Me Consultant February 2018

For the construction specialist

Driven to Innovate We speak to AECOM’s Charles Dunk about the role, and future, of immersive tech ON TOPIC

The importance of light and luminaires on projects

IN PRACTICE

Four experts discuss PPP issues and the way forward

ON SITE

The importance of midrange housing in the GCC

ISSUE 045

February 2018 Publication licensed by Dubai Production City A product of Big Project Middle East

CONTENTS

On topic IndUstRY VIEWs FROm AcROss thE mIddLE EAst

07

09

07 AnALYsIs

Faithful+Gould’s David Clifton and Donal O’Leary provide insights into Saudi Arabia’s economy in Q4 2017 09 AnALYsIs

Cavendish Maxwell’s Manika Dhama highlights current trends in Ajman’s residential real estate market 12 nEWs

Rockwell Group to work on super tall tower in DMCC’s Uptown Dubai development

13

18

In practice AnALYsIs, InsIghts And IntERVIEWs

18 IntERVIEW

Jason Saundalkar talks to Charles Dunk, AECOM’s regional immersive technologies specialist, about the role and future of technology such as AR and VR in the construction industry

24

28

24 InsIght

We talk to four regional experts about the state of public-private partnerships in the GCC and find out what governments need to put in place to boost project success

On site cAsE stUdIEs, OpInIOns And snApshOts

32

36

32 IntERVIEW

We talk to KEO’s Philip Gillard about his new role and goals 38 OpInIOn

ARADA’s Derek Rush on the importance of mid-range housing and a developer’s relationship with contractors 40 thE BAck pAgE

Strategy&’s Ramy Sfeir says that landowners should be proactive and strategic in extracting value from dormant land

38

40

FEBRUARY 2018 3

WELCOME

Group EDITOR’S NOTE

MANAGING DIRECTOR RAZ ISLAM raz.islam@cpitrademedia.com +971 4 375 5471 EDITORIAL DIRECTOR VIJAYA CHERIAN vijaya.cherian@cpitrademedia.com +971 4 375 5713

Editorial

Construction Tech We’ve got an interesting few months coming up for both Middle East Consultant and Big Project Middle East. I’m very much looking forward to working on MEC’s first themed issue for the year (out in March) and beyond that, both Gavin and I have begun the ground work for our highly anticipated Value Engineering Summit, which is scheduled for May. We’re on the lookout for construction experts to present and be part of our panels, so if you’re keen to participate, please do drop either of us a note.

Coming back to the issue that you now hold in your hands, we covered a lot of interesting topics this month, but one in particular was close to my heart. In the second half of January, I sat down with AECOM’s Charles Dunk to chat about immersive technology, which covered things like augmented reality and virtual reality.

It was fantastic to chat about, and experience, the real-world applications and many benefits of these innovations and discuss what the future may hold.

Following my interview, my mind started to wander and following a weekend filled with pizza and some of my favourite movies, I began to wonder when we’d see some of the things that movies have already made ‘real’ for many of us. I reckon there are tons of applications in the construction sector for advanced gesturebased user interfaces, the sort that 2008’s Iron Man and 2002’s Minority Report showed us. Gesture interfaces do exist today, but they’re nowhere near as intuitive or powerful as what those movies showed us – just imagine examining and building or making changes to realistic models using technology like that.

On-site, with the contracting side of things, I reckon the ‘power loader’ that Sigourney Weaver used to defeat the alien queen in the 1980s classic Aliens should become a reality. Here though, I’ll admit it’s more because I’ve always wanted to pilot one of those things but, in reality, I suspect it will have little use on-site in the future as advanced 3D printing looks poised to be the next big thing. Enjoy the magazine!

EDITOR JASoN SAuNdALkAR jason.s@cpitrademedia.com +971 4 375 5475 SUB EDITOR AELREd doYLE aelred.doyle@cpitrademedia.com

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Jason Saundalkar Editor, Middle East Consultant 4 FEBRUARY 2018

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ON TOPIC

MOST POPULAR

fEATUREd

REAdERS’ COMMENTS

CONSTRUCTION

$1.4bN hIGhWAy TO KSA

Carillion crisis – Regional projects will continue

This achievement deserves a lot of attention (UAE opens upgraded $1.4bn highway to Saudi Arabia, January 24, 2018).

Although everyone loves to hear about exciting stories like the Hyperloop One or flying taxis in Dubai, I think projects like this are actually far more important for everyday lives.

Thousands of trucks and cars carrying goods and people cross our borders every single day, and investment into the highways that cross the continent is absolutely critical to development here. As we continue to wait for the GCC Railway to be completed, the roads will remain the most important link between the countries of the region – the traffic notwithstanding.

I’m sure I’m not alone in welcoming improvements to the Gulf’s main highways. You only have to take a look at the number plates of cars in Dubai during the holiday periods to see how many families are already coming to the UAE from Saudi… Personally, I can’t wait to take a road trip on the Sheikh Khalifa bin Zayed Highway from Abu Dhabi to the border!

CONSULTANT

Chris Seymour appointed as MD of Mott MacDonald ME

Video: GCC Power Market Overview 2018

CONSTRUCTION

Laing O’Rourke wins Expo 2020 contracts worth $182m

CONSTRUCTION

Abu Dhabi to build world’s largest desalination plant

CONSTRUCTION

Nakheel, AccorHotels to debut Raffles on Palm Jumeirah

6 FEBRUARY 2018

Video: What to expect at Middle East Electricity 2018

Name withheld by request

ON TOPIC

ANALYSIS

KSA Market Intelligence Faithful+Gould’s David Clifton and Donal O’Leary provide an overview of Saudi Arabia’s economy in Q4 2017

O

PEC’s commitment to maintaining constraints in production, coupled with a series of geopolitical events (Kurdistan, Iraq and Iran) and pipeline breakages, means oil pricing has returned to a $67 per barrel point not seen since May 2015. Although US shale production has picked up most of the low-hanging fields of production, it will subsequently require major investment into new, harder to develop and costlier locations, and therefore we are less likely to see the decline in crude prices this year (providing OPEC compliance holds). This gives the potential for a lesser budget deficit for the year than currently forecast.

The recent 2018 budget shows an overall increase of 9.9% to $263bn, which includes a 13.6% increase in capital spending to $54bn.

