EXCLUSIVE INTERVIEW: CAMERON GILLANDERS of GHD ON BUSINESS IN QATAR - PG. 38
issue 1.3
November 2014
Qatar’s National Museum: The pros and cons of building
THE
COUNTRY’S DESERT ROSE
Technology
BIM software can lower costs and create new opportunities for Qatar
Q&A
Unincorporated Joint Ventures: A solution for Qatar’s high-risk projects?
Plus:
How can Qatar address challenges of meeting its concrete demand?
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The National Museum of Qatar, designed to resemble a rosette formation of crystals, is due for completion in 2016. (Image Flickr Damon McDonald)
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contents
NOVEMBER 2014 www.qatarconstructionnews.com
Cover Story The design of the National Museum of Qatar, currently under construction in Doha, Qatar’s National Museum: is inspired by a desert The pros and cons of building rose. Architectural COUNTRY’S DESERT ROSE illustrations, however, rarely accurately reflect depictions. Qatar surely hopes the structure of the project will be a radiant jewel in the desert peninsula’s crown, but will it live up to these expectations? Lee Winter, a Qatarbased construction professional, explores the pros and cons. EXCLUSIVE INTERVIEW: CAMERON GILLANDERS Of GHD, QATAR, ON BUSINESS IN QATAR - PG. 26
issue 1.3
THE
November 2014
Technology
BIM software can lower costs and create new opportunities for Qatar
Q&A
Unincorporated Joint Ventures: A solution for Qatar’s high-risk projects?
Plus:
How can Qatar address challenges of meeting its concrete demand
Regulars
From the Editor - 6 Construction News - 8 Guest Column - 16 Legal - 43 Qatar Tenders - 44
28.
24. Technology Qatar’s mega projects to stand test of time with Building Information Modelling With projects including the Museum of Islamic Art, the National Museum of Qatar, the Qatar Faculty of Islamic Studies, the Khalifa International Stadium, and the Lusail Multi-purpose Sports Hall, BIM software can lower costs and create new opportunities for Qatar, writes Paul Wallett, area business director of Tekla Middle East.
Q&A Unincorporated Joint Ventures: A solution for Qatar’s high-risk projects? Many large-scale projects in Qatar are supported by unincorporated joint ventures (UJV). In conversation with QCN, Dani Kabbani, managing partner of Eversheds Qatar and Garrett Grennan, tax director at PwC Qatar, talk about benefits and challenges of UJVs in Qatar.
38. Interview GHD believes in making global expertise suit local needs In an exclusive interview with Aparajita Mukherjee, Cameron Gillanders, operating centre manager, Qatar, GHD, talks about how the company has taken its business forward in Qatar, given the market specialties it has, and what prospects it sees for itself in the coming years with the ensuing construction boom. QCN | November 2014
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November 2014 | QCN
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tackling TRAFFIC CONGESTION IN DOHA
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MSHEIREB DOWNTOWN building tOWARDS
World Cup
risk factors
SUSTAINABLE REGENERATION
Can Qatar stand the test ahead of 2022?
Plus:
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Technology
Monitoring the structural health of buildings in Qatar
Gem.indd 2
Does Hamad International Airport already g u l f e a need r t h m oa ving second terminal? Are more women needed in Qatar’s construction sector?
Terminating construction contracts in Qatar Business Optimism Index for Qatar’s construction sector
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9/16/14 12:26 PM
INTERVIEW:
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editor’s letter
According to a recent survey by Qatar’s Ministry of Development Planning and Statistics, the country will experience record growth in demand for building materials in the years leading up to the 2022 World Cup. The findings come as no surprise looking at the pace of construction and infrastructure works in progress. While many of these projects were already a part of the Qatar National Vision 2030, FIFA’s World Cup has brought forward the deadline for some key developments. And in some ways, the tournament has also taken some credit for these developments. Qatar’s winning bid for the 2022 World Cup is great. It brings more development, money and fame to the country. However, projects directly linked to the tournament have ostensibly stolen much of the limelight away from other projects, which, albeit unique, have received less attention. One such iconic project is the National Museum of Qatar. Iconic, indeed, because once complete, the museum is designed to resemble a desert rose – a rosette formation of crystals found in hot arid climates. While details and complexities of the World Cup stadiums have frequented international and local media, concerns around projects such
November 2014 | QCN
as the national museum remain a rarity. In our September issue of QCN, we discussed some risks and complexities in preparation of the stadiums for the 2022 World Cup. This time, we cover the other side of Qatar’s construction scene not related, and if at all, only remotely linked to the tournament. On page 18, Lee Winter, a Dohabased construction professional, unveils some ongoing issues contractors are facing in achieving Jean Nouvel’s ambitious design for the National Museum of Qatar. A project where placement of huge interlocking discs can only be adjusted within a range of a few millimetres, questions arise as to what extent the implementation of design will match the original concept, and if it does, how reliable will it be? Add to this the common challenges of mega projects, such as managing interface risks, an issue Pamela McDonald and Gabriel Olufemi of Pinsent Masons elaborate from a legal standpoint on page 43. Ultimately, a key concern for Qatar is whether, after spending millions, the National Museum of Qatar, like other such projects, will emerge as a long-lasting icon for the country? A question QCN explores in this issue.
Farwa Zahra Editor
www.qatarconstructionnews.com
Construction section
News
Landscape architecture has played insignificant part in developing the industry professional Is landscape architecture entering more into the realm of exterior decoration? Industry professionals from various countries highlighted this question at a recent event. While Qatar’s national vision unequivocally states the importance of preserving and protecting its unique environment, architects and construction professionals called to attention the importance of maintaining Qatar’s natural landscaping through sustainable practices. by Farwa Zahra
“The homogenisation of landscapes has become so popular that modern cities are losing their local identity.” - Hala Shiblaq, landscape architecture, Qatar Project Management.
November 2014 | QCN
construction news
d a relatively e Gulf cities, says
In the last few years, a number of high-rise buildings have transformed Doha’s landscape in many ways. According to Steven Velegrinis, director of urban design at Perkins+Will, the modern development as experienced by Qatar is no longer a Western idea, but a universal one. (Image Reuters/Arabian Eye)
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A key takeaway of the Future Landscape and Public Realm Qatar conference held in October, remained the question of Gulf states losing their uniqueness in the quest of modern urbanisation. Indeed, during the last few years, Qatar and the Gulf have gone through rapid urbanisation, which in many ways transgresses from the region’s natural fibre. Speaking about the unique landscapes of the Gulf, Steven Velegrinis, director of urban design at Perkins+Will said, “Landscape architecture has played a relatively insignificant part in developing the Gulf cities.” But this modern development, he explained, is no longer a Western idea. With modern urbanisation happening across the globe, the concept has become more and more universal over time. When it comes to the outdoor environment in the Gulf, Velegrinis said, the landscape architecture has reduced to exterior decoration with less connection to the region’s ecology. Addressing the same concern, Qatar Project Management’s landscape architect Hala Shiblaq said, “The homogenisation of landscapes has become so popular that modern cities are losing their local identity.” According to Qatar National Vision 2030, “The State of Qatar seeks to preserve and protect its unique environment…The environmental pillar will be increasingly important as Qatar is forced to deal with local environmental issues, such as the impact of diminishing water and hydrocarbon resources, and the effects of pollution and environmental degradation, as well as international environmental issues such as the potential impact of global warming on water levels in Qatar and thereby on coastal urban development.” Focusing on environmental concerns of some current landscaping practices, Shiblaq spoke about the environmental impacts of using artificial grass for landscaping, which highlights Velegrinis’ view that landscape architecture has reduced to exterior decoration. “Due to the intense transformations these cities undergo, developers are using artificial treatments such as artificial grass. However, we must be wary of the rubber infill used in some low-grade artificial grass fields often made out of pulverised tyres with traces of heavy metals such as lead, and could also contain traces of carcinogens,” she said. Considering Qatar’s natural landscape, Shiblaq suggested that using sand infill as a better alternative to rubber infill, as the former also helps reduce heat. Speaking about eco-friendly choices, she said that a number of organic alternatives are now available in Qatar’s market to reduce the carbon footprint in the process of landscaping. While artificial turfs have their merits when used on places such as medians, roundabouts or airport grounds, developers and designers should refrain from using artificial grass in residential and educational facilities, sports fields or playgrounds until the health and environmental impacts are resolved, Shiblaq stressed. QCN | November 2014
Construction
News
Industry Views
QCN approached a number of construction professionals asking about their key concerns in Qatar’s infrastructure market right now. Here’s what they had to say.
key concerns in Qatar’s infrastructure SCENE: Water, energy efficiency and waste management “With major improvements needed in Qatar’s infrastructure, demand for large-scale construction is high, which will have a huge impact on the supply chain. Growing concerns around the availability of key materials continues, with shortages of concrete and steel at the top of the list, and this will only increase further due to the acceleration of projects released to the market as we lead up to the 2022 World Cup. Inevitably, as material demands increase, prices will rise. From a design point of view, the old issues still have not gone away. Water, energy efficiency and waste management need to improve with Qatar consuming too much water and energy per capita as the country tries to cope with its population growth and keep up with demand. All these issues, however, can be addressed in the design phase, particularly through sustainable master-planning. So what is the solution? It is about designing with a hierarchy of engineering and environmental initiatives in mind.
