SAUDI ARABIA BAHRAIN UNITED ARAB EMIRATES QATAR OMAN KUWAIT
Construction An ITP Business Publication | Licensed by Dubai Media City
WEEK
CONSTRUCTIONWEEKONLINE.COM
MAY 1-7, 2010 [319]
NEWS, ANALYSIS, PROJECTS, TENDERS, CLASSIFIEDS, AND JOBS IN THE MIDDLE EAST
INSIDE NEWS Changes and charges at the troubled Dubai Lagoons development PAGE 9
INTERVIEW James Reed of Abu Dhabi’s UPC on capital district plans PAGE 12
SITE VISIT Sandoval Gardens is mixing German and Arab expertise PAGE 16
CW LOOKS AT THE LARGEST AND MOST SUCCESSFUL CONTRACTORS IN SAUDI ARABIA
CITY FOCUS Analysis of the latest news and updates from Muscat, Oman PAGE 28
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CONTENTS MAY 1-7, 2010 | ISSUE 319 09
16
16 SITE VISIT A look at how the Sandoval Gardens project in Jumeirah Village is progressing.
20 TOP TEN The largest and most successful contractors in Saudi Arabia.
24 PRODUCT FOCUS A look at the fibre reinforced polymer option for critical bridge repairs.
26 12 20
28
24
REGULARS 2 ONLINE 4 MAIL
FRONT
DIRECTORY
9 DUBAI LAGOONS
26 SECTOR FOCUS 28 CITY FOCUS 30 SPECIALIST SERVICES
Angry buyers hit with more charges as terms change on long-running and delayed property development.
10 OMAN CEMENT Income up and profits down slightly for Sultanate’s cement supplier.
11 NEWS IN BRIEF Highlights of the week.
FEATURES
BACK
12 INTERVIEW
32 DIALOGUE
Development manager James Reed explains what the Abu Dhabi Urban Planning Council’s 20-year plan involves.
Mike Aspinwall tells all about the efficiency to a construction company of a fully linked-up computer system. MAY 1–7, 2010 CONSTRUCTION WEEK
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ONLINE
www.ConstructionWEEKonline.com MOST POPULAR POWER 20: TOP ARCHITECTS INDIAN STEEL MAGNATE NAMED BRITAIN’S RICHEST MAN WORKERS CAN BEAT THE HEAT WITH ‘COOLING VEST’ CONSTRUCTION DIPS AS DUBAI AND KSA INDICES FALL
HAVE YOUR SAY
BURJ OBSERVATION DECK TICKET PRICES Is it fair for ‘At the Top’ to charge as much as it does for a viewing?
JOBS OF THE WEEK IN PICTURES: MIRDIF CITY CENTRE Majid Al Futtaim Properties has recently opened the US 816.8 million (AED3 billion) Mirdif City Centre after a construction time of 31 months. The developer worked with consultants and contractors such as Alec, WSP, Holford Associates and RTKL to complete the project on time. Three hundred and fifty shops out of 430 were opened on launch day. This equates to 167,225m2 of retail space, which was unveiled to the public. The mall also consists of 75 restaurants and cafes, as well as a 10 screen multiplex cinema totaling 6000m2, a new water-based ‘edutainment’ recreation facility and an indoor skydiving centre. To read more visit www.ConstructionWeekOnline.com
FEATURES Sector focus
Design
PIPELINES Pipeline deals have been constant in the region, CW discovers
HIGH FASHION Italian architects discuss the art of effective retail design
City update
Analysis
YANBU One of the engines of Saudi Arabia growth, Yanbu’s appeal is expanding
RISKY BUSINESS CW learns first hand if doing business in Iraq is really practical
Projects administrator, Dubai Sales executive, Sharjah Mechanical engineer, Abu Dhabi
ONLINE POLL WHAT IS EMAAR’S PROFIT A SIGN OF?
31.2% 26.0% 24.0% 18.8%
Stringent financial management
An economic recovery
Burj Khalifa good will
A bail-out bonus
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CONSTRUCTION WEEK MAY 1-7, 2010
TO VOTE IN THIS WEEK’S SPOT POLL GO TO www.ConstructionWEEKonline.com
MAIL RE: INDIAN STEEL MAGNATE NAMED BRITAIN’S RICHEST MAN I’m proud to be Indian. Just imagine, a mere 63 years ago the British left India impoverished after ruling the country for more than 150 years and here is an Indian named as the richest Briton living in the UK. He started from scratch and worked his way to the top. You make us proud Mr Mittal. SALIM BAIG Mr Mittal should invest part of his fortune in the infrastructure development and education of underprivileged children in India. MUHAMMED AZEEM You made more than enough money as an NRI, but now please make India rich and healthy by investing your money into the country. You could make India a live and happening country by creating new employment opportunities for millions of your own brothers. MOHAN N KUNTE I’m proud to hear the news about Mr. Mittal and, as an Indian, I’m proud for us. Our country as whole should be uplifted economically and develop so that there is a better standard of living. Necessities of life should be provided like water, bread and electricity. MUHAMMAD RAFIKH MOODBIDRI Congratulations to you and all who stood beside you in your efforts to grow. It would be great to hear your story as it
would inspire people who are striving to improve. GOOGY Congratulations to Lakshmi Mittal. Hats off to you! You have made India proud. I wish you all the best for the future. MURTAZA SAKARWALA It is great to hear that UK’s most wealthy man is an Indian - proud to be Indian. JG MOST INFLUENTIAL CONSTRUCTION SUPPLIERS IN THE GCC Congratulations to CMCI. May your success last forever, especially now a lot of development is going on SHAHID RE: WORKERS CAN BEAT THE HEAT WITH ‘COOLING VEST’ A very practical application. This can be made cheaper if it is used extensively by all contracting companies in the GCC. The cash-rich companies can make it possible. ABHIJIT KUWALEKAR I recommend cooling products made by a company called Techniche International. They are in the US but distribute all over the world. ERIN MIYAGISHIMA UPC TARGET AFFORDABLE HOMES IN 2030 OUTLINE I love the statement: “The high-end has been saturated.” There’s no more money there so let’s switch gears and go to the next victims – the middle class. They have a little bit of money, let’s rid them of it.
WRITE TO THE EDITOR Please address your letters to: Post, Construction Week, PO Box 500024, Dubai, UAE or email editor@ConstructionWeekOnline.com. Please provide your full name and address, stating clearly if you do not wish us to print them. Alternatively log on to www.ConstructionWEEKonline.com and air your views on any one of a number of the latest Middle East business articles. The opinions expressed in this section are of particular individuals and are in no way a reflection of the publisher’s views.
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CONSTRUCTION WEEK MAY 1–7, 2010
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FOREWORD PETROL AND PARKING
“THE PERPETUAL SALIK DODGERS AMONG US CAN ONLY HOPE THE RTA HAS BEEN PREOCCUPIED WITH FINISHING TOUCHES TO THE METRO’S RED LINE, ELSE MORE SALIK GATES COULD BE ON THE WAY TOO.”
APOLOGY: IN ISSUE 318 CW INCORRECTLY LISTED ALAM STEEL AS BEING HEADQUARTERED IN KUWAIT. THE COMPANY’S HEADQUARTERS ARE IN DUBAI.
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CONSTRUCTION WEEK MAY 1–7, 2010
Inflation is back. Don’t let anyone tell you otherwise. Amid reports that single figure inflation is expected across the region in 2010 and that Dubai is experiencing year-on-year inflation lows, let’s take a moment to consider some facts. The price of petrol has just gone up. Okay, that’s just in the UAE, but a rise is a rise. After years of double digit inflation, the authorities have taken the opportunity to get a much-needed price rise in, during a period when it won’t immediately make the economic data look bad. Smooth move. Yes, you read that right, much needed. The cheaper something is, the easier it is to waste, and here in the Gulf we waste petrol big time. Perhaps the petrol authorities took a lesson from Dubai Municipality, which doubled the base rate of metered parking from one dirham to two, just the other week. Not an outrageous sum by any means, but the law enabling the increase had been in place for a couple of years, and had not been acted upon. The perpetual Salik dodgers among us can only hope the RTA has been preoccupied with finishing touches to the Metro’s Red line, else more Salik gates could be on the way too. Price increases that will be felt throughout the Gulf include the construction commodities of steel and aluminium, which have both been on the rise. Copper has been trying to join them and while it has been a bit all over the place in 2010, it is heading vaguely upward. This points to an increased cost of doing business. Headline figures for manpower costs may be down, in some cities rent has dropped too, but while big noticeable numbers are working to keep inflation low, others that lie at the heart of construction are on the way up. If you can’t find the evidence in the inflation figures, try checking your bottom line.
