabeth Broomhall

Potentially months away from an upturn, and a short distance from some of the world’s fastest developing markets, GCC construction companies

that have suffered the worst of the fi nancial crisis may have a real opportunity to prosper once more. So far this year, we have seen an increase in projects in Dubai, one of the worst hit by the downturn, as well as an infl ux of infrastructure and tourism developments across the GCC, particularly in places like Saudi Arabia.

Unfortunately, things are never quite as simple as they fi rst appear. With a huge rise in the number of international competitors hitting our shores, it is now more important than ever for local contractors to have a competitive edge. Somewhat behind the UK and US in terms of business models, they are under pressure to have more advanced corporate policies in place if they are to have competitive advantage at the bidding stage and make the most of new business opportunities.

One sector, namely risk management, has attracted a substantial amount of attention recently, not least because this is an area where construction fi rms have invested minimally, but one which experts say is crucial in today’s somewhat unpredictable environment and vital for companies when moving into unfamiliar markets.

“This economic crisis is different from previous downturns in terms of its size and characteristics, and the last 18 months have shown that we cannot predict future shocks,” says Arabtec CFO Ziad Makhzoumi. “This more complex and unpredictable environment requires a shift to a more dynamic business approach.”

Executives from Dubai-based project management solutions company, Collaboration, Management and Control Solutions (CMCS) are also of this opinion. Founder and CEO Bassam Samman is convinced that due to the unpredictable nature of construction work, risk management policies play a vital role in business success.

“Contractors are a perfect example of what is known as project-centric organisations, where the company’s success and failure depends very much on how successful fi rms are when they deliver their projects,” he says. “Risks by defi nition are inherited in each project delivery due to the fact that whenever a project is executed, the organisation must make many assumptions to address the unknowns of the project.”

In addition, he comments how, as a result of this project-driven environment, the construction industry faces a greater number of risks than other sectors.

“There tend to be fewer risks facing other industries, whose business is mainly

ANALYSIS

“The construction industry tends to be one of the industries where risk management policies are less formal and complete,” - Founder and CEO of Collaboration, Management and Control Solutions (CMCS) Bassam Samman

ANALYSIS

SEPTEMBER 11–17, 2010 CONSTRUCTION WEEK 23

ANALYSIS

For up-to-the-minute analysis log on to constructionweekonline.com

operations-driven rather than projects-driven. Contractors are faced with different types of risks, including risks related to technical specifi cation of the project and the quality of completed works, and risks that relate to project management, so things like schedule, budget, contracts administration and safety.”

Other risks, he explains, are organisational risks relating to the contractor’s fi nancial and management practices, and fi nally external risks that could result from government regulations, weather conditions, war and hostile attacks, strikes and natural disasters.

Compounding the problem, according to regional director of risk management fi rm EC Harris Middle East, John Williams, are developers that transfer their own risks onto contractors, squeezing them on price to cope with tough economic conditions.

“The money contractors lose will eventually need to be recovered and will result in claims and disputes over failed performance against time and quality,” he says, adding that the ability to sustain cash fl ow in today’s market, combined with increasing on-site obligations and health and safety issues related to stalled projects, creates even further risks.

Hence, the question begged by many industry analysts today. Does the construction industry have the right risk management policies in place to guide it safely through an economic recovery? Or not? A recent study of ME companies, mainly construction fi rms, by CMCS, would suggest not. While only 59% of survey respondents said they had a risk management policy in place compared with 73.5% in the UK, only 59% of them adhered to pre-defi ned procedures for risk management, compared with the UK’s 73.4%. According to the company, this reiterates a clear need for improved risk management attitudes in the region.

“Regretfully, in our region, companies are less willing to adopt best practices that enhance their business performance unless they are enforced to do so by their clients,” says Samman. “They tend to assume that many of those best practices represent additional costs to their business.

This could be true if they do not take into account the benefi ts that result from adopting those practices.”

Worse still, according to the experts, is that despite attracting higher risks than other industries, construction tends to be one of the worst industry sectors for investing in risk management policies.

“The construction industry tends to be one of the industries where risk management policies are less formal and complete,” explains Samman. “And, even though it is no different to anywhere else in the world in terms risks, investment in risk management among GCC contractors tends to be less compared with other regions.”

Agreeing with Samman, Williams points out that the problem in the GCC is not so much about identifying risks as it is about managing them.

“Traditionally, technology, pharmaceutical and aerospace industries have been particularly good at risk management. Construction is generally less sophisticated and has taken a tactical rather than strategic approach. Risks are sometimes identifi ed, but they are not being managed throughout the project,” he says.

Indeed, both companies suggest that one of the reasons the construction industry appears so lax when it comes to risk management is because of companies’ approach to and understanding of risk.Whilst Bassam argues that companies fail to appreciate the existence of risks

CMCS’ Bassam Samman says proper risk management policies are vital.

ANALYSIS


beyond contractual dangers, Williams says a focus on commercial risks rather than a holistic view of the project, as well as short term thinking, is what makes contractors vulnerable to future problems. What’s more, Bassam says that because investment in risk management is generally driven by offi cial government and industry bodies, construction will always fall behind due to a lack of regulation in this area.

And yet, in sharp contrast with these assumptions, a number of contractors in the region claim to make risk management a high priority. Many, including fi rms such as Arabtec, Alec and ASCG, say they put risk management before advertising and marketing, project management technology and even sustainability.

“Risk management and health and safety are areas which will always remain a key focus and priority across Alec,” says the company’s fi nancial director Greg Walsh. “For example, many lessons have and are still being learnt at the Dubai Airport project and these are being utilised and implemented on other projects. There is no compromise at Alec in this regard.”

In truth, it is likely that we are seeing an increase in the number of bigger industry players investing in risk management policies, while the majority of the smaller players are

falling behind, as is the case with most best practice principles in the Middle East. But certainly, there remains a large proportion of contractors yet to invest in or properly manage their risk policy, as revealed in the CMCS survey among other studies. The problem in the context of an unpredictable economic climate, according to experts, is that a failure to invest in risk management will massively reduce their chances of winning work in an upturn or new market.

“Should we see an upturn, those companies who do not have the proper risk management policies in place may not be able to respond quickly enough to demand, perhaps due to a lack of talent, and will thus be committed to low margin work when the market returns. They will also be more vulnerable to the unwanted side-effects of claims and disputes,” says Williams.

Samman on the other hand, is more concerned with how a lack of risk management policy will impact on contractors’ ability to bid for the work in the fi rst place.

“Contractors will notice an impact as project owners start requiring them to adopt risk management strategies for their developments. One should not ignore the fact that a failed project does not only negatively affect the contractor but also the owner of the project, and it is for this reason

we are fi nding more project owners adding requirements for contractors to provide a risk management plan as part of the proposal submission process. Contractors that will not be able to make such submissions and that cannot demonstrate that they employ project risk management practices will fi nd themselves unable to take part.”

So is it all bad news? Is the Middle East headed towards another dip as our international competitors take the lead?

Not necessarily. Though experts remain fairly adamant that more investment in this area is needed, they have, incidentally, noticed an improvement in the latter years.

“We have noticed an increase in the adoption of risk management policies in our region over the past few months, but it’s more driven by project owners,” says Samman, emphasising the need for a change in attitudes in the GCC, and for more contractors themselves to appreciate the benefi ts of risk management strategies.

Williams agrees. “We are starting to move towards more of a risk-managed culture as we adopt more international best practice and corporate governance principles. During the boom time, investors were less concerned, but they are beginning to be a bit more cautious. But whilst it is sensible to be careful, it is not sensible to be so careful that you are infl exible and unresponsive,” he says.

No risk of that…

The fi gures...In a recent study of ME companies and mainly construction fi rms by CMCS, just 59% of survey respondents said they had a risk management policy in place, compared to 73.5% in the UK. Additionally, only 59% of those respondents adhered to pre-defi ned procedures for risk management, compared to 73.4% in the UK. According to CMCS, this survey highlights a clear need for improved risk management attitudes and practices in the region.

EC Harris’ reigonal leader, John Williams.

