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// contents 10 12 26 28 30
March 2017 // Issue #25
Editor’s note News Appointments Contracts Market report Faisal Durrani, Head of Research, Cluttons
36 Comment 40 Analysis
It's the final countdown to expo 2020, but will Dubai be ready?
44 In person
William Bodie of parsons
construction business news me // March 2017 //
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CEO Wissam Younane wissam@bncpublishing.net Managing Director Walid Zok walid@bncpublishing.net Director Rabih Najm rabih@bncpublishing.net Group Publishing Director Diarmuid O'Malley dom@bncpublishing.net Group Sales Director Joaquim D'Costa jo@bncpublishing.net +971 50 440 2706
Group Commercial Director Fred Dubery fred@bncpublishing.net Business Development Director Rabih Naderi rabih.naderi@bncpublishing.net +966 50 328 9818
Editor Jason O'Connell jason@bncpublishing.net Art Director Aaron Sutton aaron@bncpublishing.net Sales Manager Vishvanath Shetty vish@bncpublishing.net +971 52 6745378
49 Cover Story
Our in-depth preview of Conexpo, where we look at the relationship between the construction industries in the US and the Middle East
80 Design
A new arts hub in Saudi Arabia
86 Legal Insight 90 Take 10 Middle East Malls
96 Supplier News 100 Save the Date 102 Editor’s Pick 8
// construction business news me // March 2017
Marketing Executive Mark Anthony Monzon mark@bncpublishing.net
SUBSCRIBE subscriptions@bncpublishing.net PO Box 502511 Dubai, United Arab Emirates P +971 4 4200 506 | F +971 4 4200 196 For all commercial enquiries related to Construction Business News ME contact sales@bncpublishing.net T +971 55 339 5097 All rights reserved Š 2015. Opinions expressed are solely those of the contributors. Construction Business News ME and all subsidiary publications in the MENA region are officially licensed exclusively to BNC Publishing in the MENA region by Construction Business News ME. No part of this magazine may be reproduced or transmitted in any form or by any means without written permission of the publisher. Images used in Construction Business News ME are credited when necessary. Attributed use of copyrighted images with permission. All images not credited courtesy Shutterstock. Printed by International Printing Press www.ippuae.com
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9
// Editor's note
editor’s note
Home truths
W
elcome to a March issue where we venture across to the United States for the Conexpo-Con/ Agg event in Las Vegas. Throughout our special preview of the 2017’s biggest event for machinery and equipment, we look at the special history US brands and construction companies have here in the region as well as previewing some of the major releases at the event. We also take a look at how the Middle East industry can learn from its peers in one of the world’s most advanced economies. The US construction industry continues to supply machinery and equipment on a huge array of projects in the region. It left the confines of its domestic market many decades ago and today manufactures on a global scale with many of the famous US brands we see on our job sites here coming from plants based across the world. The new US administration’s desire to see a return of factories to its industrial heartlands may be laudable but it is an arguably outdated and impractical dream when you consider that some of its biggest names
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have benefited from an outward-looking approach of using global skill, expertise and local knowledge. The construction equipment and machinery industry is also heavily reliant on automation and it is unlikely to deliver jobs on a huge scale. In the wake of the US election, stock prices in US machinery surged upwards on the back of pledges to invest in the nation’s infrastructure. However, the industry remains heavily reliant on sales abroad and the reality could be that its future success will be shaped by its performance globally not at home. The Middle East is a fine example of what international partnerships can achieve when they collaborate and many of the most important contributions, whether it is architects, engineering firms or equipment providers, originate from the US. Working alongside their partners here they continue to help build an exciting future for the region and that should be a cause for celebration and not introspection.
// construction business news me // March 2017
Jason o'Connell Editor
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// Update An update from around the region
For News, features and more, Visit www.CBNme.com Follow us on twitter for breaking news: @cbn_ME Follow us on Facebook for up-to-the-minute breaking news
Contracts
Dubai readies $3bn Expo 2020 contracts Key awards include the final infrastructure package and the three thematic districts
Expo 2020 Dubai will award 47 construction contracts worth AED 11bn ($3bn) in 2017 as preparations for the first World Expo in the Middle East, Africa and South Asia continue to gather pace. A further 98 non-construction contracts totalling more than AED 360mn ($98mn) will also be dished out before the year is out. These will range from legal advisory services to event management and merchandising. Construction contracts to be awarded this year, which are open to local, regional 12
and international businesses, include the third and final infrastructure package for the event’s support areas, including car parking. Other key awards include the contracts to build the three thematic districts that will host the majority of the pavilions, as well as the public areas and the design, development and delivery of all temporary architecture and infrastructure required to stage the event. The Expo 2020 Dubai eSourcing Portal includes details of upcoming tender
// construction business news me // March 2017
opportunities as well as contracts already awarded. These range from smaller contracts to larger, multibillion dirham opportunities. Her Excellency Reem Al Hashimy, UAE Minister of State for International Cooperation and Director General, Dubai Expo 2020 Bureau, said: “We are committed to working with leading businesses from across the world in order to deliver an exceptional event of this scale, on time and on budget. “This is particularly true
when it comes to the development of the physical site, which will live on long beyond 2021 to become an anchor for the UAE’s developing knowledge economy in Dubai South". In 2016, Expo 2020 Dubai awarded over 1,200 contracts, investing more than AED 2bn ($544.5mn) in the economy. This included the appointment of an Orascom-Besix joint venture at the end of the year to develop the deep infrastructure at the Expo site in Dubai South.
Finance
Nakheel posts record breaking profit Nakheel has recorded the highest yearly net profit in the company’s history thanks to the expansion of its retail, hospitality and residential leasing businesses. The Dubai developer booked earnings of AED 4.96bn ($1.35bn) in 2016 – a 13 percent increase on the 2015 net profit of AED 4.38bn. Nakheel had a particularly strong final quarter, generating a net profit of AED 955mn for the three months to December 31 – up 22 percent on the same period in 2015. The 2016 results take the company’s cumulative net earnings since 2010 to AED 19.9bn. Property development, the company’s core business, continued apace to ensure that new projects are completed, adding further strength to the balance sheet. During 2016, Nakheel handed over 1,426 land form and built form units, primarily in Palm Jumeirah, Jumeirah Park, Al Furjan and International City.
Nakheel Chairman Ali Rashid Lootah
Nakheel Chairman Ali Rashid Lootah said: “Under our ongoing commitment to maintaining the momentum in the local economy, Nakheel awarded construction contracts worth around AED 3bn in 2016, and is set to award AED 10bn worth this year. “We are currently working towards completing our healthy pipeline of projects
and making them operational in the next few years, starting with The Pointe at Palm Jumeirah, one of our key hospitality and retail destinations, which is due to open this year.” Retail revenue grew by more than 70 percent in 2016 compared to 2015, proving that the strategy to create more company-owned, cash-generating assets is
paying off. In 2016, Nakheel Malls further expanded its operating retail portfolio by opening its phase one extension at Ibn Battuta Mall, neighbourhood Pavilions at International City and Al Furjan and the Club Vista Mare restaurant plaza on Palm Jumeirah. Revenue from Nakheel’s hospitality business jumped by 50 percent in 2016 compared to 2015. During the year, Nakheel Hospitality commenced operations at hotels Dragon Mart (ibis Styles, operated by Accor) and Ibn Battuta Mall (operated as a Premier Inn), which have 623 rooms between them. Residential leasing also performed well in 2016, with occupancy rates remaining at almost 100 percent. With more residential leasing expected to become operational in 2017, this sector will continue to provide a steady source of revenue for Nakheel.
Construction milestone
Multiplex tops out Al Maryah Central mall Construction contractor Multiplex has completed major structural work on the Al Maryah Central mall in Abu Dhabi less than 18 months after starting work on the project. It means the 2.8 million sq ft Al Maryah Central, which is linked to the existing Galleria mall on Al Maryah Island, is on course to open its doors in 2018.
The mall’s structure includes a 185,000 cm3 concrete frame poured in situ. Approxi-
mately 15 million man hours have been dedicated to this achievement to-date.
Marcus Truscott, Managing Director of Multiplex Middle East said: “This milestone serves as a testament to the hard work and collaboration between Multiplex, Gulf Related and our partners to deliver a world-class shopping destination in Abu Dhabi. We look forward to continuing to work with Gulf Related to ensure the project’s successful completion in 2018.”
construction business news me // March 2017 //
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// NEWS
Infrastructure
Parsons celebrates Riyadh Metro safety milestone
The Riyadh Metro project in Saudi Arabia has exceeded 3 million safe work hours, less than a year after surpassing 2 million safe work hours without a single lost-time incident, Parsons has announced. Riyadh Metro Transit Consultants (RMTC) is the engineer of record for two
Riyadh Metro contracts and is performing program and construction management services as a consortium of three partners, with Parsons having the lead role in Health, Safety and Environment (HSE) management. “Safety is one of Parsons’ six core values, and we are firmly committed to main-
taining a safe and healthy environment in all of our offices and on each of our projects,” said Gary Adams, Parsons Group President. “I am very proud of the RMTC project team for achieving such a significant safety milestone; their shared commitment and combined efforts have seen the application of stringent HSE policies and standards enforced on site for all key stakeholders.” Parsons has been working in the Middle East Africa region for more than 60 years and has offices in the UAE, Qatar, Saudi Arabia, Oman, and Bahrain. The company’s portfolio of ongoing work in the region includes major oil and gas projects as well as highways, bridges, rail and transit, airports, ports, water infrastructure, plus hospitals, public schools, universities, mosques, and other public buildings.
// They said...
“Under our ongoing commitment, Nakheel awarded construction contracts worth around AED 3bn in 2016, and is set to award AED 10bn worth this year” Ali Rashid Lootah, Nakheel
“The property sector remains highly attractive especially in the residential segment which is one of the country’s key pillars for the future” HE Sheikh Sultan bin Ahmed Al Qasimi, Basma Group
// In numbers
$240bn $69bn Total value of GCC rail projects
50% of rail investment is in KSA 14
// construction business news me // March 2017
value of rail projects under construction
18%
of rail investment is in UAE
“Dubai Municipality and Philips Lighting are preparing for the supply of two million Dubai Lamps for residential and professional use across the city in 2017” Hussain Nasser Lootah, Dubai Municipality
MEP
Dubai Lamp to become mandatory
Developers of new buildings will soon be obliged to install the Dubai Lamp, a series of new energy efficient light bulbs launched last year by Dubai Municipality and Philips Lighting. Deployment of the bulbs will be made a basic requirement for getting the Building Completion Certificate, Hussain Nasser Lootah, Director General of Dubai Municipality said. “In the beginning, we will concentrate on the new buildings,” Lootah said. “As regards the old buildings, we will make a study on the implementation mechanism. The municipality will also focus on big complexes such as schools, hospitals, mosques and other big buildings.” Philips Lighting was contracted for the design, manufacture and supply of Dubai Lamp which will hit the market by the end of this year. The bulbs offer a number of benefits, including electricity savings of up to 90 percent and an average lifespan up to 15 times longer than conventional bulbs. The lamp is characterised as
environmentally friendly as it does not contain mercury or generate heat and thus saves cooling costs and does not spread ultraviolet light. “We have plans to replace 80% of the traditional lamps used in Dubai with the new Dubai Lamp,” Lootah said. “Dubai Municipality and Philips Lighting are preparing for the supply of two million Dubai Lamps for residential and professional use across the city in 2017. This could increase to 10 million lamps by 2021.” The contract is for five years, and the intellectual property rights will be divided equally between Dubai Municipality and Philips Lighting during that period. The manufacturing and supply of lamps will start during March 2017, and will be available in four models, both in cool daylight and warm white colours: 1W Candle Lamp to replace 25W incandescent lamp, 2W Bulb to replace 40W incandescent lamp, 3W Bulb to replace 60W incandescent lamp, and 3W MR16 Spot to replace 50W halogen spots.
Recruitment
DEWA tenders 200MW solar project
Dubai Electricity and Water Authority (DEWA) has issued a Request for Proposal (RFP) to all qualified bidders for a 200MW Concentrated Solar Power (CSP) Power Plant, the fourth phase of the Mohammed bin Rashid Al Maktoum Solar Park. The 200MW plant is due to be operational by April 2021 and DEWA will generate 1,000MW using this technology by 2030. A consortium of KPMG (Financial), Mott MacDonald (Technical) and Ashurt (Legal) was appointed in September to advise DEWA on the first phase of its concentrated solar power (CSP) plant. The Mohammed bin Rashid Al Maktoum Solar Park will reach a capacity of 1,000MW by 2020, and 5,000MW by 2030, with total investments of AED 50bn ($13.6bn). In contrast to the first three phases of the solar park which used solar photovoltaic (PV) technology, commonly referred to as solar panels, the fourth phase uses CSP technology, which is more expensive but can continue to generate electricity for several hours after sun set. The 13MW first phase became operational in 2013 while the 200MW second phase is under construction and will be operational by 2017. In June 2016, DEWA announced that a Masdar-led consortium was the selected bidder for the 800MW third phase to be completed by 2020.
Bechtel launches graduate programme in KSA
Bechtel has launched a major new graduate recruitment program with the Riyadh College of Technology (RCT) in Saudi Arabia. Under the joint initiative, the global leader in engineering, procurement and construction will train and subsequently hire 75 RCT students who are pursuing careers in civil engineering, architecture, or survey technology. The first group of students will start the three-month training programme in March 2017, including a stint of work experience at a Bechtel project in Saudi Arabia. “Bechtel’s partnership with the Riyadh College of Technology shows our commitment to the community and to improving workers’ skills in Saudi Arabia,” said Abdulrahman Al-Ghabban, Bechtel’s Deputy Country Manager. “Together we are creating better career opportunities, quality infrastructure and economic growth.” US-based Bechtel has worked in Saudi Arabia for more than 70 years developing megaprojects from large oil and gas facilities to airports and other critical infrastructure. The company is currently working on lines 1 and 2 of the six-line Riyadh Metro and providing program management services at Jubail Industrial City, the largest civil engineering project in the world.
construction business news me // March 2017 //
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// NEWS
// Snapshot
The clubhouse at Trump International Golf Club Dubai, the centrepiece of the new DAMAC Hills luxury real estate project
Infrastructure
Six Construct completes Qatar terminal
Top 5 Web Stories
www.cbnme.com
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1
ACC and Kier score $183mn Dubai contract
2
Fire strikes Kuwait’s $775mn cultural centre
3
CSCEC bags Dubai contracts worth $250mn
4
Heavy wind topples crane in Dubai
5
Multiplex tops out Al Maryah Central mall
Six Construct has completed work on a project that has doubled the capacity of an aggregate handling terminal in Mesaieed, Qatar. The project, a partnership with Danish firm FLSMidth, has replaced the current operation system at the gabbro terminal with a state-of-the-art conveyor system, boosting annual turnover to 30 million tons of aggregate. The subsidiary of Belgian contractor BESIX was responsible for building the auxiliary infrastructure, such as sub-stations and weigh bridges, and installing the electro-mechanical equipment. Within the first few months of the project, Six Construct was also awarded two additional 33KV substations, which feeds the main project under a separate EPC contract. “Although we have now completed construction works of the project, we, with a partner, are also being considered to assist the client with the initial operation and maintenance of the Gab-
// construction business news me // March 2017
bro Terminal,” said Valery Paquier, Resident Manager, Six Construct Qatar. “Not only is this a true testament of our company’s good client relations, but it also highlights our ambitions as a group to be able to cover the complete infrastructure lifecycle of a project. “Solid asset management is becoming a cornerstone in the diverse offerings of BESIX, and we are very proud of the range of services we are able to offer as a company,” added Paquier.
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// NEWS
Contract
Admares to build Marasi Business Bay floating homes
Admares has won the contract to build floating buildings for phase 1 of the Marasi Business Bay development in Dubai. The company will design and manufacture 10 water homes, two restaurants and an exclusive yacht club at its purpose built facility in Finland before transporting them to Dubai by the end of 2017.
Developed by Dubai Properties, the entire Marasi Business Bay area will include the longest waterfront promenade in the Emirates and the UAE’s first-ever homes on water with pedestrian and boat access, as well as restaurants, leisure facilities and five palm tree-lined yacht marinas with approximately 700 berths.
The development’s main architectural feature will be the homes on water, each of which will enjoy exclusive boat access and views of the surrounding Dubai Water Canal. Admares is a pioneer of innovative floating construction, including the Burj Al Arab Terrace which was added to the famous hotel last year. The company is working on the Marasi Business Bay project in partnership with Finnish interior design studio Kudos and Sigge Architects. Admares CEO Mikael Hedberg, said: “We started at the top with our first project in the Emirates, working with Jumeirah and Dubai Holding for the Burj Al Arab Terrace. Having successfully delivered the new resort extension – the biggest-ever undertaking of its kind in the world – we now have another project where the client was looking to create a landmark development with a high degree of innovation and quality.”
SSH awarded the Marassi Boulevard project SSH has revealed its latest design project in Bahrain - the Marassi Boulevard project. The building design firm was awarded the full design contract for the project by Eagle Hills, a private real estate investment and development company. The residential mixed-use development is located within urban waterfront project Marassi Al Bahrain. SSH CEO, Bob Hope stated: “Marassi Boulevard is an exciting addition to the Marrassi Al Bahrain area and it has been an honour for SSH to be
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a part of making this vision a reality. “With a strong focus on building communities, we see ourselves as the only regionally based architects and engineers, delivering international standards and are excited to have contributed to the growth of the already impressive Marassi Al Bahrain community.” Marassi Boulevard consists of four low-rise residential buildings of seven to ten floors, including more than 240 homes, from studios to three-bedroom apartments, and boasting 700 sqm of community retail.
// construction business news me // March 2017
Eagle Hills Bahrain, general manager Daniel Hammond, said: “No detail has been overlooked by SSH, our architects involved in the creation of Marassi Boulevard’s design. We wanted residents to experience metropolitan living that suits a range of tastes, budgets and requirements, whilst retaining a sense of shared community. “All visitors will find something to love at the boulevard due to its perfect balance between beautiful landscaping and retail offering – the major themes of Marassi Al Bahrain as a whole.”
// Bitesize news
Landscaping contractor Akar Technical Services has completed work on the $3.8mn Al Wadi Park project in Hatta, Dubai.
GE has secured orders worth more than $1.4bn to set up power plants and provide technology upgrades and maintenance services in Iraq.
Collaboration Management & Control Solutions (CMCS) has introduced an Executive Training Program for Project Management Offices (PMOs) in the UAE.
Gettco Construction has been awarded with Integrated Management System certificates by TNV UK with the support of Excelledia Quality Consulting.
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// NEWS
Real Estate
KBW and Basma form property start up
Safety
KBW Investments (KBW) and Basma Group (Basma) have teamed up to launch a new property developer targeting the residential market in the UAE. ARADA will focus on ‘creating communities’ within the ever-expanding midmarket segment, according to a statement. The agreement was signed by HRH Prince Khaled bin Alwaleed bin Talal, founding Chairman of KBW Investments, and HE Sheikh Sultan bin Ahmed Al Qasimi, Chairman of Basma Group. With a launch focus on Sharjah, ARADA will build on the government’s vision to position the emirate as a vibrant cultural and business hub. Commenting on the launch, HE Sheikh Sultan bin Ahmed Al Qasimi, said: “The property sector remains highly attractive especially in the residential segment which is one of the country’s key pillars for the future. “We have made important strides towards aligning our goals with the leader20
ship’s vision and supporting its ambitious aspirations in partnership with KBW Investments. Today, ARADA is the result of these joined efforts and we are confident that it will play a pivotal role in closing the gap in the underserved sector of urban communities.” HRH Prince Khaled bin Alwaleed bin Talal said: “Over the past few years, KBW Investments has been carefully curating a group of companies that work together across sectors, and have amassed the expertise, scale, and capabilities to contribute to Sharjah’s burgeoning real estate segment. “Through our discussions with industry experts and investors, we’ve determined the consumer need for aspirational urban concepts that provide a strong value proposition to Sharjah residents or those looking to invest from other emirates and the larger GCC.” Prince Khaled added that an ARADA project announcement would be made in the immediate term.