STUART MATTHEWS SENIOR GROUP EDITOR stuart.matthews@itp.com
HEIGHT
HIGH FLIERS MOST INFLUENTIAL AIRPORT SUPPLIERS
From Doha to Dubai, the GCC is leading the world when it comes to airport construction. But who are the companies behind the amazing developments? Who are the contractors, engineers, designers, architects, suppliers and manufacturers?
the innovation and the track record. Looking at both on-going developments and completed airports – the terminals, facilities and runways, CW will reveal the companies that have had the greatest impact in one of the GCC’s most successful industries.
On Saturday 15 May, Construction Week will publish for the first time the definitive list of Airport Power. Over the past six months, our team of researchers has examined in detail every single airport development in the GCC. We have studied the quality, the technology,
You have a chance to be involved in this list by contributing to a half page editorial box out for your company. The editorial copy deadline is the 9th May for the box out and the advertising copy deadline is the 11th May.
Please contact me immediately to grow your business across the region Jason Bowman, Publishing Director
T: +971 4 210 8351
E: jason.bowman@itp.com
ConstructionWEEK
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>News >Highlights
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16
DUBAI LAGOONS HAS BEEN PLAGUED BY DELAYS AND NOW INVESTORS ARE TO BE HIT WITH FURTHER REGISTRATION CHARGES.
AED 1000 CHARGE ADDS TO DUBAI LAGOON INVESTOR BILL By Ben Roberts
Investors in the Dubai Lagoon project in Dubai Investment Park are to be charged AED 1000 to register their off-plan purchases, despite a delay of up to two years on the project that shows little sign of providing compensation. The Ogood system from the Dubai Land Department aims to register all off-plan purchases on the AED3 billion project, without which owners will not be able to obtain their title deed later, nor be able to resell or transfer the unit, according to the newsletter to investors. Sources from the Dubai Lagoon Investment Committee – the investor consortium – believe charges were not transparent from the beginning as the Interim Registry is a new entity, and that AED 4,750 was demanded three months ago. Others argue that property does not have to be registered until it is sold. At the same time, Schon Properties, the developer, is encouraging investors to switch to a new installment plan in which payments will only be made when phases are completed – a move it says will boost
transparency but that will give some investors paying in a different system no choice but to comply. Dubai Lagoon has been severely delayed with greatly uneven development, leading to a lawsuit against the company two years ago. Though Zone 1 has all building structures and block works complete, Zones 2 and 4 have completed enabling works, while construction within Zone 3 is only complete up to the second floor slab. Developments in zones 5, 6 and 7 have ground to a halt, the company has acknowledged. The payments will be structured as 30% as an initial deposit, and 10% upon every completion of enabling works and the completion of subsequent slabs. This is opposed to some investors paying 50% for unit construction and 50% over a seven-year period. Schon is still deciding the discount for investors that switch payment methods. Sonia Schon, executive director, said all buyers still have the right to stick to their original contract without anyone forcing them to change.
But if investors in units in Zones 5, 6 and 7 accept the repatriation to a property in Zones 1, 2, 3 and 4 to make up for the delay in their original unit’s construction, they will have to abide by the new payment plan, and may find specifications for their new unit very different. Sonia Schon denied that investors were being forced into the new payments system if they wanted to obtain a property or unit any time soon. However, she added: “Right now our priority is for those who will switch their payment method”. She acknowledged that any ‘anticipated completion date’ clause in the original contract signed by investors, which promised compensation would be honoured, given the length in delay for the project as a whole. However, this compensation cannot be used by zones 5-7 investors as a down-payment on their new unit in zones 1-4, as the compensation would only be assessed and distributed at the handing-over stage. Full refunds for investors are not an option, she added. MAY 1-7, 2010 CONSTRUCTION WEEK
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FRONT OMAN CEMENT COMPANY LEADS SALES DIP By Ben Roberts Oman Cement Company demonstrated that you may have to produce more and sell less in the Sultanate, according to its quarterly results. The Muscat-based company’s net income rose RO 7.1 million (AED67.73 million, US $18.4 million) for the first three months of 2010 against the end of 2009, although this resulted in a 2.8% reduction in net profits. Gross margins gained 19.2% to 45.1% over this year’s first quarter compared to 25.8% for the same time period in 2009. Price cuts imported clinker – the lumps produced by the cement kiln stage that is ground to form cement – was cited as the cause of the year-on-year gains, with the decline in sales volumes accountable for the quarter-by-quarter slip. Cement produced during this first quarter increased to 495.1 kilotons from 474.8 kilotons during the corresponding period of last
year. Sales volume fell from 580,000 tons to 490,000 tons, according to Global Investment House in Kuwait. Average cement prices remained slightly higher at RO31.33 per ton since the beginning of the year. The company is currently upgrading a packaging plant is in progress, due for the end of the second quarter. Raysut Cement last week posted a 32% decline in sales for the first quarter and a fall in revenues to RO 16.3 million from RO23.9 million in for the same period last year. At the same time the company increased its cement production. Construction Materials Industries & Contracting saw sales fall 13.8% as net profits declined 152.51% from RO154,776 down to RO81,278, although the company added that the new lime kiln commissioned in March will have a capacity of 200 metric tons. JOHN MACDOUGALL/AFP/GETTY IMAGES
CEMENT FIGURES ARE ON THE MOVE IN OMAN.
Nakheel, the beleaguered developer at the heart of Dubai World, last week began signing two-part cash and securities settlement agreements to pay creditors and kick-start its parent’s US $25 billion restructuring. The company said in a statement that it is to pay 40% of the amount owed in cash and an annual return of 10% on the recovered claims, with the 60% in listed securities. Creditors would receive cash “as soon as an agreement on 65% of the total agreed claims” is reached. “This is expected to be achieved in the very near future,” the company said. “All indications suggest that this will be a prompt process.”
CASH IS ON THE WAY FROM NAKHEEL.
INDIAN STEEL MAGNATE UK’S RICHEST MAN
10
NAKHEEL BEGINS SETTLEMENT DEALS FOR CREDITORS
By Stuart Matthews
JCB TAKES ON COPYCATS
Lakshmi Mittal and family topped the rich list in the UK’s Sunday Times newspaper. Mittal heads up the world’s biggest steelmaker, ArcelorMittal and has had his wealth estimated at £22,450 million (AED126,777 million), up from £10,800 million in 2009. Nominally the richest Briton, Mittal hails from India, where his father built up the family steel operation in Calcutta. In 2009, ArcelorMittal had revenues of $65.1 billion and crude steel production of 73.2 million tonnes, representing approximately 8% of world steel output.
JCB has taken legal action against three unnamed Far Eastern manufacturers for patent infringements. The action was taken when the Bauma show began and the company successfully applied for court orders in Germany, with preliminary injunctions being served against manufacturers exhibiting the infringing machines at the show.
CONSTRUCTION WEEK MAY 1–7, 2010
LAKSHMI MITTAL IS UK’S RICHEST.
FRONT HIGHLIGHTS Real estate
Human resources
MAG GROUP CEO CALLS FOR TRANSPARENCY A triumvirate of transparency, liquidity and regulations must be enhanced to revive Dubai’s flagging real estate market, according to the CEO of MAG Group Property Development. Speaking at the Infrastructure and Property Development MEA Summit, Mohammed Nimer said these three elements were “needed more than ever to reassure and protect legitimate investors seeking a reasonable reward for a reasonable risk”. Trust between buyer and seller is vital, he stated on day one of the three-day summit, as well as affordability and a clear value for money.