“Should we see an upturn, those companies who do not have the proper risk management policies in place may not be able to respond quickly enough to demand,” Regional director of risk management fi rm EC Harris Middle East, John Williams


FACE TO FACEFACE TO FACE


Two companies, two projects, in two months. Al Fara’a General Contracting and Wates have had a profi table summer as their UAE-UK joint venture gains momentum as the spurt of new-build schools

continues in Abu DhabiBy Ben Roberts

FACE TO FACE

A LESSON IN SCHOOL BUILDING

For the last two-and-a-half years two big con-tractors have provided the latest chapter in the deep ties between the UAE and the UK.

The fi rst company has been deep in the fabric of Abu Dhabi for more than 30 years for engineering, procurement and construction, and is part of the

Al Fara’a Group that includes business lines in pre-cast concrete, property and steel among others. The latter is one of the oldest contractors in the UK with a bursting portfolio of school, custodial and renovation projects under its belt which celebrates only its ninth month in its Abu Dhabi offi ce.

Together, Al Fara’a General Contracting and Wates are combining their experience to capitalise on the huge opportunities in the UAE capital, and this summer the two-year association has fl ourished with two school projects.

Similarities between the companies existed from the outset, they point out, including the fact that they are both family-owned and family-run. This was infl uential in the decision for Wates - which had been researching the Gulf region - to establish a business entity with the local special grade company. “The cement that ties the two companies together is at a highest level in the organisation,” says Michael Kennedy, Wates’ Middle East director. “The Wates family has been in construction for around 120 years and is in its fourth generation. The Al Fara’a Group has been family run for 30-plus years.”

Though Wates had kept an eye on the Gulf for many years, it was Al Fara’a that made the initial move “out of the blue”, as Kennedy remembers, setting up an initial meeting in the UK to get to know

the Surrey-based fi rm. Chimanlal Gangaramani, vice chairman of Al Fara’a Integrated Construction Group, sitting next to Kennedy in Al Fara’a’s offi ce, explains that a number of government projects required companies to tender for projects as part of an international joint venture, spurring Al Fara’a to start its own research into like-minded foreign companies. “During this process we came across Wates as a good prospect - we started the dialogue two-and-a-half years back and within 18 months we had ‘signed off’ the joint venture.”

The fi rst contract win of the two school projects, in June, was worth AED65 million and mandated the companies to upgrade the British School in Al Khubairet in the heart of the city. Building and demolition began a month later and the construction will be completed in two phases over two years. The second project, secured 8th July, was the construction of a 1,500-pupil secondary school for Aldar Academies at Al Bateen – an AED150 million contract.

The latter project presented a particular challenge. Aldar Academies is striving to create a different, less hierarchical structure for a school to allow more interaction between different areas. This comprises a courtyard in the centre, capturing the sunlight, with all other departments feeding off it.

Kennedy calls it the “cutting edge” of modern design for world class academies. “It’s a very unusual design as there is a central circulation space with teaching wings coming from that. The design would challenge any company in the world. There’s a lot of architectural interest which is inspiration for the students, and contains all the other things you’d expect: sports facilities, swimming pool, workshops.”

FACE TO FACEFACE TO FACE


St Pauls renovation.

“Aldar has placed a very special emphasis on this project. It’s an iconic job for the company and probably the cream of families in Abu Dhabi will be going to those schools.” – Chimanlal Gangaramani

progress on a monthly basis, and we are very fortunate that it has shown confi dence in this joint venture.”

Kennedy adds: “I think one of the things Aldar valued from our joint venture is our empathy with the education process and our understanding of what the design is trying to achieve.”

With building planned and underway, further benefi ts to the joint venture presented themselves; in particular, the range of sub-contract work and materials within the Al Fara’a Group. The company has separate business lines in steel, interiors and joinery, as well as the companies Belgium Aluminium & Glass, Unibeton Ready Mix and El Sabbah Electromechanical. Recruiting services from within the group quickens and simplifi es the process, says Kennedy.

“All these divisions probably add an edge over others in regards to delivering the jobs on time - because you have all the contractors in-house and you can provide the right quality to clients,” he says, though both men add that although in-house companies will be employed more than external fi rms, the rigorous tendering process remains.

“The companies have to be competitive, and need to make sure we’re putting market-

Wates has a signifi cant experience in building schools, including higher education establishments such as work on John Moore’s University in Liverpool and East Surrey College. Al Fara’a’s experience in the sector includes the Gulf Library Manuscript and Studies Centre. Sensitivity

to education and understanding the infl uence of the building to the

learning process was critical to their success in winning the contracts, the

two men believe. “Any child spends more than 70% of

their time in a school so they have taken everything into consideration if you look

at the architecture of the project,” says Gangaramani. “I would say it is really an engineering marvel.

“Aldar has placed a very special emphasis on this project. It’s an iconic job for the company and probably the cream of families

in Abu Dhabi will be going to those schools. So it’s a very important

job and right at the top of management at Aldar

it is very keen to keep up

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best value. You ask where the benefi t comes in; well, the majority comes from removing overhead costs. If you’re self-delivering you’ve got one set of costs and production; a sub-contractor would bring their own. That’s where the benefi ts come from.”

Wates was registered in Abu Dhabi in November, and it celebrated the opening of its fi rst offi ce in December. Why did it choose Abu Dhabi? Kennedy says the company visited a number of the emirates with at least one trip with the senior directors in attendance. Abu Dhabi, he said, is where the company saw the greatest potential. “Remember, at that time, Dubai was in full fl ight in its frothy stage,” he says. “But we decided that market was not for us. Abu Dhabi had a structured view on its growth and what it wanted to achieve.”

The UAE capital has the fi nancial back-up and aspiration in place, he adds, and there is “every evidence and indication” that it will

“We can see line of sight in some great opportunities for about the end of the year and the early part of next year.” – Matthew Kennedy

succeed fruitfully with its 2030 Economic Vision.

“I think the prospects are very good,” adds Gangaramani, “in every area of every place. The Tourism Development and Investment Company and the Urban Planning Council are looking to make this a big city, with Saadiyat Island, Sir Baniyas… TDIC is developing it and it’s [in fact] bigger than Saadiyat. We’ve got two jobs for that as Al Fara’a.”

Kennedy points out that the opportunities to be involved in the social infrastructure of both the city and its offshore projects are plentiful. Any real estate developer knows that to maintain value on a piece of land the social infrastructure needs to be in place, he says: families living in villas will demand local schools, hospitals and other necessities.

It means the joint venture will keep its options open in terms of the projects it goes for, both men say, though it is early days. However, Kennedy reports that, on the back of the two school projects already won, their joint venture has made them a lot more visible in the local market.

“Whether it’s Saadiyat, or a local authority government- backed school, we have line of sight. It’s very important to monitor every scheme, and see how these markets develop.”

In addition, K e n n e d y says the joint venture has benefi ted from Al Fara’a’s local knowledge and experience.

215 value, in millions of dirhams, of the joint venture’s two projects so far

FACE TO FACE


TeamworkJoint ventures, as the term suggests, can double the experience, skills and good ideas brought to a project. But how exactly do companies operate together when work begins? Kennedy says the practicalities of working together were fl eshed out in the early stages of the venture. “Wates brings a certain amount of systems and operating procedures on site, as well as management skills,” he says.

“It relies heavily on Al Fara’a’s skills in managing the workforce directly and the specifi c skilled trades. So it’s a combination. With regards safety management, we are

Al Bateen Sports ground.

An impression of the main entrace of the Aldar Academy at Al Bateen.

working to put in place world-class safety procedures onto the site.”

He adds that although the regional offi ce has only 12 people, they are backed-up by thousands of colleagues in the UK where the company has specialist teams for anything “you’d expect a large contractor to have”: design, temporary works and procurement among them.

The joint venture is equally funded with a mutual account, making use of Al Fara’s long-standing banking relationships and local knowledge. The joint venture has a board, too, comprised of executives from the two fi rms, says Gangaramani, which meets

every week and follows the progress of the projects.

Aldar keeps a close eye too, although the two say the construction progress is not based on any set of ‘milestones’: build to a certain level, receive a payment. Kennedy explains that the construction stages monitored by all concerned are based more around periods of time. “For the contracts we’re on we get paid at the valuation stage, a very traditional method,” he says, adding that a ‘milestone’ structure more typically helps for employing an incoming sub-contractor for a specifi c area.