// construction business news me // March 2017
AESG launches Fire and Life Safety practice
UAE-based consultancy AESG has established a dedicated Fire and Life Safety service hot on the heels of civil defence authorities launching an updated Code of Practice for the building industry. Among the eleven services offered by the new department are Building Fire and Life Safety Strategy and Design, Qualitative and Quantitative Fire Risk Assessments, Fire Systems Design and Engineering, Fire Safety Audits, Fire Protection System Design. AESG said the new division would draw on the wealth of experience gained in the field through its involvement in high-profile projects such as Al Hamra Tower in Kuwait, The Opus Business Bay and Al Jalila Children’s Specialty Hospital. Division Director, Peter van Gorp, who is a veteran with over 20 years of experience in the specific area, believes this expertise offers a key benefit for clients. “Skyscrapers and high-rise buildings are commonplace
to city skylines in the Middle East and these large developments require sophisticated fire and life safety strategies. There is a tremendous amount of oil and gas related activities in the region which require detailed planning to develop optimised and effective fire engineering solutions.” “At AESG, we have invested not only in developing technical knowledge, but also in insuring that it is translated and incorporated into the services we deliver.” Initially, the company’s focus will be on providing advisory and engineering services to clients in the building, industrial, and Oil & Gas sectors. The needs of customers within these diverse segments varies considerably, but AESG is confident it will be able to cater to all unique requirements as its team is fully proficient in both international and local standards, including the NFPA, UAE Fire and Life Safety Code and the International Fire Code.
Construction
Leighton lays foundation stone for Qatar towers Leighton Contracting (Qatar) has laid the foundation stone for a major residential tower project on The Pearl-Qatar. The groundbreaking ceremony for Al Mutahidah Towers was overseen by senior officials of United Development Company (UDC), the master developer of the man-made island. HLG Contracting, parent company of Leighton Contracting, revealed in November that it had won the QAR 580mn ($160mn) contract for the construction of the project, which is
located on the beach front precinct of Viva Bahriya. Navayuga Engineering Company completed piling works involving 917 piles as well as the excavation and backfilling works. Al Mutahidah Towers consists of twin 25 storey residential towers containing a total of 480 apartments, two parking levels, ground floor entrance lobby and amenities/entertainment areas with a gross floor area of 160,500 square meters. The project is expected to be completed in the fourth quarter of 2019.
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construction business news me // March 2017 //
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// NEWS
Market report
Strong outlook for Dubai construction
Construction activity in Dubai look set to remain strong through 2017 with a total of 4,000 projects amounting to an estimated $313.6bn, analysts say. Dubai projects account for 39 percent of active projects in the UAE and 42 percent of the total estimated value of those projects, according to BNC Network’s Construction Analytics which tracks projects across five market sectors that are in the concept, design, tender, under construction and on-hold phases. According to BNC’s Dubai Overview Report published in January 2017, the urban construction sector has more than 3,200 active projects amounting to a combined estimated value of over $245bn. This is followed by the transport sector with 187 projects valued at $32.4bn, the utilities industry with 203 projects valued at $24.3bn, 377 industrial projects valued 22
at $5.8bn, and 12 projects in the oil and gas sector totalling $4.6bn. Some of Dubai’s current multi-billion dollar projects include Dubai Metro Red Line Extension which is a part of the Expo 2020 initiative, Container Terminal 4 of the Jebel Ali Port Expansion project and the Royal Atlantis Resort and Residences located in Palm Jumeirah. Other megaprojects include the “Dubai Harbour” project announced by H.H Sheikh Mohammed Bin Rashid Al Maktoum in January, which will see construction of an impressive waterfront development spanning more than 20 million sq. feet. In December, 37 active projects worth an estimated $2.2bn moved to construction in Dubai. As of the end of 2016, the total number of projects under construction was 2,508 with an estimated worth of around $92bn.
// construction business news me // March 2017
Project
Qatar spending $2bn per month on infra
Qatar is spending almost $500m a week on major infrastructure projects as it gears up to host the 2022 Fifa World Cup. Spending is likely to continue at the same rate for the next three to four years as the country builds towards the mega event, according to finance minister said Ali al-Emadi. As well as a number of new stadiums Qatar is busy investing in roads, rail links and hospitals. The final bill could top an incredible $200bn, al-Emadi told reporters at a press conference last month. “90% of the 2022 contracts have already been awarded,” added Emadi. “That doesn’t mean the stadiums only, we are talking about highways, rail, ports, airports, those are really underway, even hospitals and everything.” He added: “We are really giving ourselves a good chance of delivering things on time and we don’t want to get in a place that we start painting while people are coming to the country.” Qatar will build nine brand new venues and renovate an additional three. Construction is underway on more than half the new venues. Work on the first venue – Khalifa Stadium – will be completed this year and all stadiums are expected to be finalised by the end of 2020.
Nakheel hires Dar Al Handasah
Nakheel has appointed Dubai-based international consultants Dar Al Handasah for infrastructure design, engineering and site supervision services at the Madinat Al Arab project at Waterfront Jebel Ali. The project spans five zones and covers a 522 hectare site with 266 mixed-use land plots, Nakheel said in a statement. Infrastructure design for four of the five zones is almost complete with construction tender due for release in Q2 2017. A Nakheel spokesman said: “Madinat Al Arab’s strategic location, within easy reach of Dubai World Central Airport, the Expo 2020 site, recently-opened attractions and theme parks and the UAE capital, Abu Dhabi, makes it a significant area for growth and development. “We are reinforcing our commitment to the area and its investors by moving ahead with infrastructure in this key part of Waterfront.” Nakheel has already completed the nearby Veneto and Badrah communities, which feature nearly 800 homes and a community retail centre, due to open this year. Nearby, the sprawling 42-tower Jebel Ali Gardens community for 40,000 people, is under development.
Projects
Amec Foster Wheeler opens Oman office Amec Foster Wheeler has opened a new office in the Sultanate of Oman, establishing a permanent presence in a country where it has a long history of delivering projects. The firm has won a number of recent projects in Oman, including a three-year technical services agreement contract with Oman Oil Refineries and Petroleum Industries Company SAOC (Orpic) in 2015 for the Mina Al Fahal Refinery and Sohar Refinery, Aromatics and Polypropylene plants. Amec Foster Wheeler was also awarded a contract by the Oman Tank Terminal
Company (OTTCO) for the front-end engineering design of the Ras Markaz Crude Oil Park Project in Oman. This project involves phased development of a terminal designed to hold about 200 million barrels of crude oil, making it one of the largest oil storage facilities of its type. Amec Foster Wheeler supplies a wide range of services and technology to all sectors of the process industry in the Middle East including environmental, oil and gas (both onshore and offshore), refining, petrochemicals and power.
Timeless standard
Robin Levien inspires Ideal Standard’s new collection
Ideal Standard’s new Connect Air collection for the MENA region has made its debut at the company’s Design Bathroom Centre in Dubai. The extremely light weight and durable Connect Air collection, has been designed by world-famous creator and product designer Robin Levien and his team at Studio Levien. The new Air collection comprises ceramics – including WCs, bidets, basins, vessels, vanities , furniture, bathtubs and shower trays – and Ideal Standard claims it, “brings care lavished on every detail to guarantee, with its high quality materials, the highest possible standards of comfort and functionality, style and design.” “The Connect Air collection taps into the minimalistic trend for sleek and slim
line interiors, which can now be transferred throughout the household to include the bathroom,” says Levien about the collection. “It is all about lightness at every element of design.” Connect Air WC’s have been designed with an invisible fixation system that enhances the beautifully elegant, airy design. The WCs additionally feature the famous AquaBlade technology in which, unlike existing flushing systems, the water covers the entire surface of the inner bowl. In traditional WC’s, a significant area of the bowl is left unwashed on flushing, whereas AquaBlade guarantees total hygiene, as the area below the rim is rinsed clean. The water rinses right from the top of the bowl for better performance and there is no overhanging rim, giving the unit
an unprecedented look. Connect Air is available as in four different forms: vanity, vessel, basin and semi-countertop. Sizes start from 40cm up to a 134cm option and are designed to offer flexibility of installation and variety in style. Ultra-thin rim for the vessels, slim low profile for the vanities, angled low exterior sides for the basins. While each offers the same crisp elegance, each makes a decisively individual design state-
ment, says Ideal Standard. Connect Air furniture is designed to highlight the soft and curved lines of the ceramics. The range finishes come in six bi-colour combinations, chosen by Levien to fit diverse houses and styles. The range’s bathtubs and shower trays offer thin contours to increase the comfort area, but “also to contribute to total range harmony.” “Connect Air brings unprecedented elegance to the bathroom with a range of ceramics, baths and furniture in an array of sizes and finishes, granting an airy feel to any environment and creating efficient, durable and stunning bathrooms,” explains Dimitra Dotsia, marketing manager at Ideal Standard. “The collection can be configured to suit individual needs and different spaces.”
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// NEWS
Real Estate
Azizi launches project within Meydan One Meydan Group and Azizi Developments have teamed up on a residential and retail project within the Meydan One development. The low-rise project will comprise of G4 – G10 floors will be close to Meydan One Mall and its attractions. Saeed Humaid Al Tayer, Chairman and CEO of the Meydan Group and Mirwais Azizi, Chairman of Azizi Group, presided over the signing ceremony at the Meydan Group’s headquarters. ‘’Meydan is a name that evokes opportunity and we are glad that the Azizi Developments have partnered with us. Like us, they are investing in the future,” said Saeed Humaid Al Tayer.
‘’Meydan’s assets sit in a strategic geographical corridor. The proximity of this project, with all its important amenities, within the Meydan One eco system, the Dubai Water
Canal, where we are co-stakeholders, and proximity to Dubai’s business and financial sector is a case in point. “The growth witnessed here will dovetail into the plans
that we have articulated for the future and this will be evident soon.’’ Located between Meydan and Al Khail Road, Meydan One was launched in August 2015 by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. The development will have a number of record breaking features, including Dubai One Tower, which will be the world’s tallest residential tower at 711 metres. The mega project will also have the world's largest dancing fountains, the world’s longest indoor ski slopes and a huge multi-purpose sports facility.
Real Estate
Danube almost sells out of Miraclz Danube Properties has sold 95 percent of its latest residential tower project - Miraclz The news was announced at a press conference at the Grand Hyatt Hotel on Wednesday in the presence of Sushmita Sen, a renowned Indian actress and the face of Danube Group. Attendees of the event were given updates on all the on-going projects under the Danube Properties portfolio, including Dreamz, Glitz 1, 2 and 3, Starz, Glamz, and Miraclz. “I take great pleasure in announcing that our seventh project is almost sold out and the construction on all our sides are progressing very well,” said Rizwan Sajan, Founder and Chairman of Danube Group. 24
“Today the ‘Stop Renting and Start Owning’ trend has grown immensely and we are proud to be the pioneers in affordable housing.
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“Moreover, the launch of Miraclz was quite interesting, as it is a magnificent structure, at an excellent location and we introduced a new
brand ambassador for the campaign. We are extremely happy with the response received and looking to introduce new concepts in the affordable housing sector” The AED 400mn ($108mn) ‘Miraclz’ tower is located at Dubai’s Arjaan neighborhood close to Miracle Garden. It offers a selection of 591 apartment units ranging from studio to two bedroom apartments, where each home is fully furnished and equipped with modular furniture, where the living room turns into a bedroom with a full-sized bed at night. The tower is conveniently located near all the major landmarks of the city, making it an ideal location to own a home.
Marc Evertse, SOHAR Executive Commercial Manager
Why go through the Strait when you can go straight to the Gulf.
With deep-water berths outside the Straight of Hormuz, investments of $25 billion and seamless sea-road-air access to the region’s largest markets, it’s no wonder so many companies choose to start their journey in SOHAR, one of the world’s fastest growing Port and Freezone developments.
// Appointments
Appointments Movers and shakers in the industry
Mott Mac appoints Mike Haigh as group MD Mott MacDonald has named Mike Haigh as the group managing director of its $2bn business. He will be responsible for day-to-day management and operations of the firm, which has 16,000 staff working across engineering, management and development consultancy. Haigh joined Mott MacDonald in 1981 as a graduate engineer working on international projects in the water sector. He joined the executive board in 2013 and was most recently managing director of Mott MacDonald’s Europe and Africa region, which has more than 7,000 staff and $1bn annual revenues.
Mats Rahmström named Atlas Copco President and CEO Mats Rahmstrom will become the new President and CEO of Sweden’s Atlas Copco on April 27, replacing Ronnie Leten, who has resigned the position after managing Atlas Copco successfully for eight years. Currently Senior Executive Vice President and President of the Industrial Technique business area, Rahmstrom began his Atlas Copco career in 1988. Before he took on his current position in 2008 he was President of the Tools and Assembly Systems General Industry division within Atlas Copco’s Industrial Technique. He will be Atlas Copco’s 12th President and CEO since the company was established in 1873.
Aconex appoints Craig Fulton as Chief Technology Officer Construction software platform Aconex has appointed Craig Fulton as Chief Technology Officer (CTO), responsible for all product engineering and cloud hosting functions. Fulton brings over 20 years of technology management, cloud, security, and infrastructure experience across multiple industries, including telecommunications, financial services, government, software, and digital. He joins Aconex from Telstra, Australia's largest telecommunications and media company, where he held a series of executive positions in cloud solutions and delivery, including Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS) and Infrastructure-as-aService (IaaS) engineering. 26
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// Contracts
Contracts HLG bags $109mn Al Garhoud Towers contract HLG Contracting has sealed a AED 401mn ($109mn) contract for the construction of a three tower project in Dubai. The deal to build Al Garhoud Towers close to Dubai International Airport was awarded by developer Hasabi Real Estate. The three buildings - conjoined by a mezzanine floor - comprise 100 serviced apartments in one building, a 350-room 3-star hotel in a second building, and a 250-room 4-star hotel in a third building. Construction is scheduled to complete in the second quarter of 2018.
CH2M appointed on Dubai Parks and Resorts phase 2
CSCEC bags Dubai contracts worth $250mn China State Construction Engineering Corporation (CSCEC) has won a pair of infrastructure contracts in Dubai weighing in at a combined value of close to $250mn. The Middle East branch of the Chinese contractor will carry out a AED 800mn ($216mn) road improvement project in the south of Dubai for the Roads and Transport Authority (RTA). In addition, the firm was awarded a AED 117.5mn ($32mn) infrastructure contract for the Akoya Oxygen residential development by Damac Properties.
KAEC penned deals worth over $426mn in 2016 Saudi Arabia’s King Abdullah Economic City (KAEC), the world’s largest privatelyfunded new city, signed contracts worth SAR 1.6bn ($426mn) in 2016. Around 30 percent of the total volume of contracts were for developments in the Industrial Valley and another 40 percent were for residential developments. It added that 88 percent of contracts were signed with Saudi-based firms and that none of the announced deals included contracts and agreements with companies that have investments in KAEC.
CH2M has been appointed to deliver the in-park and resort wide infrastructure and traffic services for the next phase of Dubai Parks and Resorts. Phase 2 plans for the destination include constructing a Six Flags theme park, with world recordbreaking roller coasters set to open in 2019. The US-based construction management company provided a number of services during the first phase of the project which opened to the public at the end of 2016.
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EFS awarded $122mn FM contracts EFS Facilities Services has started 2017 with a bang, adding new contracts worth AED 450mn ($122.5mn). A major government entity in the UAE as well as projects in Qatar are among the new deals which come off the back of a successful 2016, where it saw 15 percent growth. Tariq Chauhan, Group CEO said: “Despite the challenging conditions and cautious market sentiment prevailing in our region, we are confident of building upon the successes of 2016 and progressing in our long-term objectives globally.”
DCC clinches contract to build 1/JBR
ACC and Kier score $183mn Dubai contract A joint venture of Arabian Construction Company (ACC) and UK-based Kier has won a GBP 150mm ($188.3mn) contract to build an apartment complex in Dubai. The 50-50 partnership will build the scheme for developer Nshama as part of the Town Square residential project. The project will include 1,496 apartments as well as retail and leisure facilities, Kier revealed in an update adding that the project will be funded with the support of UK Export Finance.
Omniyat appoints Sun Eng and Contracting Omniyat has appointed Sun Engineering and Contracting Company as the main contractor for its latest project, a two tower development close to the new Dubai Water Canal in Burj Khalifa District. The Sterling will have 343 apartments ranging from one-bedroom homes starting at 1,000 sq. ft. to twobedrooms at 1,700 sq. ft. and three-bedrooms at 2,600 sq.ft. Omniyat didn’t put a price tag on the deal.
Dubai Construction Company (DCC) has won the contract to build a new luxury sea-front tower in Dubai. Work on 1/ JBR has begun and the project is on track to complete by the end of 2019, developer Dubai Properties announced today. Located at the entrance to Jumeirah Beach Residence (JBR), the 46-story tower will have 161 large units, ranging from twobedroom apartments to fivebedroom penthouses. The value of the deal was not revealed.
Boskalis books $510mn Oman port deal
Insha Contracting wins $17mn Barwa Village deal
Dutch dredging specialist Royal Boskalis Westminster has signed a Letter of Intent for a EUR 480mn ($510mn) contract to expand the port of Duqm in Oman. Work includes engineering, design, procurement and construction of a bulk liquid berth terminal at the port which is an industrial free trade zone located between Muscat and Salalah. Design activities are due to commence in the coming weeks and equipment will be mobilized mid-2017. The project is expected to be completed in 2020.
Barwa Real Estate Company has awarded the QAR 63mn ($17.3mn) construction contract for the extension of its Barwa Village project to Insha Contracting and Trading. The project consists of floors with retail and food and beverage on the ground and mezzanine floors and 177 residential apartments on the first, second and third floors.