ENGINEERING STUDENTS GET CHANCE AT INTERNSHIP An intern programme for emerging engineers is being developed by Dutco Balfour Beatty, working in partnership with Heriot-Watt University. This is the first time the company has entered into a formalised intern arrangement with a university in Dubai. “As an organisation we obviously gain from getting people involved during their education, as opposed to graduates,” said Martin Harper, commercial manager for Dutco Balfour Beatty. “They can see how things work practically and obviously, if we take interns during their study period, we
can have a look at the good students and perhaps offer post-graduate internships too. There’s an opportunity there for both sides. It will give the student a general feel for construction and us the chance to have a good grad programme if things go well.” A typical intern will become a deputy to an intermediate engineer, moving between roles every few weeks. The long-term aim is to help develop a sustainable local workforce. Business
PIERLITE BUCKS DOWNTURN WITH AED22M UPGRADE Pierlite Middle East, a leading manufacturer of light fittings and accessories, is bucking the downturn by forging
ahead with a major expansion of its local manufacturing operation. The company has completed the first phase of an AED22 million upgrade. This will add 9 290 m2 to the existing facility, which will have a total output of 1.2 million recessed ceiling light fitting units and louvres a year, in addition to 1.8 million batten fittings. The expanded facility in the Sharjah Airport International Free (SAIF) Zone was inaugurated by Sheikh Abdullah Bin Mohammed Al Thani, chairman of Sharjah Aviation and SAIF Zone, at a function held at the factory premises on 21 April 2010. The company was established in 2008.
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www.wago.com MAY 1–7, 2010 CONSTRUCTION WEEK MARCH 13–19,
11 35
INTERVIEW JAMES REED
JAMES REED, DEVELOPMENT MANAGER, CAPITAL DISTRICT – URBAN PLANNING COUNCIL
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CONSTRUCTION WEEK MAY 1–7, 2010
THE START OF SOMETHING BIG ABU DHABI’S CAPITAL DISTRICT IS TAKING SUSTAINABILITY AS FAR AS IT WILL GO, AS THE EMIRATE’S STAR INTERNATIONALLY CONTINUES TO RISE By Ben Roberts
A
bu Dhabi’s landmark plans for its capital district will be driven by a dual effort towards both environmental and ‘cultural sustainability’, combining local and international knowledge, says James Reed of the Urban Planning Council (UPC). The development manager for the district, said in an interview on the second day of Cityscape Abu Dhabi that the UPC’s 20-year plans and assistance for the implementation of those plans will provide a ‘model for how master plans are executed’. “UPC is taking a central role regarding planning and assisting in the implementation. We’re not the developer but assembling planners property owners and facilitating executors.” On the other side of the UPC’s stand from the big screen that relayed to onlookers at regular intervals a video feature of the project, the Texan-bred manager said his recent entrance into Middle East development presented familiar fundamentals as working in the US – except for the doublespeed of execution. “I didn’t really have a ‘transition’,” he explained. “The basic project assembly, land, money and buildings are the same. Then at the next level it becomes ‘real estate’ – from non-market issues to market issues. Then you are asking ‘will this building do what we want it to do?’ “We’re combining all these things through the Urban Planning Council and the Abu Dhabi government. We’re taking the energy, money and leadership of the government, of where it wants to go, to
create a sustainable city that is also cul- 45 million m2. There will be 370,000 permanent residents and 450,000 workers turally sustainable.” He added that although the drive to be and visitors per day on top of that, meaning green ‘will always be a big part’, the project that the capital district alone could have must keep its focus on the end users of the 820,000 people. We forecast the 1.4 million retail, commercial and residential develop- current population to be as high as three ments. This is what is meant by culturally million by 2030.” sustainable. “If people don’t want to be The statistics are compiled from sevthere, if no-one lives there, then it’s just a eral government departments as private research. “This also includes real estate series of buildings.” Reed’s experience arguably leaves him well- companies and management consultants, placed to help with the implementation of asking questions such as ‘how many use the project and fit the holistic ‘macro scale’ the high-speed rail; how many people can of the government’s plans. He has worked be absorbed through retail?” The capital district will have approxiin all three main elements of construction – design, development and finance. Most mately 3000 villas on plots, single family recently this has been in project finance for a plots, adjacent to the Khalifa ‘A’ neighbourhedge fund, where he hood. “Many homes essentially provided will be for first time “THE UPC IS TAKING A the bridge between buyers,” he said. The CENTRAL ROLE REGARDING investors and the infrastructure is to PLANNING AND ASSISTING asset management be completed by the IN THE IMPLEMENTATION division – ‘neither end of 2015. “We can OF THOSE PLANS” of these two are real factor it so that we estate experts’. This can start some areas role, he says, ended last year when com- immediately. The capital district will serve mercial development was waning in the as the home of the central government, US and Europe. municipalities, as well as many of the Private finance, muted recently in the larger embassies.” The development will be subjected to latest stage of the downturn, may grow again through further public-private part- the Estidama system, which is based on nerships for the right investor. “There’s LEED criteria but more specifically suited a conservative outlook as to how outside to the Middle Eastern climate. At the core investment is approached and rightly so. of Estidama – whose code book is now in How you leverage real estate has become an full effect – is its Pearl Rating system, which important question. Traditionally finance Reed says is more detailed ‘and includes a has been government backed, and per- few more things’ than LEED. Compared haps Dubai was an example of a change in to the US, where sustainability is assessed on a project-by-project basis, Reed said that process. The figures for the capital district are it would apply to fundamental underextensive. “The capital covers 45km2, or liers, such as water sustainability. “We’re MAY 1–7, 2010 CONSTRUCTION WEEK
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INTERVIEW JAMES REED
CAPITAL DISTRICT, ABU DHABI IS SET TO ACCOMMODATE 370,000 PERMANENT RESIDENTS.
looking on a macro scale; so for example, that the price of materials will always be a how does Reem Island and Downtown concern, particularly for steel and cement. work together?” “Steel was up by around 36% for months, He added that the UPC continues to drive and that’s not even the biggest impact. for the Estidama system to be mandatory. Most of the villas will be in concrete frame“Currently, the LEED system is voluntary; works with concrete blocks, so they’re very the Estidama system needs to be regula- solid constructions.” These prices will be factored in over tory. It needs to be part of the approval process, just to encourage developers to the many years of financial monitoring, however. You’ve got to remember that ‘build a better building’. “We’ll apply the this is 45 km2 over most sustainable the next 20 years, so “CURRENTLY, THE LEED measures in our SYSTEM IS VOLUNTARY; THE [today’s price] canland development; not be too much of ESTIDAMA SYSTEM NEEDS TO BE REGULATORY. IT not just in the GCC a concern.” NEEDS TO BE PART OF THE but in the world, Sustainability will APPROVAL PROCESS” everything we do is also be represented measured through in the capital district the Estidama system. at a human level. The Emirati population of “We’ll have requirements for investors the upcoming villas will continue to develop and governments and encourage the uti- their skills and this combination with foreign lization of pearl as much as possible. The expertise will cement Abu Dhabi on the UPC is taking sustainability as far as we world stage. Eventually, Emirati building expertise will be a key export. can take it.” Reed added that this includes where “Part of economic and sustainability is materials are sourced. He said plans for the transfer of knowledge – the skills that a concrete plant nearby are in the pipe- the expatriate community can pass on to line, as well as a plant to source steel. “We the next generation. Most of the construccan call our buildings sustainable, but if tion work will still be carried out by other we’re flying the materials from half-way nations – that will perhaps always be the around the world then it nullifies that case – with the Emiratis looking to fulfill carbon offset.” analytical positions. “What’s happening among the Emiratis With such a diverse scheme of projects for the capital district, Reed acknowledges is a concerted effort to have an impact at 14
CONSTRUCTION WEEK MAY 1–7, 2010
all levels. The UPC is a great example of how people can work together – it’s not just talking the talk.” Despite seeing the similarities between the GCC and the US, he is still impressed by the speed from drawing board to construction, adding that in other countries a project might be restructured a few times in the space between these two stages. And this is clearly a special project overall at a timely Cityscape. “It’s a very interesting convention – well represented by local developers. People who attend come from all walks of life, so it’s very interesting from an attendee standpoint. Abu Dhabi should be the focus of every consultant out there. “For me, what’s most it’s the sheer impact of what is planned. Nowhere else in the world is this being repeated.”