“We should be minimising and recycling construction waste where possible, and recycling operational waste using a districtwide recycling network.” This should start with reducing demand at the source through to an efficient system design to recycling what’s left over, which will help protect our natural resources and the environment for future generations. Practical measures for water include using low flow fixtures along with a combination of drinking water and recycled treated water to serve them – unused water can then be used for irrigation. In terms of energy, it is about efficient treatment of the skin of a building to reduce excessive solar and thermal gain (glass and
“Magnitude and complexity of current and planned infrastructure projects is a historic record for Qatar. Some of the major concerns for any project developers are inflation and meeting deadlines.” Ibrahim Jaidah, CEO, Arab Engineering Bureau, predicts that in less than a decade, Doha will have one of the most advanced infrastructures in the world.
November 2014 | QCN
shading optimisation and a reduction in air leakage), as well as effective airconditioning systems with efficient motors and controls and highly efficient central cooling systems to service a site. We should also be minimising and recycling construction waste where possible, and recycling operational waste using a district-wide recycling network. As with most developing countries throughout the world, infrastructure is a cause for concern; however, it is great to see that Qatar is working and striving towards making the improvements required to thrive.”
Matt Kitson is the regional director of Hilson Moran, Qatar.
“On the infrastructure side, one of the challenges is actually getting different stakeholders to work together.” Dr. Neil Kirkpatrick, sustainability manager, Qatar Local Roads and Drainage Programme, Parsons Brinckerhoff, says that the very challenge of working with many stakeholders also offers an opportunity for them to support one another.
construction news
November’s big number
USD
22.5 billion
The value of contracts awarded in Qatar’s project market reached USD22.5 (QAR82 billion) in the first three quarters of 2014, surpassing USD22.3 billion (QAR81 billion) worth of contracts awarded in the whole of 2013, according to Meed Projects. With more projects lined up for awards ahead of the 2022 World Cup, the amount of awarded deals in Qatar is expected to reach USD30 billion (QAR109 billion) by the end of 2014.
11
Lusail City set for expansion Mourjan Marinas – Lusail City lies at the heart of the Lusail City development. The new berths at Mourjan Marinas will range between eight and 10 metres initially.
Doha’s marina Mourjan Marinas – Lusail City has announced it will expand in response to increasingly high demand for more berths in Qatar. Construction is now underway on 49 new modern floating berths, which will bring the marina’s total offering to 142 berths. QCN approached Wayne Shepherd, general manager of Mourjan Marinas, asking how the expansion will benefit Lusail City development. “The new expansion will provide berthing for smaller boats to meet the current market demands,” he replied, “reflecting Mourjan Marinas’ continued commitment to supporting and developing Qatar as a marine and boating destination. The new additions will enhance Mourjan Marinas – Lusail City marina and promenade as a destination, providing Lusail City, which is currently under construction, with a showcase facility while other components are still under development.”
USD
45
billion A new report, GCC infrastructure Market 2014, forecasts that more than USD45 billion (QAR164 billion) of infrastructure contracts will be awarded in the Gulf by the end of 2014 - double the USD22.6 billion (QAR82 billion) awarded in 2012. As part of its infrastructure development, Qatar has invested USD8.2 billion (QAR30 billion) on a state-of-the-art industrial port, Doha’s New Port Project, which is set to be completed 10 years ahead of schedule in 2020.
Awards
Key recent contracts awarded in Qatar • Cofely Besix Mannai Facility Management (CBMFM) has won its first contract by Qatar Petroleum (QP) to maintain and replace all the heating, ventilating and airconditioning (HVAC) equipment located at Dukhan Fields in Qatar. Under this contract, CBMFM will be responsible for maintaining more than 1200 HVAC equipment in Dukhan Fields, covering an area of around 65 kilometres (km) and containing 700 oil and gas and water injection wells, and over
4000 km of pipelines. The contract with QP is valid for an initial fiveyear period and will require a total of 120 operational personnel. • The Public Works Authority (Ashghal) has awarded a number of construction and consulting contracts (design and construction supervision) for healthcare buildings with a value of QAR1.077 billion. Contracts signed include a construction contract for Hamad Medical City’s simulation centre, and two contracts to build four
healthcare centres in Muaither, Al Wajbah, Al Waab, and Al Jamiaa. The consulting contracts (design and construction supervision) include a contract to design and supervise the construction of an annex of Al Khor Hospital with a capacity of 500 beds, a design contract for an annex for the emergency section at Hamad General Hospital, and a design and construction supervision contract of the National Health Laboratories in Mesaimeer.
QCN | November 2014
construction news
Demand may outstrip the supply of sustainable materials According to a new report, to meet green building regulations in the Gulf Cooperation Council (GCC), demand may outstrip the supply of vital sustainable materials. There are enormous opportunities in the region for suppliers of energy saving and green products, including lighting, kitchen and bathroom fittings and natural stone fittings, states a recent report GCC Focus on Sustainability in Construction by Ventures Middle East. According to the report, there were 1236 LEED-rated projects in the GCC in 2013 and the United Arab Emirates accounts for 67 percent of them. Qatar has 190 projects (16 percent), Saudi Arabia has 158 projects (13 percent), and Bahrain, Kuwait and Oman have 51 LEED-rated projects between them, accounting for around four percent. While the new report establishes that most developers now recognise the commercial benefits of sustainable developments, it also points out that some contractors are “reluctant to procure technologies which are perceived to be more expensive and are unsure of any tangible benefit”.
1236
External factors hindering development in QATAR’s construction business 1%
Availability of raw materials
1%
Cost of raw materials
1%
Others
2%
Cost of rental/leasing
2%
Inflation
2%
Political uncertainty in the region
2%
Availability of skilled labour Cost of fuel
3%
Payments/receivables delay
7%
Government regulations
8%
Competition
15% 56% 0
10
20
No negative factors 30
190 2nd
Qatar’s rank for LEED-rated project market in the Gulf Source: Ventures Middle East, GCC Focus on Sustainability in Construction.
50
60
Need for smarter concrete production across the Gulf
projects in Qatar
Qatar’s share in the Gulf’s LEEDrated project market
40
Source: Dun & Bradstreet’s Business Optimism Index – Qatar, Q3 2014.
LEED-rated projects in the Gulf in 2013
16%
13
Blocks of concrete stacked at a worksite at Doha’s Corniche. (Image Arabian Eye)
Enhanced concrete and construction techniques will help ensure consistent supply and enable developers to effectively manage costs. With infrastructure project awards across the region forecast to exceed QAR313 billion in 2014, according to construction intelligence firm Ventures Onsite, demand for concrete is set to rise significantly in the Gulf Cooperation
Council (GCC), which already accounts for over 40 percent of the Middle East concrete consumption. “Developers in the GCC have implemented the latest and most advanced technologies of ready-mixed concrete in the construction of highrise buildings and iconic structures,” Ihab Bassiouni, United Arab Emirates’ country manager for Grey Matters Consultancy, said, “High performance concrete has been used with emphasis on concrete placeability, strength and durability. More attention shall be paid to the impact of concrete on the environment where new sustainable solutions, in terms of concrete materials and production facilities, shall be adopted in order to cope with the rising trend towards sustainable developments in the region.” QCN | November 2014
Construction
NewsEvents 10 - 11 November
7th Annual Bridges and Highways Middle East Summit Hilton Doha
10 - 11 November
6th Annual Middle East District Cooling Summit The Ritz Carlton Doha
17 - 20 November
The Big 5 2014
Dubai World Trade Centre, United Arab Emirates.