Spying opportunitiesThe joint venture is currently in talks with a number of potential counterparties for upcoming projects. Gangaramani says this runs the “full spectrum” of education projects, from kindergartens to universities.

But something stands out about the joint venture’s current discussions that may translate into contract wins. Kennedy

FACE TO FACE

reveals that developers have held pre-tender discussions with the two fi rms about elements of upcoming projects, including design, materials and the most effi cient approach to the construction. Getting their foot in the door before a public notice may be a vital X-factor for success: not every available contractor can be included in such meetings. “We can see line of sight in some great opportunities for about the end of the year and the early part of next year,” he says.

Early-stage talks about design bring the two men to identify another important trend. The last year in particular has seen contracts awarded that include both design and construction, essentially expanding the demands on the contractor as well as the skill base. Kez Taylor, managing director of contractor ALEC, recently identifi ed to Construction Week the benefi ts of including contractors in the architectural stage, to benefi t the integration of services needed to build the project and the eventual maintenance needed.

“Special clients are looking for contractors that are both design and construction,” says Kennedy. “It’s not a conventional contracting job, but he can understand the logistics of the job, he can price it together during the design stage and communicate with the client, giving the best value engineering a product they are looking for at an early stage.” This is opposed, he adds, to a consultant providing the design and the eventual budgets can be higher. As with the benefi ts of using the Al Fara’a Group’s other businesses, the savings from one design-and-build contract with a single counterparty can be substantial.

With options available internally, the joint venture is looking at a breadth of opportunities externally. This includes looking beyond education-linked projects, as well as early discussions about where the two fi rms might next operate. But Kennedy, who described his fi rst year in the country as “a roller coaster of emotion and effort” and “nothing as I expected”, says it is still early days.

BIOGRAPHIESWates has a long history in the UK, with more than 80% of its work coming from existing clients. John Moore’s university in Liverpool and Langley Academy in Slough are just two of the education-linked projects, as well as renovation work on St Paul’s Cathedral in London.

Matthew Kennedy has turned his skills to a range of construction issues such as health and safety and environmental challenges. Previous projects include work on a four-year AED500 million education and local government building programme for Birmingham City Council; and a primary and secondary school new build and renovation for Coventry City Education, an AED410 million contract.

Al Fara’a Integrated Construction Group comprises ten business units that span property, construction and industrial ventures in the United Arab Emirates and India.

Chimanlal Gangaramani holds a degree in electronic engineering from Mumbai University in 1994. After two years in computer systems culminating in one year’s entrepreneurial experience, Gangaramani joined Al Sabbah Electro-Mechanical on a ten-month development programme, later promoted to general manager. After another six months, Gangaramani underwent a further development programme in Al Fara’a General Contracting, while still responsible for the general management of Al Sabbah.

A year later, he was promoted to acting general manager of Al Fara’a General Contracting, which was confi rmed after six months. His responsibilities were expanded to include the management of Unibeton Ready Mix and Belgium Aluminium and Glass. In 2002, Mr Gangaramani was promoted to Group general manager, and then in early 2008 to the position of vice chairman of the group.

FACE TO FACE

For up-to-the-minute analysis log on to constructionweekonline.com



EDUCATION

IN SHARP CONTRAST WITH THE DAYS OF HIGH-RISES, HOTELS AND REAL ESTATE, a new demand for infra-structure is sweeping across the GCC. This year, a pronounced focus on soft infrastructure, and particu-larly schools, is prevalent.

Like many other sectors, most of the demand for schools is driven by anticipated population growth and limited, out-of-date facilities. For example, whilst the demand for pupil places is expected to grow 5% in the UAE alone in the next few years, in April this year, waiting lists of up to 3,500 applicants were recorded for individual schools in the country, and a large number of facilities were accused of being ineffi cient, poor qual-ity and antiquated.

In some cases, the problem is even more acute. In Abu Dhabi especially, ongoing issues related to the inade-quate safety standards and high prices of ‘villa schools’ have forced the Abu Dhabi Education Council (ADEC) to order the closure of all 71 villa schools in the region – 25,000 pupils reportedly enrolled at premises which put their lives at risk. Unsurprisingly, this has put massive pressure on both the public and private sector to

Smart buildingAcross the GCC, more and more authorities are investing in school building, creating huge opportunities for Middle East contractors. But as with all specialised buildings, there are a number of challenges. CW speaks to some of the region’s biggest school builders to fi nd out more.

By Elizabeth Broomhall


EDUCATION


“In recent years, a great deal of time and money has

been invested in tourism, but now the UAE government is

catching up on those sectors left behind.” Stride Treglown’s

general manager Nathan Hones.

EDUCATION


build a high number of new schools quickly and effi ciently in order to accommodate the 45,000 pupils who will need replacing when the schools shut down. This is on top of a lack of schools for low and middle-income families, which is seemingly creating hostility among poorer expatriate families.

“School fees are very high in top level expat schools and we simply need more schools to put a downward pressure on the price,” says architectural fi rm Stride Treglown’s general manager Nathan Hones. “Leaders of the UAE recognise that the strength of local Emiratis in business and of the global economy starts with a fi rm foundation in education, but it also realises that if it wants to keep the wealth of the expatriate experience here, it needs to cater for their children’s education at all levels of society. In recent years, a great deal of time and money has been invested in tourism, energy, residential and commercial projects, but now the UAE government is catching up on those sectors left behind, such as transportation, power and education.”

FundingOf course, for contractors, consultants and architects, heavy investment in schools projects means a fresh infl ux of new contract wins on the table. Earlier this year, ADEC revealed plans to build thirty private schools in the next thirty years alongside proposals to renovate an additional 15 facilities each year after the UAE government committed AED 17.8 billion to social affairs, education and healthcare, of which AED 9.8 billion was set aside for education. In July, bids were sought for several new schools due to be constructed across six plots of land in Khalifa City B and Mohamed bin Zayed City, scheduled for completion in 2013.

Meanwhile, developer Aldar Academies, which has already built four private schools in the GCC, is currently constructing the Al Bateen secondary school, which will cater for as many as 1,300 pupils. Expert school builders and joint-main contractors for the project, Al Fara’a and Wates Construction, believe there are real opportunities in this sector. “There is plenty of funding available for school projects, as they are carefully sought and planned initiatives of the government and of major developers,” says Al Fara’a Inte-grated Construction Group’s vice chairman, Chimanlal Gangara-mani. “The truth is that governments have committed to improving education standards, and along with a focus on infrastructure and civic facilities, we expect to see a lot of continued investment in the education sector by the authorities and private investors alike.”

EDUCATION PROJECTS CURRENTLY UNDER CONSTRUCTION:• The Al Bateen Academy• The British School Al Khubairat• Al Yasmeena School extension• 6 schools in Al Ain• 5 kindergarten schools in Al Ain and Abu Dhabi • Higher Colleges of Technology Women’s College,

Ras Al Khaimah• New York University, Abu Dhabi • Oasis International School, Al Ain


EDUCATION

According to other school building experts however, there may in fact be more private investors shouldering the costs when it comes to replacing villa schools – distinguishable from private schools being developed by the likes of Aldar Academies for wealthier families and those being renovated or built by the ADEC.

“The problem in Abu Dhabi is that you have villa school owners who have previously been making 30-40% profi t with a thousand pupils cramped in an inappropriate villa school, now needing to fund a building of around AED 25-30 million whilst reducing their profi t margins to 10-15% and with payback periods of around 10-15 years,” explains Hones.

“Even though ADEC provide land to these villa school owners, it does not address the construction costs. The only way the school can cater for this is to increase their cashfl ow by increasing school fees, but this is almost impossible as the ADEC mandate that if you are transferring students from one school to another there is a cap on how much you can increase fees. In addition, the struggling villa schools will now be expected to provide top quality teachers and facilities, which will add costs again.”

He adds: “As a result of this, many of the clients who have come to us for services are school owners, businessmen, and one semi-government backed developer. But the latter is looking at a VIP school, which unfortunately does not address the need for more low-income schools.”