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// Market report
Fighting Back Property markets in the southern Gulf are beginning to stir after being floored by the oil price drop. But it could be a long road back for some. By Faisal Durrani, Head of Research, Cluttons
Dubai, UAE
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roperty markets across the Gulf are still reeling from the lingering impact of the oil price collapse that took place in 2014. Many governments in the Gulf region have had to reconsider their economic profiles and long standing policy of offering a tax-free business environment. The six member states of the Gulf Cooperation Council (GCC), including Saudi Arabia, the United Arab Emirates, Bahrain, Oman, Kuwait and Qatar, have all seen a stagnation, or correction in values and rents across their residential and commercial property markets for almost two years now. While oil prices have demonstrated somewhat of a recovery over the last six months, many of the region’s governments still struggle from a heavy reliance on oil revenues to fund state spending, economic growth profiles have been trimmed and a record number of infrastructure projects have been shelved, or stalled. In fact, MEED, which tracks total real estate and infrastructure projects and completions across the GCC reported 2016 as registering a $61bn delta between completed and awarded projects, the weakest performance of the index since its inception 12 years ago. As many of the GCC states still retain a high reliance on hydrocarbon revenues to fund infrastructure spending, the governments have collectively announced plans to roll out a 5% value-added tax (VAT), commencing on January 1, 2018. It’s still unclear at this stage how the property market will be impacted by the new tax, but it goes without saying that it will be a game changer for the region that has prided itself on its tax-free status historically. Still, despite the anaemic economic conditions, some markets and sectors have demonstrated a great degree of resilience in the face of what are arguably the most challenging conditions since the ‘Great Recession’ of 2008. Dubai, United Arab Emirates Despite buoyant domestic economic conditions, Dubai has seen a slight to moderate contraction in rents and values across its residential and commercial markets largely because of flagging glob-
al economic growth. This is of course in part linked to the emirate’s staging of the looming 2020 World Expo, which is driving a flurry of investment activity and job creation. This is expected to gain momentum as we head towards the six-month mega event that is expected to draw in over 25 million international visitors. During January alone, $3bn worth of Expo-linked infrastructure and construction projects were awarded, highlighting the importance of the event that is expected to add 300,000 new jobs to the city’s economy over the next four years. Clearly such a growth surge will have positive ramifications for demand in both the residential and commercial markets across the city. For now, the city’s residential market ended 2016 with values down roughly 25% on the last market peak of Q3 2008. We still expect values to stabilise towards the end of 2017 and key triggers to slow the decline are likely to continue emerging in the form of infrastructure projects linked to the World Expo in 2020 and other mega projects. These include city-altering projects like the Dubai Canal, Blue Waters Island, Emaar’s 3,000 foot plus ‘The Tower’ and the expansion of what is set to be the world’s largest airport, Al Maktoum International Airport. These will all help to sustain, or lift, public sentiment, which has proved instrumental in keeping the emirate’s economic growth profile the most positive in the region. The change in US leadership may well bring some surprises as well, but this is something we are monitoring closely. For now, decisions taken in the White House look set to boost the emirate’s profile amongst regional investors should they feel alienated by new US regulations, or nervous about the health of the global economy. Despite some submarkets in Dubai heading towards bottoming out, transaction volumes are still weak and reflect the general nervousness around commitments to purchase, while the wider issue of affordability remains a stubborn thorn in the market’s side. Quarterly transaction volumes slipped by 21% during Q3 2016, led by a 22% fall in apartment deal volumes, which were down 26% when
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// Market report
Abu Dhabi, UAE
compared to Q3 in 2015. The average price of a transacted villa has also fallen by 28.1% between Jan-Sep 2016 to stand at $1.1mn (AED 3.9mn). Away from the residential market, the office market has been punctuated by high levels of consolidation activity, particularly last year, most notably from the oil and gas sector, but also existing occupiers looking at efficiencies through single-hub operations. A great deal of that activity has all but subsided. The rising star in the office occupier market is certainly the Technology Media Telecommunications (TMT) sector. Internet City and Media City remain the core focus of this rapidly expanding and ever important sector for Dubai’s economy. The government’s recent Future-Accelerators Programme is paving the way for further strong expansion in this area over the short term and has even attracted the likes of LA-based Hyperloop-One. However, with limited amount of space available in high demand locations, interest is likely to rise in complimentary free-zones such as Dubai Science Park. New and existing TMT occupiers have been active in the market recently, such as Samsung which has recently trebled its floor space and Amazon Web Services which has announced plans to establish a new Middle East office in the emirate as it works to grow its presence in the region. Looking ahead, ‘The Avenue’, Dubai 32
Faisal Durrani, Head of Research, Cluttons
For now, decisions taken in the White House look set to boost the emirate’s profile amongst regional investors should they feel alienated by new US regulations, or nervous about the health of the global economy” International Financial Centre’s (DIFC) retail parade, is expected to spur overall activity and take up across the city’s critical financial nerve centre. The Avenue is expected to bring increased connectivity as the DIFC matures into a more pedestrian friendly environment. For
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now, core buildings command very low vacancy rates of sub 5% and we expect this to persist. The shortage of space in this part of DIFC is hampering activity, however we have recorded a few small relocation deals within the finance and banking sector of under 3,000 sq ft. No supply relief is expected until early 2019, when the $1bn ICD Brookfield Place is expected to complete. The development will provide 900,000 sq ft of Grade A space. Nearby, One Central may offer further significant Grade A space when two more buildings in phase 2 complete later this year. Despite the somewhat flat conditions, Dubai’s office market has been the most resilient in the region, which stems from its appeal amongst international occupiers and the strong belief in the domestic economy’s ability to shake off any fringe impacts of an uncertain global outlook. This is reflected in the fact that occupiers such as Huawei and MasterCard are pressing ahead with purpose built schemes in sought after office hotspots such as Dubai Internet City. Abu Dhabi, United Arab Emirates In the Emirati capital, Abu Dhabi, the impact of the oil price collapse is far more acute, with a notable acceleration in the residential market’s correction. This is because of global economic uncertainty and more importantly, the
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// Market report
protracted oil and gas sector's decline, which represents nearly 50% of the emirate’s GDP. This, combined with continued market softening across residential and office markets has led to nervousness amongst investors, with many reluctant to commit to purchases until they see signs of stabilisation. After holding steady for over a year, prime (AED 1,900 psm) and secondary (AED 1,100 psm) office rents in Abu Dhabi slipped by 5% and 8.3% respectively during Q3 of 2016. Receding demand and a growing amount of secondary space on the market has undermined rents. In fact, rates in some of Abu Dhabi’s prime office buildings have also buckled under the market’s weakness, with asking rents declining by up to 20% in some Grade A buildings. Bahrain Away from the United Arab Emirates, Bahrain’s property markets are also showing signs of stabilising after several years of challenging economic conditions that were exacerbated by an unprecedented period of national tensions. Households in Bahrain have been faced with some very challenging headwinds over the past 12-18 months, with national subsidy removals on fuel and some food items. Furthermore, job security fears are denting confidence and driving down budgets. That said, the relative resilience of rental budgets in the residential market when compared to conditions in 2008/09 continue to outperform expectations. Still, economic fragility and the ongoing impact of the low oil price environment have curtailed job creation levels and dampened overall sentiment and this will continue to hamper the Kingdom’s property market. In the office market, the stability borders on stagnation with almost no change in rents across the board last year. The limited activity continues to be largely driven by internal relocations, although renewed stability across the Kingdom has also helped the market settle. Landlords however, remain reluctant to adjust rent downwards as they are already at levels not seen in over four years. We have already seen concessions made on lease terms and 34
Manama, Bahrain
Muscat, Oman
expect this trend to intensify. There has been a concerted move to offer greater flexibility around lease terms, whilst also offering smaller amounts of office space. Oman Across in Oman, the local residential and office markets are feeling the burden of economic challenges, however the capital, Muscat, remains a highly attractive tourist destination within the Gulf – and investors have taken note. Expansion in the hospitality sector is set to be a beacon of growth in 2017 for the Sultanate. Significant growth in the Omani tourism sector is feeding a period of exponential development in the four and five-star hotel market. In fact, over the next two years, hotels currently under construction will deliver a 50% increase in room supply to the premium segment of the market. The significant increase in supply we are anticipating will result in a more competitive market from a hotel operator perspective but will also provide a greater choice for customers. We expect this will help to drive the continued growth in the tourism and hospitality sector, with other operators drawn in by
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the allure of a rapidly emerging market. Although we see significant opportunities within the hospitality sector, the outlook is less positive for the residential and office markets with several factors impacting performance. The volatility caused by low oil prices has had a knock-on effect on the number of professionals working in the Sultanate; but redundancies have now spread well beyond the oil sector. This in turn has heavily impacted the demand for real estate. The prospects for an immediate turn around in the residential market remain unlikely, and given the country’s heavy reliance on the oil and gas sector, outlook for the residential market remains weak. More positively, the government is clearly working hard behind the scenes to drive more efficient spending, while at the same time undertaking sentiment boosting mega projects such as the recent tendering for the first phase of Oman Rail and the progression of works related to the $1.3bn redevelopment of Mina Sultan Qaboos. Projects such as these bode well for future demand for residential property, but for now, the outlook remains subdued.
// Comment
Contract Crunch The reducing volume of project awards has been a major issue affecting the construction industry, but it is not the only one, says Ben Hughes, Director Capital Projects, Deloitte Middle East.
T
he International Monetary Fund (IMF) predicts GDP growth across the GCC to increase to 2.3% in 2017 from 1.7% in 2016, which is a reflection of a stabilising oil price and increased market confidence, underpinned by government’s restructuring initiatives aimed at reducing oil dependency and boosting the private sector, such as Vision 2030 in Saudi Arabia. The current oil price rebound has resulted in the price per barrel reaching anywhere between US$50 and US$60, which is a marked improvement on previous lows of mid-high US$20’s per barrel. That said, oil prices hovered around US$100 per barrel for a prolonged period of time until mid-2015, and it is therefore not unreasonable for oil-generating economies to tighten their belts against a backdrop of falling revenues. Governments have reduced spending and prioritized projects to meet social and economic development objectives. The decline in project awards in 2016 has negatively impacted the construction industry across the gulf region, with the most affected markets being Saudi Arabia, Qatar and Abu Dhabi due to a greater level of dependence on oil income. The impact on the construction industry is significant The reducing volume of project awards has been a major issue affecting the construction industry, but it is not the only one. Due to the lower number of projects and tightening budgets generally, there is an increased level of competition across the industry to secure those few contracts which are still being awarded, and this has translated into downward pricing pressure, i.e. reduced margins when preparing project budgets or estimates. The lower volume of project awards 36
Ben Hughes, Director Capital Projects, Deloitte Middle East
The sheer volume of projects either being planned, or currently being executed, in addition to the wider strategic initiatives being set in motion by governments across the region, has to give cause for optimism” has not necessarily translated into quicker decision-making either. In fact, it has also affected the decisionmaking process because ever-more scrutiny is being placed on award decisions, and this in turn is affecting the contracting industry which is reliant on a steady pipeline of projects just to remain solvent. Moreover, the tightening of budgets has unfortunately manifested in a number of government entities delaying, or in some cases, deferring payments and this has constrained cash flow across the entire industry – in some cases resulting in significant
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financial issues and social unrest. The 2015 Deloitte Powers of Construction report, analyzed the key findings of a C-Suite survey conducted with regional construction companies and the feedback provided compelling reading. In particular, it was noted that the average collection cycle from completing the work to collecting the cash totalled 225 days, and there have been no reported improvements in the cycle since then. Indeed, the simple act of processing invoices has become ever more protracted and adversarial with innumerable examples of “the Engineer” either not certifying interim payment certificates (PCs) or substantially reducing the certified amounts for very minor technicalities or differences of opinion. In other well reported cases, government agencies have issued promissory notes in lieu of physical payments as they do not have the funds to honor those payments. Often the promissory notes are later converted into a reduced cash payment, which then exacerbates the same cash flow issues being experienced by the contractors and their supply chain. In a similar vein, pricing strategies are becoming more divergent. Given the prevailing market conditions, many contractors will look to reduce margin and accept work to maintain turnover, but will do so without necessarily considering or pricing-in risks for fear that this will make them commercially uncompetitive. In a more buoyant market, contractor pricing converges, where many bidders will consider both risks and opportunities and factor this into their commercial offer – which benefits all parties because risks are known and foreseeable, and opportunities are proactively considered. Linked to this trend of low margin pricing is the increasingly common occurrence of contractors looking
King Abdullah Financial District in Riyadh
to enhance revenue through variations. For a substantial number of contractors, their bidding strategies are predicated on making money from variations, either client-driven changes to the scope or technically derived changes due to constructability or design issues. This in turn can lead to conflict during the delivery of projects and often manifests in contractual claims for time and cost, as has become increasingly apparent during this latest economic cycle. What does the future hold for construction across the GCC? There certainly are a number of macro-economic factors that will continue to drive growth. Demographic pressure is giving rise to a growing need for infrastructure to be developed, including transport infrastructure, social housing, schools and hospitals as well as power and water projects. It is imperative the GCC countries diversify their economies by moving from an oil-based to
a knowledge-based economy that will provide a sustainable source of growth and employment when oil resources are exhausted. Localized construction drivers like the mega events in Dubai and Qatar, and ultimately a strong tourism drive for a number of governments across the region will also play an important role. According to MEED, the total value of projects either in the planning or the delivery stage across the GCC is US$2.8 trillion. Saudi Arabia leading the way with US$1.1 trillion of projects, followed by the UAE with US$830 billion and the remaining total spread more modestly across Kuwait, Qatar, Oman and Bahrain. Clearly, a pipeline of projects of this magnitude has to be perceived in a positive light by the construction industry. The key question is when these projects will reach the contract award stage, as only then will the positive economic impact be truly felt. Whilst the economic headwinds
prevail in the short term, there are signs that these will dissipate over the coming months and that 2017 will represent an improvement over 2016. The sheer volume of projects either being planned, or currently being executed, in addition to the wider strategic initiatives being set in motion by governments across the region, has to give cause for optimism. Such factors will then hopefully manifest into widespread positive sentiment which will result in governments re-engaging in major project expenditure, and contractors (and their supply chain) taking more confidence in this and pricing more conventionally. With more focus on capex efficiency, return on investment and much more targeted investment strategies, clients will similarly feel the need to manage risk and balance this against the potential rewards, thereby creating a more focused yet positive contracting environment moving forwards.
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PPP in the Middle East GCC governments turn to public-private partnership financing structures, as oil revenues decline By Ian Tempest, Director, Faithful+Gould
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ighter government budgets and growing infrastructure needs have brought the public-private partnership (PPP) methodology under the spotlight in the Gulf Cooperation Council (GCC) countries. Regional governments are now seeking private sector involvement for sectors that were once exclusively state-funded. The region’s sizable infrastructure investment gap is driving the PPP interest, as governments work towards honouring their publicised visions for their peoples’ futures. Infrastructure is at the forefront of each country’s development plans, but the public sector can’t do it alone. Sectors such as water, power, transport, education, telecommunications and healthcare are ripe for transformation, with PPP providing a potential solution. PPP can harness private sector efficiencies, bringing levels of financial, administrative, technical and technological expertise that may be lacking in government agencies. The mechanism provides a comprehensive transfer of risk and responsibility for delivering and maintaining the asset, optimising capital and whole life costs. Public sector borrowing is reduced, inward investment may be easier to attract, and there may also be economic diversification benefits. PPP remains under-utilised and less understood here than in more mature markets such as Australia, Canada and the UK. The GCC countries are drawing on PPP principles honed in these more mature markets, but country-specific models are expected to evolve. A comprehensive PPP landscape includes national legislative, regulatory and process frameworks, and this will take time to embed in each country. Until recently, most Middle East PPP has been undertaken without specific PPP law or government policy 38
Sectors such as water, power, transport, education, telecommunications and healthcare are ripe for transformation, with PPP providing a potential solution” underpinning the project. Dubai and Kuwait have surged ahead, with Kuwait expanding its PPP law in 2014 and 2015, and Dubai introducing its PPP law in 2015. Elsewhere, Saudi Arabia and Oman have indicated that they are actively exploring PPP frameworks. In project terms, Kuwait is leading the way with just under $49bn worth of projects under its PPP programme. The UAE is a close second, with approximately $35bn of projects planned or under way since introducing its PPP legislation. PPP success depends on establishing a greater understanding of the challenges, benefits and risks. Historically, the region’s procurement approach has loaded project risk on to the private sector and this has been
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reflected in higher construction costs. Governments now need to demonstrate their commitment to PPP, to attract private sector investors and project operating companies. Transparent policy frameworks, with fair allocation and acceptance of appropriate levels of risk, will be expected. Attractive deal structures, with properly defined project scope and adequate guarantees over the likely revenues to be generated, will do much to encourage participation. Bidding for PPP projects can be time-consuming, complex, and expensive, but sufficient interest must be generated to attract a competitive range of bidders. Governments will need to consider ways of making the opportunities attractive and viable, ensuring that the private sector can have confidence in the schemes. New PPP programmes typically bring an initial learning curve, as laws and procurement procedures are tested for the first time. Efficiency gains may not be fully realised until several projects have been delivered and the laws tested. However, the region has the advantage of the lessons learned from mature PPP countries, with the opportunity to benefit from global best practice. Thus far, large complex projects in the power and water sectors, and, to a lesser extent, transport, have been the main users of PPP, but there are many untapped opportunities. Healthcare, education, waste management and street lighting are likely to be explored, as PPP matures in the region. The recent PPP legislation enacted in Kuwait and Dubai has been welcomed by the private sector, with local and international consultants, contractors and operators interested in helping develop the methodology in the region. Faithful+Gould has global experience of PPP and we are currently advising clients on schemes in the UAE.
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// Analysis
$3bn
n structio n o c o p x E s to be contract d awarde in 2017
The
Countdown Begins After a lengthy build-up, 2017 will be the year that construction activity really begins to crank up on the site of Expo 2020 Dubai. But are they cutting it a bit fine? 40
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Expo 2020 masterplan
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reparations for what is likely to be the biggest event ever hosted in the Gulf region are about to gather pace following the news that the bulk of the contracts for construction of the site are set to be awarded this year. The organisers of Expo 2020 Dubai announced last month they will hand
out 47 construction contracts worth a huge AED 11bn ($3bn) over the course of 2017. At the same time it was revealed that just before the turn of the year an Orascom-Besix joint venture had bagged a major contract to carry out deep infrastructure work at the Expo site in Dubai South. Additional construction contracts to be awarded this year include the third and final infrastructure package for the event’s support areas, including car parking. Other key awards include the contracts to build the three thematic districts that will host the majority of the pavilions, as well as the public areas and the design, development and delivery of all temporary architecture and infrastructure required to stage the event. “We are committed to working with leading businesses from across the world in order to deliver an exceptional event of this scale, on time and on budget, “Her Excellency Reem Al Hashimy, UAE Minister of State for International Cooperation and Director General, Dubai Expo 2020 Bureau, said in February.
“This is particularly true when it comes to the development of the physical site, which will live on long beyond 2021 to become an anchor for the UAE’s developing knowledge economy in Dubai South.” Once complete, the Expo site will cover 4.38 km2 and host up to 300,000 people a day during the six months of the event which runs from October 2020 until April 2021. Ahmed Al Khatib, Vice President of Real Estate & Delivery, Expo 2020 Dubai, said: “While 2016 was an important year for design, 2017 is when the momentum of construction will really build, ahead of international participants beginning work on their pavilions in 2018.” He added: “These important contracts will help us meet our target of completing the majority of construction with a year to go before Expo 2020 Dubai opens its doors in October 2020, providing the opportunity for allimportant readiness testing.” Early works on site are now complete, with more than 4.7 million cubic metres of earth moved - enough
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to fill about 1,800 Olympic sized swimming pools. The first infrastructure contract, covering the deep infrastructure of the non-gated Expo area, including the Expo Village, was awarded to Tristar Engineering and Construction in July 2016 and is due to be completed by April 2018. The aim is to have the site ready for participants to begin work on their respective pavilions by that date. A challenging timeline All infrastructure work is due to be complete by October 2019, exactly one year before the six-month event kicks off. But with many of the major contracts still to be awarded, is the government going to achieve its aim of having everything ready by then? “They are cutting it all a bit fine,” says David Clifton, Regional Development Director. “I can understand the logic of delaying until the latest possible moment as this will delay the high OpEx costs associated with keeping the Expo site running at the level required. I would suspect that the drop dead date to have the site complete will be six months prior to the commencement date in October 2020 to allow successful ORAT (Operational Readiness and Transfer) to the operations team. “However, a recent study by MEED indicates that the average contract build time in the UAE is 36 months but the average build time is between 48-50 months dependent on asset type. This would suggest that the true critical path has passed. There are concerns subsequently that the delivery could be late.” He added: “That’s not to say the completion can’t meet the schedule, but the probability is that a 24/7 working pattern will end up occurring on larger contracts, which would end up adding additional costs to the delivery programme. Companies will need to fast track projects in the main. Some packages will be easy to achieve, but larger and more complex packages will need to be accelerated.” Clifton details a number of key challenges involved in fast tracking 42
Public Realm
The UAE Pavilion
projects to get the site ready in time. • Time – with a tightening timeline, certain programmes are likely to shift towards 24/7 construction. • Supply Chain – Since so many packages will be running concurrently, suppliers may well be constrained in terms of delivery. Since the global financial crisis when organisations shrunk considerably, few companies are willing or able to expand quickly to fulfil what is a short term project. Without a guaranteed, sustainable pipeline of work to maintain a larger organisation, most won’t expand. This means that there could well be a
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competition for short term resource at the project peak load in 2018/19 • Costs – Inflation will occur due to constrained short term capacity in the supply chain. Couple that with the introduction of VAT in 2018 in the UAE and we forecast that inflation will be 3 percent in the industry this year and up to 6 percent in 2018. • Overarching Manpower – Has the main contractor got the available manpower in the short term to shift to a 24/7 operation if required? Noting that few wish to expand quickly for a short term scheme, contractor capacity in 2018 must be of concern for the delivery programme.