17 -1 8 November
18 - 19 November
3rd Annual Middle East Smart Cities Summit
10 - 11 December
AcousticsTech Qatar
Intercontinental Doha - The City
3 - 4 December
Future Drainage Networks Qatar Intercontinental Doha - The City
10 - 11 December
InsulationTech Qatar Intercontinental Doha - The City
7 - 8 January, 2015
5TH INTERNATIONAL CONFERENCE ON ADVANCED MATERIALS RESEARCH Concorde Hotel Doha
Solar Qatar Summit
AcousticsTech Qatar will provide networking opportunities for professionals to enhance building acoustics. (Image Corbis)
To be held at Intercontinental Doha The City, the event is designed to tackle the challenges of enhancing building acoustics and construction noise control. AcousticsTech Qatar will provide the opportunity to maximise networking and knowledge-sharing between professionals and solution providers operating in this field. Recognising the importance of noise control as central to delivering superior indoor environment quality, AcousticsTech Qatar is colocated with InsulationTech Qatar.
2 - 4 February Qatar’s hot climate is favourable to utilise solar energy and cut down the use of hydrocarbons. (Image Fotoarabia)
Attracting over 300 senior level engineers, architects, project managers, developers, utilities operators, sustainability consultants and municipal authorities, this event will provide Qatar’s leading platform for project updates, knowledge-sharing and high level networking for the solar industry. To be held at the Ritz Carlton Doha, the event will also offer the unique opportunity for Qatar to discover the latest solar energy technologies from leading local and international suppliers.
November 2014 | QCN
Interiors Qatar Exhibition Interiors Qatar Exhibition is a threeday interiors event to be held at the Qatar National Convention Centre. The event brings together international trade professionals such as designers, architects, contractors, engineers, consultants, project managers, manufacturers, high net worth individuals, facility managers and fit-out companies among others. For exhibitors in particular, the event can help generate new sales leads and provide opportunity for market research and launch new products.
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15
17 - 20 NOVEMBER 2014
Dubai World Trade Centre 11:00 - 19:00 Daily
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to save the AED 100 entry fee www.thebig5.ae/qcn1
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section
The pros and cons of building Qatar’s National Museum Will the National Museum of Qatar depict its designer’s vision of a desert rose? by Lee Winter
November 2014 | QCN
The National Museum of Qatar, designed to resemble a rosette formation of crystals, is expected to be an iconic addition to Doha’s current landscape. (Image Ateliers Jean Nouvel)
QCN | November 2014
20
cover story
The design of the National Museum of Qatar, currently under construction in Doha, is inspired by a desert rose - a naturally occurring rosette formation of crystals found only in arid, sandy conditions. Once complete, Jean Nouvel, designer of the project, believes it “will become Qatar’s voice of culture, delivering a message about the metamorphosis of modernity and the beauty that happens when the desert meets the sea”. Architectural illustrations, however, rarely accurately reflect depictions. Qatar will hope the structure of the National Museum of Qatar will be a radiant jewel in the desert peninsula’s crown, but will it live up to these expectations? Lee Winter, a Qatar-based construction professional, explores the pros and cons.
W
ith so much attention trained upon the eight stadiums currently under construction for the often maligned World Cup in 2022, not to mention the lessthan-desirable attention brought about by the recent labour law controversies, it is a considerable injustice that another of Qatar’s iconic buildings-in-waiting is not being merited with the top-billing that it truly deserves. When compared to the largely generic stadiums (allowing for as much originality as one could expect from the limited world of football arenas and with a few dashes of moderate variations aside), Doha’s unparalleled new museum, the National Museum of Qatar, is almost otherworldly. Due for completion in 2016, it is gradually, yet resolutely blossoming from the landscape situated on the south end of Doha’s Corniche and, once complete, the low-lying construction will provide a beguiling, if somewhat unexpected, revival to bleary-eyed travellers arriving in the country’s capital as they amble their way from Hamad International Airport and are met by the sprawling and captivating monument. Inspired by the desert rose, a naturally occurring rosette formation of crystals found only in arid, sandy conditions, the superstructure is deliberately hunkereddown into its surroundings, appearing to grow from the ground and be at one with it; much like the phenomenon that it mimics. According to the architect, Pritzker-Prize winner, Jean Nouvel, it is a representation of a passage of time, referencing Qatar’s steeped ancient history. A metaphor, then, in more ways than one; with the grandiose and enterprising design, mirroring the audacity and progression that Qatar is currently showcasing on several fronts, and a concept that echoes a process of crystallisation, the design seems to perfectly emulate the November 2014 | QCN
coming-together of history and tradition with modernity, artistry and ultimately, beauty. It is, to put it mildly, an elaborate and flamboyant concept. The exterior, exhibiting a sand-coloured finish and comprising several interlocking glass-reinforced concrete (GRC) panels, suggests the bladelike petals of the desert rose. Similarly, the interior is comprised of interpenetrating discs – some positioned almost vertically, others lying more or less horizontally – are of varying curvature and diameter, and define the pavilions’ floors, walls and roofs. These interlocking pavilions, which encircle a large courtyard area, provide an organisation of the building that suggests the idea of a caravanserai – the traditional resting places that supported the flow of commerce and travellers across desert trade routes – with Nouvel himself echoing these sentiments, describing it as “a modern-day caravanserai” where visitors can “leave the desert behind,
“Just as Al Jazeera emits a voice which has become that of the Gulf, so the National Museum of Qatar will become Qatar’s voice of culture, delivering a message about the metamorphosis of modernity and the beauty that happens when the desert meets the sea.” – Jean Nouvel, designer.
According to Jean Noveul, designer of the National Museum of Qatar, the project is a metamorphosis of modernity and the beauty that happens when the desert meets the sea. (Image Astad Project Management)
cover story
220
Capacity of the auditorium at the National Museum of Qatar.
One of the single most difficult problems to conquer on such a bewildering project is the inevitable deviation of certain elements from their design position.
returning with treasured images that remain engraved on your memory”. A further metaphor from the architect, as the notion of a society in movement is beautifully encapsulated. Finished product Conceptualisation, it would seem, with sentiment and substance at its core, does raise a few questions: the most obvious being, quite simply, how will it look when it is finished? Architectural illustrations, after all, rarely depict accurate reflections of the real world. Qataris will hope (and probably expect) it will be a radiant jewel in the desert peninsula’s crown, but will it live up to these imposing expectations? Such a large-scale and monotone structure is sure to divide opinion. Will the extravagant ideas that tumbled from Nouvel’s award-winning mind translate into reality in the exact ways he visualised? Which leads us, of course, to the real question; the question that pervades the mind of each person involved with the project, whether they care to admit it or not; is it even achievable? And therein lies the rub… What goes on behind the scenes of a construction site is very rarely a smooth transition from design to build. In the Middle East in particular, it is a rare occasion where it could be said that everything’s coming up (desert) roses. And while this axiom applies to even the simplest of structures, it translates to a rather more extravagant meaning for those tasked with delivering the most complex project in the whole of the Gulf. The aforementioned discs of varying
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angular trajectories, diameter, curvature and instances of interpenetration throw up innumerable difficulties from both an engineering and installation perspective. The exterior discs are made up of primaryand secondary-steel truss structures, assembled in a hub-and-spoke arrangement. Each of these spokes have elaborate, fourpoint adjustable brackets and as each and every one of the surveyors and engineers will testify, it takes more than a smile to get them positioned correctly. The GRC cladding then sits atop these brackets, enveloping every millimetre of the discs’ surface and eventually wrapping around them at the perimeter. If this intricate positioning process – requiring groups of workers collaborating on a minute-by-minute basis – were to be carried out in controlled laboratory settings, then the surveyors and their installation teams would be faced with sophisticated and taxing calculations, as well as delicate repositioning movements, all performed ad hoc, to ensure each panel has the correct position relative to X, Y and Z coordinates. That is to say, the four corners of each quadrilateral panel must be positioned correctly – to within two millimetres (mm) of accuracy – in terms of left/right (X), in/out (Y) and height (Z) across numerous different planes, angles and degrees of curvature. To label that ‘tricky’ would be to display a flair for the understatement that would rival Nouvel’s design ingenuity. Take that task outside of ‘laboratory settings’ however, and relocate it to an ever-changing landscape where exposure to extreme sunlight is unavoidable, temperatures upwards of 45 degrees celsius and humidity levels of 90 to 100 percent are commonplace, condition changes of almost 30 degrees celsius from sunrise to sunset occur almost year-round (causing the already complicated steel-truss configuration to expand and contract by as much as 10 to 15 mm throughout the day) and added to the almost laughable but ostensibly pervasive misconception that coherent English is spoken by every labourer, installer and engineer on the site, and the picture becomes far clearer and uniquely formidable. Further obstacles Such are the unenviable issues that Principal Contractor Hyundai Engineering and Construction is facing – admirably, it must QCN | November 2014
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cover story
Each of the spokes in the exterior disks of the National Museum of Qatar have elaborate, four-point adjustable brackets. (Image Astad Project Management)
The location of each disk on site has a theoretical position that is predetermined at the design phase. Achieving that placement on site, in the exact correct position according to the theoretical values, is practically impossible.