Although this incorporates some already committed monies to new projects, we expect to see a significant uplift in government project awards through the year. With 12% of the budget being funded by debt, we anticipate significant further bond issuances soon, in both USD and riyals. Total government expenditure is significantly increased when including the Public Investment Fund’s $22bn and other funds committed to stimulus at $13bn – a record total of $298bn.

With change very much on the agenda, we’ve seen construction awards lower than we forecast, due to a relatively poor end to the year, at a level comparable to 2016 of $22bn. Market dynamics are leading awards away from buildings, roads and rail to a high level of activity on power and water and oil & gas (relative to the previous year). This is FEBRUARY 2018 7

GDP, 2008-2018 ($ billion) 800 700 600 500 400 300 200 100 08

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Construction as a percentage of GDP – KSA, 2012-2017 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0%

2012

2013

2014

2015

2016

2017

General inflation, January-November 2017 0.1 0 -0.1 -0.2 -0.3 -0.4 -0.5 -0.6 Jan

Feb

Mar

8 FEBRUARY 2018

Apr

May

Jun

Jul

Aug

Sep

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Nov

expected in the short term to continue, as the delivery lead times on independent power projects (IPP) and independent water and power projects (IWPP) is significant, and power and water capacity need to be in place early in the development curve. The funding models for these type of developments are well understood regionally, and successful schemes are already in operation.

Over the course of 2017, the pipeline of programmes and projects within the industry experienced significant flux. With the reprioritisation programme undertaken, we saw potential works under build or in pipeline decrease from $1.05tn to $800bn in early 2017, before the wave of announcements later in the year, which lifted the market potential to $1.75tn. As the construction industry looks to recover over the coming years after six consecutive quarters of contraction, the 2017 forecast contribution to GDP is $41.5bn, or 6%. The increase in the Kingdom’s budget and the raft of new announcements add a level of tentative positivity for 2018-2020.

We still have a tight lending environment, which is certainly constraining a significant proportion of the private sector that does wish to commence delivery of developments. An additional constraint has been the uncertainty associated with the supporting infrastructure developments that the private sector needs from the government sector.

We expect the assigned budgets to actively encourage the private sector to move quite quickly, especially in the fields of housing, hospitality and manufacturing.

With the continued loss in backlog for the industry, we saw another year of contraction in 2017, as the workforce shrank as it did in 2016.

Given our expectations for 2018, it is expected that by late year, backlogs should come under less pressure. We also expect the significant roll-out of project management offices (PMOs) across the government and semi-government sector to gain traction during 2018, with prioritised projects and programmes being rolled out at a relatively significant pace.

This is a positive outlook for the industry, given the past two years of contraction and uncertainty.

While we know that bonds and PPPs (public-private partnerships) are areas of focus and already being rolled out in certain sectors, we anticipate seeing other potential forms of transaction come more into play. These could include reverse trade with the Kingdom’s largest customers. The potential to agree direct payment in oil for the delivery of large-scale infrastructure programmes is a distinct option.

The pipeline of opportunities in 2018 means our forecast for contracting awards has increased by quite a significant percentage to circa $35bn, as government commitments start to come through. This is led by schemes announced in previous years that we believed would be awarded by end of 2017 – including Makkah Metro – and Saudi Aramco’s continued drive to invest $414bn over the 10-year horizon.

This is based on the significant increase in government commitment to a level of PPP-type funding, and on regional liquidity still being quite tight but with the attraction of ECAs to support certain schemes.

Source: Faithful+Gould

ON TOPIC

ON TOPIC

ANALYSIS

Ajman Residential Market Overview Manika Dhama continues her focus on the northern emirates and discusses Ajman’s residential real estate market

T

he Ajman residential property market has in the past primarily catered to residents looking for a cheaper alternative to the neighbouring emirates of Sharjah and Dubai. During the market peak of 2011 and beyond, residential projects closer to the Sharjah border fulfilled the demand for affordable housing for expatriates.

This group of residents made up 83% of the total population in 2015, and chose to live in Ajman apartment blocks within a 20-30-minute drive of key business centres in Sharjah and Dubai. However, price and rent declines among properties in Dubai since 2016 have had a knock-on effect in the northern emirates, including Ajman, where some projects have been scaled down or cancelled and price and rent performance have been negatively impacted.

Residential Supply

The residential market in Ajman was initially dominated by villas/ townhouses built by locals, but there has been an increasing number of apartment projects developed in recent years to cater to demand from expatriates. According to Cavendish Maxwell’s research, approximately 9,100 apartment units are scheduled to complete between 2018-19, with expected completion dates ranging from March 2018 to June 2019.

In contrast, the total upcoming supply for villas/townhouses is 2,500 units, with expected completion dates ranging from March 2018 to December 2019. The majority of large apartment projects are on the Corniche and in Ajman City, with more than 800 units each coming up in at least three projects in these areas. These are primarily mid-rise towers of 15-20 floors, with only two projects with 40-floor towers.

FEBRUARY 2018 9

ON TOPIC

“Infrastructure impetus from the government and improved transparency, along with increasing activity from private sector real estate companies, could help improve the investment profile of the emirate”

Transactions

According to the Real Estate Regulatory Agency, Ajman (ARRA), in 2016 the emirate registered more than 18,000 freehold unit transactions, an increase of 39% from 2015 (as of December 15, 2016). Overall, $408m worth of transactions were finalised during the year.

Cavendish Maxwell research suggests that Arab and Indian nationals make up the majority of buyers in freehold locations in Ajman.

These include developments such as Al Zorah, Ajman One, Emirates City and Ajman Uptown City. Most of the residential projects in Ajman have been built by private developers who do not have projects in other emirates. However, new projects have recently been announced by developers with a track record in neighbouring emirates. This includes Tiger Properties’ Hamadiyah City, featuring 100 towers between 10 and 45 storeys spread over 40m sqft. The project is on Mohammed bin Zayed Road, and infrastructure work is underway.

sizes for two-bedrooms range from 800sqft to 2,500sqft. Studios, the next popular unit type, are available in 300-900sqft sizes.