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Staying on Track
California-based Parsons has been involved in some of the biggest infrastructure projects in the Middle East. William Bodie, MEA Executive Vice President, tells Construction Business News how the company plans to stay one step ahead of the competition. Dubai Metro
Parsons has a long history in the Middle East. Where did it all begin? Parsons has had a continuous presence in the Middle East for more than 40 years but we delivered our first projects here more than 60 years ago. Our first projects in the region go all the way back to the 1950s, starting with a groundwater survey in 44
1953 in Kuwait that helped establish our future in overseas water projects. In 1958, Dhahran Airport in Saudi Arabia was Parsons’ first major airport project. We were the designbuild architect and engineer on this award-winning facility. Our team featured sophisticated themes of well-known Arabic designs throughout the terminal.
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What's your main service offering in this part of the world? Parsons is a technology-driven engineering services firm with experience in the engineering, construction, technical, and professional services industries. The corporation is a leader in many diversified markets with a focus on infrastructure, defense, security,
and construction. Parsons delivers design/design-build, program/construction management, systems design/engineering, cyber/converged security, and other professional services packaged in innovative alternative delivery methods to government agencies, as well as to private industrial customers worldwide. We provide a variety of services in the Middle East, ranging from project management, to studies, design, construction supervision, master planning, etc. We offer a comprehensive selection of services that cover every aspect of a program or project, including management, procurement, consulting, security, and alternative project delivery (APD). Our long history reflects our innovative solutions that take a project from inception and startup, through execution, testing, and closeout.
honed our value engineering offerings, so we can drill down on the services previously provided and identify savings for customers as they move forward on projects. Other projects are proceeding more slowly as governments cut or stretch out capital spending. The issue of delayed payments is more acute now; we are seeing day sales outstanding that go significantly beyond contractual terms and conditions that we sign up for and depending on the project, late payments can reach 2 to 3 times of the contractually mandated terms. However, Parsons has been in this region for decades, through many cycles in oil and gas markets, and we have performed throughout these cycles. We also are helping drive diversification by contributing to the aviation, land development, and tourism sectors.
How have lower oil prices affected the construction sector over the past two years? Hydrocarbon revenues contribute significantly to government budgets in MEA, which in turn fund most major infrastructure projects; so our customers’ planning parameters are highly impacted by fluctuations in oil and gas prices. The GCC countries’ effort to diversify their economies away from a disproportionate dependence on oil and gas revenues and their focus on infrastructure development for tourism, trade, and finance presents opportunities for Parsons to provide solutions in multiple sectors that are not reliant on oil prices. We are equipped with the thinking and technology to support the GCC government’s diversification efforts, given our experience with a variety of services in many diversified markets such as transportation, leisure, housing, and security. Several projects have already been put on hold; however, because of our extensive track record on major projects in the region, we have
How can companies navigate through this tricky period? Delivering more performance, more innovation, and more schedule confidence per customer dollar spent. That is what we focus on and we do that with our people, processes, and technologies – we believe we have the best in all three. Do you expect to see alternative funding mechanisms emerge as a result? For example PPP? For decades, APD methods have been used outside of the Middle East, but historically it has not been a significant delivery model for infrastructure in the region. Middle East customers have begun to show interest in APD models given the recent uneasy economic environment across all oil exporting countries as they seek to find more efficient delivery of major infrastructure programs. Although many fear that the construction market may slow down significantly due to the decrease in oil prices, there are significant international events, long-term plans, and social
In the last 10 years alone, Parsons has completed more than 900 projects in the Middle East. • Dubai Metro – world's longest fully automated metro network, and first in the region. • Etihad Rail Phase 1 – the region’s first freight rail project. • Sorbonne University Abu Dhabi – one of world’s oldest universities, first French highereducation institution to move overseas. • Yanbu Industrial City, Saudi Arabia – Parsons has participated as a consultant and construction manager in all phases of the city’s impressive development. • Hamad International Airport, Doha – Parsons managed the construction of the concourses, lounges, automated people mover, and concessions.
• Palm Jumeirah Bridges and Palm Crescent Tunnel in Dubai – vital infrastructure for what now is probably one of the world’s most famous artificial islands. (pictured) • Sheikh Zayed Road – the UAE's most famous road.
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Parsons has around 200 active projects in the region. Major ones include:
Hamad International Airport, Doha
• Abu Dhabi Airport Expansion Program, UAE. Since 2005, Parsons has been working for the Abu Dhabi Airports Company (ADAC), supporting them in delivering this major expansion program. The multibillion-dollar program was structured to quickly deliver improvements that meet immediate needs while preparing for anticipated growth. • Lusail Development Project, Qatar. Parsons has been providing program and construction management services for Lusail Development since 2006. Lusail City extends across an area of 38 km² and includes four exclusive islands and 19 multipurpose residential, mixed use, entertainment, and commercial districts. It will include leisure spots, residential buildings, commercial towers, avenues, and public ports. The customer is Lusail Real Estate Development Company. • Ministry of Housing Program, KSA. Parsons was awarded the first package released by the Saudi Arabian Ministry of Housing as part of a program to build 500,000 houses over the next few years. This initial package comprises 32 million m² of land area divided into 11 sites spread across the Kingdom. Each site covers a different area, ranging from 10 million m² in Dammam to 729,000 m² in Khamis Mushayt. The customer is the Ministry of Housing Saudi Arabia.
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projects due to a growing population in the region. As such, the region is looking at alternative funding sources, tighter budgets, and the delivery models that are more efficient and save time. This is becoming more evident as the infrastructure projects such as highways and rail and transit are being bid as design-build (DB), and for the industrial market, water, wastewater, and power are being bid as design-build-operate (DBO), engineerprocure-construct, and public-privatepartnerships (P3s). There are rising expectations that the private sector will step in to fill the funding gap. In some areas where P3 projects have long been on their agendas, they may be accelerated because of tighter government spending. Private sector funding of capital projects would be of importance over the next few years, but weakening fiscal positions of Middle East governments may affect the private sector appetite for investing in the region. However, this is an opportunity rather than a time of challenge. After the enormous spend-
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ing of the past few years, a slowdown in activity will give organizations the space to deal with a backlog of projects as well as to prioritize and look for process efficiencies. Parsons’ design-build business in North America has been a success where Parsons has been the lead designer on more design-build projects than any of our competitors. Parsons’ strong resume as a design-builder and our employees’ extensive design-build experience well positions the company for the emerging design-build and APD markets in MEA. What do you see as being the key challenge working in the region at the moment? Infrastructure spending is being scrutinized heavily by government agencies, and low-price only contract awards are now becoming more frequent. While we always look for ways to field competitive cost structures, the environment today is that the lowest price is more important relative to everything else.
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Abu Dhabi Airport’s new Midfield Terminal Project
disruption as well as the ability to recover from disruption. This process requires a review of the adequacy of established physical security policies and processes and seamlessly integrates them with new policies and processes associated with security and resilience. Parsons has the people, processes, and technologies expertise to develop actionable resiliency strategies that can support the stakeholders of smart cities to advance their cities from smart cities to smart, secure, safe, and resilient cities.
We can compete on price, however, we are not going to race to the bottom just to win work if we don’t think we can deliver the quality that is part of the reputation and brand value that Parsons enjoys in the region, and the reason why we have built market share. Which markets and sectors present the best opportunities in the region right now? Parsons has a strong market position in the UAE, Qatar, Oman and Saudi Arabia, where we have delivered landmark projects for aviation, roads and highways, bridges and tunnels, and land development. There is an opportunity to deliver core portfolio services (aviation, roads and highways, bridges and tunnels, etc.) to some of the relatively under-developed countries (such as Bahrain, Egypt, Kuwait, and Iraq) for Parsons. Similarly, there are a series of adjacent market lines new for Parsons in MEA that can be introduced in countries where we are already established. Water/wastewater, oil and gas development, infrastructure, buildings, ports and harbors, and defense 48
William Bodie, MEA Executive Vice President, Parsons
and security are lines that we plan to introduce in established regions. We foresee significant opportunities in smart cities and the smart infrastructure required by them. Parsons is currently working with the Smart Dubai Office on developing the Resilient Dubai Strategy. The strategy will enable the Smart City’s stakeholders (citizens, government, commerce, etc.) to continue receiving and providing services with no, or minimal,
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Is Parsons involved in Expo Dubai 2020 or the FIFA World Cup in Qatar 2022? Parsons was awarded the site-wide infrastructure design and construction supervision services contract for the Expo 2020 Dubai site and we have been working on it since 2015. We are also involved in several other projects that will contribute to providing the infrastructure required for Expo 2020. We are also involved in developing some of the critical roads and rail infrastructure required by Qatar 2022, such as Doha Expressway, Doha Metro, and Qatar Long Distance Rail.
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It’s in Vegas baby! Everything you need to know about this year’s big construction event in Las Vegas The rotating big three international construction show programme spins and stops roulette-style in Las Vegas this year. While Conexpo (or to give it its full title Conexpo-Con/Agg) may not have courted the Middle East construction industry like Intermat in France or be the biggest like Bauma in Germany, it is the only place to see some of biggest and best-known brands in their native habitat in 2017. And while it is primarily a North American showcase, it earns its reputation for being an international gathering place for the construction industry by being a great opportunity to see light and heavy equipment as well as technology that has a shared heritage with the behemoth that is the US’ IT and software industry. There is also the less-known co-located IFPE exhibition which focuses on the latest tech and expertise from the fluid power, power transmission and motion control industries. Spread across the vast Las Vegas Convention Center, the show can be daunting, especially to first-time visitors. This year’s show features more new product categories and more new exhibitors than ever before with 230,000-plus net sqm of exhibits and 2,500-plus exhibitors (if you are planning on a visit, CBNME suggests you use the online searchable show planner to see who’s exhibiting, check out the new products and create a personalised agenda of exhibits, education and networking meetings). Conexpo is also offering a record 143 education sessions across 10 tracks, including a new Technology track, to provide attendees with the latest industry knowledge and best practices to improve their professional skills and company productivity. “Education is a critical component 50
of Conexpo, and we encourage attendees to take advantage of the convenience of so many learning opportunities available; they’ll be able to work smarter because of the knowledge they gain here,” says Rich Goldsbury, Conexpo 2017 chair and president of Bobcat Company and Doosan. The new Conexpo Technology track focuses on industry innovations and future growth opportunities in the technology field, including drones, autonomous machines, 3-D imaging, smart apps, gamification, big data and IoT. The education tracks will also offer the latest trends and best practices focused on: aggregates; asphalt; concrete; cranes, rigging and aerial lifts; earthmoving and site development; equipment management and
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maintenance; management: business best practices; management: workforce development skills; and safety and regulations. The emphasis this year on technology that increases productivity, reduce downtime, and enhance safety and sustainability should be of relevance to an increasingly costconscious Middle East. There is a certainly plenty to interest construction professionals in the new 23,000-plus sqm Tech Experience which offers an interactive look at the trends and solutions developing now and emerging in three key areas: the jobsite, workforce and infrastructure. Highlights include the unveiling of the world’s first fully functional 3D steel printed excavator, the Infrastructure Vision 2050 initiative of the Association of Equipment Manufacturers
The world’s first working 3D printed excavator
About the show • ConExpo-Con/AGG 2017 • Las Vegas Convention Center, Las Vegas, Nevada • 7-11, March, 2017 Show hours • Tuesday, 7 March - Friday, 10 March • Exhibits 9 a.m. to 5 p.m. • Saturday, 11 March • Exhibits 9 a.m. to 3 p.m.
(AEM), a Drone Zone and 3D Printworks. There is also the Tech Talks forum which the organisers promise provides “short yet content-rich presentations to inspire and inform”. Speakers will focus primarily on the growing opportunity for applied and blue-sky innovation to benefit infrastructure projects and construction jobsites. The 40-session line-up includes such luminaries as former NASA astronauts Captains Mark and Scott Kelly as well as D'Arcy Salzmann, senior director, strategy, Microsoft HoloLens and studio manager, Future Bureau, Microsoft. It also features some speakers that will be of high interest to the region including, James Benham who’s BIM and smart technology company JB Knowledge is active in the Middle East, Scott Brusaw, co-founder, Solar
Roadways who will look at using panels on highways and Wayne Rapp, director of manufacturing at Hyperloop One which is working in the UAE to develop its futuristic transport system. The show makes great use of its location too, with a series of networking events available, including NASCAR Experiences and related raceway offers, Young Attendee get-togethers to foster professional growth (and have some fun!) and more. “Don’t miss this ultimate one-stop destination to find the newest product innovations and best practices, meet with the industry experts, network and have some fun,” urges Sara Truesdale Mooney, show director and vice president exhibitions and business development, Association of Equipment Manufacturers.
For the past two years a conglomerate of trade associations, industry, government and academia have been collaborating on the world’s first operational 3D printed excavator. That project made a giant leap forward with the recent printing of a prototype that leveraged large-scale additive manufacturing technologies and further explores the feasibility of printing with metal alloys. Known affectionately as Project AME (Additive Manufactured Excavator), the excavator is being 3D printed using various machines at the Oak Ridge National Laboratory’s Manufacturing Demonstration Facility (MDF) to create and assemble three components: the cab, the boom, and a heat exchanger. The excavator’s boom will be fabricated using newly developed free-form additive manufacturing technique to print large-scale metal components. 3D printing an excavator for the first time has been a learning experience for both seasoned researchers and the next generation of engineers. A student engineering team from the University of Illinois at Urbana-Champaign won a design competition and was on-hand at the MDF to watch their cab design take shape on the big area additive manufacturing machine – using carbon fiber-reinforced acrylonitrile butadiene styrene, or ABS, plastic. Their reaction could only be described as pure joy. “The reaction of the UIUC team was like watching kids on Christmas morning,” said John Rozum, IFPE show director. “They worked hundreds of hours on this project and it was incredible to see them finally get to watch the printing process and see their design in full size.” Project AME will be on display at IFPE and CONEXPO-CON/ AGG 2017 as part of the new Tech Experience.
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Is infrastructure a Trump card for US brands? The Trump administration arrives with the US machinery sector at a crossroads A billionaire property magnate, reality TV show star and President of United States, Donald Trump must have the world’s most eclectic and extensive CV. In and amongst the whirlwind of tweets, policy announcements and press conferences of recent months has been a pledge to return US manufacturing back to prominence. By placing America first, Trump is prepared to tear up the rule-book on trade and, in the case of construction machinery, reverse decades of lost ground to European and Asian competitors. From the perspective of a region which has seen Caterpillar machines and US-made cranes help build up entire industries, cities and countries within a few decades, it is difficult to appreciate how this would be the case. However, the new Trump administration enters as the US construction machinery industry has seen its sales decline in 2016 in the Middle East. Caterpillar has just announced that its combined sales in the European, Africa and Middle East region were down 34% of $644 in 2016 compared to 2015, with low oil prices and uncertainty over the UK's so-called Brexit to blame. Of course, US manufacturers are not the only ones to have been exposed by rougher waters in international markets but there is a sense that the Chinese manufacturers (singled out by Trump) that were so buoyant on the back of their booming domestic market until it stalled could begin to dominate global sales. The technology gap is closing and so is the know-how of how to sell in different markets. Trump’s rallying call to the US manufacturing heartlands brings into focus what’s at stake for US manufacturers. The wrangling over trade deals and the re-positioning of foreign policy has only just begun but Trump and his administration has promised to prioritise infrastructure spending. Threats and opportunities are now presented to the US industry but if it is to have a renaissance, it is going to start at home and not abroad. A team including Brian Myerholtz, Simon Rees and Raph Mannino from the Boston Consulting Group (BCG) have been analysing the repercussions of what the US Administration’s infrastructure focus will have on the industry. “The surge in infrastructure spending that President Donald Trump has proposed promises to be a boon for companies that manufacture equipment used in large-scale construction projects,” say the authors of the “What President Trump’s Infrastructure Plan Means for Construction Machinery Makers” report. 52
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“During the 2016 presidential campaign, then-candidate Trump proposed an increase in infrastructure spending of $1 trillion to create jobs and repair the nation’s crumbling roads, bridges, and transportation assets. Following the election, the incoming administration reaffirmed this objective, and congressional leaders on both sides of the aisle have expressed support.” According to the BCG team, construction machinery manufacturers should expect infrastructure investment to increase, though exactly how much, in which sectors, and in which geographies remains “highly uncertain”. “For most of the past two decades, Congress has authorised only shortterm highway funding plans. In December 2015, however, Congress and President Obama agreed to a five-year, $305 billion highway-funding plan. In addition, large local infrastructure projects were recently passed in Los Angeles ($120 billion) and the Seattle area ($54 billion). These developments, coupled with the promise of a massive spending surge under the Trump
Machinery manufacturers that can apply foresight, flexibility, and creativity to emerging situations will be in the best position to capture the tremendous value at stake.” administration, may give investors in the market the confidence to initiate larger-scale projects with significant capital expenditures on machinery.” PPPs are viewed as a strong method to enable a bounce in infrastructure spending at a state-level but they require robust regulatory frameworks to draw in investors. States such as California and Virginia have not only a firmly established regulatory framework, but also a need a willingness to invest in projects such
as toll roads and railway systems, explains the BCG team. They also suggest a “short-term influx of investment into sectors such as energy and water is likely when the new administration rolls back regulations in these areas.” They also recommend that the construction machinery must work proactively to capture opportunities. “Machine manufacturers should identify state priorities and work with engineering, procurement, and construction (EPC) companies to create lists of shovel-ready projects. EPC companies, operators, and financing organisations can form consortia around specific projects, and each consortium can then present the projects to state governments,” say Myerholtz, Rees and Mannino. “A manufacturer should identify these consortia and projects so that it can target its commercial resources at the emerging customers and get a seat at the table early. This proactive approach will increase the likelihood of success for both the machine manufacturer and the consortia.”
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With the Trump administration barely into its second month, it is unsurprising that the scale of investment, the timing of enactment, and the sources of funds, be it via PPPs or some other route, is not yet clear. There is still an agreement needed between the administration and Congress
BCG on the new Administration’s outline for infrastructure investment In an otherwise contentious campaign, Hillary Clinton and Donald Trump agreed on the need for additional infrastructure investment. After the election, President Trump continued to emphasise that infrastructure improvements would be a focus of his administration. He proposed a plan to increase total investment by $1 trillion through 2025, giving states significant flexibility with regard to spending the funds. The president touts the plan as revenue - neutral because it relies on tax incentives to stimulate investment in infrastructure, though whether this self-sustaining aspect of the plan is achievable remains unclear. In addition, Trump has begun to act on his campaign pledges to roll back Obama-era energy regulations (such as restrictions on shale oil extraction) and to grant permits for new pipelines, which will likely spur near-term investment in those sectors. The Trump administration views the proposed investment in infrastructure and the relaxation of regulations as ways to stimulate long-term overall economic growth and to bolster direct employment in the short term. As outlined, the president’s plan calls for offering $137 billion in tax incentives to generate this additional $1 trillion investment in facilities that the government, private corporations, and publicprivate partnerships (PPPs) operate. Specifically, equity investors in infrastructure projects would receive a tax credit equal to 82% of their investment, in addition to any returns.