Hence, a potential issue for contractors considering whether or not to get involved in a school project includes differentiating between the publicly-funded and upper-end private school projects, and those aimed at providing affordable school facili-ties in the place of villa schools, which may or may not affect payment terms.

PRINCESS NOORA UNIVERSITYA project being constructed by Arabtec in Saudi Arabia.

Strict architectural requirementsSeparately, and from a construction point of view, perhaps the main challenge when considering school building is a lack of experience. Evidently, it seems that without having some expertise in the fi eld, it can be diffi cult for new contractors to enter this market. More constrained by time and site safety than other projects, respec-tively due to the imminence of school terms and the need to protect children during school renovation, education projects are typically expected to meet much stricter criteria than other proj-ects, with a far tighter approval process and very detailed requirements for archi-tectural and MEP works.

“There are a myriad of requirements particular to school projects, and it is in the interests of the school management team and developer to be selective when choosing their contractors so they can ensure the benefi ts are maximised from a long-term facilities and operations point of view,” says Gangaramani. “For a start, schools are extremely time-bound projects, which need to be handed over in time for children and teachers to start the new term or year.”

Wates International’s Middle East direc-tor Matthew Kennedy agrees. “Schools have to be ready for the start of the academic year, so construction projects must focus on a late summer completion to

permit F.F.E. fi t out in time for the teach-ing staff to ‘move in’.”

Notably, time constraints are also a key consideration in respect of the detailed requirements for architectural and MEP works, which according to industry experts, these are becoming stricter with a new focus on quality, sustainability and modernness.

“The demand in the UAE is not just for schools, but for creating better learning environments with innova-tive solutions for making learning a creative and happier experience,” explains Dewan Architects’ executive director Ammar Al Assam. “From a design point of view, education proj-ects are normally low rise projects, with the major challenges being functional-ity, performance and safety rather than external architectural image.”

“The demand in the UAE is not just for schools, but for creating

better learning environments with innovative solutions for

making learning a creative and happier experience.” Dewan

Architects’ executive director Ammar Al Assam.

EDUCATION


more so than the architectural specifi ca-tions given their association with tech-nology, sustainability and pupil comfort. Clearly, when it comes to technology, MEP subcontractors have a responsibil-ity to ensure every school building is suitably fi tted with power lines connect-ing them to servers and the internet, as well as the basic power supply.

“School building is improving all the time to promote learning,” says Kennedy. “ICT is a big part of that.” Assam seconds this argument, in his assertion that “modern educational buildings tend to require technological facilities such as sophisticated audio-visual equipment and state-of-the-art information networking systems.”

Pupil comfort, on the other hand, and indeed, sustainability, is more to do with ventilation, plumbing, lighting and acoustics. “Education projects differ from typical projects as they have the objective of creating a sustainable, comfortable and dynamic learning environment.

“For the fi rst time, sustainability features such as energy-effi cient air conditioning systems and water-saving devices have been incorporated into school design and building,” says ADEC’s section manager for Educational Facilities Design, Alberto Treves. “Orien-tations, insulation and shading devices are also now being carefully planned, in addition to all of the electricity required for daily consumption in classrooms being generated on site.”

He adds: “Further key features of the new school designs include special attention when it comes to maximising

In line with this view, ADEC’s mini-mum requirements for private school facilities compel architects to take some key factors into consideration when designing a school. First, is the location of the site itself. Sites within 3.25km of an airport runway for example are seen as inappropriate for school buildings, as are sites located unsafe distances from high-voltage power transmission lines, adjacent to sites containing toxic or hazardous substances, or those within 500m of any facility that might reason-ably emit or handle hazardous materials. These are among an array of other sites which are also considered inappropriate or dangerous. Other restrictions are put in place when it comes to the number of levels in a building. For schools housing children grades six to 12 for example, the maximum permitted on all except high density urban projects is ground plus two fl oor-levels.

Additionally, as concerns the architect, attention needs to be given to surround-ing traffi c, so as not to disrupt local traffi c plans and ensure pupils are not required to cross vehicular traffi c to reach carparks. Sports areas need to be accessible, whilst allowing for sports and outdoor learning spaces so that schools can effectively meet the full curriculum. Added considerations include library

size, washroom location, storage facili-ties, the need for administrative areas, as well as classroom size and layout. “It is important, especially when it comes to building low income schools, to maxi-mize the use of each and every room so that the school does not pay more than it needs and so that each room is effi cient as possible,” says Hones.

As regards MEP works, the require-ments are stringent again, arguably, even

ADEC’S STRATEGIC DEVELOPMENT PLAN:ADEC is developing a Strategic Plan that will guide the Council-led initiatives to improve education in the Emirate of Abu Dhabi. The plan sets the strategic direction and objectives for ADEC.

The purpose of the plan is to outline a comprehensive educational improvement and fi nancing model to assist the Council in implement-ing its education reform plans in the most effective way. One of the key priorities is to increase both quality and access to private schools in the Emirate, with more affordable options for high quality, private education for all communities and residents in Abu Dhabi.

EAST SURREY COLLEGE IN THE UK IS A KEY EDUCATIONAL PROJECT IN WATES’ PORTFOLIO OF SCHOOL DEVELOPMENTS.

EDUCATION


ON SITE

the use of daylight, as well as maintain-ing indoor air quality, acoustics and thermal comfort to provide students and teachers with a healthy, safe and stimu-lating work environment.”

Indeed, according to Assam, it is clean-liness and a healthy environment that is most important when it comes to school building. “Building schools that are healthy and clean learning environments is crucial. It includes careful selection of materials and intelligent energy model-ing exercises.”

Thus, to noone’s surprise, ADEC is very specifi c in its list of MEP or ‘systems’ requirements about how sustainability and pupil comfort is to be achieved. Whilst the lighting must meet British or American standards, the building’s thermal HVAC system must be “designed, installed and operated to enhance learning and teaching by eliminating thermal distractions”. Specifi cally, temper-ature, humidity and ventilation must be controlled.

These requirements are in addition to those which state that plumbing fi xtures must be age-specifi c, classrooms must be designed with a minimum of 5% gross fl oor area of the space as an area of glazing, whilst there has to be at least

one operable window in every room and high sound-transmission, room separa-tors installed between critical instruc-tion spaces.

For experienced contractors like Wates and Al Fara’a, these considerations are pretty standard. “It’s the simple things like, trips, fi nger traps, lighting levels and child-sized washroom facilities that need to be thought about,” says Kennedy. “The key to a successful school is a good design born from a thorough understanding of the academic curriculum and timetable, and one that is built with quality and safety at the forefront of the project team’s minds.”

EDUCATION

“Governments have committed to improving educationstandards, and we expect to see a lot of continued investment in this sector.” Al Fara’a Integrated Construction Group’s vice chairman, Chimanlal Gangaramani

And for those who are not as experi-enced, ADEC claims to have made the whole process much easier. “At the begin-ning of a project we provide fi rms with our design manual, which contains not only standards and guidelines but abun-dant examples of what we consider best practice in educational facilities design,” they say.

“This makes the quality control process very transparent, and it is mostly verifi ca-tion that ADEC expectations are met in every project.”

One thing’s for sure, they’re bound to be easier than hospitals.

TIPS FOR SUCCESSFUL SCHOOL BUILDING: Top tips for school building from expert school builders Wates Construc-tion and Al Fara’a International:• Tap into expertise across all stages of the project lifecyle – from as

early as the design stage.• Optimise each phase of the project through the application of best

practices.• Take into account issues such as LEED compliance and value

generation for the benefi t of investors.• Collaborate with subsidiaries and suppliers. • Integrate the design and build process to shorten timescales and

improve the cost effectiveness of the project.• Choose materials carefully, understanding that construction costs are

less than operational and maintenance costs.

502017 BIG 5 ADS 2010 S2 OL.indd 1502017 BIG 5 ADS 2010 S2 OL.indd 1 24/08/2010 09:18:3024/08/2010 09:18:30


THE DUBAI METRO

Just the ticketTo celebrate the Dubai Metro’s fi rst birthday, CW’s special report looks back over the last year to see how the Gulf’s earliest mass urban transport system has been runningBy Elizabeth Broomhall

THE DUBAI METRO


L aunched on the ninth day of the ninth month of 2009 at 09:09pm, the Dubai Metro was the fi rst mass urban transport system in the GCC and the Emirate’s biggest ever achievement in terms of infrastructure. Show-casing Dubai as a world-class city, the Metro quite literally brought the

Emirate and the Middle East construction industry up to speed with the rest of the globe, positioning Dubai as an international business hub and employing some of the most modern building techniques and materials ever used on a project of this kind.