Rents in Ajman Corniche range from $9,300 per annum for a onebedroom unit to $19,100 per annum for a three-bedroom unit, while Emirates City rents start at around $6,535 for a one-bedroom and can go up to $12,251 for a three-bedroom unit of 1,800sqft. In comparison, villa/townhouse rents in Ajman Uptown start at $10,900 per annum for two-bedroom units and larger units of around 2,300sqft command rates of $17,700 to $20,419 per annum. Four- or five-bedroom villas and townhouses of 4,000-5,000sqft in Al Mwaihat command rates as high as $38,116 per annum.

Community facilities

Prevailing apartment prices in the emirate range from $82 per sqft in Emirates City to $133 per sqft on average in the Musheiref area. The majority of stock is one- and two-bedroom apartments. Square foot area for a one-bedroom ranges from 550sqft to as large as 1,900sqft, while

In addition to residential projects, Ajman has also attracted large-scale retail developments catering to the catchment population, as well as visitors from neighbouring emirates. Among the prominent retail offerings is Majid Al Futtaim’s Ajman City Centre, on Al Ettehad Street in Al Jurf. The mall has recently grown from 29,000sqm to 55,672sqm in size as part of the ongoing redevelopment, in addition to increasing parking capacity from 750 to 1,800 as part of a $177m extension.

Further down the road is the China Mall in Al Jurf industrial area. This merchandise wholesale distribution centre is operated by Gulf Chinese Trading Corporation (GCTC) and occupies an area of 280,000sqm. Additionally, Ajman Holding recently announced the development of a 100-store mall, Mirkaaz, being built over one million

Ajman GDP at current prices (AED million)

Ajman apartment area range by unit mix type (sqft)

Price and Rent Performance

GDP at current prices

Growth rate %

Minimum 6.0%

20,000

Maximum

4,000 3,500

4.5%

15,000

3,000 2,500

3.0%

10,000

2,000 1,500

1.5%

5,000

1,000 500

2010

2011

10 FEBRUARY 2018

2012

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2014

Studio

1BR

2BR

3BR

Sources: Cavendish Maxwell, Ajman Department of Economic Development

The upcoming villas and townhouses are primarily in the Al Raqaib residential district, which is being developed under the Sheikh Zayed Housing Programme.

ON TOPIC

sqft of land in the Al Tallah II area bordering Sharjah. The proposed development is expected to be completed by December 2019.

Economic Overview and Outlook

Ajman’s GDP was $4.68bn in 2014 (the most recent available government data), up 5% compared to 2013. Over the same period, the construction, real estate, business services and financial corporation sector grew at an annual rate of 8%. Additionally, Ajman’s industrial base has approximately 256 industrial firms – the emirate ranks third in the UAE in this sector, with manufactured goods exported to over 65 countries.

Additionally, Ajman’s Department of Economic Development reported an increase in demand for new commercial licences, to 4,233 licenses in 2016, a growth rate of 16%.

Development in Ajman’s industrial areas, as well

Ajman upcoming apartment supply, 2018-2019 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 2018

2019

as steady growth in its manufacturing sector, is expected to improve job opportunities, thus improving demand for residential properties.

With a population of 267,684 in 2016, expected to reach 300,000 by 2020, the Ajman real estate sector needs to be supported by additional job creation within the emirate, through the manufacturing and construction sectors in particular, along with an increase in business activity in the free zone.

In 2017, the government of Ajman allocated 34% of its $321m budget to supporting economic and infrastructure development, translating the Ajman Vision 2021 and the emirate’s future plans.

Infrastructure impetus from the government and improved transparency as well as ease of doing business, along with increasing activity from private sector real estate companies, could help improve the investment profile of the emirate in the coming years.

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ON TOPIC

Rockwell to work on tower in Uptown Dubai DMCC has selected New York-based Rockwell Group to be the interior architect of a super tall tower in its Uptown Dubai development. The as yet unnamed tower is one of two super tall towers that will anchor the 10m sqft project.

Six global bidders were shortlisted, with the final nod going to the Rockwell Group. DMCC said the firm’s scope of work includes the design of the tower’s premium five-star hotel and branded residences.

“We are excited to work with Rockwell Group to create a breathtaking experience with global appeal, and what will become one of Uptown Dubai’s two iconic super tall towers. Their global experience in bringing futuristic concepts and innovative designs to life will lift Uptown Dubai’s energetic vibe and design to new heights. It’s an exciting time for design in Dubai,” said Ahmed Bin Sulayem, executive chairman, DMCC. Once complete, the luxury tower will feature luxury hotel rooms and suites, high-end restaurants, health spas, conference facilities, grade A commercial space and 237 branded residences. DMCC began construction of its Uptown Dubai District in September last year.

12 FEBRUARY 2018

Majid Al Futtaim opens My City Centre Al Dhait Majid Al Futtaim (MAF) has opened My City Centre Al Dhait in Ras Al Khaimah, another investment by the company in a communityand convenience-focused retail and services destination. The $18.65m mall has a total area of 7,000sqm and a gross leasable area of 5,494sqm, housing more than 30 regional and international lifestyle brands.

My City Centre Al Dhait is MAF’s third My City Centre mall in the UAE, a neighbourhood shopping and dining destination created specifically for nearby residential and commercial communities.

The opening of My City Centre Al Dhait reinforces MAF’s 2016 commitment to increase investment in the UAE by $8bn by 2026, taking its total investment in the country to $13bn.

My City Centre Al Dhait follows green building protocols with facilities such as collecting condensed water from air conditioning and ventilation systems for use in irrigation. The mall is also fitted with LED lights and water-saving low-flow fixtures and faucets. The single-storey property meets LEED Gold criteria and its solar-panelled parking bays are expected to deliver energy savings of 7.5%.

ON TOPIC

RICS launches global ‘Cities for our Future’ competition

Emaar Beachfront to offer Miami lifestyle Emaar Development has launched its latest build-to-sell project in the UAE. Emaar Beachfront is to be a private, gated-island destination that will allow residents to experience Miami Beach-style living in Dubai.

The master-planned private island will offer a range of leisure and lifestyle attractions including F&B outlets, beachside play areas and retail pop-ups. The 10m sqft destination will also give residents access to a 1.5km private beach and the developer says the project will offer exceptional quality and design excellence.

“Emaar Beachfront is a one-of-its-kind private island development that offers the opportunity to experience a new lifestyle by the Arabian Gulf. Its unique selling proposition is its location and the free access it offers for residents to a private beach,” said Ahmad Al Matrooshi, managing director of Emaar Properties.