November 2014 | QCN
be said – on a daily basis. To delve a little deeper into the challenges, one of the more onerous obstacles lies at the intersection points of the different discs – for the discs that ‘stand-alone’ are few and far-between. As one can imagine, where one disc, which, for example, has an angular trajectory of 45 degrees, meets another that sits off the horizontal plane by 30 degrees, complex predicaments arise when one, or both, of these discs (while being within the allowable tolerances) are not perfectly positioned. This obviously has a direct impact upon the ability of the surveyors and installation teams to install the relevant GRC panels in the correct theoretical positions. In the hands of lesser-men, panic would ensue. To allay this headache, however, Hyundai has exerted considerable foresight by introducing minor, yet deliberate delays to the installation of the panels that meet at intersecting discs. They have chosen to execute as-built surveys that will record the site conditions whenever necessary and fabricate bespoke panels that should slot into place like the final pieces of a colossal jigsaw puzzle. This solution not only displays admirable time management manipulation, as the undesirable scenario of cutting panels in situ is avoided, but is also fiscally sound as labour teams are not forced to down-tools while a solution is deliberated by higher management. Very astute. Designing the impossible As is evident, Hyundai is not naïve to the complexity of the quandaries which they face and have taken several precautionary measures to ensure the project is delivered on time and to specification. One of these measures takes the shape of German design consultants Werner Sobek, who has been instrumental in relieving some of the issues being encountered. One of the single most difficult problems to conquer on such a bewildering project is the inevitable deviation of certain elements
from their design position. The location of each disc on site has a theoretical position that is predetermined at the design phase. Achieving that placement on site, in the exact correct position according to the theoretical values, is practically impossible; due to various accumulative tolerances related to fabrication, surveying and installation that simply cannot be avoided. With that being said, the design of the GRC panels is directly related to the design of the disc and therefore, if the discs are wrong (even to within acceptable degrees of tolerance) how will the panels fit? As the design consultants, Werner Sobek has a thorough understanding of theoretical versus actual and has devised a decidedly adept system to mitigate certain errors. Deviation of the discs, in terms of the angular trajectory, sway, height positions being too low or too high, or even bowing and bending at the extremities, are accounted for in a bespoke set of mathematical formulas (laid out on a staggering array of spreadsheets) that allow each surveyor and their installation teams to make the numerous adjustments necessary on site, based on the actuality of each disc’s position. Of course, it is one thing to have a design consultant prepare an all-conquering spreadsheet that allows inaccurate, or even incorrect, disc position to be addressed, but if the professionals in the field are unable to comprehend its functionality, apply the mathematics and translate the theory to reality, then this exercise fails before it has even begun. And this is where surveying experts come to the fore. Specialising in cladding and façade works, Swansea Surveys is actively positioning themselves as the direct link between the design office, Hyundai management and the battleground that is the site itself, gaining an exhaustive understanding of the predicaments that each are concerned with, and proposing real-time solutions that satisfy all parties and address
cover story
all requirements that may arise. The exterior disks of the National Museum of Qatar are made up of primary and secondary steel truss structures, assembled in a hub-and-spoke arrangement. (Image Flickr Damon McDonald)
There appears to be a dearth of expertise and talent in the desert metropolis and it is for this reason that a significant question mark remains over the project.
Eradicating difficulties A more recent step taken by Hyundai to ensure steady progression was the acquisition of improved installation expertise. To date, there have been countless vexations that the installation teams formerly present on site were simply unable to overcome, with none (as of yet) having a sufficient understanding of the necessary processes or possessing the capabilities to efficiently execute the correct installation practices. To eradicate these difficulties, the South Korean titans have drafted the expertise of Fibro Building, Trading and Contracting. Specialising in GRC fabrication and installation, Fibro have been given the uninviting task of performing the convoluted positioning of the panels and are fully aware that a certain Nouvel will not hold his tongue should any discrepancies between his design and the actuality be
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visible to his keen and trained eye. As far as the interior is concerned, unique features, including ‘sonorous cocoons’ and entire walls that become cinematic displays, are the trappings currently causing companies such as Eagon Windows and Doors substantial anguish, with their primary concern being the installation of the glazed façades which fill the voids between discs and perimeter mullions (recessed into the ceiling, floor and walls), giving the glazing a frameless appearance when viewed from an external perspective. Perhaps the most overriding concern of all is the scarcity of such adroitness, or even competency, not only on this project, but across the country as a whole. Save for the aforementioned companies, there appears, rather unfortunately, to be an alarming dearth of expertise and talent in the desert metropolis and it is for this reason, more than any other, that a significant question mark remains over the project; an ‘if’ rather than ‘when’ regarding the realisation of such a striking and evocative design. The prospect of completing a project of such spectacular complexity, therefore, seems, at best, daunting and at worst, perhaps insurmountable. The merits of such conjecture will, of course, be determined in the not-too-distant future. As it stands, the construction site appears nothing more than a disorganised mesh of twisted metal, the soaring and plummeting steel-truss structure resembling a rollercoaster, of sorts. Upon his first visit to this haphazard site, Nouvel’s eyes lit up as the “first fragrance of the reality” became palpable. His belief is that “the National Museum of Qatar will become Qatar’s voice of culture, delivering a message about the metamorphosis of modernity and the beauty that happens when the desert meets the sea”. His design is one that is truly fascinating and one cannot help but hope it materialises in all of the ways that he has envisaged.
Lee Winter is a civil engineer working as the general manager at Swansea Surveys, Qatar.
QCN | November 2014
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technology
Qatar’s mega projects to stand the test of time with Building Information ModeLling software Used in projects including the Museum of Islamic Art, the National Museum of Qatar, the Qatar Faculty of Islamic Studies, the Khalifa International Stadium, and the Lusail Multipurpose Sports Hall, Building Information Modelling (BIM) software can lower costs, create new opportunities, and leverage Qatar’s broadband for architectural innovation, writes Paul Wallett of Tekla Middle East.
We are increasingly seeing Qatar’s architects, constructors, engineers and developers ditch the blueprints and Computer Aided Design in favour of BIM.
November 2014 | QCN
On Doha’s Corniche, it is easy to envision the upcoming hub of cultural anchors in dialogue: IM Pei’s Museum of Islamic Art, inspired by traditional Islamic motifs, and Jean Nouvel’s National Museum of Qatar’s desert rose crystal design presenting a step into the future. National museums not only need to present a country’s history and values inside the galleries, but also need to be instantly recognisable by people around the world. Behind the National Museum of Qatar’s desert rose design is a series of complex interlocking discs. No two discs are the same, nor do they intersect in exactly the same way. And with the gallery spaces determined by the gaps in the discs, any slight change in the design would have significantly altered the structure of the discs themselves. As a result, the owners, architects, engineers, contractors, and steel fabricators needed systems and processes to work with and model the 3D geometric
ideas in a 3D space. The resulting engineering solutions then needed to be communicated with not only the Qatar Museums Authority, but also the project teams in London, Paris, and Geneva. Only a few years ago, this level of detail would have been nearly impossible to accomplish. But thanks to rapid advancements in BIM software, the structural team created wire-frame geometry for designing 250,000 steel elements, the contractor accurately priced the design, and construction is being coordinated accordingly.