But the Dubai Metro was more than just another infrastructure project. In true Dubai style, it stood out for being the world’s biggest, fully-automated driverless train, and for aiming to be the longest automated metro network service ever once

the second line was fi nished. Meanwhile, and like a number of other state-of-the-art projects in Dubai, its architectural signifi cance lay in its ability to refl ect the Emirate’s unique identity and character - an individual and iconic

appearance capturing the extreme climatic conditions of the region with the themes of earth, air, fi re and water.

A year after the offi cial opening of the Metro by HH Sheikh Mohammed bin Rashid Al Maktoum, vice president and prime minister of the UAE and ruler

of Dubai, and the big questions resonating across the GCC as more and more countries seek to follow Dubai’s lead are: How successful has the Metro been in achieving its aims?

What has it done for Dubai? And what does the future hold

for the region’s most modern transpor-

tation system?

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Constructing the Dubai metroDeveloped by the Dubai’s Road Transport Association (the RTA), the Metro was primarily launched to reduce traffi c on the Emirate’s heavily congested roads, and to cater for an expanding population expected to reach 3 million by 2017.

A few years back, RTA board chairman and director Mattar Al Tayer announced that whilst the authority was working on road projects worth US $2.5 billion, road develop-ment was never going to be enough to solve Dubai’s traffi c issues. “Experience has taught us that building roads alone does not solve

OPENING OF THE METROHH Sheikh Mohammed bin Rashid Al Maktoum, vice president and prime minister of the UAE and ruler of Dubai, opened the Metro on 9 September 2009.

THE DUBAI METRO

Constructing the Dubai metrol d b h b i’ d

Maaktoumminnister opeened th

G OF THE METROkh Mohammed bin Rashid Alm vice president and prime

OOPPENINGHHH SheikMaaktoum

congestion problems,” he said. “Transport must be operated as a complete system with integrated modes of transport such as bus, rail and water transport.”

Another reason for building the Metro was to propel the city of Dubai into the next league of global business hubs. Before the Metro, the heavily populated Middle Eastern metropolis, forever on the cusp of urban development, was competing with other international cities on almost every level except for transportation. Thus, there was a clear need for a mass urban transport system both to refl ect the city’s growth and

advancement during the previous decade and to bring Dubai onto a level playing fi eld with its global competitors.

These factors in mind, it was not long before Mattar Al Tayer announced the launch of the Gulf ’s fi rst ever Light Rail Transit (LRT) project.

With the ultimate aim of allowing 100 trains to whisk 650 million passengers per annum to 56 stations along four separate lines by the year 2011, it was hoped that the Metro would reduce traffi c on Dubai’s roads by as much as 17%, whilst heralding a new era for this fast-developing city.

THE DUBAI METRO


Ali Free Zone in the south of the Emir-ate and Rashidiya in the North, in just four and a half years. Bearing in mind the increasingly-challenging transport conditions and the fast-rising population,

as far as the RTA was concerned, there were no excuses for not meeting this deadline.

Of course, having had no intentions of failing, the RTA and DURL consortium did succeed in fi nishing the fi rst phase of the project as scheduled, and on the Metro’s fi rst day of operation, opened 10 stations along the Red Line at a total cost of US $7.6 billion.

Did it achieve its aims?As with any major project in any developing city, over the course of the last year, there has been much speculation about whether or not the metro has achieved what it set out to

WHAT THE RIDERS HAVE TO SAY:

A TAXI DRIVER’S THOUGHTS…

“I use the metro for my daily work commute and to get to shopping destinations over the weekends. Access to a metro station was a major consideration for me when my lease expired on my home. Though the Metro is not as fast as travelling by car, it has the added benefi ts of being a stress-free form of cheap travel. It has slashed my travel budget by about half. My offi ce is relocat-ing from Garhoud to Media city but the fl exibility of the metro means I’ll still be able to use it while pondering alternative loca-tions.” – Farah Keenan, regular metro user from Deira.

“The metro stations are ten minutes walk from where I live, and a fi ve minute walk from my offi ce and from the Ibn Battuta mall where I do my shopping. The Metro is punctual which means I can always be on time. It is also a calm and cool way to travel, and greatly cuts down the expense of travelling. In terms of cleanliness and lack of crowds it is one of the best of the eight metro systems I have ridden. It is also perhaps the cheapest of them all.” – Gareth Hope, regular metro user from JBR.

“We have defi nitely seen a reduc-tion in traffi c in Dubai since the Metro. A lot of people use it to save money. We were very wor-ried about business when it was fi rst launched, but the effects aren’t as bad as we thought. People still use taxis, but it tends to be for short trips, when they’re in a rush, at weekends or when the Metro isn’t running.”

Eager to deliver on promise, the RTA was as quick with contract awards as it was when deciding on development plans. In 2004, as many as six hungry consortiums prequalifi ed for the Metro’s main construction contract, and by May the following year, the AED 12.45 billion package for the fi rst phase of the project was fi nally awarded to the Dubai Rail Link Consortium (DURL). Consisting of four companies: Mitsubishi Heavy Industries, Mitsubishi Corporation, Obayashi Corpora-tion and Yapi Merkezi, the consortium was assigned with the task of building the fi rst line, the 52.1km Red Line, between Jebel

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accomplish, and whether or not the original plans for ongoing expansion will indeed go ahead after all. On the one hand, there can be no denying that there have been some issues. Firstly, just 11 out of the 19 outstanding Red Line stations originally scheduled for hand over in February 2010 have been opened as planned. Meanwhile, the 22.5km Green Line, the Metro’s second line intended to link Dubai Airport Free Zone to Dubai Healthcare City, bringing the total amount of track on the Dubai metro to 74.6km, is also incomplete after originally being scheduled for handover in April 2010. Finally, an additional two lines – the Purple Line and the Blue Line – were put on hold last year after the global economic crisis quashed demand for the Metro’s services.

And yet, irrespective of these delays, the Metro’s success as a world-class piece of infrastructure continues to override any bad feeling – both in the Emirate of Dubai and across the GCC. From transport and economic experts, to contractors, commuters and taxi drivers, the general consensus is that the

Metro has been one of the most successful projects to occur in Dubai, far surpassing the RTA’s original expectations.

“From an operations point of view, the Metro has been a great success which can be evidenced by the increasing number of customers utilising the service,” says Stephen Burke, director of VSL – a subcontractor on the project responsible for the superstructure works of 60km of bridging on both the Red Line and the Green Line. “It has successfully linked one end of Dubai with the other, giv-ing the Emirate a cohesive feel by joining together the Old and the New Dubai.

“As well as being a great showcase for Dubai as a world class city, it is a super example of contemporary technology which will help stimulate the construction of other metros in the region.” He adds: “From a construction perspective, the authorities have set the bar high, demanding fi rst class quality building and a state-of-the-art design which takes into account environmental and sustainability issues. This will pay off dividends in the future as the infrastructure maintenance costs will be minimised.”

3.3 million80%74.6kmUS $7.617%US $3.38

of the Metro line is elevated

total length of the track

total cost of the Dubai Metro in billions

percentage of traffi c reduction expected with the launch of the Metro

value of main contract awarded to DURL in billions

passengers used the Metro in July

“The Metro has been signifi cant in helping the

Emirate cope with the aftermath of the

fi nancial crisis by allowing the

redeployment of human resources.” – DIFC’s director of

macroeconomics and statistics Fabio

Scacciavillani

The Dubai Metro was the fi rst urban transport system in the GCC and one of the Emirate’s greatest infrastructure achievements.

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THE DUBAI METRO


“The Metro has given the Emirate a cohesive feel by joining together the Old and the New Dubai.” – VSL’s deputy general manager Stephen Burke

Laith Haboubi, business development director from IBS Mapei, a supplier of construction adhesives and chemicals to the project, was also positive about the project’s success. “We are very proud to have been associated with this project, which certainly led the way not only in urban transport in the region, but also in terms of architecture and engineer-ing with many processes and systems being used for the fi rst time in this area.”