Emaar also announced Beach Vista, a two-tower residential development with 33 and 26 storeys. It will be the first on the island and the developer said residents will be able to enjoy views of the Arabian Sea, Palm Jumeirah, Marina, Burj Al Arab and the wider Dubai skyline.

“As the first residential community in Emaar Beachfront, Beach Vista is for those who value the finer aspects of life, and promises a relaxed lifestyle in a serene setting. It will appeal not just to UAE-based and regional investors but also international buyers who value the distinctive lifestyle choice it offers,” added Al Matrooshi.

RICS (Royal Institution of Chartered Surveyors) has kicked off a global competition in partnership with the United Kingdom National Commission for UNESCO and the Association of Commonwealth Universities.

The ‘Cities for our Future’ competition challenges young people to find ways to help tackle the most pressing issues affecting growing cities around the world.

To win, entrants will have to provide practical, innovative solutions to address challenges such as strained infrastructure and services, poor quality housing and even poor air quality.

Those entering the competition will be asked to propose solutions to issues affecting 24 global cities, including those in the GCC. With GCC cities specifically, which have historically been heavily reliant on petrochemicals, participants will have to think about how these cities can diversify and embrace the benefits of solar energy to help combat climate change.

Young people wishing to enter the competition should visit www. citiesforourfuture.com.

FEBRUARY 2018 13

ON TOPIC

Atkins appoints new head of architecture Atkins has appointed regional veteran Lee Morris as its new head of architecture for the Middle East & Africa.

In his role, Morris will focus on managing a team of architecturally led, multi-disciplinary designers and urbanists to spearhead projects in the region.

With the increasing activity in the Saudi Arabia market, the strength and capabilities of the Atkins’ international design and architectural offering is more important than ever, said the company in a statement announcing the appointment.

Atkins was acquired by SNC-Lavalin last summer and has masterplanned the King Abdul Aziz Road development in KSA over the last eight years and is now designing one of the key gateway buildings and two hotels.

Morris is integral to developing Atkins’ portfolio of work in the Kingdom.

“During this time of change in the region, fresh and innovative approaches to design are essential,” said Simon Moon, Atkins’ CEO for the Middle East and Africa, commenting on Lee’s appointment. “I’m very happy to welcome Lee back to Atkins where I believe he will bring great vision and leadership to our architecture team in the region.”

14 FEBRUARY 2018

RSG completes Burj Sabah foundation work Dubai-based real estate developer RSG Properties has announced that foundation work on its Burj Sabah tower in Dubai’s Jumeirah Village Circle (JVC) is now complete. Construction work on the project is being led by Al Asri Engineering Consultant and Team Engineering Enterprises.

The developer said that 3,400m3 of concrete and 640t of steel was used for the foundation of the tower. RSG added that raft foundation works were completed in 24 hours and involved a vast amount of raw materials, logistics and a 150-strong workforce that worked through the night.

The raft foundation works were conducted on Islamic New Year 2017, to avoid creating traffic delays while transporting the vast amount of concrete from the cement plant to the site. The developer also said the project’s on-site and off-site crews made the enabling works process a timely success.

The tower will offer 19 floors and a mix of studio, one- and twobedroom apartments. Burj Sabah was also pre-certified as a green building and is said to incorporate green elements in its design and construction. RSG said the tower is as green and smart as it is comfortable and that, once it is complete, it will offer residents premium suburban living.

RSG said work on the construction site is progressing according to the agreed schedule, and the developer expects the tower to open in February 2019.

ON TOPIC

Chris Seymour appointed MD of Mott MacDonald

PDO opens tender for 100MW solar plant Petroleum Development Oman (PDO) has invited companies to participate in a competitive tender for a 100MW solar photovoltaic (PV) project in southern Oman.

The power generation project will be the first renewable energy venture for PDO, a majority government-owned entity. The project will be developed as an independent power project (IPP) and electricity produced by the plant will be managed by PDO exclusively, under a 23-year power purchase agreement (PPA) with the developer.

A PDO statement said: “It is envisaged that the project will be privately financed through a combination of sponsor and thirdparty equity and non/limited recourse debt, under a similar structure to previous IPPs. It is intended that PDO will sign a direct agreement with the project’s lenders setting out financial commitments.”

The company that wins the competitive tender will be given a long-term concession to design, construct, finance, operate and maintain the solar plant for the duration of the PPA term. A request for proposal (RFP) is likely to be issued in the near future, while the award for the concession will likely take place in June.

Global engineering, management and development consultancy Mott MacDonald has appointed Chris Seymour as managing director of its Middle East business. Seymour first joined the consultancy in 2016 as development director for the Middle East and South Asia region.

As part of his new role, Seymour is responsible for expanding the consultancy’s operations across the region and will focus on energy, infrastructure and the built environment.

“Chris has made a huge impact since he joined us a couple of years ago. He takes on this role at an exciting time of change and development in the Middle East, with many regional governments looking to honour their ambitious infrastructure commitments. To fund this there is continued focus and appetite for PPP in the region, as well as spending commitments being made by some governments on the back of better oil revenues in the second half of 2017. With Chris’ broad experience and leadership, we’re looking forward to working closely with our clients in the Middle East to help them realise their ambitions,” said David Cox, regional managing director for Middle East and South Asia, Mott MacDonald.

FEBRUARY 2018 15

ON TOPIC

OPINION 01 Sergio Padula is a technical director and lighting expert at iGuzzini Middle East.

The Importance of Light and Luminaires iGuzzini’s Sergio Padula discusses how light can be used to provide a variety of services in different environments

01

L

ight and luminaires are an important element of the most popular infrastructural platform for the Internet of Things (IoT) – I’m talking about smart cities and applications in homes, building, retail, office and even the cultural fields.

Light is an element for data transmission, and luminaires become a means of communication over WLC, Li-Fi and Beacon protocols managed with various devices.

Light creates new services based on the data

transmission rate for the benefit of users.

With the use of sensors, museum visitors (for example) can obtain smart information through apps; video surveillance information can be provided in real time about traffic and parking conditions in cities; occupancy flows can be detected in workplaces where space optimisation is vital; customer purchasing habits can be interpreted in retail.