New opportunities The National Museum of Qatar is just one of the many mega projects rising in Qatar – including ambitious cultural, sporting, and infrastructure facilities – that both deftly preserve the country’s rich heritage and take bold architectural steps into the future. With a report by Deloitte pegging Qatar’s total infrastructure projects valued
technology
at USD200 billion (QAR728 billion) by 2022, the question on everyone’s mind is: How can Qatar possibly complete all of these complex projects on time? We are increasingly seeing Qatar’s architects, constructors, engineers, and developers ditch the blueprints and Computer Aided Design (CAD) in favour of BIM software for the entire lifecycle of a project, including the design, build, and operational phases. BIM is unlocking new opportunities for producing feasibility studies, creating incredibly detailed and real-life 3D models, and enhancing communication between the construction site and offices. Architects and engineers can hence enhance their integration by using BIM, such as by creating lists of materials and labour, and automating tasks that were once unpredictable, like the effects of sunlight or weather on building interiors. BIM also enables visual coordination that can overcome language barriers, something very crucial in a country as diverse as Qatar. BIM enables organisations to understand budget costs, and to potentially quickly enhance return on investment, while also requiring a fraction of the budget of hiring and retaining talent.
Organisations that do not adopt BIM are at risk of falling behind competition, using BIM to lower down costs. If you take reinforced concrete as an example, it can be difficult to integrate across mechanical, electrical and plumbing services, fire protection, and reinforcing. But with BIM, site supervisors can calculate the right quantities of concrete to order, which is not necessary for the engineers to learn.
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The Museum of Islamic Art is one of Qatar’s projects facilitated by the Building Information Modelling (BIM) software.
Leveraging Qatar’s broadband for architectural innovation With Qatar making strong progress in delivering high-quality and affordable broadband access in line with the National Broadband Plan, the country is ideally placed to leverage BIM to develop the next generation of architectural innovation. In the near future, Qatar’s construction specialists will be able to use mobile devices and augmented reality on site to relay real-time updates on projects back to offices around the world, enabling seamless communication and deployment. Thanks to BIM, Qatar’s mega projects can be designed and planned with fewer errors and last-minute changes, while being completed on time and on budget – enabling Qatar’s projects to stand the test of time, to 2022 and beyond.
Paul Wallett is area business director of Tekla Middle East, provider of advanced construction software.
QCN | November 2014
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“Although we have seen an increase in unincorporated joint venture formation, some local tenders still require that an incorporated joint venture bid for the work at the onset.� - Dani Kabbani, managing partner, Eversheds Qatar.
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Unincorporated Joint Ventures: A solution for Qatar’s high-risk projects?
Contracting is notoriously difficult for major capital projects, and the current flavour from a business perspective is to use unincorporated joint ventures (UJV), which might sound like a risky proposition. Clearing common misconceptions in conversation with QCN, Dani Kabbani, managing partner of Eversheds Qatar and Garrett Grennan, tax director at PwC Qatar, talk about benefits and challenges of UJVs in Qatar.
Are UJVs recognised in Qatar? Dani Kabbani: The Commercial Companies Law No.5 of 2002 recognises the joint venture form that is not embodied within a legal entity (Articles 52 to 60). Such joint ventures are not subject to registration requirements. Although third parties may only have recourse against the partner or partners with whom they have conducted business, should the partners conduct their business in a way that resembles doing business through a company, then the joint venture partners shall be jointly liable towards such third parties.
With several large-scale projects in progress, incorporated and unincorporated joint ventures are commonly practiced in Qatar’s construction scene. (Image Corbis)
Why are companies increasingly forming JVs and how many forms are there? Dani Kabbani: The increasing number of major projects in Qatar and the region coupled with
the limited number of qualified contracting companies is putting pressure on the contractors when it comes to the provision of bonding (whether tender or performance bond). Contractors are increasingly approaching large projects through a venture with one or more contracting companies. Through this approach, participants are able to split strains on finance and resources. Risks can also be shared and the parties can benefit from the synergy of their respective skill sets. These cooperative relationships are known as joint ventures. Joint ventures may be formally incorporated through a joint venture company (IJV), forming a separate and independent legal entity from the co-venturers. Some are taking a different approach by avoiding the incorporation of a separate entity and operate instead as an unincorporated joint venture (UJV). QCN | November 2014
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What are the advantages of opting for a UJV?
“Proper planning of UJV is essential to avoid tax results which could be substantially different from what was anticipated.� Garrett Grennan, tax director, PwC Qatar.
November 2014 | QCN
Dani Kabbani: When the incorporation of a JV through a company is not mandatory (either as a legal requirement or as a condition of a tender), opting for a UJV can be attractive, as parties do not need to undertake what can be seen as a lengthy and administrative incorporation process. Despite still having to negotiate the terms of the UJV, the time and cost savings mean that the parties will concentrate on finalising their bid proposal while minimising financial exposure. UJV partners will, as mentioned, still need to formalise their relationship through legally binding agreements, but these will be based on general contract law rather than statutory companies law. Such agreements need to be carefully drafted to reflect the rights and obligations of each participant. UJVs also offer an escape from the highly regulated management structure required under IJVs, where a board of directors or managers will be in charge of the management. A UJV is not subject to such statutory requirements and restrictions, and as a consequence benefits from greater
flexibility, given that the management arrangements can be structured in the way the parties see fit. Once the project is completed, the JV agreement can be terminated without going through the lengthy dissolution process characteristic of registered companies.
How are UJVs treated in practice in Qatar? Dani Kabbani: Although we have seen an increase in UJV formation, some local tenders still require that an IJV bid for the work at the onset. Other tenders will allow joint submission of a bid from separate companies, with a condition for the joint bidders to incorporate a company should they be awarded the tender. Certain tenders will require the participation of a Qatari entity in the bid, mostly through the incorporation of a company with one or more non-Qatari bidder; another might have the requirement to include a Qatari company in the process but without necessarily requiring the incorporation of JV. Other practical issues arising from the use of UJVs relate to the opening of bank
Q&A
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accounts, as it is difficult to open a local Qatari bank account in the name of the two participants in a UJV. Parties will often resolve this issue by having the bank account in the name of one of them while having more than one authorised signatory on the account with each signatory representing a participant in the UJV. Similar complications arise when financing is required. Since the UJV will have no assets in its name, the participants will each need to provide a form of security acceptable to the lenders, and the participants will often be required to be jointly and severally liable towards the lenders.
Can you comment on prime reasons attracting companies to UJVs?
According to Garrett Grennan, tax director, PwC Qatar, most large capital projects in Qatar have an element of UJVs, namely capital projects with Qatar Rail, Ashghal, Qatar Petroleum and Kahramaa, among others. (Image Corbis)
Garrett Grennan: A UJV usually involves a number of parties pooling resources to jointly control and manage a specific project. There are a number of reasons contractors and principals have a preference to engage in a project under a UJV. These include: • Capital projects in Qatar involve undertakings of considerable size. Individual enterprises can pool their resources and jointly undertake projects that would be beyond the financial and managerial resources of the participants individually. Principals benefit from economies of scale. • UJVs involve projects that face a high degree of risk. Conducting such activities through a UJV allows the spreading of risk between parties. • A UJV allows parties to combine their resources, skills and expertise under a single but combined management team. The business benefits are clear, however, the accounting, legal and tax consequences of forming a UJV can be complicated and require pre-planning prior to entering into such contracts to avoid uncertain business outcomes.
What about the liability of the participants operating through a UJV? Dani Kabbani: The starting position in an IJV, as a separate legal entity, is that it is the IJV and not the partners in the JV that bears all the risks. Co-venturers in an IJV will be liable in proportion to their interest in the IJV. However, in certain circumstances, the parties in an IJV will be required to provide parent company guarantees. With regard to
Eversheds’ Dani Kabbani tells QCN that despite the unincorporated nature of a UJV, partners still need to formalise their relationship through legally binding agreements.
UJVs, the tender will almost always require the co-venturers to agree that they would be jointly and severally liable. The parties to a UJV will often agree on a risk and profit allocation among themselves that differs from one project to another. For example, Party A would be entitled to 25 percent of the profits (with liability limited to the same amount), whereas Party B would be entitled to 75 percent. Joint and several liability towards the issuer of the tender means that party A can be made liable for 100 percent despite having agreed with Party A to taking on 25 percent of the risks only. The parties need to carefully draft their internal arrangements to protect themselves in the situation where a party will need to have recourse against its UJV partner for paying more than what was agreed among them.