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to be found and Myerholtz, Rees and Mannino agree that a clear picture may not surface until later in the year. This, they argue, presents an opportunity for some manufacturers. “After decades of underinvestment and short-term federal spending patches, a consensus is emerging that investment in infrastructure should increase. Although the timing, level of funding, and specific project types remain uncertain, a significant increase is likely to occur,” explain Myerholtz, Rees and Mannino. “Machinery manufacturers that can apply foresight, flexibility, and creativity to emerging situations will be in the best position to capture the tremendous value at stake. “As it remains unclear how much funding for infrastructure will become available in which geographies and in which sectors, the most flexible manufacturers will be in a position to reap the greatest benefit when opportunities emerge. Specifically, flexibility in manufacturing operations and supply chains will remain critical.” “If all of the proposed $1 trillion incremental investment is realised, it will represent an increase of approximately 50% in total infrastructure spending. Not all contractors and EPCs have the balance sheet to finance that level of growth, and this
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fact presents manufacturers with an opportunity to introduce new financing models to assist customers. Manufacturers should work with customers on financing models that emphasise speed and flexibility so that they can respond to what could be a large and rapid increase in demand.” With speed a potential factor in ensuring the infrastructure programme is successful, there is also cause to believe that non-US suppliers could be attracted to the market. Eng. Domenico Ciano, technical director of Raimondi Cranes, a Middle Eastern-owned, European crane manufacturer, agrees the new administration presents the industry with an opportunity. “I don’t think that Raimondi, as a manufacturer, is affected by politics as much as contractors and construction companies would be,” he says. “The main issue that would present itself for us, and main opportunity, is how much work is actually being done and whether or not that work is best met by a crane of European manufacture or otherwise. Thus far, we have not noticed any direct or indirect change in business. There is an increasing discussion about US infrastructure investments, and for manufacturers of heavy machinery, that would be positive and welcomed news.”
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// Cover Story
On the Case in the GCC
Ahead of ConExpo, Construction Business News Middle East looks at a famous US brand that has gone both global and local in the GCC
C
ase has come a long way from its Rus Belt origins in Racine, Wisconsin. Since its founding as J.I. Case Threshing Machine Company in 142 (2017 marks its 175th anniversary), the famous eagle has endured fire, war and economic decline and today and is a famous US name that is part of the CNH Industrial capital goods powerhouse, which includes other
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brands such as Iveco and New Holland. This month’s ConExpo is good opportunity to catch up with Franco Invernizzi, regional manager CE Middle East who has been an instrumental figure in raising Case’s presence in the region. The past half-decade has seen the company focus on improving its reach in the Gulf, from entering into a partnership with Roots Group in Saudi Arabia in 2012 to most
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recently securing a distribution deal with International Equipment & Contracting Co (IECC) in Oman. “CASE has always maintained a presence in the important MENA marketplace, marketing and supporting our full range of construction equipment through a comprehensive network of distributors,” begins Invernizzi. “Our focus on providing excellence to our customers
in all aspects of their dealings with the brand has and always will be of critical importance to us.” Serving a vast market, where contractors are often working in remote locations, demands an investment into real estate for companies with serious ambitions of growing their market share. Invernizzi explains Case has concentrated on expanding its own physical distribution presence to provide better coverage across the territory. “During the last year, we have further invested in the region, growing our team in the Middle East and moving into larger office facilities in DAFZA in Dubai,” he says. “In 2016, we also opened a new dedicated parts warehouse in Jebel Ali, which now serves as the main parts hub for the region. Our market share in the region is growing today and we are accelerating our efforts to ensure this growth continues strongly in the future.” He adds that the company is also beginning to feel the benefit of the development of its dealer network. “CASE and our dealers work as a partnership to deliver the best solutions to our customers in the marketplace.” he says. “This approach is delivering real results for our customers. This process is continuous as we strive to keep enhanc-
ing the local solutions offered to our customers across the region. Without a strong distribution network even the best products can fail, so the CASE network strives to be best in class in supporting all of the after sales needs for the customers across the region. He adds: “Our product offering is complemented by our services, and we are introducing maintenance packages, retail financing, and telematics to better fit to the business needs of our customers in the Middle East region.” Case’s rise in the region’s inventories has coincided with an economically turbulent period in the GCC. The effects of the global downturn that was sparked almost a decade ago has been compounded by a prolonged period of low oil prices. With the price gently rising, but short of the highs of before, the construction industry and those that provide equipment to it are still under pressure. Signs of recovery are still months away, he explains. “Today, we can say the market has started to stabilise, in line with the relative stability in oil prices,” he says. “With the current global geo-political situation, continuing regional security concerns and the new oil price band of between $50 and $60 per barrel the recovery
We believe that there is a balance to providing the right value proposition to the marketplace. This does not mean the lowest cost, but providing a solution that will ensure the customer can achieve the necessary levels of production throughout the expected life of the asset.” signs are likely to be seen during the latter part of 2017 at best. We believe the total market sizes to be generally in line with those of 2016.” The Saudi Arabian market has arguably been hit the hardest but then it had the hardest to fall. With billions promised to improve the country’s infrastructure and regenerate its cities, the construction equipment manufacturers rushed in but the market has stalled over the past 18 months. The general consensus is that the number of awards will slow even further from $30 billion to $27 billion in 2017 but could be bottoming out. “As with all manufacturers, we have been significantly affected by the downturn in the size of the marketplace,” he says of the Kingdom’s current situation. “In 2017, we look forward to seeing the stability return to the marketplace and hopefully see some growth in our opportunities. As in all countries, we will be working with our distribution to capital-
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Dipping into the market Invernizzi gives the low down on the 570T backhoe The Case 570T runs a turbocharged, four-cylinder FPT Industrial S8000 Series engine that delivers a superior performance, high torque and best-in-class fuel economy. The S-shaped boom has been designed for premium digging and lifting performance, while its heavy-duty structure ensures strength and durability. The Case 570T reaches deeper than any other backhoe loader in this segment: up to 5.58 metres with the Extendahoe dipper version. Customers looking for maximum flexibility can count on the lifting hook welded to the bucket linkage when they need the rear arm to lift and handle suspended objects, a unique feature by Case. The front axle is designed to handle heavyduty applications even in extreme conditions. This highly productive package comes with superior comfort: the largest cab in the industry is ergonomically designed to provide a comfortable workstation with excellent all round visibility. The easy serviceability maximizes uptime and productivity, while contributing to the low costs of operation.
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ise on any opportunities there are.” Beyond Saudi Arabia, there are pockets of strong demand for equipment. Particularly in the UAE and Qatar as they respectively build towards the Expo 2020 and FIFA World Cup 2022. Invernizzi feels Case is in a strong position to take advantage of any opportunities that may come its way. “We have a full range of equipment suitable for the MENA construction industry and we are fully prepared for what the market will do,” he comments. “We have a flexible approach to the market and can react quickly to market changes. We have a healthy stock of equipment in the MENA marketplace that will allow us to meet the needs of this market. “CASE offers a full product line-up into the marketplace that suits the needs of the challenging MENA marketplace,” he continues. “We have a full range of compact equipment. Our range of backhoe loaders suits the market needs perfectly – the CASE 570T 4x4 tractor backhoe loader – as the entry level model – provides a highly versatile and cost effective site solution. Our CASE 580T – as a mid-range – offers enhanced operator comforts and slightly higher productiv-
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ity, and the 695ST 4x4 machine tops the range offering maximum productivity and versatility.” Case has worked on providing a balance of technology and value to customers, particularly those who own smaller volumes of plant and fleet. Invernizzi says that too helps Case to be well-positioned despite ongoing volatility in the GCC’s economic outlook. “We believe that there is a balance to providing the right value proposition to the marketplace. This does not mean the lowest cost, but providing a solution that will ensure the customer can achieve the necessary levels of production throughout the expected life of the asset. All of this in tough market conditions that we face in the MENA region. “The CASE 570T is a great example of our approach. It has been specifically designed and engineered to match the requirements of customers (as has its 1107DX compactor) in the region who look for a reliable and performing machine, and a fast return on their investment,” he continues. “This model shares the DNA of the long lineage of CASE backhoe loaders, built on the company’s long history of industry firsts which include the world’s first factory-built tractor
loader backhoe introduced in 1957. More than 600,000 units later, Case backhoe loaders are synonymous with performance, high lifting capacity, best digging depth, and great breakout forces. He describes Case’s heavy line range of equipment as second to none and believes its crawler excavators from 13 to 80t can cover all of the needs of the construction sector. “Engineered and manufactured in Japan, these machines embrace the latest Japanese technology to provide a highly efficient, productive and easy to operate machine. The Wheeled Loading Shovel offering for the Middle East provides machines up to 5cum bucket capacity. Our most popular machines, the 1021F and 821F perfectly suit the main market needs and offer high productivity levels, ensuring maximum output for the customers. The Case 885B Grader, with 14ft moldboard, is a highly productive and efficient grading solution, maximising output on infrastructure projects.” Talk of infrastructure leads Invernizzi to discuss the company’s expanding range of equipment solutions for road building. These robust and reliable machines are able to operate in the toughest conditions, and at the
right cost of ownership, he adds. “The Case B Series motor graders have been increasingly successful in the region and are acknowledged for their ability to work in all environments, guaranteeing high productivity. Their fuel-efficient, turbocharged FPT engine delivers operating speeds of up to 44 km/h,” he explains. “The front A-frame drawbar provides outstanding stability, while the heavy duty boxed frame design increases the life of the components. Thanks to the multi-radius design, the B Series grades move more material with less fuel and lower power absorption. Daily maintenance can be done in a matter of minutes thanks to the ground-level access to the checkpoints.” Continuing his tour of Case’s infrastructure ranges he argues the M Series dozers, deliver “best-in-class” drawbar pull and are built strong to perform in harsh environments. They deliver massive power in every condition to maximise productivity - and this performance comes in an easy-to-service and comfortable package. Case´s offering also includes new products specifically designed and engineered to match the requirements of its customers in this region. Just to mention a couple would be our Case 570T backhoe loader and Case 1107DX compactor. For the roller compactor segment, Case offers the reliable performance and excellent productivity of its soil compactor line-up, which he reveals will be soon expanded with the intro-
duction of the new Case 1107 EX vibratory soil compactor. “This renewed model is taking productivity and fuel efficiency to higher levels, thanks to the S8000 engine designed by FTP Industrial (part of CNH Industrial), which has built a strong reputation for performance, reliability and low fuel consumption. The robust design and world-class components of the 1107 EX ensure high levels of reliability and extended operating life, even in the most extreme conditions. With best-in-class serviceability, the Case 1107 EX compactor reduces downtime and operating costs, while resulting in greater productivity and profitability.” While it has concentrated on the value end of the market for some of its larger equipment, it has also spotted an opportunity for smaller, compact equipment that can be utilised by a number of sectors as well as construction companies. It joins Bobcat, another well-known but foreign-owned US brand, in realising the GCC is primed to understand the benefit of smaller, versatile machines that can be deployed in a number of roles. “With regards to skidsteer loaders, we are currently the second largest manufacturer globally and we have a full range of machines which deliver great performance and best in class access for routine maintenance tasks – ensuring maximum availability of our customers’ asset,” he says. “We have also launched in the MENA markets the new C Series of mini excavators ranging from 1.8t to 3.7t (Case CX17C, CX18C, CX26C and CX37C). The timing of this launch enables us to compete in this rapidly growing sector in the market, supporting the landscaping and urban maintenance market sectors. The new C Series raises the bar, offering better performance, a rich array of features, and even greater comfort and safety – all contributing to outstanding productivity.” With an already varied range ready to be bolstered by the new machines, Invernizzi is looking beyond ConExpo and the year ahead. “Our main focus for the year in the MENA region will be growing the Case business and delivering excellence in the customer relationships even further.”
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The US brands you know
CBNME reviews the big launches of some of the best-known US brands in the Middle East
Bobcat
Headquarters: West Fargo, Dakota
Bobcat recently revealed a choice of 11 new telehandler models covering maximum lifting capacities between 2.6 tonnes and 4.1 tonnes, with lifting heights from 6m to 18 m in the region. It is also exhibiting a variety of compact equipment, including its M2-Series loaders at Conexpo. Bobcat compact equipment on display will include the M2-Series skid-steer loaders, compact track loaders, and all-wheel steer loaders designed for general construction contractors. Also on display will be a variety of attachments for use with Bobcat compact equipment. According to Bobcat, the M2Series compact loaders offer a variety of performance, operator comfort and visibility enhancements to help increase operator productivity and provide enhanced uptime protection. The M2-Series includes S450 through S850 skid-steer loaders, T450 through T870 compact track loaders, and the A770 all-wheel steer loader. Altogether, the M2-Series includes 24 skid-steer, compact track and all-wheel steer loader models. Features of the M2-Series include the following: automatic ride control option: allows operators to easily switch between auto and off from inside the cab; a reversing fan option which temporarily reverses the cooling fan direction — for several seconds — to blow dust and small debris from the radiator 60
and rear screens; front and rear cab isolators, door seals and side screen dampers: reduces noise, vibration and dust inside the Bobcat loader cab; a low-effort hydrostatic pump which
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reduces drive lever effort by as much as 25% in 600- and 700-frame-size M2Series loaders; and larger model decals which help identify model numbers, a useful addition for large jobsites where
Caterpillar There is no better known US machinery brand than Caterpillar and with 40 machines on display in two different exhibit areas, Caterpillar has one of the largest displays at Conexpo. The M317F Wheeled Excavator is a compact radius design that expands versatility and enhances productivity in tight work areas. The new Cat compact radius wheeled excavators deliver the same capabilities and efficiencies as their standard radius counterparts. The 390F and 336F XE Excavators, both with crawler undercarriages, have been updated to deliver improved productivity and lower costs. Both excavators lead their size classes in fuel efficiency. The 390F can be equipped with the industry only integrated payload system for accurate truck loading. The 336F XE has the payload system as standard equipment, as is 2D GRADE - with the option of a number of integrated Cat Connect grade control systems. In terms of wheel loaders the new 986K on display is replacing the H Series model and deliver lower cost per ton in earthmoving and aggregates operations. Debutant the 950 GC gives wheel loader owners a choice when determining the best machine for their business. In addition to the 950M, the 972M XE and 982M will be on display to highlight updates including new Cat Connect Technologies, additional operator comfort and safety features, and features that help reduce operating costs. The new 745 Articulated Truck features an all new, class leading cab with enhanced visibility. Innovative machine control features further improve operator efficiency and safety. The new stability assist system reduces the risk of rollovers, and the new Economy Mode reduces fuel consumption. The updated D6T Dozer on display at Conexpo features a new transmission and new Auto Shift system that allows the D6T to achieve
Headquarters: Peoria, Illinois
fuel savings of 20%, compared with the previous model and as much as 30% in light-load and finish-grading applications. Another dozer is featured in a live demonstration shown in Cat's Gold Lot exhibit. A D8T dozer at Cat’s headquarters Peoria, Illinois, will be controlled remotely from the operator station in the exhibit. Wireless connectivity enables the operator to work from a safe location, whether nearby or far away. In addition to the D8T demonstration, a Cat Command remote control system equips a 988K Wheel Loader shown in the Gold Lot exhibit. In addition to the big machines operating via remote control, a live demonstration of skid steer loader line-of-sight remote control will be conducted in the Gold Lot. The full line of Cat paving products is represented at Conexpo, with emphasis on three new cold planers – PM825, PM622 and PM312. The new PM800 Series complements the previously released PM600 Series and features increased engine power for demanding applications. Increased weight and cooling capacity allow the PM800 Series to perform under the
toughest of conditions. The PM300 Series is highly versatile, capable of urban and patchwork applications, small to medium road milling and where compact dimensions, optimum maneuverability and high production capabilities are required. In addition to the big machines, Cat compact and building construction machines will be on display at Conexpo. The new TH514D Telehandler sports a three-section boom and a Tier 4 Final compliant engine. The 46-ft reach and 11,000-lb lift capacity are ideally suited for pick and place lifting. Cat D Series telehandlers will also offer new, innovative options such as a reverse object detection system, an advanced display screen and a reversing camera. Caterpillar also will present several innovative solutions available across its 14-model line of compact excavators. The 300.9D Versatile Power System (VPS) with H25 Hammer represents an ideal configuration for indoor demolition applications. Another unique solution is the 304.5E2 Extra Tool Carrier (XTC), which includes a skid steer loader coupler interface in place of the traditional dozer blade.
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Terex Headquarters: Westport, Connecticut
Terex owns a huge range of aerial work platforms, construction, cranes, material handling and port solutions and materials processing under its own branding and other acquisitions such as Genie and Terex Finlay. Genie will be showcasing its SX-136XC self-propelled telescopic boom lift which has a 27.5m outreach and 300kg of unrestricted lift capacity (plus the ability to work 6m below grade). The lift can additionally take operators to a height in excess of 40m within 2 ½ minutes. It can drive at full height using its 74hp Deutz engine and has four-wheel drive and four-wheel steer capabilities. Its has an 5.5m to 9m telescoping jib, offering operators up and over capabilities, as well as 125o of jib articulation. Terex Finlay will demonstate its I-140 impact crusher which was launched in 2016. the company says that the Terex Finlay I-140 has made a “real impact” on the global marketplace in the mid-sized category of impactor crushers with machines now working on every continent. The I-140 features an advanced electronic control system that monitors and controls the speed of the rotor and regulates the heavy duty vibrating feeder with integrated pre-screen to maintain a consistent feed of material into the impact chamber for optimal crushing conditions. 62
Manitowoc
Headquarters: Manitowoc, Wisonsin Crane-maker Manitowoc is exhibiting its Grove GMK5250L (250t) and GMK5150L (150t) long boom all-terrain cranes for the first time on at the event. Mounted on 5-axle carriers, they carry 70m and 60m booms (or arrows to use US industry slang) and are the longest in their class. Also confirmed is the GRT880 mobile rough terrain crane which has a load capacity of 75t and integrates the Manitowoc’s Crane Control System (CCS) which was recently unveiled at a special conference in Cairo. The company also plans to debut a final crawler crane which will be unveiled at the show. Its Potain brand of tower cranes, so successfully represented by NFT in the GCC, will show three new cranes. The self-erecting crane Hup 40-30 appears for the first time at a show. The
JLG
versatile manoeuverable crane features 16 different configuration options and Potain’s Smart Set Up software in combination with its High Performance Lifting remote control technology. Two high capacity tower cranes, the MDT 559 and MDT 219 which also feature CCS will also be demonstrated.
Headquarters: McConnellsburg, Pennsylvania
Access platform and lift specialist JLG Industries is launching nine new products in the boom-lift, scissor-lift, and telehandler categories at the show. A variety of the company’s best-selling products, including the 400S boom lift, the SkyTrak 10054 telehandler, and the 1932R electric scissor lift, will be on display. The SkyTrak is the best-selling telehandler in the US market and the 10054 features a new spacious cab with an intuitive single multifunction joystick, integrated arm rest and optional air conditioning. The company has also worked to improve boom function speeds for picking and placing loads more efficiently. The 10054 also has an integrated tow hitch and wide range of attachments for more options on the job site.