A significant example within the cultural field can be seen at Scrovegni Chapel in Padua, Italy. With Tunable White, a technology that enables white light tones to be adjusted dynamically as the intensity of natural light varies, we have implemented an unprecedented responsive lighting system in a very prestigious cultural space.

Through a system of sensors used to detect the intensity and the spectrum characteristic of the light, artificial light can interact dynamically with the variation of natural light and be automatically adjusted in terms of colour and intensity, in order to guarantee the best perception of the artwork (Giotto’s frescoes). The new IoT lighting system is a ‘restoration of perception’ project

that combines LED luminaires, environment sensors and internet protocol software to light the fourteenth-century fresco cycle.

In an initial phase, sensors designed specifically for the interior space will measure the variations in natural light.

Then, once this data has been processed, a dynamic smart lighting system will be installed and use a specific, highly advanced algorithm to adapt the artificial light to any changes in environmental conditions. This will benefit both the visual experience and the conservation of the paintings, as the artificial light will interact dynamically with the natural light and automatically adjust the colour temperature and intensity, to constantly achieve values which offer the best possible viewing conditions.

The system operates on an internet protocol developed for sensor nodes and is therefore compatible with the worldwide web. This means each sensor node can be reached remotely to view the data measured or even change the settings for a more emotional, true and immersive experience of the magical colours of Giotto’s art.

“The artificial light will automatically adjust the colour temperature and intensity to constantly achieve values that offer the best possible viewing conditions” 16 FEBRUaRY 2018

Image courtesy of UN Studio

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IN PRACTICE

18 FEBRUARY 2018

IN PRACTICE

INTERVIEW

Driven to Innovate Jason Saundalkar talks to Charles Dunk, associate director, immersive technologies, UAE & Oman at AECOM, about the role and future of immersive technologies in the construction industry echnological innovation is one of engineering firm AECOM’s key focuses, and Charles Dunk is the man at the heart of the company’s impressive immersion technology services in the UAE and Oman. Dunk is a stalwart of the regional construction industry, having worked on the contractor side before transitioning to AECOM in 2013.

In his current role, Dunk helps AECOM Middle East develop immersive content for regional projects using a variety of technologies including virtualisation, augmentation and virtual reality. To do this, he relies on several carefully selected tools including Oculus Rift VR headsets, smart devices and touchscreens, as well as web and projection with head tracking for holographic interaction. Dunk is a self-confessed tech geek and an innovator, which is what brought him to AECOM in the first place.

“AECOM were early adopters of BIM in the Middle East, and I was recruited because of that. The person that recruited me remembered that I had once stuck a miniature laser scanner to my helmet on a building site. I walked around scanning the hospital project looking a little foolish and the memory stuck, and I was recruited in part because of that willingness to try new things,” Dunk says with a smile.

Having joined AECOM and working closely with the firm’s local BIM team, Dunk then seized an opportunity to innovate while working on a theme park, which kick-started the consultancy’s VR drive. “About two years ago, I was working within the BIM team and the Oculus Rift was starting to be publicised. I took a risk and tried the technology on a theme park project and it took off. I took it to a project office where we had about 40 people, including the IP holder. Theming was very important for the project and even with very simple lighting and materials, it made a massive stir. Later, we found out the client was

interested to hear that we were using VR to evaluate the project. It was primarily used to understand the space, and that was when I realised that this is genuinely useful. So I approached our leadership, saying: ‘Look, this is something that we should take on.’ And after a few conversations and a solid business plan, we kicked off about 18 months ago.”

Technology as a Differentiator

Since then, the firm has been taking advantage of VR technology to accomplish a number of objectives with clients and stakeholders. Dunk explains: “We use it for projects with large groups and stakeholders – it helps communicate with non-technical stakeholders and approvers. A big risk for many Middle East projects is keeping to the programme and getting approvals from statutory authorities without impacting the end date.”

“Augmented reality is more about the bigger scale, like master planning projects. Virtual reality tends to be for the building scale and we’re also using VR for driving simulations, which comes in handy on transportation projects” FEBRUARY 2018 19

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“We have a standard VR suite set-up across the globe, which means we can offer VR to large multidisciplines and fast track projects. Globally disparate teams meet inside digital models and we always find something with VR that might have been missed in drawings or with traditional screens” He continues, “We use traditional ways of approaching stakeholders, but we sometimes also use innovative ways. An example would be for mega Dubai projects – using technology doesn’t guarantee approval, but we find that we get faster approvals or more informed decisions.

Internally, we also use it for risk management of designs. Recently we used VR on a theme park project to understand the complicated 3D nature of a rollercoaster threading through an existing structure.”

It’s here Dunk points out that while AECOM has an augmented reality offering, it has different use cases to VR. “Augmented reality is more about the bigger scale, like master planning projects. Virtual reality tends to be for the building scale and we’re also using VR for driving simulations, which comes in handy on transportation projects.”

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AECOM’s technology offering has been well received and the firm now sees three different levels of engagement from clients. “Some clients are asking for it as a contracted deliverable, so there’s clearly demand.

Then there are other clients who want it but say, ‘Can we bundle virtual reality with your existing service offering?’ So then we have to figure out how to make it work commercially. There are also clients that don’t ask for it but we offer VR or AR because we think it will improve the project and get better collaborator engagement. So there are three levels of engagement with clients.”

With regard to the amount of detail the company builds into its models, Dunk notes that beyond increasingly detailed VR visuals, AECOM is also able to offer acoustic modelling.

IN PRACTICE

01 The firm created an interactive VR digital twin of a typical hotel room, which was used by the client and architect to explore different interior design configurations.

02 AECOM is working with the Dubai Driving Centre (DDC) to include innovative solutions such 02

“The more senses you engage, the more immersive the experience.

We have a specialist in Glasgow, an acoustics engineer, and he understands material properties for VR. If it’s an outside plaza, acoustic properties are less important, but if it’s for a new royal theatre for example, then yes, we would physically, visually and acoustically model the interior space. We’ve modelled an airport terminal with people moving around and as they get closer, you can hear their footsteps. At a more advanced level this is called binaural sound.”