CAPITAL DISTRICT Location - seven kilometres inland south of Abu Dhabi island, between Mohammed bin Zayed City and Abu Dhabi International Airport Land space - 45 km2 Residents – 370,000 Workers – 450,000 Infrastructure project manager (Capital District) - AECOM
FRONT SITE VISIT SANDOVAL GARDENS
DEUTSCHLAND TO DUBAI BAVARIA GULF’S FLAGSHIP SANDOVAL GARDENS PROJECT HAS BEEN AN INTERESTING MIX OF GERMAN AND ARAB EXPERTISE, AND ITS TOWNHOUSES ARE NEAR TO COMPLETION By Ben Roberts; Photos by Shruti Jagdeesh
T
here is so much suspicion in the market now, everything is questioned. That’s why we’re very transparent,” says Raymond Lefevre, general manager of Bavaria Gulf, standing in the doorway of one of the sand-coloured townhouses in the company’s Sandoval Gardens complex in Jumeirah Village. He explains that all buyers of the townhouses receive a detailed specification, which is an advance on the state of communica16
CONSTRUCTION WEEK MAY 1–7, 2010
tion between developer and customer in the context of the last few years. “If you bought a property three years ago often there would be no specification,” he explains. “I bought a property and for a specification there was a blank sheet that simply said: ‘to be provided later’. We wanted to be a transparent company, and that’s why we have a huge list. All items are listed, including which brands and which models. This is very important – when you target end users they want to know what they’re getting for their money.” The 36 townhouses are the first part of
an AED260 million twin-development of the overall Sandoval Gardens that will also include a five-star-level apartment building. The designs and construction are part of a new niche of German design for the UAE market. The company is now close to handing over the residences, which it says are 95% sold. All townhouses conform to TUeV, a German standard of quality that is a common benchmark in Lefevre’s home market. This means that all construction and finishing is assessed by a third-party, which essentially represents the buyer. “These third parties
FRONT
are important because they represent the buyer and ensure specifications are fulfilled – otherwise the buyer would just have to trust the developer!” He adds that the transparency message – which includes monthly newsletters containing pictures and interviews with suppliers – has been well received by the buyers. Site visits are also accommodated, and frequently popular. “Some people come every month,” says Lefevre. The German paint on the outside is one of the first notable aspects: it has a flexible component that makes it elastic – important to cover cracks and adapt to minor expansions in the building. “As every civil engineer knows, there will always be cracks. The paint can expand and contract with the building, from the heat of the day when it can be 40 degrees to the evening when it’s 20 degrees. “ Lefevre explains that 90% of the finishing materials came from Germany and the rest of Europe, as well as some of the MEP materials. “With TUeV we’re committed
to German standards and some finishing materials, for example from China, we couldn’t get them.” He admits that there had been some delay to the construction based on the ubiquitous problem of rising material costs, and that this problem is exacerbated by purchasing across continents. This admittance was echoed by Bassam Khamash, assistant civil engineer at Al Sayegh Contracting, the main contractor who worked closely on the project. “There was a delay in the delivery for many of the materials that came from Europe. For local materials, we found that suppliers have less in stock as they have not ordered more than they need from their sources.” He forecasts that the recent problems to air freight coming from Europe caused by Icelandic volcanic ash might have an effect on the materials for the other parts of the project still to be completed. Khamash says that he was very impressed by the standard of materials procured from Europe.
Another slight delay to construction proceedings lay in the developer’s decision to install some elements such as TRASTA outside cladding in a way typical to the German market. This resulted in a German specialist flying in to train the workers. Khammash was amused by the international variations of this task. “No-one here knows their method of installation. You can get materials in the UAE from anywhere in the world, yet the local method of installation is the same. But every country has different ways of installing!” Lefevre says that the financial slowdown reduced some of the profitability, but still not below initial values. In Europe that price
CONTRACT DETAILS Tender date: December 2008 Construction start date: April 2009 Contract period 21 months Completion date: December 2010 Project cost: AED 235,000,000 Construction cost: AED 175,000,000
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WHAT IS TUEV? Technischer Überwachungs-Vereinare –(English: Technical Inspection Association) German organizations that work to validate the safety of products of all kinds. As independent consultants, they examine plants, motor vehicles, energy installations, devices and products that require monitoring. MAIN ROOM OF THE SHOW TOWN HOUSE.
for some finishing materials has not come down, and with the currency exchange we’ve had to purchase at a higher price. For us, the strategy is that we’re looking to break even. We still have to deliver on what we promised. I think breaking even is a good result in today’s market.” But he adds that the fact that projects such as this have been able to continue has been testament to some important principles. “In the last two years the industry has seen many projects stop. Now, the big question to ask is why? “It’s an interesting point. The first answer is that the properties were bought by end users and not speculators, and our policy has been to only sell to end users. The second is to be totally transparent. If you as a buyer are left in the dark, you are going to be scared to pay. The third point is that we try to help customers be as flexible as possible with their payments. The land was purchased three years ago from Bavaria Gulf’s own funds, and the
RAYMOND LEFEVRE, OF BAVARIA GULF.
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project is funded by the so-far steady stream of payments from buyers. “If you are the end user, it is in your interest to keep the payments coming,” he notes. Upstairs the sand-coloured walls of the corridors lead to bedrooms in the front and back. Taps in the bathrooms are fitted with a mechanism that will cause the water running out to bubble, thus reducing the number of litres used over a typical day, along with two levels for the toilet flush. The master bedroom contains a balcony that looks over the skeletal construction of the apartment building, which stands between the two sets of townhouses. Overlooking the structure slowly taking shape, populated by workers carrying poles and corrugated metal sheets above their heads, he explains that the Leadership in Energy and Environmental Design (LEED) certification that is voluntary in some parts of the world, is mandated in this part of the city by the planning and construction regulations for commercial developments in the Jebel Ali free zone (JAFZA). “JAFZA amended LEED to make the standard workable – so there are different requirements for different things depending on the environment,” he says. “Here it would be things like water conservation, and, of course, you would need special provisions for air conditioning, with less of an emphasis on how rain water is used.” He adds however, that the townhouses have a facility to collect rainwater to be used for the irrigation of the plants. He is happy with the company’s choice of Al Sayegh. “Al Sayegh is a good contractor with high standards. It was very open to bring the quality to a higher level.” It is a time of quiet excitement for Bavaria Gulf, close to completion of the first phase after a year in construction for what is for
the company its ‘flagship’ project in Dubai. It is likely to be particularly satisfying for Lefevre, who claims not to have had a vacation for two years – ‘next year, maybe’ – and has spent an unusual amount of personal time coordinating onsite. Every day is a challenge, he says, though he is buoyed by the fact that this is just the beginning. “Next year we will be diversifying into property management and facilities management and have another project. “We took into account the regional aspects of the design, we took care with the communal areas so there will be some beautiful landscapes. So much effort has been put into this project, probably much of which the client won’t see. What we hope is that over the next couple of years people will notice certain parts of the design and say we put a lot of thought into it.”