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The jewel in the crown Italy’s Raimondi Cranes ventures to new heights
I
t was on the eve of the last ConExpo that it was announced that Raimondi Cranes had been acquired by KBW Investments, a company founded and chaired by the California-born Saudi prince HRH Prince Khaled bin Alwaleed bin Talal. The acquisition of the Italian cranemaker came at a turbulent period for the Italian construction equipment and automotive industries as it was seemingly being picked off by a series of circling investors. Concrete specialist Cifa had been purchased by Zoomlion in 2008 and Dressta fell to fellow Chinese giant LiuGong in 2012. By the time KBW Investments picked up Raimondi in 2014, it felt like the country’s manufacturing base was being stripped away. Fast-forward three years and it is clear that, in the case of Raimondi Cranes, the slide into KBW’s swollen and highly diverse portfolio has signalled a new beginning. It goes to ConExpo with a renewed sense of purpose and vigour to take on the US market. But it is also surging forwards in other markets where it had previously stalled and, unsurprisingly given KBW’s standing in the region, the Middle East and North Africa is a stand-out destination. 64
Now that we’ve gained so much ground in Europe and the Middle East, it’s time to re-engage North America.” “Raimondi Cranes was officially launched as a ‘direct’ entity in the MENA region after the KBW Investments acquisition,” explains technical director, Eng. Domenico Ciano of the Legnano, Milan-based company. “That being said, Raimondi products, especially our range of tower cranes, were already at work in the region long before the acquisition. The main change post-acquisition was that Raimondi’s Middle East main headquarters in Dubai functions as a client-direct office, not in an agent or third party capacity. Dealing with Raimondi in the Middle East is the same as dealing directly with Raimondi’s global headquarters in Italy.” Ciano performs dual roles as an
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executive and as the head of Raimondi’s technical team. He is responsible for all R&D and all technical aspects at the heritage manufacturer. He tells CBNME, that the company will focus on reconnecting with its North American customers at the event. “It’s less about raising our profile, and more about getting back in touch with our North American client base and reintroducing the brand itself. Formerly, Raimondi Cranes had a decent market share in North America – we weren’t the biggest player by far but we did have solid repeat clientele and market interest. The company went through some significant shifts, and during that period we weren’t attending to the US and Canada the way we probably should have,” he explains. “Now that we’ve gained so much ground in Europe and the Middle East, it’s time to re-engage North America. He adds that the past two years in the Australian market have also been been truly “phenomenal” with its two agents there clearing benchmark after benchmark. “This success, in a competitive and hyper-driven Western market, has helped to shape our strategy
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How advances in cabin design also aid safety and productivity “Crane cabin designs vary from manufacturer to manufacturer. One of the least employed tactics in cabin design is one of the biggest potential pitfalls, in my opinion,” says Eng. Domenico Ciano. “Namely, forgetting to check with the crane operators on what exactly it is that they need to best execute the work at hand in the safest possible manner. “During our BAUMA 2016 exhibition, a crane operator actually came in and told us how excellent our new design was because it addressed one of the key issues onsite: visibility. We positioned the R16 at ground level so crane operators could freely enter the cabin and get a hands-on feel for it. Back during our R&D stage for the Raimondi Deluxe R16 Crane Cabin, we spent hour after hour with crane operators. “All of the operator feedback was taken into consideration when we developed and iterated the new cabin design. Some R16 features that have earned Raimondi very positive operator feedback: more than 80% of the total area is glass including underfoot and the actual cabin door, and the specially-formulated two-toned windshield glass reducing glare and reflection while preserving extreme visibility.”
for countries like Canada and the United States.” Raimondi has opted out of showcasing its cranes at ConExpo. It is a move Ciano explains that will enable executives from the technical and after sales care teams to be onsite and communicate with potential clients and forge fresh relationships. He adds that this is a deliberate switch in strategy from last year. “At JDLMED 2016, ANKOMAK 2016 and at BAUMA 2016, we did showcase cranes as those markets - respectively France, Turkey, and Germany – as the main players there already know Raimondi’s executives on a one-to-one basis. North America, being a very nascent market for us, perhaps needs more 66
to connect with our people, some of whom have been with the company for more than two decades,” he says. “It’s our priority to convey to the construction industries of Canada and the US - our people think of the client first, and that our quality and heritage of craftsmanship will be an investment that pays for itself. Raimondi’s history of durability, productivity, and a precision is what we want the North American construction companies to learn about us.” According to Ciano, one of KBW Investments’ early moves post-acquisition was to make significant investment into R&D which alleviated the pressure on the technical team. “With the newly allocated resources, they could now explore technological alternatives and bring on key team members that would inject fresh perspectives into product development,” he says. “It allowed them to become imaginative and innovative, and to take their time finding new solutions that best served the construction market’s needs. From a business standpoint, it has been fantastic as it has allowed for a renewed confidence in Raimondi’s production capabilities and even encouraged a lot of bespoke requests that we were both
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excited and happy to meet.” KBW has been highly involved on some hugely prestigious projects in the Middle East while it has continued to strengthen the construction arm of its portfolio, including acquiring a 50% stake in Arcadia Engineering. Its Saudi Prince owner considers Raimondi as a jewel in the portfolio and in turn his Italian cranemaker is able to move onto projects it may have otherwise missed out on. “Certainly, KBW’s ongoing work and large-scale projects across the Middle East have already provided new opportunities for Raimondi Cranes. Just recently, Klampfer Middle East, a KBW company founded jointly with Basma Group and Klampfer GmbH of Austria, contracted a Raimondi MRT152 erection in Sharjah, United Arab Emirates,” says Ciano. “The MRT152 is scheduled to be onsite for the duration of 24 months, and as part of a highly-publicised worksite we’re proud to have a Raimondi model so prominently featured. As a ‘parent’ company, KBW looks to continue to support and grow Group ventures through cross-portfolio engagement, so whenever and wherever there is a suitable fit you can expect to see Raimondi involved.”
How cranes can projects on plan and on budget “The productivity of a worksite together with optimal safety are two keys to a successfully-executed project. Cranes, as a cornerstone of the construction industry, are basically one of the top decision points on how smooth and how quickly things will go. You often find that your investment in a quality European crane pays for itself – for example, a crane idling onsite while a part is sourced is basically one way to veer your project off-budget very quickly. Investing in reliable and intelligently-designed heavy lifting machinery is one of the best ways to proactively ensure that you’ve done everything in your control to keep projects on-plan and on-budget.”
He adds: “KBW Investments is currently involved in two separate infrastructure projects, and we would readily present best-fit alternatives from the Raimondi Cranes range for both projects. We are open to all opportunities where our models can add value and surpass client expectations, and infrastructure is a big part of overall construction.” Client support, he emphasises, is something that Raimondi Cranes takes very seriously. “This is the standard for every client, not just those that are part of the KBW
Investments portfolio. There is literally no job that is prioritised in terms of client servicing – be it one crane or ten cranes, we present every Raimondi customer with every available support mechanism. One of the highlights of working with a Raimondi crane is that we make our experts secconded and on-call for clients, and this can be from everything to technical aspects to things like heavy machinery administrative tasks like import paperwork assistance. “We are committed to client servicing, and that means from inception stage onward should the customer request our involvement, input and assistance. Some of the jobsites that Raimondi can be found on are heritage projects, meaning that the worksites themselves are extremely delicate. One such example is positioning of a Raimondi luffing LR60 crane at Great Scotland Yard placed by our official British agent Bennetts Cranes Limited. As you can imagine, it’s a very densely built-up zone - there is literally no margin for error as each building is a heritage site in itself. Raimondi prides itself on listening to the client’s requirements, and then helping to propose and develop the most seamless alternatives to best realise all stakeholder objectives.”
Last year, saw the company launch a new luffing crane, the Raimondi LR213, and a new topless crane, the Raimondi MRT159, together with the Raimondi Deluxe R16 Crane Cabin. While Ciano and Raimondi will not be scaling any cranes at ConExpo, he says that the company is continuing a role out of new technology. “We have a very busy year ahead. We’re putting into action the needs of various markets that we previously communicated about in Q3 2016,” he says. “In our scope for 2017 is plans for a new luffing crane and a flat-top tower crane targeted at the North American market. These two new models, as well as some European-targeted easy-mount machines are part of this year’s strategy. We’ll be communicating more about these models as our plans come to fruition.” In the Middle East Raimondi will be focused on presenting two new Raimondi models, a new luffing and a new topless cranes. He tells CBNME that the Middle East has demonstrated a clear preference for its MRT294 topless crane with the two newest models following closely behind, the MRT159 and the LR213: “The 40t-plus range is in progress, and that will also broaden our scope in terms of addressing client needs.”
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Lifting the market
Construction Business News Middle East catches up with Florian Attenhauser of Sennebogen to get the German manufacturer’s insight into the region’s crane market CBNME’s look at Conexpo is an opportunity to also review the current state of the region’s machinery market. The magazine sat down with Florian Attenhauser, PR and international marketing manager at Sennebogen, one of the world’s leading producers of material handlers, electric excavators, duty cycle cranes, crawler, port and telescopic cranes. Sennebogen has been highly active in the Middle East since developing its own dealer network a decade ago. It has subsequently gone on to establish itself in a number of major markets in the region and continues to enjoy a growing number machines and an increase in market share. The company was a supporting sponsor of the first Cranes and Transport Middle East (CATME) conference CATME event in Abu Dhabi in December, affirming its rising prominence in the region. “The event was well organised and gave us the possibility to meet many customers (mainly from UAE) at once,” he begins. “The level of participants was very good and there were many decision makers, owners, CEOs and general managers there.” He tells CBNME that the company used the event to introduce its Heavy Duty Cycle crane products to the market. It was also an opportunity to understand the current market situation directly from those that could use them. “The event was more or less a ‘heavy lift conference’, so the speeches were about extra-ordinary heavy lifts in the Middle 68
East. While there was less focus on current market activities, during the coffee breaks we could talk to many of our clients to get an impression about the market for 2017.” According to Attenhauser, the GCC market, which has seen some markets and segments endure a tough period due to a fall in the oil price, is growing slowly but for a company that specialises in niche machines there are still opportunities out there. “The general lifting crane market is still difficult whether you are selling or renting but there is good demand for special machines which can’t be offered by crane rental companies,” he says. Sennebogen boasts a well-balanced range of equipment that suits a variety of sectors. Attenhauser feels the company is still well-positioned despite ongoing volatility in the GCC. “Especially when the pure lifting crawler market is still under enormous price pressure from Far East competition,” he says. “We have been focusing more and more on telescopic crawler and Heavy Duty Cycle cranes as well as customised solutions.” He adds that the Iraq market has fallen short of the company’s hopes but feels other markets show some strength. “Unfortunately Iraq didn’t came up as expected and will need much more time,” he comments. “In 2017 it will be UAE, Qatar, Kuwait, Iran and Egypt.” The Saudi Arabian market has frustrated many that had been attracted by its huge
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project pipeline. Sennebogen’s continuing search for a partner in the Kingdom has seen it side-step many of the problems experienced by others supplying to the market. He argues that a fall in activity could present an opportunity to the company. “We are not much affected by the bad market situation in KSA as we haven’t entered the market so far. We did some project deliveries – mainly for special applications – but in general it was very difficult for us to find the right partner,” he says. “We expect to now find better possibilities for entering the KSA market.” He warns, however, that the latest rise in oil price will not have the impact on the market KSA many hope for: “The oil price has to climb up at least above $70 to have an effect on the market.” Looking at Qatar, he adds that, while the market will be highly active this year, “we do not expect a ‘peak’ in purchasing as a lot of equipment is already available in Qatar.” Sennebogen is planning a new crawler crane model, Attenhauser reveals, and is looking to step up its efforts in the crane rental market and the telescopic crawler market. It also wants to continue its grass roots work within the region. “We are doing regular dealer conferences and trainings as well we support the local partners in main discussions with our clients,” he says. “We are looking for new partners in areas we haven’t been active so far to increase our network as well as our turnover in GCC.”
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The insider view: Challenges in the year ahead
In the second of a two-part series, SOHAR Port and freezone CEO Mark Geilenkirchen tackles the challenges ahead in 2017
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SHORTAGE OF SKILLED LABOUR The success of the transportation and logistics industry depends significantly on the quality and quantity of the people involved in operating the value chain. Despite strong infrastructure expansion and growth in the logistics market, there is still a lack of skilled labour to support the logistics sector in the GCC. Numerous jobs in the logistics industry, such as those in procurement, sourcing, material handling and transportation, demand different categories of labour for the various roles. The GCC has been heavily reliant on expats for both skilled and unskilled labour, due to shortages in the local human capital market. Therefore, logistics companies are compelled to hire skilled expats who demand higher salaries, leading to cost escalations. FRAGMENTED MARKET Being in the early stages of growth, the GCC logistics industry is highly fragmented, with thousands of players either already operating or planning to enter the market. Because of this fragmentation, companies are hesitant to invest in technology because their volatile workloads cannot harness the same cost benefits as larger-scale operations. In addition, high attrition rates, the poor quality of trade and transport related infrastructure, and inadequate indigenous logistics services also pose big challenges. However, the GCC transport and logistics industry is witnessing consolidation through significant M&A activity, with Aramex (UAE), Agility Public Warehousing Company (Kuwait), and DP World (UAE) being the most active acquirers. LOW-DENSITY ROAD NETWORKS Road density is a measure that calculates the ratio of the length of a country’s total road network to its land area. It helps in comparing a country’s road infrastructure with other countries. As the most developed nations in the GCC, the UAE and Saudi Arabia still lag behind other countries as their road density is below 20 kilometres per 100 square kilometres. Road density in developed and developing countries such as Germany (180 kilometres), UK (172 kilometres), India (143 kilometres), Japan (90 kilometres) and US (67 kilometres) are much higher. On the other hand, smaller states like Bahrain, Kuwait and Qatar have above-average road densities compared with global benchmarks. Poor road network density escalates the cost
Increased competition has necessitated outsourcing to help companies maintain their position in the market. 4PL is the next step in the evolution of the logistics industry, as more customers require partners to share risks and gains.” of transportation, both in terms of money as well as time, thereby causing difficulties in the integration of various regions within the GCC economy. FUNDING CHALLENGES The GCC’s substantial dependency on the oil trade has led it to face numerous challenges brought about by the oil price decline. Due to sluggish demand in China, political upsets in Iraq and Libya, and shale gas discoveries in the US, oil prices halved from $110 per barrel in 2014, to around $55 per barrel in 2015. In Bahrain, foreign investors are no longer willing to buy into stalled infrastructure projects worth $795 million, due to low returns on account of falling oil prices. However, Saudi Arabia, the UAE and Qatar are better shielded from the effects of falling oil prices due to larger and more mature domestic banking systems, better access to international markets and larger sovereign wealth funds. Struggling revenues from nonhydrocarbon sector The non-oil sector in the GCC is still in its nascent stage of development and the region’s di-
versification efforts have not yet begun to yield economic dividends that could adequately fund logistics projects. Experts have forecast that in 2016, growth in the non-oil sectors will be the lowest since the 1990s, at only 2.9%. This not-so-positive outlook stems from the fact that the non-oil sector’s fortunes remain aligned with growth in oil prices, which are displaying a falling trend. LOW PRIVATE PARTICIPATION World Bank data on public-private partnerships (PPPs) during the period 1990-2014 indicates that the GCC has among the lowest number of PPP projects, compared to other regions of the world. This is due to factors such as volatile oil prices, the availability of sufficient fiscal headroom to fund infrastructure projects from hydrocarbon sales, and sovereign debt issues. The public sector therefore still dominates the GCC transport and logistics industry. PPPs in transport in the MENA region have been very low. The PPP investment as a percentage of GDP stood at 4% in MENA, lower than that in other regions such as Latin America, the Caribbean, and South Asia, where PPP investment as a percentage of GDP was around 15%. OPERATIONAL GAPS Several operational factors are hindering efficient logistics flow within the GCC. These include inefficient clearance processing leading to problems with customs and other government bodies; high, non tariff-related trading costs; the inability to track and trace consignments; and the delayed delivery of consignments. On average, logistics players in the GCC spend 30 to 45 working days each year on resolving clearance and regulatory issues, compared to a global average of around 15 days. In Saudi Arabia, for instance, mandatory lab tests are imposed on many commodities that enter the Kingdom. This leads to a 14-day holdup on shipments until fully tested and cleared, leading to extra inventory build-up and cost escalations. Agility, in its Emerging Markets Logistics Index for 2014, highlighted government related issues and regulatory complications in the MENA region as key supply-chain risks. Furthermore, the institutes in charge of transport and logistics in the GCC have weak policy formulation and management capacities, mainly due to the lack of coordination between them.
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Trends to watch
Sohar port
Contract Logistics The dominance of integrated service providers is a major trend in the GCC market, with the sector slated to expand by 33% in the MENA region by 2017. By outsourcing the logistics part of their operations to 3PL or 4PL providers, companies can focus on improving their core competencies while saving time and money. Moreover, increased competition has necessitated outsourcing to help companies maintain their position in the market. 4PL is the next step in the evolution of the logistics industry, as more customers require partners to share risks and gains. IoT & Smart Logistics The Internet of Things (IoT) is rapidly gaining ground in the logistics sector in the GCC, with companies implementing enhanced connectivity technologies to increase efficiency in port and road logistics. IoT offers traders a mobile, round-the-clock application platform that gives them real-time information from any geographical location. This in turn leads to better traffic management in and around port areas, and reduced waiting times at the docks. As an example of a successful IoT implementation in Dubai, part of a “Smart Port” initiative, active RFID (radio-frequency identification) tags have been issued to trucks transporting cargo to and from Jebel Ali terminal. The UAE and Qatar will also invest significantly in the development of IoT, with the GCC’s cloud market set to grow from $118.5 million in 2014, to $668.5 million by 2020.
Autonomous Vehicles Autonomous vehicles are capable of sensing their environment on the basis of global positioning systems (GPS), radar, sensors and software, and navigate without human input. The technology of autonomous trucks holds great promise in the GCC as it can infuse a lot of efficiency in the road freight industry by reducing a large number of low-value expat jobs and creating high-value digital technology jobs for GCC nationals. Most of the freight in the GCC moves by truck, with more than one million trucks currently in operation, and this number has been growing at 5% to 9% year-on-year since 2012. Experts believe that this trend would change the face of the GCC logistics industry, providing great cost savings and technological advantages to trucking companies in the region. Development of Rail Network The Gulf region’s railway landscape is set to transform due to the vast number of projects in planning and already underway. The need to balance out excessive dependence on roadways, save on fuel costs, and lower environmental impact has necessitated huge investment towards the development of railways in the GCC region. Over $200 billion have been earmarked for investment in constructing thousands of kilometres of new railway lines across the GCC. Saudi Arabian Railways is building a massive rail network of 5,000 kilometres to strengthen its existing road connectivity.
Public-Private Partnership Projects (1990–2014) 15%
15% 8%
9% 4%
2%
Latin America
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East Asia and Pacific
South Asia
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Europe and Central Asia
Sub-Saharan Africa
Middle East and North Africa
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The right direction Asif Khan, General Manager, GENAVCO, discussed the US brands in its roster and its growth UAE-based player GENAVCO (General Navigation and Commerce Company) and its General Manager (Plant & Equipment) Asif Khan know a thing or two about the importance of US brands. Included in its bulging roster of commercial vehicles, heavy equipment and lubricants are famous mainstays of the US industry such as MTU, Gardner Denver (CompAir), Terex, Crown and JLG. It also boasts other major international brands such as Liebherr, Wirtgen and is closely associated with ISUZU. “JLG comes first among all the US brands (for Genavco in terms of plant and equipment), although our partnership with Detroit Diesel, now owned by MTU, dates back to 1967, so we have been a partner for the last 50 years,” he says. “We started our business with Detroit Diesel and Allison Transmissions when they were part of General Motors.” Using JLG, Crown and MTU as examples, he is able to take a considered look at how the US equipment industry’s has become a global manufacturer - as we speak, Khan is also able to share his almost encyclopedic knowledge of Detroit Diesel’s complicated history. It is a timely discussion as a debate continues over where US brands should be produced. “These brands, JLG, Crown and MTU are no longer limited by being US-only companies. These are multinational companies that have research and development and manufacturing centres outside the US having presence in China, Europe and Asian market as well. They may be listed on the New York Stock Exchange but they are multinational companies. “Like other multinational competitors, they have the same philosophy regarding R&D, product enhancement and quality improvement. All these 74
can be associated with US brands. It would not be easy to get them all back (to the US).” Genavco continues its own development on the back of the demand for equipment driven by the UAE’s infrastructure expansion plans ahead of Expo 2020 and other strategic projects it expects to fuel market growth. Genavco’s expansion strategy will be based on its offering comprehensive yet diverse product portfolio, competent human capital, exceptional service delivery and market leading facilities. February saw Genavco officially unveil its newest facility in Mussafah, Abu Dhabi’s industrial centre. The new facility has a total built up area of 2,822 sqm and comprises a state-of-art ISUZU and Heavy Equipment Showroom, a service facility, a spare parts sales service and a BP-Quick Lube Facility. The service facility measures 1,050qm alone and has 13 service bays with a dedicated VIP waiting area promising a
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“futuristic” customer service experience. The facility also makes a significant statement regarding its commitment to an area of the UAE keeping in purview of infrastructure development and increased demand in the region for the last few years for the UAE Vision 2021. As we look to the future and embark on our journey to empowerment at all levels. “We are a company that believes in organic growth and we take our decisions carefully. We waited for the situation to be conducive,” he says. “The focus for 2017 is Abu Dhabi for us. Looking at the oil price - if it settles between $50-$75 per barrel - then Abu Dhabi will be spending more and the projects that have been announced will proceed to mobilisation. The first month of this year has been very good in terms of order booking, especially from the Abu Dhabi region. We think it shows we have gone in the right direction.