Can you expand on the possible accounting complexities associated with UJV? Garrett Grennan: The accounting complexities can be best illustrated through a typical example of a UJV. A Qatar public body engages a UJV for an Engineering, Procurement and Construction (EPC) project. The parties to the UJV consist of a 100 percent Qatar-owned company QCN | November 2014
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Q&A
and a temporary Qatar branch of a foreign company linked to the EPC contract. The parties have a 50 percent stake each in the UJV and for an accounting period, contract revenue of QAR15 million was recognised and construction costs of QAR10 million were incurred. A UJV is not recognised as a separate entity for Qatar tax purposes and historically each party would recognise its share of the UJV’s assets, liabilities, revenue and expenses (proportionate based accounting) for tax and accounting purposes. Based on the example given above, each party would recognise and disclose the following for accounting and tax purposes: A contract revenue of QAR7.5 million, minus the contract costs of QAR5 million, generates a contract profit of QAR2.5 million. This accounting treatment facilitates a detailed analysis of contract revenue and costs to be reported to the Qatar tax authority. However, on January 1, 2013, the international accounting standard for the treatment of joint ventures was changed under IFRS 11. There were concerns that proportionate based accounting would no longer be permitted for UJVs, and parties would be obliged to account for their stake under equity-based accounting, by disclosing the net position as a single line item in the comprehensive statement of income (that is contract profit of QAR2.5 million). Reconciling this accounting treatment into a tax return would cause difficulty as the Qatar tax authority would generally require further information. It has been our experience that the historical ‘one size fits all’ proportionate based accounting for UJVs under IFRS no longer applies. In determining whether a UJV under IFRS 11 is a joint operation (and therefore proportionate based accounting) or a joint venture (and therefore equity based accounting), there are a number of variables to consider. The lack of legal separation of the parties from the assets and liabilities of the UJV remains an indicator that proportionate based accounting may remain appropriate; however, a detailed assessment of all of the contractual terms (legal and commercial) as well as understanding the purpose of the arrangement is now required to be concluded. Should these contractual terms confer rights to only the net assets of the arrangement to the parties, then equity based accounting may be appropriate. November 2014 | QCN
Garrett Grennan, tax director, PwC Qatar, says, conducting activities on high-risk projects through an unincorporated joint venture allows spreading the risk between parties.
Unanimous consent by both parties to make decisions over the operations of the UJV is required before considering IFRS 11. If one party can control the UJV, then that party should consolidate the UJV in line with IFRS 10 while the other party should use equity accounting for its associate investment.
Having discussed the accounting complexities surrounding UJV, can you comment on the tax issues faced by a UJV? Garrett Grennan: The tax issues faced by a UJV are driven by two factors: • The Qatar tax authority does not recognise a UJV as a separate entity, consequently it cannot register with the tax authority, file an annual tax declaration, pay annual corporate income tax or apply withholding tax on payments to subcontractors. • The parties to a UJV may have separate corporate identities which have separate tax issues. Consider the example given previously, the 100 percent Qatarowned company is tax exempt while the temporary Qatar branch is liable to corporate income tax at 10 percent on its profits and is exposed to contract tax retention. In our experience, proper planning of a UJV is essential to avoid tax results which could be substantially different from what was anticipated. This requires a detailed understanding of the UJV, identification of the tax issues and discussions between all stakeholders. From a tax governance perspective, a starting point would be to: • Identify a principal partner who will take responsibility for the UJV’s application of withholding tax and contract tax retention; and • Discuss with the UJV’s principal to understand how contract tax retention and withholding tax may be applied to advance and milestone payments.
“With regard to UJVs, the tender will almost always require the co-venturers to agree that they would be jointly and severally liable.” - Dani Kabbani, managing partner, Eversheds Qatar.
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UAE Construction Sector’s Pace Set to Rapidly Accelerate with USD 46 Billion in Projects for 2014 Renewed Industry Confidence Sees Largest Ever Editions of The Big 5, Middle East Concrete and PMV Live This Year
T
he UAE construction sector’s pace is set to rapidly accelerate in 2014, with the government announcing a number of major development projects and stepping up spending on social infrastructure development. An April 2014 report by construction intelligence firm Ventures Onsite remarks that the new projects, combined with many previously stalled projects now forging ahead, will continue to bolster the 2013 upswing into 2014. The same report remarks that the UAE’s GDP for 2014 is set to grow at 4% to reach USD 404 billion, up from 390 billion in 2014, fuelled by the construction sector upturn and support from the oil & gas sector. The report sets the value of the country’s building construction sector at almost 60% of the total projects in the construction industry, followed by infrastructure, oil & gas and power & water, with total construction projects awarded in the UAE totalling USD 38 billion in 2013. 2014 is expected to reach USD 46 billion in awarded projects in the country. The region’s leading international building and construction show, The Big 5, will demonstrate this renewed industry confidence with its largest edition yet.
November 2014 | QCN
The Big 5 2013 attracted more visitors than ever and with 98% planning to return this year plus a host of new exhibitors from across the world, Andy White, Group Event Director of The Big 5 believes this year’s event will be the largest and best attended in its illustrious 35 year history. The Big 5 has cemented its international footprint, as the show welcomed 2,700 international exhibitors from nearly 60 countries, and attracted more than 74,000 international and local participants from 124 countries last year. More than a third of the previous edition’s participants hailed from countries outside of the GCC, with some of the highest numbers coming from Europe (Italy) and Asia (South Korea). The 35th edition of the show has already seen an increase in international exhibitors, driven by renewed confidence in the region’s construction sector. Running alongside The Big 5, two co-located events, PMV Live and Middle East Concrete, offer a 360 degree platform to the building and construction industry, with the three shows providing the largest international building construction, concrete and
heavy machinery gathering place in the region. Last year the co-located shows attracted a record breaking 32% increase in attendance over 2012, with another outstanding year expected for 2014 as companies in the PMV and concrete sectors take advantage of the region’s burgeoning infrastructure projects. The Big 5 returns in 2014 with eight dedicated product sectors: steel; building interiors; coating, adhesives & sealants; general construction; kitchens & bathrooms; water technology; windows, doors and cladding; and heating, ventilation and air conditioning systems (HVAC). Following last year’s record attendance across more than 130 educational seminars, 30 live product demonstrations, and five workshops, organisers are preparing an even larger and more interactive suite of educational activities at The Big 5, with more than 40 certified workshops plus a two-day conference on Sustainable Design and Construction taking place in 2014. The 35th edition of The Big 5 runs from 17 - 20 November, 2014 at the Dubai World Trade Centre.
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Qatar Financial Centre: Turning Qatar into the Region’s Business Hub
Established in 2005, the Qatar Financial Centre (QFC) helps build a first-class business environment in Qatar, which provides a platform for domestic, regional and international growth based on English Common Law, world-class principles-based regulations, and a straightforward and competitive tax regime.
The QFC continues to evolve to help the State of Qatar meet its development objectives by continuously reviewing its offering to provide a competitive, firstclass business environment supporting local firms’ international expansion while remaining conducive to international companies looking for a platform to capitalise on opportunities in Qatar and the region. Additionally, as an onshore jurisdiction, in contrast to other regional financial centres, the QFC facilitates the transaction of business inside and outside Qatar, in local or foreign currency. Further, QFC-licenced firms are allowed to operate from anywhere in Qatar. The QFC Authority has recently undertaken several enhancements to its licensing and registration processes for Professional and Business Services firms, including a ‘one-stop shop’ for licensing, immigration and related services. Crucially, these enhancements shorten turnaround times for licencing and registration applications, which can now be completed in as little as one month. This, coupled with the fact that the QFC’s licensing fees are competitive by world standards, means that setting up at QFC can be completed rapidly. In addition, investment in IT has broadened the suite of online services available and improved efficiency across front and back office functions. For example, the QFC has introduced ‘e-immigration’, which facilitates private access for immigration-related medical checks for QFC-licenced firms’ November 2014 | QCN
employees and their families, and online tax submission. In order to ensure a razorsharp client focus, it has also introduced a dedicated client relations team. Taken together, all these initiatives contribute to making the QFC a more efficient and attractive business environment. These enhancements have occurred in parallel to the formation in the QFC of structures such as Special Purpose Companies, Regional HQs, Holding Companies, Single Family Offices and others. In recent years, the QFC has broadened the range of firms it welcomes, and now caters to a wide variety of corporate structures and professional and business services firms. In developing its tax regime, the QFC has an eye on attracting foreign companies by adopting a low tax rate and a transparent, efficient administrative process – a unique approach for financial centres in the region. Drawing on recognised features of other, established tax regimes, it is clear in its application and effect, and straightforward in its approach. At a time when many international jurisdictions are looking to increase business taxation, the QFC’s tax regime is among the most favourable in the world – Qatar’s tax regime was ranked second for the fourth year in a row in a report published by the World Bank, the International Finance Corporation and PriceWaterhouseCooper – with a flat tax rate of just 10 percent on locally sourced profits and no personal,
social, withholding or capital taxes. It also accommodates the particular requirements of Islamic finance, which is expanding strongly. For the first time in the MENA region, the QFC published the ‘QFC Tax Manual,’ an in-house tax guidance manual intended to help payers of corporate tax and their agents interpret the rules and regulations, get greater clarity and assistance in preparing tax computations and returns. Further, the QFC encourages foreign companies by permitting 100 percent foreign ownership and allowing all profits to be repatriated outside of Qatar as the company chooses. The QFC’s powerful proposition combines a highly attractive package of balanced regulation, first-class services and access to one of the world’s least tapped and fastest-growing investment pools. It is a proposition which an increasing number of Qatari and international firms are benefitting from: nearly 30 percent of QFC-licenced companies are homegrown Qatari businesses. Since its inception, the QFC’s regulations have continually evolved to keep pace with international best practice. Today, and in line with the Qatar National Vision 2030 goals to support the development of local businesses, the QFC continues to facilitate an optimum business environment that encourages the growing number of professional and business services firms considering Qatar as their corporate base, to make the move to set up here.