VITAL STATISTICS Built up area: 27,127 m2 Value of townhouses (cumulative): AED95 million Target date of completion: May 2010 Target date of whole project: Q4 2010 Project: Sandoval Gardens 10 Townhouses on Plot JVC14IFRP003, Sandoval Gardens 16 Townhouses on Plot JVC14IFRP001, Sandoval Lane 10 Townhouses on Plot JVC14CFRP001, and Sandoval Gardens 165 Apartments on Plot JVC14IMRP200 Consultant: Planquadrat Middle East, Project manager/management contractor: Bavaria Middle East Main contractor: Al Sayegh Contracting LLC Sub contractors: Protech Company, DULJIN Fze, Marieo Aluminum, United Technology, Al Fahidi Gas, ASKOF International, VIEWTEC, Bin Marah Painting, EMS (Electro Mechanical Specialised Group), ThyssenKrupp Elevators UAE, CCL Gulf Pre-stressed Concrete LLC Architect: Planquadrat Middle East Materials suppliers: Taps & More , Rehau, Hofemeier Kitchens, Comtuer, Marazzi, M&E consulting engineer: Dynamic Engineering Consultant Mechanical, electrical, plumbing contractor: Al Sayegh Engineering Est. Lighting designer: Power Point Trading
TOP 10 SAUDI CONTRACTORS CW LOOKS AT THE 10 LARGEST AND MOST SUCCESSFUL CONTRACTORS IN SAUDI ARABIA hile the global economic crisis has brought irrepressible pressure on the region’s construction sector, the kingdom of Saudi Arabia has shown itself to be less affected than most economies in the GCC. Even as Dubai was announcing project cancellations and stalls – valued at US $500 billion at the peak of the crisis – Saudi Arabia, seemingly isolated continued to announce major public sector schemes that continued to drive forward its construction and real estate market. Unsurprisingly, contractors in the kingdom, while cautious, have not seen work dry up, buoyed by the government’s latest budget, which emphasised spending on new projects, particularly in education. Although some firms whose clients operated purely in the private sector have felt the pinch, more than those backed by government-funded public sector schemes. Speaking to contractors in the kingdom, CW discovers the mood is overwhelmingly
THE UNDER CONSTRUCTION MECCA ROYAL CLOCK TOWER HOTEL COMPLEX IN THE HOLY SAUDI CITY OF MECCA IS BEING BUILT BY THE SAUDI BINLADIN GROUP.
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positive among the majority. Their faith in the ability of the country to avoid the worst affects of the economic crisis is total. As none are publicly listed, the top ten contractors have been positioned through a combination of profile, staff numbers and value of current projects. The list is dominated by local Saudi familyrun firms. The big two, Saudi Oger and Saudi Binladin Group have ruled the market for decades and consistently secure the biggest projects through a combination of resources – both personnel and material – and extent of capital backing. A family-run firm may be common in the GCC, but according to a report by Booz &
Company published in 2009, it also offers specific advantages such as access to capital, information and business networks. In a survey of 25 family-owned firms in the GCC showed that nearly half (48%) were involved in five or more sectors, 40% were engaged in three or four sectors and 12% active in two sectors or fewer. This dominance is not viewed favourably by other firms in the kingdom. A complaint often heard by smaller contractors is that the sheer scale of projects in Saudi Arabia negate the option of even tendering, leaving the big two to pick and choose. Once secure they then subcontract work out to the same smaller firms who have to take what is on offer. To combat this, at least 11 local construction companies are planning to merge to form one of the kingdom’s largest contractors, to be called Saudi Consolidate Contracting Company, which is expected to be worth US $1.1 billion. Plans to finalise the number of firms involved in the merger are expected by July 2010, before establishing an operational company in 2013.
> For more top 10s visit www.ConstructionWEEKonline.com
SAUDI BINLADIN GROUP
THE AL FAISALIYA TOWER IS ANOTHER RIYADH LANDMARK BUILT BY THE SAUDI BINLADIN GROUP.
The kingdom’s largest construction firm has subsidiaries across the region including Egypt, Jordan, Lebanon and the UAE. Following its inception in 1931, the firm’s reputation was secured when close links between King Abdulaziz Al Saud – the founder of Saudi Arabia – and SBG’s chairman Mohammed Binladin saw the firm work on the extension of the holy mosques in Mecca and Medina. In 1964 it was commissioned to reclad the Dome of the Rock in Jerusalem. Since that time the
SAUDI OGER Saudi Binladin’s main rival, Saudi Oger occupies a similar sphere of influence within the kingdom’s construction sector. Since its inception in 1978 by former Lebanese Prime Minister Rafiq Hariri – when he took over the French firm Oger – the family firm has become a multi-divisional giant with subsidiaries in Dubai, Abu Dhabi and the
US$5 BILLION DI
UK. In 2007 the firm won work valued at approximately $5 billion and consistently operates on the grandest schemes in Saudi Arabia. Unsurprisingly they mirror those of Saudi Binladin; KAEC, the $2.7 billion Jabal Omar, which is being jointly constructed between the two firms, and Princess Nourah bint Abdulrahman University for Women. THE CONSTRUCTION SITE OF THE KING ABDULLAH UNIVERSITY IN JEDDAH, FOR WHICH SAUDI OGER IS THE MAIN CONTRACTOR.
SAU VALUE OFWORK OGER’S 7 IN 200
firm has grown to work on some of the country’s major infrastructure and real estate projects including the NorthSouth railway project, the $36 billion King Abdullah Economic City, Abraj Al Bait residential scheme in Mecca and the Jabal Omar scheme, also in Mecca. Away from construction, it also acts as developer on a number of projects. It is jointly-developing the $30 billion Jizan Economic City with Malaysia’s MMC Group. In 2007 the firm won contracts valued at approximately $4 billion.
EL SEIF ENGINEERING & CONTRACTING One of the kingdom’s oldest contracting firms, El Seif has been operating since the 1950’s. Initially dealing in commerce and transport sectors where it comprised a large vehicle fleet, El Seif expanded in the 1970s into general contracting with branch offices in Qatar, Lebanon, Bahrain, the UAE and Iraq. With over 8 000 employees, the firm has successfully partaken in a number of iconic projects, including the symbolic Kingdom Tower in Riyadh, the Jewels Twin Towers project in Dubai Marina and Qatar’s Silhouette Tower. Its chairman, Khaled Al Seif is also chairman of the Saudi-British Joint Business Council. In 2008 it also secured one of three initial packages for the Princess Nourah bint Abdulrahman University for Women valued at SR8 billion.
8000
AL RASHID TRADING & CONTRACTING COMPANY (RTCC) Abdullah Al Rashid & Brothers was established in 1957 in Al Hufof city. Upon relocating its headquarters to the Saudi Arabian capital city of Riyadh, the company merged with Rashid Abdulrahman Al Rashid Company to form Al Rashid Trading & Contracting Company. In partnership with Germany’s EADS, RTCC secured one of the most
high-profile but sensitive projects to be tendered in Saudi Arabia in years. The kingdom’s $3 billion border fence project covers a distance of about 6 000 km to detect incursions along its border with Iraq, Yemen, Jordan, Kuwait and Qatar. In 2009 it also won a $427 million contract to build residences for staff at King Saud University in Riyadh.
CURRENT S E EMPLOYE IF AT EL-SE
KINGDOM TOWER, A LANDMARK OF RIYADH, COUNTED EL SEIF ENGINEERING & CONTRACTING AMONG ITS CONSTRUCTION CONTRACTORS.
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ALMABANI GENERAL CONTRACTORS Established in Jeddah in 1972, it has since expanded to become one of the kingdom’s largest contractors with offices in Khobar, Riyadh, Jubail, Beirut and Qatar. The firm has established a niche in the kingdom for infrastructure projects, in particular aviation-led schemes. It is carrying out the modernisation and redevelopment of seven regional airport runways, as well as bidding for two huge tenders for King Abdulaziz airport at Jeddah valued at $5 billion to $6 billion. It is also carrying out a road tunnel project under Riyadh airbase, which will alleviate traffic in the capital.