Aside from setting building examples and adding to Dubai’s incredible portfolio of con-struction projects, the Dubai Metro has also

had an impact on Dubai’s economy. It is for this reason, according to the DIFC’s director of macroeconomics and statistics Dr. Fabio Scacciavillani, that the Metro’s biggest effects can be felt by real people in their everyday lives. “The whole notion of a city is made up of a combination of human activities and economic activities, which work better when communication and transportation systems within the city work well. Thus, a good transportation sys-tem means that the whole economy of the city improves exponentially.”

Talking specifi cally about how the Dubai Metro has affected people’s lives, he con-tinues: “The two key characteristics needed to ensure an urban transport system has a lasting impact are effi ciency and cost. In that sense, I would say the Dubai Metro is at the top of the quality scale, because it is a very modern system, and very afford-able when compared to the average income in the city. So, even people who are at the lower end of the pay scale can easily afford it. Importantly,” he adds, “this means that people who live in densely populated areas or places where there are fewer jobs are

The Dubai Metro was the world’s biggest, fully-automated driverless train. So far it has one Red Line with 10 stations and one Green Line still under construction.

Stephen Burke

ector had an impact on Dubai’s economy. It is Talking specifi cally about how the Dubai

Metro has affected people’s lives, he con-

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able to travel quickly to areas far away from where they reside or to places where there are an abundance of jobs, respectively. This has been critical in diversifying the labour market in Dubai, and signifi cant in helping the Emirate cope with the aftermath of the fi nancial crisis by allowing the redeploy-ment of human resources from places and sectors that have been badly affected, to those that haven’t.”

“The project led the way not only in urban transport in the region, but also in terms of architecture and engineering .” – IBS Mapei’s business development director, Laith Haboubi

In addition, he explains how by freeing individuals from the confi nes of their resi-dential areas, the Metro has increased spend-ing in the city, improving the quality of life and allowing locals to enjoy the amenities that the city has to offer – key if Dubai is to retain its strong expatriate community. Separately, he asserts that the Metro has been invaluable in making Dubai a more attractive tourist destination and in creating a more effi cient business environment.

In terms of bringing Dubai up to speed with the rest of the world, Scacciavillani is again confi dent that the Metro has had a crucial role to play. “Dubai is one of the

most modern cities in the world in terms of infrastructure, buildings, construction technology and so forth. Before the metro, the one thing that clearly stood out in com-parison to other world cities was the lack of affordable urban transportation. With the Metro, Dubai has closed this gap. It’s more globally competitive, and on a par with the other major cities and world hubs in terms of quality of living and effi ciency.”

But what about minimising traffi c in the region? Has the metro reduced congestion by 17% as it set out to do?

“The impact of traffi c and congestion is

he world in terms st modern cities in thinfrastructure, buildings, construction infrastructure buildin

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Following Dubai’s lead are other GCC states such as Kuwait and Saudi Arabia - each currently looking at the possibility of having its own metro system.

not easy to quantify, and requires a very systematic study to evaluate the impact of other factors such as new roads opening, the elimination of some construction sites and the reduction of people in or moving around Dubai since the fi nancial crisis.

“In terms of passenger numbers, I believe the Metro has exceeded the RTA’s expectations, at least in the initial months. Currently, it is hard to know how popular the Metro is due to

the impact of seasonal factors.” According to reports, as many as 130,000 passengers used the Metro on July 1st, a 212% rise in the daily ridership of the Metro since October 2009. In total, the number of passengers that have ridden on the Metro since its launch last year has surpassed 23 million passengers.

“The number of metro users is steadily on the rise since the launch of the service in September 2009,” said Al Tayer in a public

statement in July, “with ridership jumping from 1.8 million passengers in October 2009 to 3.3 million passengers in June 2010, record-ing in the process an increase rate as high as 185%. In September 2009 the number of metro commuters clocked 1,196,920 passengers and the following month saw an increase in the ridership to 1,767,879 passengers.”

Looking forwardGiven the Metro’s popularity, one of the biggest concerns for riders and industry experts is the future of the metro, some riders even going as far as to base their property-purchasing decisions on the opening of new stations. According to reports, the remaining eight stations are set to open in stages depending on passenger numbers over the next year, whilst the Green Line is now on course for completion by the end of 2010. For the time being, it seems that both the Purple and Blue Lines have been put on hold.

Other, more exciting news includes the pos-sibility of an inter-emirate metro service and a series of high speed rail links, with a number of subcontractors already lining themselves up to bid for work on such projects. Clearly, there is real potential for the region to become more and more interconnected and for the benefi ts of the fi rst line to be compounded, though when the RTA will move forward with such plans, remains unknown.

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MACHINERY MARKET


W HEN THE WORLDWIDE economic recession began to bite in mid-2008, new machinery sales in the construc-

tion and mining industries felt the pinch. Even major players weren’t immune: Cater-pillar and JCB – two of the biggest names in the heavy vehicle industry were hit with the double whammy of a declining market and a hike in the cost of raw materials required to make their machines.

News was fairly bleak. JCB axed at least 500 staff in the UK as its European sales slumped 20% by July 2008 and, while emerging markets like the Middle East, Russia and Brazil were still reasonably buoyant, fi gures only partially offset the fall in European sales.

Caterpillar was also struck by the crisis. The company had been enjoying escalating year-on-year machinery sales increases since September 2004 in its Europe, Asia and Middle East – the second largest combined market after the Americas – but July 2008 stopped them dead in their tracks. The company equalled its year-on-year fi gures that month, but it preempted a 22 month decline in sales.

Caterpillar’s EAME operations refl ected a general global trend for the company. Its worldwide sales slumped from $51.3 bn in 2008 to $32.4 bn for 2009, while sales in machinery dropped 43% from $31.8 bn to $18.1 bn. The company’s stock price

Heavy fuelAfter a diffi cult two years heavy equipment manufacturers are beginning to see a sales resurgence. By Carlin Gerbich

suffered too; Caterpillar’s annual report states stock prices based on the last day trading of every year and, according to these statistics, prices dipped to a four-year low of $44.67 in 2008. However, of late, things have started to look up for the company. While revenues for the fi rst half of the year were down on those posted in 2009, year-on-year monthly sales sheets for June and July have risen for the fi rst time since 2008.

By the time CW closed for press this week, the company’s share price was listed at $70.08, almost reaching pre-fi nancial crisis levels (2007: $72.56). Caterpillar senior executives feel that the pick-up in local and global sales seen in June and July is a sign that the market is in recovery.

“During the second quarter, portfolio quality began to show signs of improvement as economic conditions around the world continued to improve,” said Kent Adams, Cat Financial president and vice president of Caterpillar Inc.

“Our focus in 2010 has been in three key areas: serving our Caterpillar customers and dealers, managing the portfolio and ensuring we have ample liquidity. While there are still economic concerns around the world, we are well positioned to support our customers as the recovery gains momentum,” he added.

JCB survived the crisis by cutting staff and limiting work hours for those who remained with the company. In September 2009, workers also took a week of unpaid

42.322

$6.1Percentage Komatsu sales jumped in the Africa and Middle East during April-June 2010

Amount, in US millions, raised during WWA Group’s annual Ramadan auction in Dubai

Number of successive months Cat global sales declined

MACHINERY MARKET


Komatsu, on the other hand, discovered growth in the Middle East and Africa where both Caterpillar and JCB have not. The Japanese specialists in heavy construction and mining equipment issued its fi rst quarter (April-June 2010) results which revealed the company’s global sales totalled $4.8bn, a 42.3% jump in year-on-year sales for the quarter. While construction projects in China and Oceania accounted for most of that growth, the Middle East and Africa had seen an 18% increase in sales for the period, totalling $254.7m

While new equipment sales have pleased local dealers and their international parent companies, traffi c through auction houses and rental fi rms has also picked up.

leave to help the business through the crisis. Since then, the company has started recruiting again and now employs 7,000 people worldwide, 3,000 of them in the UK.