Western truck star
Daimler Trucks North America will once again be rolling its Freightliner and Western Star trucks out at Conexpo The company’s founders, Gottlieb Daimler and Carl Benz, made history with the invention of the automobile in the year 1886. 125 years later, in anniversary year 2011, Daimler AG is one of the world’s most successful automotive companies. With its divisions MercedesBenz Cars, Daimler Trucks, MercedesBenz Vans, Daimler Buses and Daimler Financial Services, the Daimler Group is one of the biggest producers of premium cars and the world’s biggest manufacturer of commercial vehicles with a global reach. Daimler Financial Services provides its customers with a full range of automotive financial services including financing, leasing, insurance and fleet management. As seen at last year’s IAA event, Daimler continues to shape the future of mobility. The group applies innovative and green technologies to produce safe and superior vehicles which fascinate and delight its customers. With the development of alternative drive systems, Daimler is the only vehicle producer investing in all three technologies of hybrid drive, electric motors and fuel cells, with the goal of achieving emission-free mobility in the long term. This is just one example of how Daimler willingly accepts the challenge of meeting its responsibility towards society and the environment. Daimler sells its vehicles and services in nearly all the countries of the world and has production facilities in Europe, North and South America, Asia, and Africa. Its current brand portfolio includes, in addition to the world’s most valuable premium automotive brand, Mercedes-Benz, as well as MercedesAMG and Mercedes-Maybach, the brands smart, Freightliner, Western Star, BharatBenz, Fuso, Setra and Thomas Built Buses, and Daimler Financial Services’ brands: Mercedes-Benz Bank,
Dr Wolfgang Bernhard, member of the board of management of Daimler AG
Mercedes-Benz Financial, Daimler Truck Financial, moovel and car2go. The company is listed on the stock exchanges of Frankfurt and Stuttgart (stock exchange symbol DAI). Daimler Commercial Vehicles MENA (DCV MENA) is one out of six regional centres worldwide located in Dubai and responsible for all Commercial Vehicles related activities of Daimler in the Middle East as well as North Africa (19 countries – from Morocco to Pakistan). The purpose of the Regional Centre DCV MENA is to be closer to the customer, to enhance market sensitivity and to increase the added value effectively within short time. The Sales, After Sales and Replacement Parts activities for each market are organized via a network of exclusive general distributors. The Office was set-up and became operational in November 1998 as DaimlerChrysler Middle East, when Daimler-Benz and Chrysler International joined forces and merged. The new office (Regional Office Middle East) in the Jebel Ali Free Zone, Dubai was officially opened on 7th April 2001. Following the demerger of Chrysler Group in March 2008, DaimlerChrysler
Middle East became Daimler Middle East & Levant. Today the regional centre manages sales and customer services and parts activities for the brands Fuso, MercedesBenz and Setra in the following markets: Afghanistan, Algeria (Fuso only), Bahrain, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Sultanate of Oman, Pakistan, Qatar, Kingdom of Saudi Arabia, Syria, Tunisia, United Arab Emirates (UAE) and Yemen. Dr Wolfgang Bernhard, member of the board of management of Daimler AG says the company has most recently focused on expanding its regional centres in the Middle East and Africa. “Doing this in support of our other activities has really given us a global presence. It’s now easier to name the countries we are not in,” he explains. “In the past we steered Middle East business from Stuttgart and I can assure you that we feel this was not good enough. We want people that wake up in the morning in the same time zone, open up the newspaper and read the same stories our customers are reading and are living in the same world as our customers.” He continues: “Our regional centre in Dubai makes us much closer to our customers. We believe in the long run that the Middle East will be important. It is difficult these days with all the conflicts we see – it is risky with unstable countries we have like Libya, Egypt and all the way over to Syria. However we still believe there is business to be made and that we can play a constructive role in the region. We also believe the oil price will come back – purchasing power will come back and the violent conflicts we see will solved. Mercedes and Fuso is very strong there.”
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After the boom Andrew Skudder, CEO, CCS, advises now is the time for construction companies to get back control of their operations With the GCC construction industry enduring a tough economic climate following years of unprecedented growth, contractors are realising the value of greater control and transparency in their operations. Unfortunately, according to Andrew Skudder, CEO, CCS, the construction industry has been relatively slow to adopt information technology, where spending on IT accounts for less than 1% of revenues. Among CCS’ solutions and services is Candy, an estimating and project control solution which helps manage the estimation, management and planning of all construction projects, from estimating through to tender award and ultimately, final account. “Candy provides seamless integration of analytical estimating and critical path planning generates estimate forecasts and cash flows, while the Valuations and Earned Value modules track and monitor progress and performance of the contract for the contractor,” he explains. In addition to Candy, the web-based ERP construction accounting and costing business solution, BuidSmart comprises integrated procurement, accounting and payroll modules and a host of added features including plant, yard and store management, subcontract management, document control, business intelligence, HR and time and attendance. “CCS provides a ‘best-of-breed’ approach by integrating the essential elements of budgetary or allowable control and cost accounting to provide contractors with real time, reliable, auditable, accurate and activity-based comparative analysis of costs and allowables, the information that determines the success or failure of a construction venture.” He describes 2016 as one of the worst years for project activity since 2004, as governments and developers reacted to lower revenues by reducing project expenditure. 76
About Andrew Skudder Andrew Skudder, CEO, CCS - Construction Computer Software started his career as a commodity trader at Mitsui & Co in Johannesburg, South Africa. He joined CCS in August, 2016 from Murray & Roberts and reveals he is very excited to be working with, “a great team of people who are passionate about the industry, our solutions and our Clients. Together we aim to be the leading provider of software solutions for the global construction and engineering industry.”
“We are seeing some right-sizing in the market and a greater emphasis on cost containment,” he acknowledges. “This in itself is a challenge for CCS but is also a great opportunity as clients need critical management information to effectively manage project costs from estimate to final account. “I have confidence in the GCC’s resilience to economic changes. Companies need proper controls to restrict cash-flows and make sure the job going ahead can be done with limited fluidity. Construction is a cyclical industry, and we expect a few ups and downs, but projects for Dubai Expo 2020 and FIFA World Cup 2022 Qatar
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have to go ahead. Now more than ever, these projects’ budgets will have to be managed with discipline. “The global economic climate highlights the consequences of laxity of control systems in boom times and it is right now that all contractors should produce better estimates, and have closer control over projects and better monitoring of earned value and cash flows. To rely on the previous mindset of a continual stream of work and bulging order books would be a dangerous folly. At times like this, ‘cash is king’ and CCS’ solutions are designed to give management the tools they need to control their cash effectively.” “CCS can aid our client’s decision making processes, keeping tendering, procurement and numerous construction project variables under tight control enabling better decisions with better information produced at the right time. Current conditions present various challenges but also unique opportunities for our clients to streamline their business processes and controls.” One of CCS’ own challenges is overcoming the perception that implementing a new software solution can be superfluous to the core business activity of construction as well as expensive in terms of time, resources and costs. “Companies should take the opportunity presented by the slow down to consolidate and train staff to use the software properly and maximise on their investment,” he advises. “When the market does pick up again they will be even better equipped to utilise the software tools to aid decision making, accuracy and control to meet and better their margins. Companies have to realise the inherent benefits of proper control, speed and accuracy required to make better decisions and execute the right actions to minimise losses and maximise gains in a challenging market environment.”
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On a high
Paul Lowndes on why BASF Construction Chemicals is a high achiever in the GCC
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hen people want to build high in the Middle East, they go to BASF Construction Chemicals. A decade ago, BASF supplied its admixtures on what was become the Burj Khalifa in Dubai and the world’s tallest tower. BASF Construction Chemicals managing director Lowndes tells CBNME that the company is working on the world’s next tallest structure in Saudi Arabia. “One of our biggest achievements in this region was our contribution of admixtures to the Burj Khalifa tower in Dubai. Thanks to the performance of our MasterGlenium SKY superplasticizers, concrete could be pumped from ground level to a height of 600m,” says Lowndes. “Due to its tremendous success, the same technology has been 78
chosen for the construction of Kingdom Tower in Jeddah, Saudi Arabia.” BASF Construction Chemicals has been in the Middle East since 1979 when it opened its first production plant in Sharjah. Although BASF has expanded to many other countries (including Qatar, Kuwait, Bahrain, Saudi Arabia and Jordan), the UAE remains one of its major markets, following Saudi Arabia. Lowndes adds that BASF has also been growing “exponentially” in Oman and in order to cope with strong market demand and its own ambitions, BASF will also soon open a local admixtures production site, he reveals. “This will help meet our customer needs and maintain our leader status in this segment. Admixtures Systems is one of our key segments in our com-
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prehensive portfolio under the Master Builders Solutions brand.” BASF is continuing to develop new technology for the traditionally conservative construction sector and was invited to contribute to building the world’s first 3D-printed office building. The 250sqm building was ‘printed’ in just 17 days using a special cement mixture. Using the technique is estimated to have saved 80% on construction costs, 60% on labor costs, and 60% on construction waste. Considerations that have become more important in a greener and cost conscious construction market. “We were strongly involved in the construction of the first 3D printed office in the world, which is the temporary office of the Museum of the Future in Dubai. In close contact with the architects and
designers, we supported by providing the external insulation walls (EIFS), which give this project its impressive white shell and protects it from the harsh weather,” says Lowndes. “At BASF, we don’t limit our business to following specific existing requests from the market. We offer innovative solutions that help direct the demands into greener trends.” The 3D office project was a good example of how BASF, he adds, can be part of a successful collaboration from the design phase: “Being the first of its kind in the region, the architects and designers trusted companies like BASF to help define some project needs and details. We were there through the installation too. “We can work with clients from the design phase until the completion of the projects. Our professional business devel-
opment, sales and technical teams participate throughout the works, identifying and satisfying our customer’s needs.” He adds that on more traditional projects BASF only allows its products to be applied and installed by trained and certified applicators. “We make sure that these companies and their labourers work professionally with our technologies by conducting regular trainings in our facilities,” he explains. “When required, our technical services team assists during application. This service is well appreciated by the customers, since minimised product failure lowers the risk of project delays.” Turning his attention to other technology BASF is introducing to the market, he explains that wrapped around its Green Sense Concrete - an optimised mixture
programme in which recycled cementitious and non-cementitious materials are used in combination with specially formulated BASF admixtures – is a process to ensure clients meet environmental goals. “The result is an environmentallyfriendly, cost-effective concrete that meets, and often exceeds, performance targets,” he says. “The positive impact of using Green Sense Concrete on sustainability criteria is quantified by certified eco-efficiency analysis or life-cycle analyser tool. Essentially, we work on a concrete mix plan and prepare a report that quantifies the benefits for the client.” BASF’s long and successful history has led to its involvement in helping shape ageing local building codes and regulations, explains Lowndes. “We have been requested for some specific certifications, and we have been testing and assessing our products to meet the new regulations, especially those regarding fire safety. In many cases, we have been working closely with the regulatory bodies to assist them with technical expertise.” Construction Chemicals is only one of the numerous business units that BASF operates in the Middle East. The company set up a new Abu Dhabi branch office, BASF Middle East, in 2016 to help improve its ability to offer sustainable solutions for the region’s energy industry. Lowndes suggests the Oil & Gas and construction sectors are becoming closely connected in the region. “Largely buoyed by a rising middle class and expanding population, demand for energy will continue to grow over the next decades. Particularly here in the region, we are experiencing a drive for increased integration between refining and petrochemicals combined with ambitious plans for a greater role for alternatives in power generation.” he says. “Without a doubt that this will lead to new mega-capital projects being announced. So the connection between the construction sector and the oil and gas industry in the region is very strong and of course both sectors are cyclical. Now that the oil prices are slowly starting to rise again, construction projects across the region will also rebound, and BASF is well positioned to serve both sectors.
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Jewel of the desert A new arts hub by Snøhetta is emerging from Saudia Arabia’s Eastern Province. Dramatic and majestic, King Abdulaziz Center for World Culture is a monumental statement of the country’s past, present and future, writes Rima Alsammarae
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The past is the part that’s under the ground, while the present is the very generous lobby where everything comes together�
MAN Genuine Parts - Engine Kit
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I
t’s admirable to see the dedication and the conditions given to the youth in Saudi Arabia,” says Design Days Dubai fair director Cyril Zammit. “Not only are the beauty and scale of the building noteworthy, but so is its ambition to be a new point of convergence for culture at large. I have met the management and was impressed by their vision and their goals.” Emerging out of the rubble and dust of Dhahran, just north of the King Fahd Causeway that links the kingdom to Bahrain, is a 100-kilometre-square cultural centre – a bold Saudi Aramco initiative. Designed by Norwegian architecture firm Snøhetta, the facility, which stands starkly apart from the region’s usual glass architecture, will promote cultural development within the country through its many facilities, set to include a library, auditorium, cinema, museum, archive and exhibition spaces. Due for completion later this year, the facility was the subject of a design competition back in 2007 that ultimately saw Snøhetta win the contract with a conceptual design that proposed the convergence of five pebble-shaped structures, leaning on one another yet resting in various directions. The design team wanted to create something that would represent the country’s heritage and development, that stood as a statement of history and hope. “It’s a pretty free-flowing environment here at Snøhetta, so there were a lot of individual concepts, but the biggest one that was intuitively understood was this division between past, present and future,” says Tae Young Yoon, a senior architect at Snøhetta who oversaw the project. “That was very evident in how the project was organised in sections. “The past is the part that’s under the ground, while the present is the very generous lobby where everything comes together. And as you move up, it’s more about the future,” he adds, referring to the 98m Knowledge Tower, which aptly houses the library. 82
Literary inspiration Another concept that indirectly fuelled the team’s creativity was, Yoon says, that of an arch, inspired by the writing of Italian author and journalist Italo Calvino in which he referenced the Roman arch’s keystone – the piece that holds it all together. “It’s where all the force is transferred,” Yoon says. “It’s the one piece that allows the integrity of the whole. So even though the building looks like a stack of stones, it is, conceptually, an arch for us.”
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Guided by these two principles, Snøhetta further approached the architecture and interior using a number of design philosophies, such as energy, teamwork and the distinction between the extrovert and introvert, which heavily influenced the make-up of the exterior and interior respectively. The project’s façade is made of 360 kilometres of thin stainless steel pipe wrapped around the centre’s five ‘pebbles’ and is set above a Kalzip metal skin. The centre’s exterior has a uniform design that communicates
are in the library,” Yoon says. “We were inspired by the richness of Arabian mosaics, without being too literal about it. There are many examples of this throughout. The complexity of geometric articulation is something we all took inspiration from, again not literally, but the expressiveness of it.” Geometric patterns can also be found in the interior’s architectural lighting, most evident in the lobby, in which piercing slivers of light zigzag across the ceiling, as well as in the exterior interface that separates the building from the landscaped gardens outside – inspired by Saudi’s geology, and arid lands across the world. Other materials used for the interior of the project include bamboo and the Kvadrat-covered acoustic fabric panels by Norwegian artist Heidi Winge Strøm in the auditorium, and the Zumtobelmade chandeliers that hang in the great exhibition hall.
connectedness. Even though we see five independent structures, they lean on one another and their singular appearance illustrates a familial link, while the size and direction of each offers variance. “The exterior, or the extrovert, is heroic, I guess, without intending to be,” says Yoon. “It conveys iconic unity that’s interesting to look at.” The interior is different. Each space has its own identity, to be interpreted via the varying material choices throughout the centre.