AL REDWAN CONTRACTING COMPANY Jeddah-based Redwan Contracting Company enjoys a strong position within the market despite not retaining the highest profile. It secured a $120 million contract on KAEC, the biggest project underway in the kingdom to build 134 villas within the Resort Cove district of the new city. One of the firms bigger projects is the construction of the Le Meridien Hotel Towers in Mecca, which will form one of the components to the regeneration of Islam’s holiest city. The Al Redwan Group, the company has offices in London, Montreal, Cairo and Singapore.
AL HARBI TRADING & CONTRACTING The firm established itself in the kingdom in 1965 with offices in Riyadh, Lebanon, Kuwait and the UAE. It has experience across a range of projects, from heavy civil works and highways to residential villas and palaces. At present, it is involved in a number of governor residences for the Interior Ministry at Baha, Mecca and Najran. It also is involved in a number of education projects. These include the Taibah University expansion and the headquarters of the Saudi Arabian Ministry of Education, which is due to be completed in Q2, 2010. 22
CONSTRUCTION WEEK MAY 1–7, 2010
AL ARRAB TRADING & CONTRACTING (ACC) Having been established in 1983, the Riyadh-based Al Arrab Trading & Contracting has expanded from simple contracts into one of the kingdom’s major contractors. Consisting of 16 subsidiaries it has a workforce of 12,000 and saw a turnover of just over $500 million in 2007. In 2004, the Mada Group for Industrial
& Commercial Investment acquired a majority stake in ACC, which saw the firm expand through acquisition and growth. Subsequently, the company won the first-phase of the $6 billion Haramain high-speed rail line between Mecca and Medina. The firm has a presence in Asia, African and Europe.
SR720 MILLION
KAEC CONTRACT TO BUILD COMMERCIA L BUILDINGS
SAUDI FREYSSINET Founded by the late Shiekh Kamal Adham in 1978, the company commenced operations in the specialised fields of pre-fabricated and prestressed concrete. The firm evolved and grew into general contracting including building complexes, hospitals, industrial projects and other civil projects. Possibly one of the lower profile firms, Saudi Freyssinet nonetheless consistently secures
major residential and real estate projects in the kingdom. Notably, it won a US $191.98 million contract to build commercial buildings in King Abdullah Economic City (KAEC), a $85.3 million contract for work with Saudi Binladin Group on the light railway in Riyadh’s Princess Noura bint Abdulrahman University for women and the $193.3 million Corniche Tower in the city of Jeddah.
AL KHODARI SONS COMPANY What started life in the 1950s as a small contractor targeting the Eastern Province industrial sector has grown into the Al Khodari Group. Complete with two main firms, numerous subsidiaries and joint ventures, it now has a presence across general contracting, steel manufacturing, industrial services and
shipping. It currently employs more than 10,000 people and is benefitting from the government’s recent push to expand and modernise its educational system. It is the main EPC contractor on staff housing for Taibah University, which comprises 629 villas and 24 buildings across 4km2. The project is due to be completed in the second quarter 2012.
PRODUCT FOCUS BRIDGES
FIBRE BRIDGE REPAIR REPAIRING BRIDGES EFFECTIVELY CAN BE DONE WITH A TECHNIQUE DEVELOPED IN JAPAN. HOWEVER, CARE MUST BE TAKEN, WARN EXPERTS
T
here are lots of great bridges over the Middle East. From the majesty of the new span to Saadiyat Island, to the length of the King Fahd Causeway, to the eccentricity of the Floating Bridge, it is clear that engineers will often take different and fascinating approaches to solve the same problem. One area where bridges remain the same though, is the need for maintenance. You might have heard a seemingly never-ending and repetitive task is ‘like painting the Forth bridge’ due to the need for maintenance crews on a bridge over the Firth of Forth in Scotland, to start painting again as soon as one end has been finished.
CONDITIONS While conditions in the Gulf are a little different to the North of Scotland, erosion of structures from winds effectively sandblasting the sides is common, as is decay of metal parts from working under load in an extremely hot and humid environment. Factor in bridge strikes by vehicles, vandalism, fires, and in some cases
indifferent quality concrete when the initial structure was poured, and you will understand why it is sometimes necessary for bridge repairs to take place. The challenge for engineers is to work out a way to restore full structural integrity to a crossing, without having to start from scratch.
“ONE OF THE LIMITATIONS IS THAT THIS PRODUCT CAN ONLY BE USED AS A SUPPLEMENTARY REINFORCEMENT, NOT A PRIMARY REINFORCEMENT” One method of doing this is FRP, otherwise known as Fibre Reinforced Polymer. Simply put, this involves applying panels, sheets or rods made from carbon fibre over the exterior of an existing structure. The technique has been in use since the mid-1980s, when the Japanese government researched a way to put the strength back into an old bridge, as well as protecting is from seismic movements. However, as Muneer Merchant, GM of Structural Preservation
CONCRETE IN NEED OF REPAIR.
APPLICATION OF THE FIBRE REINFORCED POLYMER MATERIAL.
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AREA PREPARATION PRIOR TO INSTALLATION.
Renitherm and Intumex for fire protection! ®
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THE FRP MUST BE USED AS A SUPPLEMENTARY REINFORCEMENT.
Middle East pointed out, this is not a matter of simply painting the goo on. First of all, one needs to be certain of the carbon fibre being the right grade for the job: “The most comprehensive code in carbon reinforcement design is ACI 440.2R-08” he explained. “That is the most comprehensive guideline – it isn’t a code – but a guideline for external bonded reinforcement. In fact, the Canadian Highways Association has incorporated this guideline into its DOT codes and it extensively uses carbon fibre reinforcement to upgrade its bridges.”
CALCULATIONS Careful calculations need to be made in terms of how much strength can be added to an existing structure. “One of the limitations is that this product can only be used as a supplementary reinforcement, not a primary reinforcement,” Merchant cautions. “If the existing structure cannot withstand the loads involved, then carbon fibre cannot be used. In the past people have abused the technology and then there are failures because they haven’t used the right material.” “If you use carbon fibre in the right application you will have benefits, but if you design it wrong or are not experienced enough to install it, you will get failures and you’ll blame the product – but there is nothing wrong with the product or technology” he said. Merchant adds that he finds it crucial to have an experienced civil engineer involved in any area of bridge repair, who will consider such factors as vandalism or fire reinforcement. Another interesting development is that of FRP rods, which although measure just 12mm in diameter have a strength of several times that of conventional rebar, though of course it will be applied externally, and corroded rebar left in situ. “We can analyse the concrete to determine if, say, 25% of the strength of the rebar has rusted away. The strength can then be put back in with the carbon” Muneer explained.
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SECTOR FOCUS ROADS
GULF ROAD ROLL OUT NEW AND IMPROVING INFRASTRUCTURE MEANS BIG BUSINESS FOR ROADING CONTRACTORS
MARWAN NAAMANI/AFP/GETTY IMAGES
By Stuart Matthews
MANY ROAD SYSTEMS IN THE REGION ARE IN NEED OF AN UPDATE OR IMPROVEMENT.
R
esidents in Gulf countries are addicted to their cars. A heady combination of cheap petrol, competitively priced vehicles and limited options for other modes of transport, mean this is unlikely to change in the next decade. This makes for a region heavily reliant on its roads. Add a growing population and in some cases, tired infrastructure, and you get traffic congestion. However, governments in the GCC are moving to address these issues through projects of expansion and improvement. Saudi Arabia is a case in point, having allocated US $3.17 billion in its 2010 budget for construction of 6400 km of roads. This follows its 2009 allocation of SR 11.5 billion (US $3.06 billion) for road construction. In Dubai, where many freehold residential projects remain in limbo, the powerful Road & Transport Authority has allocated US $2 billion for project development in 2010. The money will cover around 129 jobs, 13 of which will be new. 26
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Among the billion dollar road projects coming on to the map is the Mafraq-Ghweifat Highway in the UAE’s isolated Western Region. The Abu Dhabi Department of Transport has set aside an estimated US $2.7 billion for the required work. The successful contractors will win a 25 year concession to upgrade, operate and maintain the highway.