The firm turned to acoustic modelling on the theme park project mentioned earlier, but Dunk notes that there is an element of guesswork on early models. “In that theme park project, we wanted to know if you could still have a conversation a few metres away from a rollercoaster while the ride was running. It’s sometimes guesswork because at the stage you’re modelling, you don’t always know acoustic properties.

On the visual side of VR, we’re very well developed I think, but on the acoustic side there’s more to do.”

Going further still, the company explored adding odour to its models, but clients have yet to request this form of immersion. “We seriously considered olfactory boxes and offered it to a client, but they declined in the end. It was for a golf course; the user could play a round with their movements tracked with a Kinect sensor. Their marketing team suggested it to us. It’s a lot harder to control, but from our point of view it’s just a one or zero and

as VR driving simulations for driving training.

the olfactory device just plugs into a computer. When an avatar in the virtual world goes to a certain location, a variable controls the device and releases a preset smell,” explains Dunk.

Progression of Technology

Looking ahead, the usage of AR and VR in the consumer and business sectors could change significantly. Dunk references the recent Consumer Electronics Show in Las Vegas as an indicator of things to come.

“Two years ago, everyone had VR. This year, it was only Sony that had a significant VR presence. I think it’s an indicator of what we’re going to see this year in the consumer space, but adoption will continue to grow at a more organic pace within the wider industry and specifically in construction. I think other manufacturing and fabrication industries will also adopt immersive technology. We will see continued adoption of digital visualisation and immersive technology, it will be used to understand projects, be it car building, aerospace or construction, but adoption will not be as fast as the consumer sector.

“On the consumer side, we’re reaching peak VR or we’re close to it, I think. Educating the public about the difference between AR and VR is going to be AR’s biggest challenge this year. I see AR picking up and VR becoming a niche but not going away. Also, I think we’ll see a blending of AR and VR technologies and not the two distinct versions we know now. Some people are starting to use the phrase XR to describe immersive technology.”

From AECOM’s point of view, the global company’s management team firmly believes that immersive technology helps to deliver better projects, which in turn leads to satisfied clients and, crucially, repeat business. As a result, the firm is committed to developing its immersion offering further.

Dunk explains: “Self-presence and tactile/haptic response are in the works. Both are technically challenging but we have tried prototypes.

We experimented with presence in a train simulator where you could see your own hands. Tactile response needs physical interaction in the FEBRUARY 2018 21

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real world. There are gloves now available, and I’ve seen full body suits that vibrate for haptic feedback. The speed of vibration and low voltage electricity emulates the difference between a smooth surface and a rough one, but you can still push your hand through it. Right now, a visual cue works well, like putting your hand through a table. I actually saw a supplier doing this: you see your hand become skeletonised, so you realise your hand has passed through something.”

The consultancy is also working closely with certain hardware/software vendors.

“We were early adopters of Trimble Microsoft HoloLens – we provided digital models and Trimble ported the data in such a way that it could be seen in the headsets. HoloLens started about 18 months ago and we then worked with Trimble to help influence the developers of HoloLens. We’ve also struck up a relationship with HTC which gives us early access to their hardware, their SDKs, and we’re on their VIVE X programme. This allows us to work with software like Unity or Unreal and be ahead of our competitors because we already know how to develop VR-ready content.”

The firm is blazing a trail for others within the construction industry and uses VR in multiple ways, including communication and to fill in gaps where BIM software falls short. “We have a standard VR suite set-up across the globe, which means we can offer VR to large multidisciplines

“Right now, we’re running a virtual reality driving simulation, working with a transportation authority in the UAE to simulate what it’s like to drive on their new highways” 22 FEBRUARY 2018

and fast track projects.

Globally disparate teams meet inside digital models and we always find something with VR that might have been missed in drawings or with traditional screens – I’ve had this happen time and again.

This is particularly true with regards to voids – software is good at detecting clashes but gaps are hard to detect automatically. BIM software is very good at quantification and clash detection, but the software can’t always tell you if there’s meant to be a gap or not. VR is very good at detecting stuff like this; you walk around a space and you can see design errors. This is particularly useful when we are offering QA/QC services on somebody else’s design,” comments Dunk.

Considering that AECOM’s immersion technology can help deliver better quality projects, there is significant potential for the firm to be engaged purely from a QA/QC standpoint. In fact, the firm is engaged on such a project at the moment, but Dunk points out that there are challenges when competing with firms outside the construction industry.

“Right now, we’re running a virtual reality driving simulation, working with a transportation authority in the UAE to simulate what it’s like to drive on their new highways. We may not be designing that highway scheme, but they approached us and said: ‘We’d like to know what it’s like to drive on our new highway, we’re concerned about this area over there.’ When we get into that space, we’re then competing against non-construction companies or non-AEC companies. That’s challenging because they might have a whole visualisation department producing movies. We don’t have that facility immediately available – we can ramp up, but the margins become quite fierce.”

That said, AECOM will continue to develop its immersive technology and research shows that its clients recognise and value its commitment to innovation, especially as it results in better quality projects. Dunk concludes: “AECOM has always had technical skills and I think that’s what separates us from our competitors, as well as how we invest and develop these technical skills. A senior VP recently described us as the sizzle on the steak.”

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GCC PPP In Focus Middle East Consultant talks to four regional experts about the state of PPP in the GCC, barriers and what governments need to put in place to boost project success ublic-private partnerships (PPP) have come to the forefront across the GCC in recent years, due to significant infrastructure requirements and reduced government budgets. Budgets have shrunk primarily due to the decline and stagnation of hydrocarbon revenues. The result is projects and sectors once exclusively funded by governments have now been opened to the private sector.

Through PPP, regional governments can leverage efficiencies and expertise in the private sector to achieve their goals. Despite this potential, however, PPP has yet to gain significant traction in the GCC. “Collaboration between the public and private sectors in the GCC has been around for some time. However, the relationship has generally been restricted to service contracts and to the water, energy and transport sectors. Most projects developed using a recognised PPP model have traditionally done so under each market’s own version of tender and procurement laws,” says Ahmed Almihdar, senior research analyst at JLL. One of the key reasons PPP has yet to make a mark is due to a lack of legislation; however, this has begun to change. Almihdar elaborates: “PPP legislative framework is currently lacking in most GCC markets, with the exception of Kuwait and the emirate of Dubai. Kuwait has made the most progress in establishing a PPP framework, having released a PPP law in 2008 and expanding it in 2014. Dubai introduced its own PPP law in 2015 and is looking likely to update it in the coming years. Oman and Qatar have also announced that they are drafting a PPP law, while Saudi Arabia established the National Centre for Privatisation in 2017 and is thought to be drafting its own PPP law as well.”