JCB managed to post increased profi ts despite a 33% drop in sales during 2009. Global sales totalled $2.1 bn and the company’s pre-tax profi ts were $44.9m, up $1.5m on the previous year.

Sir Anthony Bamford, company chairman and son of founder Joseph Cyril Bamford, said 2009 was “hugely challenging” for the construction equipment industry.

“Tough action was taken to adjust our cost base to align it to a much reduced level of demand, and this resulted in an improving profi t trend as the year progressed.”

UEG, Qatar’s sole Liebherr tower crane dealer, keeps a stock of around 40 new cranes on its books but it’s the hire fl eet of 30 additional cranes that has kept the company going during the downturn.

Company managing director, Samir Al Mughanni, said that contractors had been reluctant to sink large sums of money into new machinery during the crisis – and that had opened an opportunity for the UEG.

“To meet the boom years of 2006 and 2007 in the local market, everyone turned to Chinese manufacturers with lower prices and faster deliveries. Since then, after the downturn, everyone is beginning to look for quality, reliability and good back up services,” Samir said.

Caterpillar's popularity with GCC contractors remains strong. Sales have picked up for the fi rst time in almost two years.

MACHINERY MARKET


picking up. There are a lot of projects near Salalah that need machinery – and the Omanis tend to go for something with a little more operator comfort.”

Interestingly, Lupton says it’s not the latest machinery that tends to grab buyers’ attentions at auction: “It’s stuff like the Cat 966E (wheel loader) that they stopped making in 1992. The replacement was essentially the same design but is loaded with computerised gadgets that, while they’re nice, people ignore because they don’t tend to trust secondhand electronics once sand, dust and water gets in to them.”

“People come with a shopping list. One guy sat there and spent $2m with us for equipment he needed for a range of jobs in Saudi.”

While demand for wheeled and tracked earth-moving equipment is very strong, Lupton said the mobile crane market was still hobbled by machines that were still in the hands of the banks. JCB's ME sales have started to pick up this year.

“Nearly 80% of buyers paid enhanced prices at the time, and they’re simply not worth what the banks believe they are. We can guarantee them a price, but they’re not willing to accept it. We’re longing for the day they cut their losses and accept that they’re not going to get what they’re asking for them,” he said.

“Up to the cutbacks we had been unable to develop a clear strategy for future growth. Already it is much calmer and clearly benefi cial. And as Government projects in the Ports, Petrochemical and gas related industries go ahead, it will generate confi dence in the private sector, leading to a clear pick-up by 2011 – but the days of the past booms, with mega demand for equipment are clearly past.”

Keith Lupton, director and VP of regional sales at Jebel Ali, Dubai-based auction house WWA Group, said the company’s annual Ramadan sale attracted a large crowd and generated $6.1m in sales throughout the day.

“Every year we wonder whether people will turn up, and every year we’re pleasantly surprised. This year’s was better than previously, which is a great sign that the industry is pulling through,” he said.

“Saudi is where it’s at: there’s so much work going on out there that you simply can’t get enough, good quality equipment. Saudi buyers are a bit more discerning: they’ll pay extra for a machine in good order, and they’re quite prepared to pay full value if they feel it’s worth it.”

“Kuwait is also popular, and Oman is

Heavy equipment from as far away as Spain is sold at auction in Dubai. "No-one ever got fi red for buying Cat," said auction specialist Keith Lupton.

PROJECT UPDATE

WANT TO UPDATE YOUR PROJECT'S PROGRESS, OR HAVE IT INCLUDED HERE? Email: [email protected]

ON SITE CW reviews a collection of its most recent site and plant visits to keep you up to date with project progress


The new VIP terminal, being built in Abu Dhabi , is part of the 'Presidential Flight unit of Abu Dhabi Airport. It consists of a large main room and a domed tower in the corner. The 400 tonne roof structure has been prefabricated, and is set to be raised from the ground and placed into position using a sequence of eight hydraulic jacks. The structure is currently sitting on temporary I-beam piers about a metre off deck.

The multi-billion dollar Khalifa Port and Industrial Zone project is one no contractor can afford to ignore. Covering 420km2, it is four times the size of Abu Dhabi island, or two-thirds the size of Singapore. With as much as $8.5 billion in construction projects already committed, and another $18.5 billion yet to be awarded for Phase 1 alone, the opportunities for contractors and investors are immense.

ABU DHABI AIRPORT TERMINAL BUILDING

LocationAbu Dhabi

VisitedJuly 2010

KHALIFA PORT AND INDUSTRIAL ZONE

LocationAbu Dhabi

VisitedAugust 2010

The American School of Dubai is a fast-track project being carried out by Al Ahmadiah Aktor. The anticipated opening date of the new campus is 14 September, to coincide with the new academic year. The design of the new campus has incorporated the latest sustainable trends to conserve energy. Construction teams include DG Jones & Partners as projects managers and RMJM architects.

AMERICAN SCHOOL OF DUBAI

LocationAl Barsha

VisitedJuly 2010

85mAED value of MEP contract awarded to

DSI

PROJECTS

After a slow and troubled start, Dubai Lagoon is a project getting back on track. Three main contractors – Bel-hasa Contracting and engineering, Bin Sabt Building Contracting and Commo-dore Contracting – are working across four zones within the development. Buildings in zone one, where eight resi-dential towers in zone one will provide 442 apartments, are due for completion around the end of 2010.

DUBAI LAGOON

LocationDubai

VisitedJune 2010

5.1mKg of steel

used so far in zone four

The Rufi Twin Towers project involves the construction of two towers with G+18 floors, in Dubai Sports City. The towers will be joined at roof level by a distinctive sky bridge. Emirates Belbadi Contracting is the main contractor. The company has worked to make sure the project makes steady progress and has agreed a year-long extension with its client, to accommodate a slow down on the job.

RUFI TWIN TOWERS

LocationDubai

VisitedJune 2010


PROJECTS

Sowwah Island, in Abu Dhabi, is being developed by Mubadala to be the new central business district of the UAE's capital. Sowwah Square is the most advanced of the island's developments so far and will be home to a new stock exchange as well as four business towers. Right next door is the Cleveland Clinic, along with the near by Rosewood Hotel. Work on a Four Seasons hotel is expected to start soon.

SOWWAH ISLAND

LocationAbu Dhabi

VisitedJune 2010

When complete Elite Residence will be a towering 91 storeys, standing 380m high and holding a total of 697 residential units. With around 20 floors still to be cast, there is plenty left to do. The current scheduled completion date is around October 2011, and to meet this, main contractor Arabian Construction Company will have to keep the pace up. Coordination between ACC and its sub contractors is seen as critical.

ELITE TOWERS

LocationDubai

VisitedJuly 2010

The King Abdullah Financial District is one of the most challenging and intricate projects currently under development in Saudi Arabia. A total of 77 buildings are expected to be built in six zones across the entire site. Saudi Bin Laden Group is building four of the first 10 towers as part of the initial construction packages. The company is targeting Leed ratings for the buildings when complete.

KING ABDULLAH FINANCIAL DISTRICT

LocationRiyadh

VisitedJune 2010

Concrete waste, from construction and demolition projects, now has an alter-native place to go, other than straight to landfill. The recently opened recycling facility in Al Dhafra, on the outskirts of Abu Dhabi, is crushing waste concrete into aggregate for use in road building. The plant will be able to produce up to 7000 tonnes a day, using crushers, con-veyors, screens and magnets to break the raw material down to size.

CONSTRUCTION AND DEMOLITION WASTE RECYCLING PLANT IN AL DHAFRA

LocationAbu Dhabi

VisitedMay 2010

7000tDaily

production capacity

With four 73-storey towers planned, the Dubai Pearl project is a massive under-taking that has taken several years and some false starts, to finally get a solid start. Piling was completed in 2009 along with the raft pouring. The towers are just starting to grow, with a 600-strong work force moving from building to building, as each one progresses at a similar pace. The project is aiming for LEED Gold certification.

DUBAI PEARL

LocationDubai

VisitedJune 2010

Al Muneera is being developed by Aldar as part of the expansive Al Raha Beach project in Abu Dhabi. The proj-ects is made up of two distinct areas, with an island and mainland divided by a canal. A total of 16 residential towers are under construction, along with an offi ce tower, 11 villas and 148 townhouses. Al Futtaim Carillion is the main contractor, with Drake & Scull providing MEP works.