“IN THE CITY OF ABU DHABI REGULAR COMMUTERS WILL BE RELIEVED WHEN WORK ON SALAM STREET AND THE MINA ROAD DEVELOPMENT IS COMPLETE.” The project will see the highway widened to four lanes in each direction (three around Ghweifat) and upgraded to meet international standards in design and safety. The road, which stretches 327 km from Mafraq to the border at Ghweifat, provides the only access route to the Western Region, including the industrial centre of Ruwais and several tourist destinations.
Payment to the winning consortium will be made via a series of equal payments spread over the 25 year period. These ongoing payments will be subject to deductions for failure to meet the prescribed performance standards and will ensure the consortium remains accountable for the operational performance of the road over the 25 year period. In early February, the Department of Transport (DoT) in Abu Dhabi received bids from three international consortia. Among the three that made bids were Irtibaat, including Abu Dhabi Commercial Bank; Construtora Norberto Odebrecht; Besix, Al Jaber, Mouchel Middle East and others; Mafraq Motorway Group, including Strabag SE; Saif Bin Darwish; Joannou & Paraskevaides, Egis Projects and others; and MTD-CSCEC Consortium, including MTD Group; China State Engineering Construction Company and Ghantoot Transport. The widening and surface improvement work is due to begin this year and end in 2014. In the city of Abu Dhabi regular commuters will be relieved when work on Salam Street and the Mina Road development is
complete. This US $1.4 billion improvement project focuses on the development of a key route into and out of Abu Dhabi. Once completed, the road’s capacity will be increased to more than 6000 cars per hour in each direction. Work includes construction of a 3.1 km, eight-lane tunnel, and the construction of 1.2 km of roads leading into and out of the tunnel. This will serve projects on Reem, Suwa, Saadiyat islands and the Mina area to the east of Abu Dhabi Island. A joint venture of Saif Bin Darwish Engineering Co. and Samsung Engineering & Construction was awarded the main construction contract early in 2008. Completion of phase one is pencilled in for the end of 2010. In Oman, the Batinah Coastal Road involves construction of a four-lane carriageway (two lanes on each side) running from Naseem Garden to Khatmat Malaha in Wilayat Shinas. With an estimated value of US $712 million the 241 km project is split into two phases. In turn phase one has been split into two packages. The first, worth US $325 million, was awarded to Turkey’s Makyol. It involves construction of a 60 km road from Naseem roundabout to Sayyid Said bin Sultan Naval Base at Wudam Al Sahel in the Wilayat of Musannah. The second, worth US $387 million, was awarded to India’s Nagarjuna Construction Company. It requires construction
of a 65.7 km road from Majees roundabout in Sohar to Khatmat Malaha. Construction of the remaining stretch of the road, around 116 km, will be covered in phase 2 of the project. Al Rajhi Company has been contracted to build 2200 homes for people displaced by the
BOMAG’S BW 332 IS THE HEAVIEST SINGLE DRUM ROLLER IN THE WORLD. WEIGHING IN AT 32 TONNES, THE MANUFACTURERS BOAST A COMPACTION DEPTH OF FOUR METRES AND A WORKING WIDTH OF 2.4 M.
new road. Work on phase one is underway and scheduled to finish in 2012. A timeframe for phase two has not been released. The Al Khor to Al Ruwais Road, phase three, is a US $600 million development project in Qatar, involving further development of the Al Khor to Al Ruwais Road. The road is 61km long and will include four lanes in each direction. It will also feature 11 cloverleaf
junctions and five tunnels. Dar Al Handasah is the project consultant. Tekfen Construction was awarded the main construction contract in October 2008, with work beginning soon after and due for completion in 2010. In Dubai upgrades to Al Khail Road seem perpetual, but are proceeding in four concurrent phases. With a combined cost estimated at US $591.5 million, the upgrade project involves widening and improving a 15km stretch of Al Khail Road between the junctions at Muscat Road and Emirates Road. The road will also be extended by 9 km to connect it to Dubai Bypass Road. All four phases of work are currently underway. Gunal Construction, Wade Adams and Ascon are among the contractors involved in the project. In Saudi Arabia the King Abdullah Highway development is being carried out by prominent contractor Saudi Oger. The project includes modification of the road to be a highway, construction of three tunnels, service roads, subways, and beautification works. The development will increase the capacity of the highway from 190,000 cars to 520,000 cars. Saudi Oger was awarded the main construction contract in early of 2008. Construction started in May 2008. The development is expected to be completed in early of 2012.
CURRENT TENDERS QATAR Consultancy Services for Development of Road in Area No. 1300 Issuer: Public Works Authority Tender no: PWA/GTC/005/10-11 Description: The works comprise the construction of all roads in the project, composed of packages 1, 2, 3, 4, & 5. Tender fee: 1000.00 QAR Closes: May 4, 2010 Contact: www.ashghal.gov.qa OMAN Duqm Port – Road works and Infrastructure Package Issuer: Ministry of Transport and Communication Tender no: 115/2010 Description: The scope of work includes road works and infrastructure package for Duqm Port.
Tender fee: 1500.00 OMR Closes: May 31, 2010 Contact: www.tenderboard.gov.om SAUDI ARABIA Bridge and Intersections in Yanbu Industrial City Issuer: Royal Commission for Jubail & Yanbu (RCJY) Tender no: PIC A-1019 (RE-BID) Description: The scope of work includes procurement, construction, testing, commissioning and all work necessary for a complete operational facility of bridge and intersections to connect the highway with the industrial and community areas at Yanbu Industrial City. Closes: Jun 20, 2010 Contact: Director Purchasing & Contracting Department,
Madinat Yanbu Al-Sinaiyah, fax no +96243216092, tel +96243210222 KUWAIT Infrastructure Works for Jamal Abdul Nasser Street Issuer: Central Tenders Committee Tender no: RA/167 Description: The scope of work includes construction, completion and maintenance of roads, overpasses, storm-water drainage, sewer and other services for Jamal Abdul Nasser Street. Bond: Applicable Tender fee: 600.00 KWD Closes: Jul 11, 2010 Contact: Central Tenders Committee - Ministry of Electricity & Water For more tenders, visit constructionweekonline.com/tenders
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CITY FOCUS MUSCAT
READY BUT STEADY THE QUIETEST CAPITAL OF THE GCC MAY HAVE WEATHERED THE WORST AND IS LOOKING TOWARD GROWTH
C
onstruction in Muscat and its surroundings First, the good news. Economic growth and capital investment has been a microcosm for the Gulf region. has been overall buoyed by the returns from oil, which in 2009 Familiar stories of a drought in financial increased from around US $35 to $75 per barrel. Then a decision support one end, and buyers unwilling to by the government last year to grant two-year visas to expatriates, purchase properties prior to completion at which can be renewed, started to filter through to an increase in the other, have been a headache for some house purchases, followed by a rise in prices. developing around the capital’s region. But The capital is now at the centre of ongoing construction projwith a more modest boom and bust than Gulf rivals, the capital looks ects that total RO104.6 billion. So far only RO6.5 billion has been set to squeeze through more completions in the next year. put on hold. Ibrahim Alhosni, investment manager at Omran, the governmentThe Wave, a joint venture between Majid al Futtaim and the owned tourism, investment and development company, said the Omani government to develop a set of white villas running along city – like the country – takes a similar cautious approach as Abu the coast, saw the benefits of the visa change and oil rise last month. Dhabi. “We’re going from a steady base, making calculated invest- At the beginning of April it was announced that the company ments based on analysis.” was to launch its first sales drive He added that there remained since August 2008 and has sold “WE’RE GOING FROM A STEADY BASE, a strong bi-partite link between 140 of 168 apartments. This was MAKING CALCULATED INVESTMENTS the public and private sectors. enhanced by a canny decision 18 BASED ON ANALYSIS” “There’s a huge involvement months ago to change the proj[from the private sector], the two ect’s plans from building luxury work hand in hand,” adding that the government infrastructure villas to more affordable apartments. Almost half the buyers are projects help the private sector, so that the private sector can Omanis, with the other buyers comprising of 38 nationalities, lend their expertise to further projects down the line. mainly from India and the UK. Michael Lenarduzzi, The Wave CEO, said that though the company has started to hand over apartments in the Qarat Al Marsa WHITE KNIGHTS: district, other apartments in the same district have not been 1. Muscat Hills - a collection of luxury homes and built yet. apartments around a golf course near the airport, finished “The floor plan of apartments has been modified and enhanced based on the feedback we received from previous apartment ownquickly to see an increase in secondary market sales this year 2. The Waves - a set of white villas running along the coast ers and also to consider pricing and market demand,” he said. Carillion Alawi and Al Turki are among the local contractors WHITE ELEPHANTS: with which The Wave is doing business. The expansion to the 1. Blue City – the 20-year mega project of schools, Muscat airport – tendered last year with construction started – apartments, villas and recreation areas said to have collapsed is also ticking over. The RO462 million (US $1.2 billion) project hired two big hitters in consulting from outside the GCC, Turkish through lack of sales and financing interest 2. Salam Yiti, an RO770 million resort firm TAV and Greece-headquartered Consolidated Contracting Company, but they are making their presence felt in the region.