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Making global expertise suit local needs Cameron Gillanders, GHD’s Qatar manager, tells QCN,“Traditionally, we’ve been much stronger, have much greater workload in property and buildings, which reflects the local needs. Certainly, we see that continuing to be the case as the Qatar economy continues to have a need for hotels, stadium projects, railway stations, and other kinds of public-built infrastructure.”
“We watch the authorities in Qatar become more conscious of the impact of development on the environment.”
November 2014 | QCN
As an employee-owned company, with its fingers in many diverse sectors spanning water, environment, transportation, energy and resources, property and building, GHD has been in Qatar since 2001. In an exclusive interview with Aparajita Mukherjee, Cameron Gillanders, GHD’s Qatar manager, talks about the company’s business in Qatar, given the market specialties it has, and what prospects he sees for the company in the coming years with the ensuing construction boom.
A
global engineering, architecture, environmental and construction services company, GHD has been in business for more than 85 years and has core competence in diverse sectors. Talking about the corporate specialties of the company, Cameron Gillanders, manager, Qatar, GHD, says, “We are an employee-owned company whereby around 25 percent of our employees have a shareholding in the company. That makes us different from almost everybody in our line of business. We do value the people that work with us and we work very hard to
retain the technical competence that these people bring, because that’s the only thing we sell.” At the global level, GHD competes with global consultants while at the same time, in a local context, the company believes in showing respect to the local communities within which it counts itself a member. Explaining the philosophy behind this, Gillanders says, “We are an organisation that tries to serve the communities within which we live and operate. That’s a culture that goes back many years, where we strategically placed our businesses close to where
section
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Al Bidda Tower on Doha Corniche is a prestige project for GHD, for which the company provided complete design and construction supervision services.
QCN | November 2014
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interview the people were living, close to the governments and clients we are serving, in order to be a part of the community.” This, says Gillanders, gives the company the accessibility it needs with its clients and vice versa.
“GHD has realised that the best business for both parties is done between How does this accessibility help the organisations that company? know each other According to Gillanders, it gives GHD a deeply, understand strategic advantage. Explaining further, he says, “When we have opportunities beyond the business drivers, where we are currently positioned, these and have respect for are usually opportunities with clients that each other.” we know and trust and who trust us. We
build on our existing client relationships when we go into new geographies or establish new services.” Gillanders believes that this model serves GHD’s clients better, in tandem with the fact that it also is a risk management strategy to protect the company against the unknowns of embarking on new geographies or new services for which there is not an immediate and known business outcome. Commenting on the factors that are a ‘must’ when GHD decides to venture into a new market, Gillanders says, “There are some non-negotiable factors. We need to be able to do business in an open and transparent way. We are also very conscious of the safety of our people. We assess the marketing climate of a country we move into, since only a mature economy will allow us to have a sustainable foundation
Oryx Rotana Hotel is a project for which GHD was the designer and supervisor. The feedback, according to Gillanders, that GHD has received from the operators is that “it’s their most successful hotel in the region in that chain.”
November 2014 | QCN
and justify our long-term presence.” GHD came to the Middle East in 2001, and the first footprint was in Qatar. That, according to Gillanders, was part of a very deliberate strategy at the time, to become more global. He adds, “We did have some overseas operations in New Zealand, in South-East Asia and Chile, and then we realised that the Middle Eastern economies, particularly Qatar and United Arab Emirates, would serve as an important stepping stone for us.” Continuing the journey, GHD now has operations in the United Kingdom, a substantial presence in North America and across Asia.
Corporate traits With such a diverse geographical spread, what are the corporate functional traits that GHD carries throughout its operations, irrespective of geography? In the opinion of Gillanders, from a corporate function perspective, GHD brings very strong governance principles. He adds, “Our board is very strong on integrity and requires all our operations to function in complete compliance with not only our internal values but the law as it stands in all the jurisdictions, and no governance oversight is tolerated.” In addition, Gillanders says that GHD’s global structure allows it the ability to genuinely share resources. He goes on to say that, “Unlike many firms that might look like us on the outside, but are simply
interview
Pictured here is Al Wakra Hospital, for which GHD provided complete design and construction supervision services.
an arrangement of franchises and operate quite independently, GHD reports only one profit and loss account and we are truly one company. For instance, I can call a colleague in the United States, or in Australia, or in Chile and, subject to their availability, have them here in Qatar within a matter of days to come and meet a particular need that I have.” Irrespective of location, all GHD employees are trained in the same systems and protocols that the company adopts to operate here, according to Gillanders. He adds, “I think it’s very important here in Qatar’s environment, where projects can be very large, they can be complex, they can change rapidly, and we meet those needs with our flexibility.” Gillanders also mentions that the workload in Qatar does fluctuate. “In order for us to be able to meet those peaks, whether they’re particular technical challenges or just the numbers of people, requires us to be well networked across business,” explains Gillanders. Commenting on the experience that GHD, as a company dealing with a crosssection of clients, has learnt over the years, Gillanders mentions, “Probably that our clients are seeking relationships, whether they are public sector or private sector. Clients invariably are looking for trusted relationships, for advice from firms or individuals that they know.” Gillanders adds that, as a company, GHD has realised through its dealings that the best business for both parties is done between organisations that know each other deeply, understand each others’ business drivers, have respect for each other, and that is something that the company tries to bring to their business here.
Sectors Of the various sectors GHD operates in – water, environment, transportation,
energy and resources, property and building, which has contributed the most to the company’s corporate bottom line? Gillanders says that, historically, GHD started as a water-focused consultancy, and in 1928, when Gordon Gutteridge first established the company, he provided sewage design solutions around Melbourne in Australia, “Water has been the preeminent service that we provide. In recent times, we diversified into transportation infrastructure when the sector was being developed in Australia. Over time, the drivers of business have evened out and we find that we are strong across all five global markets.” Coming to Qatar, Gillanders says that it is quite a different picture. “Traditionally, we’ve been much stronger, and have much greater workload in property and buildings, which reflects the local needs. Certainly, we see that continuing to be the case as the Qatar economy continues to have a need for hotels, stadium projects, railway stations, and other kinds of public-built infrastructure. Speaking about the project pipeline in Qatar, Gillanders mentions a steady business in infrastructure in roads, in water, in sewage, added to which, “we have a growing business in the environmental services, which is very exciting, as we watch the authorities in Qatar become more conscious of the impact of development on the environment. It’s very exciting for us to see a real focus and a passion now for protecting the environment, which stems from the fact that most of the public entities here are now very focused on being responsible global citizens”. Citing a case in point, Gillanders mentions that for companies such as GHD, it is exciting to see the likes of Lusail, for instance, being focused on the performance of their contractors, and being able to report positively to their stakeholders, that they are protecting the valuable marine environment around the coastline. Gillanders adds, “In the property and buildings sector, though, there doesn’t seem to be a great appetite to drive environmental change in the delivery of buildings, mostly because of the cost implications involved.” The property and buildings sector here, he says, is still very cost-driven
41
QAR
90 million GHD’s 2014 turnover target in Qatar.
“We assess the marketing climate of a country we move into since only a mature economy will allow us to have a sustainable foundation and justify our long-term presence.”
QCN | November 2014
42
interview
and image-driven and “something that is glamorous, spectacular and something that is relatively low cost may get faster acceptance. But something that is energy efficient, or flexible in terms of its future uses with a long design life may not necessarily be a high priority. And while we do see some interest from clients here to establish proper environmental ratings for buildings, it is generally modest,” he adds.