And because multiple spaces can be housed within the same pebble, the message is that while they are wholly separate from each other, they belong to the same group. Though each space is unique, the use of perforated metal and rich palettes throughout is frequent. Patterns too, inspired by Middle Eastern geometry, can be found in subtle amounts. The library, for example, has an inner skin of identical steel panels with double curvature that are designed to overlap. “Some of the richest patterns
A hub for the arts When complete, the project will host a number of cultural events, from opera and symphony concerts in the 930-seat auditorium to musicals and lectures, while the smaller cinema will offer a new venue for performing arts in the kingdom. Up in Knowledge Tower, the library (set to contain 200,000 books) will be accessible for users of all ages and interests, and travelling exhibitions will rotate throughout the great exhibition hall. It’s an audacious programme, one that will foster education and cultural dialogue. Extending its generous ambitions to its community, the centre (and therefore Saudi Aramco) will also be supporting Saudi Design Week at this year’s Design Days Dubai. In 2016, the exhibition introduced a number of Saudi designers, including Wadha Al Rashid, Oelab, Ayah Al Bitar, Noura Bouzo and Misque. Together, they explored the notions of reinventing and reinterpreting heritage by showcasing everyday objects. “When Saudi Design Week presented emerging Saudi designers last March at Design Days Dubai, it was
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The keystone is where all the force is transferred – it’s the one piece that allows the integrity of the whole. Even though the building looks like a stack of stones, it is, conceptually, an arch for us” the result of a great cooperation that started back in 2014,” says Zammit. “Between the two countries, there has always been a natural link when it comes to design. In 2017, some of the designers will be showcasing independently at Design Days, a new step for a rapidly growing market.” While the construction team finalises the last details of the cultural centre, the Snøhetta team is back in Oslo. Although they’ve recently skirted away from controversy for having delivered work in the kingdom, they’ve continued towards their mission of addressing problems through architecture and design. And they’ve taken on a number of new developments, including another Saudi project. “We have a metro station in Riyadh going up,” says Yoon. “It’s going to be on a par with this project. It’ll be amazing.” 84
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If you’re looking for robust, reliable construction equipment at affordable prices then you need to look no further than SDLG. And the B877 backhoe loader is a great place to start looking. Easy to operate and maintain, it’s a machine that’s built for hard work in the toughest conditions. When it’s time to think about buying a new machine, remember this name: SDLG. Go online to find your local SDLG dealer: www.sdlgme.com
// Legal Insight
Site Safety in the UAE Key guidance for construction managers when dealing with an accident By Rebecca Kelly, partner at global law firm Morgan Lewis
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very year, the construction industry accounts for a high number of injuries and fatalities, bringing to the forefront concerns over occupational safety in the UAE and the efficiency of the current legal framework. One of the main concerns for employers in the construction industry is to understand and implement the wide-ranging set of legal obligations in order to ensure the safety of the workers. Companies must be prepared to respond effectively to on-site accidents, and this article provides guidance in accordance with the UAE legal system. Despite the rapid growth and pace of development in the United Arab Emirates (UAE) over the past few decades, changes to the legal framework governing the health, safety and welfare of the country’s labour force have been relatively modest. Regulations concerning construction site safety have historically been governed by the Federal Law No. 8 of 1980 (as amended) (the “UAE Labour Law”) and supplemented by a patchwork of legislation, regulations and guidelines issued primarily by governmental and quasi–governmental bodies at both federal and individual Emirate level. The current legal framework The UAE Labour Law established the foundations of health and safety law 86
The ability to respond to a crisis in line with an agreed, understood and communicated policy can make a substantial difference to a company’s overall recovery from the crisis” in the UAE, imposing a number of mandatory obligations on employers, and employees, to comply with safety measures to protect the workforce. The Labour Law provides minimum requirements to which employers and
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employees must adhere, including the provision of individuals trained in first aid, the availability of medical facilities complying with the standards imposed by the Ministry of Labour, general medical examinations of employees at six month intervals, and employee training on occupational hazards prior to commencing employment. The UAE Ministerial Order No. 32 of 1982 (the “Ministerial Order”) enhanced employers’ responsibilities within the construction industry, with 10 articles exclusive to “Workers’ Safety, Protection, Health and Social Care” setting out the entitlements of workers in terms of working conditions, fire safety and the regulation of excavation and demolition work. Further UAE Ministerial Decisions following the implementation of the UAE Labour Law have sought to improve the standards of medical care provided for employees, regulate the laws concerning hazardous works, and place greater protection on employees working in remote areas and locations. Many of the initiatives taken to respond to the need to improve occupational and community health and safety have been driven by the local government departments within each Emirate. In 2008, Dubai Municipality issued the Dubai Safety Construction Manual and alongside the existing Dubai Local Order No. 61 of 1991 (“Order”)
mandates the provisions applicable (in certain cases) to both employers and employees on construction sites, including the obligation to wear appropriate protective equipment, clothing or devices; to ensure that machinery and tools are of good condition; and the procedures to adopt in the case of work accidents. The Order also provides for inspectors of the Health Department to oversee and ensure compliance with the provisions of the Order, as well as impose penalties for violations, including warnings, fines (not less than Dhs 5,000), closure of the premises for up to one month, and cancellation of commercial licenses. Such penalties are without prejudice to the more severe penalties imposed by federal laws and regulations. In Abu Dhabi, the Environment, Health and Safety Management System (“EHSMS”) was implemented by Decree No. 42 of 2009 with the purpose of protecting the environment and human health, and ensuring safety of workers in the workplace. The EHSMS is based on international standards of the International Labour Organisation (“ILO”) and the Occupational Health & Safety Advisory Services (“OHSAS”). The Framework provides for a number of mandatory requirements, along with non-mandatory guidance (in the form of Standards and Guideline Values, Technical Guidelines and Guidance Documents). If a Construction company operates in both Abu Dhabi and Dubai, by way of example, the regulations that apply to their Construction Project are based on where the project is. Consequently, a Dubai based project would follow the Federal Laws and any Dubai specific regulations. Phase I- Responses to a Crisis or Incident Companies should always be prepared to respond to an incident in the most effective manner, recognising that the health and safety of their workers is paramount. The ability to respond to a crisis in line with an
agreed, understood and communicated policy can make a substantial difference to a company’s overall recovery from the crisis. The following key observations can assist a company deal with a crisis: 1. Advance planning: Implement a suitable and localised policy for each of the Emirates within the UAE the company has construction activities dealing with the company’s response to the crisis addressing the different legal requirements across the Emirates; 2. Update the policy regularly to reflect any amendments in the government’s requirements to deal with injuries and fatalities on site (including mandatory reporting
requirements to the various government departments); 3. Train all staff in their native language about the policy, the procedures and the expectations of all their staff in the event of a crisis, and run through effective and regular training simulating an on-site crisis in order to prevent panic on the day of an incident; 4. Ensure that when a crisis happens, the right people from the company are immediately available to assist at the site to help with any aspect of government investigation. This may include nominating an individual with Arabic language skills. The nominated individuals must be available to assist with any enquiries and shut down the site if
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// Legal Insight
necessary, in accordance with any instructions issued by the authorities, to ensure the ongoing safety of all the workers; 5. Immediately deal with any mandatory reporting obligations to the government and communicate with the members of the injured / deceased’s family. Surprisingly the ‘next of kin details’ are usually not updated regularly, so noting that these details should be updated annually is important. 6. Follow up. All companies must take responsibility for their employees and should ensure that where necessary assistance is provided to them when they are required to provide statements to the Authorities. Ensure that witnesses to any on-site accident have statements prepared shortly after the incident to aid in memory recall. A company’s ability to effectively respond to a crisis directly correlates to the company’s responsibility to train all their employees to respond. Preventing accidents from happening is everyone’s responsibility, but knowing what to do when an accident happens is also everyone’s responsibility. Phase II - Overview of Investigation Process If a worker is injured on site, or there is a fatality on a construction site, the employer is required to report the incident immediately to the Government Authorities in the respective Emirate (for example the Ambulance, Police, Civil Defence and the Municipality). Depending on the severity of the incident, representatives from all Government Authorities will attend the construction site immediately. Construction companies must be ready to accept these representatives on site, and provide them with information and assistance as requested. After the initial investigation, again depending on the severity of the incident, the police are required to refer the details of the incident to the Public Prosecution for further, criminal investigation. As a result of the referral, 88
Preparedness in the face of a crisis is the key to managing both your employees on site, and the Authorities who are tasked to understand why the incident occurred” the matter may be referred to the local courts for the judge to decide what the cause of the accident was. At this stage of the investigation an individual
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may be charged for causing the death / injury and will face criminal prosecution. If the death or injury to the victim was caused through the fault of another person, the employees are liable to punishment under the UAE Penal Code which can result in prison time. The UAE Labour Law sets out the penalties imposed for breach of health and safety law. Liability can include criminal sanctions, civil compensatory damages and other administrative penalties. Ministry of Labour inspectors also have the power to levy fines, temporarily or permanently close down establishments or suspend the use of equipment that violates applicable safety standards. They can also impose penalties (which may be compounded in the case of repeat offences) up to a maximum of AED 5mn. Preparedness in the face of a crisis is the key to managing both your employees on site, and the Authorities who are tasked to understand why the incident occurred. An effective, thorough incident response plan can assist all companies deal with the immediate aftermath of an incident, which will enable the company to respond effectively and within the confines of the regulatory framework.
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// Take 10
Take 10: Middle East Malls The Middle East is already home to some of the biggest malls in the world and in Dubai alone over $4bn worth of mall contracts are set to be awarded this year, up from $502mn last year, according to MEED. We take a look at some of the stand out developments in the region.
1 Dubai Mall The biggest shopping mall in the Middle East opened in November 2008 with around 1,000 retailers, at the time the second biggest mall opening ever after the West Edmonton Mall in Canada. In 2011 it was the most visited building on the planet, attracting over 54 million visitors and in 2016 welcomed close to 100 million visitors. In addition to shopping its main attractions include an aquarium and an ice rink. The mall was built for developer Emaar by a joint venture of Dutco Balfour Beatty, Al Ghandi/CCC and Turner Construction.
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2
Mall of the Emirates, Dubai
Developed by Majid Al Futtaim, the Mall of the Emirates opened in 2005 at a cost of around AED 800mn ($210mn) with the world’s biggest indoor ski slope as its stand out feature. Around AED 1bn has since been invested to expand the mall in stages. The mall was designed by the American architectural firm F+A Architects while the main building contract was handled by Khansaheb.
3 Ibn Battuta Mall, Dubai Named after the famous Moroccan scholar and explorer, Nakheel’s Ibn Battuta Mall takes visitors on a journey of discovery through six different sections or ‘courts’ representing China, India, Persia, Egypt, Tunisia and Andalusia. Originally built by Turner Construction, the mall is currently undergoing a multi-million dollar expansion to add hundreds more shops.
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// Take 10
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Doha Festival City, Qatar Doha Festival City opens this month with 500 international brands spread over a gross building area the equivalent size of 94 football pitches and a gross leasable area of 244,000m2. Developer Bawabat Al Shamal Real Estate Company (BASREC) expects to welcome over 20 million guests within the first year of opening the mall which was built by a joint venture between ALEC Qatar and Gulf Contracting Company.
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Maryah Central, Abu Dhabi
Construction contractor Multiplex completed major structural work on the Al Maryah Central mall in Abu Dhabi last month and the project is set to open its doors in mid-2018. Anchored on one side by the first Macy’s department store outside the US and on the other by the second Bloomingdales in the UAE, the $1.05bn project will connect to the existing Galleria Mall to form a shopper’s paradise, equivalent in size to Dubai’s Mall of the Emirates. The project is developed by Gulf Related, a joint venture of Gulf Capital private equity group and New York-based Related.
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Meydan One Mall, Dubai
Launched in August 2015, Meydan One Mall will anchor a whole new neighbourhood in central Dubai between the Meydan Hotel and Al Khail Road. When it opens some time before 2020, the mall will cover more than 30,000 m2 of indoor and outdoor space, with 529 shops including two major department stores. But the stand out features of this development will be a retractable roof, the world's longest ski slope and the world’s largest dancing fountains.
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// Take 10
7
Reem Mall, Abu Dhabi
Abu Dhabi’s $1bn Reem Mall is being developed by Al Farwaniya Property Development – a partnership between Kuwaiti firms National Real Estate Company (NREC) and United Projects for Aviation Services Company (UPAC). It will comprise around 450 stores, including 85 food and beverage (F&B) outlets and a range of entertainment offerings and will also house the world’s largest indoor snow-play park. Al Futtaim Carillion was named as the preferred contractor for the project last year.
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Deira Mall, Dubai
Situated on one of four man-made islands off the coast of ‘old’ Dubai, developer Nakheel’s $1.1bn Deira Mall will cover 600,000 m2, giving it a bigger footprint than the Dubai Mall. Deira Mall is part of Nakheel’s multi-billion dollar Deira Islands development which includes the 20-tower Deira Islands Boulevard residential project and a number of resorts. A construction tender has been issued and the project is scheduled to be complete by 2020.
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Nakheel Mall, Dubai
Nakheel Mall on Dubai’s Palm Jumeirah will open later this year. Covering 418,000 m2 it will have five retail levels with 350 shops, restaurants and leisure attractions. UAE firms United Engineering Construction (UNEC) and Actco General Contracting Company were jointly awarded the contract to build the mall in May 2014. Alongside the mall will be The Palm Tower – a five-star, 52-storey hotel and residential complex – for which a separate construction contract was awarded last year.
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The Pointe, Dubai
Nakheel’s 136,000 m2 waterfront dining and leisure complex is located at the tip of the trunk of the Palm opposite the Atlantis hotel. The project will feature fountain shows, a 1.5 km promenade and nearly 150 restaurants and retail outlets and a Reel Cinema multiplex. Due to open in mid-2017, The Pointe will be accessible via The Palm Monorail, which is connected to the Dubai Tram and Dubai Metro. Gulf Technical Construction, a unit of Dubai’s Drake & Scull, won the construction contract to build the mall in February 2014.
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// Supplier News
Machinery
Caterpillar to establish global HQ in Chicago Caterpillar has scrapped plans to build a new headquarters in its hometown of Peoria, Illinois and instead will locate a limited group of senior executives and support functions in the Chicago area. Once the new location is fully operational, Caterpillar expects about 300 employees to be based there, which includes some positions relocated from the Peoria area. The company said the new location will improve access to global customers, dealers and its worldwide
operations, while also enhancing executive recruitment. However the majority of employees will remain in Central Illinois. “Caterpillar’s Board of Di-
rectors has been discussing the benefits of a more accessible, strategic location for some time,” said Caterpillar CEO Jim Umpleby. “Since 2012, about two-thirds of
Caterpillar’s sales and revenues have come from outside the United States. Locating our headquarters closer to a global transportation hub, such as Chicago, means we can meet with our global customers, dealers and employees more easily and frequently. He added: “We value our deep roots in Central Illinois, and Peoria will continue to be our hometown. The vast majority of our people will remain in this important region where we have many essential facilities and functions.”
Atlas Copco sells Dynapac brand Atlas Copco has agreed to sell its Road Construction Equipment division – Dynapac – to French industrial and construction company, Fayat Group for an undisclosed price. The Swedish industrial group said it decided to offload the business because it does “not have the economies of scale to become number one or two in this market segment”. The deal includes sales and service operations in 37 countries and production units in five
countries – Sweden, Germany, Brazil, India and China. The business has 1,265 employees and revenues of approximately SEK 2.9mn ($327,000) in 2016. Atlas Copco’s Road Construction Equipment division, part of the Construction Technique business area, manufactures rollers for asphalt and soil applications, planers and pavers sold under the Dynapac trade name which Atlas Copco acquired in 2007.
Safety
Genie unveils new lift guard Boom lift platform specialist Genie has introduced a new safety accessory that alerts when an operator disconnects the breakaway cable located near the platform control panel. The Genie Lift Guard Contact Alarm features an activation cable fitted above the boom lift’s platform control panel. When pressure is applied to the cable, it disconnects and activates the system. When the system is activated, all machine lift and drive functions are stopped to prevent additional movement in the platform, as well as an 96
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alarm sounds and beacons flash, notifying everyone near the Genie boom lift that the operator may require assistance. The Genie Lift Guard Contact Alarm system is available from the factory or as an aftermarket kit, which can easily be installed in less than 30 minutes with only a few fasteners and electrical harness connectors. This accessory is configured as a standard accessory on most new Genie Z™ (articulated) and S™ (telescopic) boom lifts.
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// Supplier News
Machinery
Potain cranes bring Egyptian mall to life
The first Potain MDT 389 cranes in the Middle East are being used to construct one of the largest retail malls ever built in Egypt—the Almaza City Centre project in Cairo. A joint venture between Hassan Allam Sons and Consolidated Contractors Company (CCC) is managing all construction work. Hassan Allam Sons purchased the four Potain MDT 389 cranes for the job after the model was launched at the bauma 2016 show in Germany. The cranes were purchased from In-
ternational Development Programmes (IDP), the exclusive dealer for Potain in Egypt. IDP managed the assembly of the cranes on site with assistance from the local Potain technical support team. The first crane was erected in June 2016, while the fourth was completed in August of that year. For the project, the MDT 389 cranes are lifting concrete and steel to heights of up to 40 m, with loads weighing up to 3.5 t. Engineer Atef Ramzy, plant, machinery and vehicles manager for
the joint-venture organisation, said the company was especially pleased with how the cranes have been performing. “Compared to other tower cranes we used in the past, the MDT 389 is much easier for our operators to control, because it has the Crane Control System (CCS) technology,” he said. “We are very pleased with the performance of the cranes. They can easily handle the required work within the timeframe, which is crucial for a project of this scale—where time means money.”
Al Shafar Steel to boost production Al Shafar Steel Engineering (ASSENT) is investing AED 175mn ($47.6mn) to expand production at its facilities in Dubai Industrial Park. The company, which specialises in structural steel design and manufacturing, will spend AED 100mn on building new facilities and AED 75mn on installing new machinery, it said in a statement. Construction is scheduled to begin in Q2 2017, and the new factory is expected to start operations by the end of 2018. The expansion will enable ASSENT to increase annual production at the site by up to 30 percent within the first two years. With 2,300 employees projected to work on-site, the state-of-the-art factory will manufacture and fabricate ready-to-use products for delivery to local clients, with integrated facilities for warehousing, storage and offices. Amr Ali Ahmed, Manager Partner & CEO of ASSENT, said: “With the UAE’s steel manufacturing sector expected to grow by a robust 20 percent by 2021, a bigger factory will place us in a superior position to contribute towards this growth. It will also help us achieve our long-term vision of expanding our footprint within the UAE and the GCC region.”
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Kuwait Build 2017 Kuwait International Fair, Kuwait City Kuwait Build Exhibition & Conference will feature over 200 local and international companies in the building and construction sector showcasing the latest products and services in residential and commercial property infrastructure in a business platform of over 4,500 sqm of exhibition space. Middle East Rail 2017 Dubai International Convention & Exhibition Center Middle East Rail is the region's largest rail exhibition and conference. Run in partnership with the National Transport Authority and Ministry of Public Works UAE, the event will bring together GCC government authorities, rail operators and contractors who are driving regional rail projects forward. CONEXPO-CON/AGG 2017 Las Vegas, Nevada Where every major construction industry is represented amongst 2,500+ exhibitors over 2,500,000 square feet and more than 140 education sessions including asphalt, aggregates, concrete, earthmoving, lifting, mining, utilities and more.
Façade Design & Engineering Innovation Exchange Intercontinental Doha Qatar, Qatar If you are an architect looking to learn how to design innovative, highperforming, fire-proof façades or a supplier looking to work with stakeholders working on the latest projects in Qatar - then don’t miss this 1-day networking platform.
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Middle East Road and Bridge Forum Dubai, UAE Middle East Road and Bridge Forum will gather heads of design, construction, projects, maintenance, asset management and safety from the transport infrastructure sector to address their challenges in achieving an increasingly cost-efficient, durable and safe transport network. Cityscape Abu Dhabi 2017 Abu Dhabi National Exhibition Center The UAE capital’s largest and most influential property exhibition is back. With hundreds of developments from Abu Dhabi and overseas being showcased, Cityscape Abu Dhabi 2017 is the home of real estate investment for the residential, retail, hospitality and commercial sectors. Project Qatar 2017 Doha Exhibition and Convention Centre Project Qatar is Qatar's leading construction fair. In 2016 over 1,050 companies and brands from 38 countries exhibited at the show and even more participating companies are expected in 2017. The event provides a unique platform to network and generate new business opportunities in the Qatar construction sector. Urban Community Development Middle East Forum Dubai, UAE This two-day conference will provide a strategic overview of urban community developments whilst identifying strategies and solutions to develop sustainable, integrated communities that respond to end user needs as well as find the right solutions to develop costeffective and high quality communities.
IMAGINE WHAT’S NEXT. Register today to get the ultimate view of where construction is going. Imagine less downtime. Imagine being more efficient. Imagine seeing what’s next from over 2,500 exhibitors spread out over 232,000 square meters. Imagination becomes reality in Las Vegas on March 7–11, 2017— and if you make your reservation right now, you can ensure your spot at this huge event... and save!
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March 7–11, 2017 | Las Vegas Convention Center | Las Vegas, USA
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// Editor's pick
Fire safety market hots up New building codes driving Middle East demand, says Frost & Sullivan report
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he Middle East fire safety market is set to double over the next five years thanks to tightening regulations and increasing infrastructure demands, according to a new report. Non-compliance of building code norms has led to a rise in fire accidents which in turn has resulted in the introduction of new regulations that are stimulating demand for products and services. A recent study by Frost & Sullivan predicts the Middle East fire safety market will grow by a CAGR of 12.4 percent to reach $4.4bn by 2021. Moreover, demand for smart product integration, coupled with growing investment in infrastructure projects for the upcoming Expo 2020 and FIFA World Cup 2022, is expected to spur demand for fire safety systems over the next five years. Passive fire safety systems have seen limited adoption as these require installation of firewalls and fire rated floor assemblies, the report says. However there is widespread use of active fire safety systems, that do manual or automatic detection and suppression of fires using fire sprinkler and fire alarm systems.
Research indicates that despite multiple growth drivers, in the Middle East opportunities come with challenges of political and social unpredictability that are forcing revision in spending patterns. The high initial cost of installing fire safety systems is a major challenge for users in the Middle East. Due to budget limitations, many organizations compromise on their fire safety systems by not adhering to the stipulated safety guidelines, thereby increasing chances of fire hazards and risk of loss of assets and human life. Technology dynamism and high installation costs have made it difficult for existing systems to upgrade. According to Frost & Sullivan’s recent research, the Middle East market for fire detection, management, response systems and analysis software was valued at $2.5bn in 2016. Fire management systems accounted for 50 percent of the total market while alarm based detectors contributed 30 percent. As technology has advancement there has been a rise in demand for software that helps predict the chances of a fire. Fire response systems, comprising high value fire engine vehicles, ambulances, and associated equipment, enjoy a good share of the market. Home to the world’s largest oil and natural gas resources, most Middle Eastern nations are making fresh investment to produce EURO VI compliant fuel and this is directly creating demand for fire safety products. Construction of high rise residential and commercial buildings as well as hosting of mega world events such as Expo 2020 and FIFA 22 are also driving growth. Governments are pushing for smart city projects and fire safety remains one of the critical components of this development. Rapid technological development of fire systems has resulted in more retrofitting demand in existing buildings and structures.
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The Kingdom of Saudi Arabia (KSA) is the bigger market but Oman to witness higher growth The demand for fire safety products in the Middle East is spearheaded by Saudi Arabia and the United Arab Emirates (UAE) followed by Oman and Qatar. Frost & Sullivan research shows KSA to be the leader in GCC market, accounting for the majority market share. The fall in oil prices and subsequent hold on infrastructure projects is expected to slow down growth in KSA in the medium term. The UAE will continue to be the commercial capital of the Middle East with majority of the commercial and residential construction underway and attracting investments. A set of fire accidents in UAE high rises in 2016 has forced local authorities to change building fire laws making tenants accountable and mandating using fire resistant construction material in buildings. Oman is expected to see the highest CAGR growth rate of 15.2% from 2017 to 2021 followed by Qatar at 14.5%, which has set ambitious plans to convert its cities into Smart cities.
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