Parsons’ Javad Farooq agrees with Almihdar’s assessment, adding: “Considering the sustained depression in hydrocarbon prices, the region appears primed for public-private partnership opportunities.

Some countries are more advanced than others in the legislative process, supported by appropriate authorised bodies; however, all of the countries appear to be exploring this form of project delivery.”

As governments look to fulfil their commitments for the delivery of infrastructure, especially with regard to time-sensitive mega projects 24 FEBRUARY 2018

such as Expo 2020 and the 2022 Qatar World Cup, the benefits of PPP are perhaps even more relevant to them today.

“New accommodation is generally provided as part of the process.

This will be aligned to design and construction best practice, with new facilities being maintained for a concession period, typically 20 years or more. The public sector entity makes no payment for the facilities or services until the contractual handover date, so there is always a powerful incentive for the developer to complete the works in accordance with the programme. There are also significant sanctions for failure or nonperformance, both during the construction and concession periods. These keep the building contractor and facilities management contractor focused on performance. PPP projects are also described as being off balance sheet, which is a significant consideration for businesses when capital-funded versus revenue-funded alternatives options are being planned,” comments Paul Sweeney, regional director – head of Programme Management KSA at Faithful+Gould.

Yasser Khan, business director at Arcadis, adds: “Access to third-party finance is an obvious benefit as it reduces the need to borrow; however, when done well, the value extends much further. PPPs can harness the expertise of the private sector to drive efficiencies on a project, and can often bring in levels of financial, technical or technological expertise that may be less developed in some government departments.”

The Risks

While PPP as a form of procurement offers several benefits, there are also risks that can have a significant impact on the delivery of projects.

“There are several financing-related risks, so it’s important to ask: Does an enforceable legal framework exist? Are there funding guarantees?

Is the government committed to meet its obligations? If the answer to these questions is no, securing the requirement capital from banks may prove difficult or costly. If there’s a failure on the operator side, the costs of re-entering the business could be significant. It should also be understood that the procurement and tendering processes are complex, costly and lengthy compared to the more traditional procurement methods, and the public body needs to remain committed throughout the process,” cautions Parsons’ Farooq.

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IN PRACTICE 01 Ahmed Almihdar is senior research analyst at JLL.

JLL’s Almihdar notes that the immature PPP sector and the lack of established legal framework are risks for firms looking to enter the GCC for the first time. He says there are also benefits to entering the market at this nascent stage, however: “Those who choose to absorb the risk could benefit in the long term.

01 Early participation can develop relationships with government agencies, as well as the practical skills and knowledge to position private sector consortiums as frontrunners for future PPPs.” Taking the complexity of PPP into account, clients must chart their requirements carefully, while the public sector should select partners who are committed to the project and have the capacity to take it on.

F+G’s Sweeney points out obsolescence is a risk as well. “Design, specification and construction obsolescence is a risk. For example, technology is constantly evolving, so 02 what is state-of-the-art today could become obsolete in 12 months. On major projects, technology to be installed three or four years hence is a real challenge, as solutions at that time will be better, smaller, more efficient or fundamentally different. In this case you have to ask, how can the public sector get what they need, as educational or healthcare demands evolve?”

Barriers to PPP success

Research published in 2016 found that 23% of the 80 PPP projects brought to market in the MENA region since 1996 failed to conclude in a deal. A number of reasons cited in that report have yet to be addressed, while new challenges have also appeared.

“Up to now, one of the biggest barriers to wider adoption of PPP in the region has been the procurement approach that’s traditionally followed.

02 Yasser Khan is a business director at Arcadis.

The current model transfers most of the risk on to the private sector; however, in some instances, this just adds higher costs to a project rather than additional value,” Arcadis’ Khan points out.

Recent political issues have also had an impact, according to Parsons’ Farooq. “Political changes, the assignment of risks and a lack of due diligence with respect to determining the value for money have all contributed to PPP projects not being concluded. Risk allocation is probably the largest barrier to success. It is imperative that risks are allocated to whomever can best manage them. Assigning all the risk to the private sector results in unsustainable projects.”

“Seeking to retain control of the asset, while expecting the private sector to provide the necessary investments, comes a close second.

To attain maximum benefit from a PPP, owners should be comfortable in allowing the private sector to manage all aspects of the project from construction to operations. A change in mindset is required whereby the public entity transitions from its traditional owner/operator role to a position of overseeing the output and performance based on agreed key performance indicators (KPIs); that is, they need to focus on the services rather than on directly owning and operating assets. For organisations with limited PPP experience, this can be extremely challenging, as it can result in a feeling of loss of control.”

JLL’s Almihdar notes, “Each GCC market operated separately in the implementation of PPPs, therefore there are a number of reasons behind PPPs not fully launching in the GCC. Reasons include the structure of

“PPPs can harness the expertise of the private sector to drive efficiencies on a project, and can often bring in levels of financial or technological expertise that may be less developed in some government departments” 26 FEBRUARY 2018

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models used not falling within traditionally defined PPP models, which makes it difficult to adopt and use in similar/other projects. A failure to establish a stable governing body to oversee the bid process, resulting in delays, also led to investor frustration and hesitation in some markets.

Political will, pre-low oil prices, was not as strong as it is now in most markets. This, combined with a lack of legislation, a governing body and clear policy towards PPPs, restricted the growth of the PPP sector.”

Building a Conducive Environment

It’s obvious regional governments still have work to do to ensure that PPP projects conclude favourably. F+G’s Sweeney advises, “There is a requirement to ensure fair regulation and contracting of PPP to make sure both parties are treated amicably – something which traditional contracting in the region hasn’t always been incredibly strong at. A true understanding of risk and reward needs to be understood and accepted by all. The contracting nature of the region rather leans towards contractors taking the downside risk – lump sum – and clients taking the upside risk – VE, etc – which will ultimately cause PPP to fail.”