Projects Talking about the projects which GHD has done or are in the process of doing, Gillanders mentions, “We are working with some real estate companies, in a longterm role, to monitor the environmental performance of their suite of projects that reflects the thinking of the authorities in terms of protecting the environment.” He singles out the Oryx Rotana Hotel, for which GHD was the designer and supervisor, working with Qatar Airways, and the feedback that they have from the operators is that “it’s their most successful hotel in the region in that chain.” Gillanders also mentions a project undertaken with Kahramaa some years ago for establishing desalinated water quality standards for the country. “There is more work to be done on that, but that was, I think, a terrific demonstration of the ability of a company like us to establish benchmarks while using the thinking from across the globe, something that now is established as Kahramaa’s desalinated water quality guidelines.” Outlining their work approach, Gillanders says that the company approaches every project around the need to design it in a responsible way. He says, “We provide our clients with advice that will serve them well in the long term and we design with the long-term economies in mind. A small but growing number of clients are looking to go beyond entrylevel investment in energy solutions, which is a result of the fact that we are in an energy-based economy here, where oil and gas are abundant...cheap energy means there has been historically a less economic imperative for the longer-term environmental outcomes.”
2022 World Cup and business prospects With the 2022 World Cup and the entire November 2014 | QCN
infrastructure planned around it, GHD expects that they will be involved in at least one stadium. Commenting on the exact nature of their involvement, Gillanders mentions, “There will be various kinds of opportunities, not only as principal designer, but we expect that most of the stadiums will be structured on a design-and-build basis, in which case there will be opportunities with builders, there will be opportunities to serve the Supreme Committee for Delivery and Legacy directly. It’s a long road to 2022 and there will be many opportunities and we fully expect to be delivering services in probably a range of different facilities.” With a QAR90 million turnover target, which GHD’s Qatar team is confident of achieving for 2014, and with 150 staff in Doha, Gillanders says, “We’re not looking to grow just for growth’s sake, but want to take on the right projects with the right clients.” As for the next three years, the challenges for Gillanders are not on winning the work, but finding the people to do the work, which will increasingly be true for all of Qatar.
Mentioning a project that GHD did with Kahramaa some years ago for establishing desalinated water quality standards for the country, Gillanders says, “There is more work to be done on that, but that was, I think, a terrific demonstration of the ability of a company like us to establish benchmarks while using the thinking from across the globe, something that now is established as Kahramaa’s desalinated water quality guidelines.” (Image Fotoarabia)
“When we have opportunities beyond where we are currently positioned, these are usually opportunities with clients that we know and trust and who trust us.”
legal
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Managing interface risks in Qatar’s mega projects There are significant interface challenges in implementing some of the world’s largest infrastructure projects, and planning against such risks at the outset can help contractors save extra costs, write Pamela McDonald and Gabriel Olufemi of Pinsent Masons. Multi-contracting project management systems and processes are essential to managing the complex interfaces and dependencies between different construction elements and ensuring economical and operational success. Even with those processes in place, interface issues arise during implementation of projects as a result of design integration; coordination of multiple contractors executing work on the same site at the same time, and integration of new and existing structures or facilities by different contractors. Planning for and protecting against common interface issues at the outset can help contractors’ side-step heavy cost implications further down the line.
Delay and prevention
Contractors (of any tier) are usually responsible for cooperating with other interfacing contractors, sharing the site area and sequencing and coordinating activities to avoid clashes with others. However, delays or even total standstills can arise if, for example, a contractor is given late access, or when execution of works by an interfacing contractor is not in accordance with specifications laid out. In our experience of advising contractors in Qatar, contracts awarded by government entities may protect the contractor from late access, but do not specifically protect them against the risk of delay and/or additional cost arising from interface issues. SubClauses 4.6 and 8.4(e) of the standard International Federation of Consulting Engineers (FIDIC) contract, for example,
are typically removed or amended, and contractors are sometimes expressly prohibited from claiming time or costs arising from sharing the site and cooperating or coordinating with interfacing contractors. Coupled with the daily significant delay penalties for failing to achieve interface dates, this can present a major risk. To alleviate the risk, contractors should include in the appendix to tender, dates by which the employer must give access to or possession of areas of the site which interfacing contractors also work on. Consequently, if the interfacing contractor causes delay and there is a knock-on effect, the contractor will be entitled to an extension of time and additional cost (see for example SubClause 2.1 of the FIDIC Yellow Book). Contractors should also review the contract to identify the key interfacing contractors’ work activities and include the timing and sequencing of those activities in their own programme. In addition, the programme should also include realistic float time for delays arising from interfacing issues. If an interface issue does arise during execution of the works, contractors should immediately consider the impact of the issue on the programme and revise and reissue the programme to the engineer. Relevant contractual notices and claim documents (including time and cost impact analysis) relating to any interface issue must be issued to the engineer in accordance with the contract.
caused by interfacing contractors is high. The contractor is usually required to procure insurance to protect it from costs arising from damage caused to its works by anything other than an employer risk event. While it may affect the premium of the insurance, especially if there are high numbers of interfacing contractors, contractors should ensure the policy protects them from loss or damage caused by interfacing problems, especially in circumstances where an indemnity has been given by the contractor for claims brought against the employer by other contractors for loss or damage caused by the contractor’s execution of the works.
If all else fails...
Practically speaking, the most effective interface management systems capitalise on direct experience and industry best practice by mapping various interfaces on the project and where the risks may arise at the outset. In the end, however, if an interface problem occurs and the contractor’s contractual avenues to recover associated time and money fail, the contractor may seek some sort of relief under the Qatar Civil Code. Coupled with effective programme management, a claim mechanism, early written notification to the engineer as soon as an issue arises, and a good insurance policy for when it all goes wrong, it is possible to manage the interface risk.
Loss and damage
From the commencement date of the contract until taking over of the works, the contractor is usually required to correct damage done to works for which it is responsible at its own cost. That risk remains with the contractor unless expressly made an employer risk event, which neither Qatar government contracts nor Sub-Clause 17.3 of FIDIC contracts do. On projects such as the Doha Metro, where there are several contractors working in relatively close proximity, the risk of damage being
Pamela McDonald and Gabriel Olufemi are solicitors at Pinsent Masons’ Qatar branch.
QCN | November 2014
www.QatarTenders.com Tender Name
Description
Client
Tender FEES (USD)
Closing (m/d/y)
Chemicals and Lubricants
Supply of chemicals and lubricants
Qatar Liquefied Gas Company (Qatargas)
137
12/8/2014
Manpower Supply
Provision of utility and equipment operators
Qatar Petroleum (QP)
137
12/7/2014
Fuel Gas Supply Pipeline Construction
Installation, construction services for fuel gas supply pipeline
Qatar Chemical Company Limited (Q-Chem)
275
12/2/2014
Metallurgical Laboratory Building Extension Works
EPIC for extension of a metallurgical laboratory building
Qatar Petroleum (QP)
137
11/30/2014
Wing Construction
Design and construction of a wing
Central Tenders Committee, Qatar
82
11/24/2014
V.I.P. Pavilion Construction
Construction of air-conditioned VIP pavilion
Ministry of Defence, Qatar
549
11/24/2014
Barracks Construction
Construction of barracks
Ministry of Defence, Qatar
824
11/24/2014
Renovation Works
Carrying out renovation works
Primary Health Care Corporation, Qatar
N/A
11/23/2014
Engineering and Process Control Improvement Works
Detailed engineering and implementation of process control improvement works
Oryx GTL
137
11/19/2014
Instrument/Electrical PCRs
Supply, installation and commissioning of instrument/electrical PCRs
Qatar Petroleum (QP)
55
11/18/2014
Professional Consultancy Services
Provision of professional consultancy services for proposed laboratories
Public Works Authority - Ashghal
206
11/18/2014
Heavy Vehicles
Supply of heavy vehicles
Ministry of Defence, Qatar
549
11/17/2014
November 2014 | QCN
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EXCLUSIVE INTERVIEW: CAMERON GILLANDERS of GHD ON BUSINESS IN QATAR - PG. 38
issue 1.3
November 2014
Qatar’s National Museum: The pros and cons of building
THE
COUNTRY’S DESERT ROSE
Technology
BIM software can lower costs and create new opportunities for Qatar
Q&A
Unincorporated Joint Ventures: A solution for Qatar’s high-risk projects?
Plus:
How can Qatar address challenges of meeting its concrete demand?