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CONSTRUCTION WEEK MAY 1–7, 2010
MUSCAT SECURITIES MARKET – STOCKS TO WATCH 1. Al Jazeera Steel Products Company – leaped from RO0.32 to RO0.39 between 25th March and 4th April, normalising since to around 0.36 2. Construction Materials IND – shot up in three months from RO0.1 to RO0.9 between 25th January and 25th April 3. Majan Glass – up from RO0.65 at the beginning of January to RO0.8 by the third week of March
FURST/AFP/GETTY IMAGES
The project calls for expansion of the airport, partly driven to the increase in visitors. The first phase is due for completion in the third quarter 2012, though Ryan Wilson, project manager at CCC, declined to specify the exact progress of the project. But some of the other mega projects are hanging as albatrosses around the neck of the city’s region. Blue City – a 20-year venture situated less than an hour from Muscat that was to comprise schools, apartments, villas and recreation areas for the burgeoning commuter belt – is widely deemed to have collapsed because of a lack of sales. The board of Al Sawadi Investment and Tourism Company, the parent company of the project, sent out a notice in February calling for investors to vote on the ‘dissolution of the company and filing subsidiaries’. Moody’s Investors Service, which rates the bonds issued by Blue City to fund construction, said that as of November last year, Blue City had sales of US$74.6 million – less than a tenth of its $860 million target. Similarly, Salam Yiti, an RO770 million resort project coordinated by Omran, the government-owned tourism developer, and Sama Dubai, has stalled completely. A spokesperson for Omran said: “In terms of project development it is still on hold and has been so for the last year, due to the financial crisis.” Wael Lawati, CEO of Omran, told journalists earlier this month that the two parties were in discussions about how to move the project forward – and if those talks break down, Omran may have to find a new partner to finish the project, he said. The spokesperson denied to CW that there were any problems with their relationship with Sama Dubai and said there were no new partners involved. Ibrahim Alhosni, Omran’s investment manager who coordinates partnerships, refused to comment. The scope of material suppliers to Muscat projects may soon change greatly, based on circumstances in surrounding countries. Hattish Kumar, senior financial analyst for Global Investment House in Kuwait, points out that the overall slump in construction in the UAE may cause many suppliers in the country to sell into Oman, to chase slipping profits. “The prices between UAE and Oman are very similar, meaning that there will be very little margin in selling into the country,” he says. The two leading cement producers have both cited this enhanced competition for a dip in recent profits and sales.
OMAN IS LOOKING TO GROW FORM A STEADY BASE.
Kumar adds that as long as the country overall meets the expectation of a 94% completion rate for projects, the future looks good for Muscat-based suppliers. Oman Cement Company saw net income rose RO 7.1 million for the first three months of 2010 against the end of 2009, although this resulted in a 2.8% reduction in net profits. Falls in sales revenues were a direct result of drop in sales volume from 580,000 tons to 490,000 tons, according to Global Investment House in Kuwait. Average cement prices remained slightly higher at RO31.33 per ton since the beginning of the year. Despite such declines for suppliers, Kumar says: “I think that if the rest of the projects can go ahead it looks good for companies that produce cement or steel.” He highlighted the as-yet unlisted Al Madinah company as a future player in the country. It will begin production in 2011 with a start-up capacity of 800,000 mega tons.
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31
DIALOGUE MIKE ASPINWALL Red sky thinking The managing director tells all about the efficiency to a construction company of a fully linked-up computer system By Ben Roberts
How did RedSky IT established itself in the Gulf?
How does this meet market needs today?
RedSky IT had a number of customers in the region over the last ten years from a number of UK firms that had partnered with Emirati companies in joint ventures. The customers were using the software in the UK, and when they established themselves in this region they bought the software with them. Five years ago we thought it was appropriate to have a presence in the region. Due to its British background construction is similar; for example, how a project gets commissioned, and the fact that architect works for the client rather than the contractor.
Until recently, when projects were sold off-plan and made money, perhaps the control of costs didn’t have to be as tight. I think what’s happening is that the smarter companies know they have to be accurate with their costs and must tightly track variations when billing clients. I think the companies that will be making a profit over the next few years are those who know where exactly they are on projects. This is a question of information, visibility, and low overheads. We’re going to see those companies that take this opportunity to invest in system, when the economy in the country recovers these companies can capitalise, and that even when margins on a project are still quite low they can still make a profit. This will allow them to bid for more contracts and make more profits.
How do you assess the last year – and have we turned a corner?
I think in the first quarter of last year things ground to a halt. Up to about January 2009 there was the idea that Dubai ‘is the biggest and the best’ and would not be affected, and then there was a big crunch. A lot of projects went on hold, although I think we’ve seen that normalise over the last few months. Tell us about the product.
What are prospective customers asking you?
They like the idea of a big-picture solution but often don’t know how it can be effectively installed in bite-size chunks. They can start, for example, with just the core accounting system in place, with a payroll system that best monitors all labourers. Further, you can know if all machinery hired is working, has their use in fact finished and can be sent back rather than incurring a lot of money needlessly in weekly hiring charges. Then there’s getting sub-contractors paid. In the past it has often been difficult to get this joined up, where in a typical company the estimating person will run his bit, and the commercial person will run his, and they don’t cross over.
The key focus is the project. Say with a piece of land you may have an idea for a tower. You work with architects and consultants to produce a design and then a document for the pricing of construction – this bill of quants can be big, detailed documents. The system can import this document for the contractor to start pricing it. As a main contractor you will slice these details into perhaps 20 to 30 pieces for sub-contracting. Then you will compare sub contractors’ prices and choose which bids to use in What are your forecasts for the rest of the year and the your tender response. Hopefully you win the contract and may company’s opportunities? have to restructure how the project will be performed. You’re I actually think it will pick up this year, perhaps more placing orders, potentially driven from updated material needs government-related projects. I think and when you will need them onsite. The we have established ourselves so that system tracks ‘goods received’ information, BIO when companies expand into different so your cost reporting is as up to date as A Cambridge graduate with an markets they can have the same solid possible. The payroll feeds costs directly engineering and computer science systems in place. Up to recently we’ve to the projects and Sub contractors degree, Mike Aspinwall was initially sold into the top end of the market, valuations can be performed which drive involved with running bespoke partly due to our initial customers. One their payments. The client valuations then development projects for manufacturing focus now is to address the small-tocreates the application for payment to the and government before moving into the medium players, as well as educational client. The internal valuation gives the true construction sector. As development seminars in Dubai, Abu Dhabi and picture of the project’s performance. director for Red Sky he led the design Saudi Arabia – the latter of which So RedSky IT’s software can provide a and development of the AXiM product. In we’ve been in contact with a number of system that can manage all of the business January 2007 he was appointed MD. prospective clients. process or just the part you need now. 32
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