AL MUNEERA

LocationAbu Dhabi

VisitedJune 2010

148Townhouses

in Al Muneera


PROJECTS

The Saudi Binladin Group for Industrial Precast operates out of Jeddah, a city with a whole street full of offices for the company and on the outskirts there are enormous factories and holding yards. The plant is supplying a number of projects across the country, including the Princess Noura Bint AbdulRahman University for Women in Riyadh and the King Abdullah University for Science and Technology.

SAUDI BINLADIN GROUP FOR INDUSTRIAL PRECAST

LocationJeddah

VisitedMay 2010

UAE-based Alec was awarded the main contract to build the US $816 million Mirdif City Centre in September 2007, with construction getting under way almost immediately. Developed by Majid Al Futtaim Properties, more than 16000 jobs were created at the peak of the design and build stage. The team behind the mall are hoping for a Leed Gold rating, to reflect the work they did to make the building sustainable.

MIRDIF CITY CENTRE

Location Dubai

Visited April 2010

Bavaria Gulf’s flagship Sandoval Gar-dens project has been an interesting mix of German and Arab expertise, and its townhouses are near to completion. The 36 townhouses are the first part of an AED260 million twin-development of the overall Sandoval Gardens. All town-houses conform to TUeV, a standard of quality that is a common benchmark, which means all construction and finishing is assessed by a third-party.

SANDOVAL GARDENS

Location Dubai

Visited April 2010

Central Sharjah is moving closer to a transformed road system to meet today’s traffic volume, following the latest milestone in Package 5 of the redevelopment of King Abdul Aziz Road. The latest completion of note, officially announced on 30th April, is the opening of the viaduct on the west side of Al Wahda Street. The viaduct crosses King Abdul Aziz Road at a 90 degree angle, itself a major project.

AL WAHDA STREET

Location Sharjah

Visited May 2010

36Townhouses

in the first part of the

project.


PROJECTS


TIPS FOR JOB SEEKERS

BE OPEN TO LEARNINGWhether you’re writing your CV or attending an interview, it is important to be open minded about learning new skills and technologies. A willingness to learn and an eagerness to keep up with the times will shine through whatever you’re doing, and your potential employer will be impressed. A confi dent attitude towards learning is additionally important. Worrying about age or inability will only hold you back.

DON’T BE PUT OFF BY JOB ADS AND SPECSWhatever you do, try not to be put off by industry-specifi c terms and job-seekers’ jargon. If you have the right qualifi cations and experience, you are most likely more than capable of doing the job, even if you think you are not. And, if you still feel like you’re out of your depth, but get called for interview, it is always worth attending in case other opportunities arise.

BE PREPARED Believe it or not, often interviewers are as nervous as interviewees. For this reason, and because sometimes potential employers may want to test your ability to answer diffi cult questions on the spot, interview questions can be challenging and irrelevant. It is therefore important to be prepared for this.

Facilities management and operations expert Ali Al Suwaidi has announced this month that he

will now be heading up facilities management for the Industrial Zone of the multi-billion dollar Khalifa Port and Industrial Zone (KPIZ) project in Taweelah, near Abu Dhabi. Formerly in charge of operations at the Burj

Khalifa, where he worked for 14 months, Mr Suwaidi brings a wealth of FM experience

to the Abu Dhabi Ports Company and to the KPIZ project. Meanwhile Obaid Saif Rashed Alkendi has been appointed as the fi rst chief executive offi cer of Fujairah Building Industries (FBI). Having been created as

part of the company’s ongoing strategy, the new position was fi lled by Mr Alkendi at the beginning of September, according to FBI chairman Mohammed O. Bin Majed. Also this month, it was revealed that Honeywell’s Kyle Bashy has left his position as business development director for Honeywell Middle East.

Shuffle

APPOINTMENTS

3 TOP JOBS

Role: Project DirectorAgency: Manpower

A large consultancy in Abu Dhabi requires a Project Director with at least 15 years’ work experience and a proven track record of working on prestigious projects in the UAE, preferably in Abu Dhabi. Crucial, are strong technical and contractual skills, the ability to take on a manage-rial role in both the design and supervision phases of a project as well as the capacity to coordinate and manage a large number of consultants and sub-consultants. Experi-ence with Abu Dhabi authori-ties and familiarity with local and international regulations are additionally important. Preference will be given to candidates with Western experience.

Role: Project Manager – bridgesAgency: KEO international Consultants

KEO International Consultants is currently seeking an experi-enced project manager for its infrastructure division in Abu Dhabi. The company is seeking candidates with a Bachelors De-gree in Civil Engineering and a minimum of eight years experi-ence in structures, fi ve of which must include experience in the design of complex/non-complex structures, pre-stressed reinforced concrete, steel and retaining walls. Preference will be given to those who can dem-onstrate an ability to use Micro-soft Excel and who are profi cient in the use of STAAD-Pro, as well as those with a Masters degree in Civil Engineering and who are registered with a recognised Professional Engineering Board.

Role: Senior HVAC ManagerAgency: Manpower

A Jeddah-based com-pany requires a Senior HVAC Manager to work on a high-profi le, prestigious project. The successful ap-plicant will have a number of responsibilities, including performance planning and monitoring of HVAC service, service quality manage-ment of HVAC operations renovation and remodeling, asset management, risk management and health and safety work. The successful candidate will need at least 10-15 years work experience within the HVAC industry as well as a facilities manage-ment background. Also vital, is a deep working knowledge of HVAC preventative and corrective maintenance.

For more details visit: www.constructionweekonline.com/jobs Please apply directly to the listed consultants.

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For directory information visit constructionweekonline.com/directory

SEPTEMBER 4-10 SEPTEMBER 11-17, 2010 CONSTRUCTION WEEK 55

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It’s the Metro’s fi rst birth-day, oh how time fl ies. I remember this time last year speaking to some of

the guys that were involved in the project, and I must say, my hard hat is off to them for being so cool under pressure and for getting it fi nished on schedule. Let’s face it – it doesn’t happen all that often in our line of work! Incidentally, I was chatting to some of the lads the other day about what they think is next on the cards for transport. To my surprise, most of them were quite confi dent that we would, at some stage, develop this inter-emirate rail network that everyone has been talking about, and they were almost positive about the possibility of high-speed rail in the UAE. My guess is that the RTA will wait a while before it commits to anything. Everyone loves the Metro of course, but I think that while things are still a bit slow, spending will be curtailed. Being honest, the next big priority has to be the outstanding lines and stations… right?

Buy inHow many more companies is Drake & Scull going to buy? I hear it has got two in the

Track-tastic

FOREMAN

it’s interesting to go along and watch people bid. They’re also a fantastic place to get a real feel for the industry and the prices people are willing to pay for big kit – away from the sales patter and glossy brochures.

Some people though just haven’t quite mastered the art of the quick sale. One poor chap at an auction I was at recently seemed to be completely out of his depth. He had his phone clamped to his ear, tentatively bidding every so

Gravy train: rail development shows signs of being a lucrative business in the region.

pipeline, but who knows how many more, and in which sectors? Actually there have been a few deals and link-ups between companies, or so I hear from mates. Merging construction companies must be weird: the number of names to remember has suddenly doubled, two people for every job, and so on. Mind you, you can have more guys working night shifts – good when you’ve got to get a tower up in double-quick time.

Re useI’m really coming round to the idea of recycled building materials: cost effective, and often identical to the original. We just need more companies to support the new recycling facilities in this region and we’re off. Hopefully, the added popularity for recycled stuff will drive down the price. But my best contacts in Saudi Arabia say that’s not the issue: using anything but brand-spanking new materials is just not the done thing.

Hammer timeI love auctions. Even if you’re not looking to pick up a bargain,

FOREMAN

Email: [email protected]

often as he checked with his boss back home, to make sure everything was still okay. He looked nervous throughout the bidding, and relieved when he fi nally missed out.

I wouldn’t have been happy sending a guy to a big auction to have him return empty handed, but I can also understand the employee’s reluctance to commit thousands of dollars, when his boss wouldn’t give him the teeth to make the decision.

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