03 Arcadis’ Khan agrees: “To attract private sector investors and operators, transparent policy frameworks and a fair allocation of risk are key. Similarly, attractive deal structures with a clearly defined project scope and adequate guarantees on the expected financial return will help to encourage participation in PPP deals. When it comes to the framework put in place, avoiding unnecessary intricacies is also important, as this could put off some stakeholders, particularly those with no previous exposure to this procurement model.”

JLL’s Almihdar notes, “Establishing a PPP law is not a 04 prerequisite to successfully complete a project under a PPP framework, and we have already seen examples of this

03 Javad Farooq is vice president and commercial director at Parsons.

04 Paul sweeney is regional director – head of Programme Management KsA at Faithful+Gould.

across the GCC markets. In more established, mature real estate markets (the UK, Australia, etc), it is not uncommon for there not to be formal PPP legislation but principles and guidelines instead, and PPPs in those markets have been successfully carried out this way for decades.”

He is also quick to point out that GCC market pressures are different to other markets around the world. “While the GCC markets can follow in the same path, growing populations, limited budgets and ambitious plans have placed pressure to develop the PPP market in a short timeframe. The GCC markets are also disadvantaged by there being a number of failed PPP projects, limiting the usage of precedent to develop and progress the sector as mature markets have done.”

While successful PPP projects have been few and far between in the region, signs of positive change can now be seen in some of the GCC countries. Parsons’ Farooq says, “A successful, albeit relatively small PPP project is the Muharraq Sewage Treatment Plant, the first PPP in Bahrain. Now in the operational phase of the 27-year period, the project has achieved numerous recognitions. I think the project has been a success because it really sought to exploit the benefits of involving the private sector. The project was well structured, the selected privatesector consortia were of high calibre (a testament to the prequalification process), risks were justly assigned and the private sector was able to innovate and introduce new technologies into the Kingdom for the provision of quality services.”

In Saudi Arabia, there have been more recent successes. “In the Kingdom, GACA has been a prevalent user of PPP. We’ve seen the Madina airport successfully delivered by the TAV consortium and have seen a further three airports awarded in this format in 2017. Furthermore, in the power and water sectors in the Kingdom, the dominant delivery vehicles are alternative funding – IWPs, IWPPs and IPPs. The successful delivery of these schemes can broadly be attributed to having experienced organisations within the delivery consortia and a client understanding of correctly partnering to bring the value the delivery model has to fruition,” F+G’s Sweeney concludes.

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ON SITE

INTERVIEW

Independent Identity Middle East Consultant talks to Jeffrey Badman about HKA’s goals and objectives in the region, following its demerger from Hill International in 2017 arly last year, news broke that Hill International’s consultancy services division would become an independent company.

Continuing to focus on construction advisory, consulting and expert services, the new entity, known as HKA, continued to operate from the 40 global offices its nearly 1,000 strong team of consultants occupied before its sale and demerger from Hill.

The new company’s official unveiling in the UAE took place early in November 2017, at the Palace Downtown Dubai. The gala was attended by 220 guests, as well as several senior executives from HKA, including David Merritt, partner and head of region for the Middle East and Africa, and CEO Renny Borhan. Following the gala, Middle East Consultant caught up with Jeffrey Badman, partner at HKA, for a chat.

What key trends and nuances did you notice in the GCC in 2017?

In the first six to eight months of 2017, there was a general lack of liquidity in the Middle East due to the low price of oil. This prompted significant restructuring of organisations and debt across the region, both in government and private entities, and an increase in the move towards encouraging foreign investment in infrastructure projects, with PPP project finance featuring highly.

problems, whatever they may be. This is where HKA adds the most value – we decode project complexity and provide the best possible outcomes for our clients.

What changes do you plan to make, if any, to HKA internally to align with market realities?

Our greatest strength is our people. Their knowledge and expertise repeatedly deliver the best possible outcomes for our clients. That is why implementing the HKA Academy, which is a training scheme that will focus on the development of our technical staff ’s core skills, is so important to us. The advantage of investing in the academy is two-fold, it will provide consistency of approach and best practice, and develop and support succession planning throughout our global business.

How do you see the ME market shaping up in the next year?

The number of projects under construction, following a tough 2017, appears to be on the increase as the oil price slowly recovers, and the regional drive to lower costs and attract foreign investment through PPP financing models takes a fuller effect. HKA will focus its efforts on core services, delivering high-quality solutions to its clients’ problems on power and water, renewables, infrastructure and O&G projects.

In particular, we have seen an increased appetite from our employer side clients to engage us early to help them practise dispute avoidance, rather than resolving their claims through arbitration or litigation.

Give us an overview of your business in the GCC since the demerger, and highlight any stand-out markets or sectors.

Which services contributed the most to HKA’s bottom line in the

While going through our own transition following the demerger from Hill International mid-year, HKA has focused on its core professional services, delivering high-quality solutions to our clients in the region.

We have been engaged predominately on complex power and water desalination projects, which have tended to be immune from prevailing market trends and driven by demand.

last 12 months?

What objectives have you laid out over the next 12 months?

Are there any markets that you are keen on expanding into?

Our focus will be on further developing our relationships with highquality clients, with the goal of assisting them in resolving their

HKA is looking to continue to build a strong reputation for the new brand name, consolidate its position in the Middle East market and

28 FEBRUARY 2018

A growing part of HKA’s business in the Middle East is our Expert Group, which provides a triumvirate of engineering, delay and quantum experts, testifying in major disputes. Over the next 12 months, we are looking to grow the technical forensic team to deliver a wider spectrum of expertise.

ON SITE

“Our greatest strength is our people.

Their knowledge and expertise repeatedly deliver the best possible outcomes for our clients. That is why implementing the HKA Academy is so important to us�

FEBRUARY 2018 29

ON SITE 01 The firm held its official brand launch in Dubai on November 1.

strengthen our relationships with our key clients. We will continue to focus our efforts on our core markets across a variety of projects.

How are you planning to make a mark in that market?

HKA is focused on becoming the pre-eminent globally connected brand in our space, where we will continue to anticipate, investigate and resolve project challenges. As trusted independent consultants, experts and advisers, we will deliver solutions amid uncertainty, dispute and over-run. We aim to expand our portfolio to continue to include some of the world’s largest and most prestigious projects.

What technology will have the biggest impact in the market?

Michael Konieczka, international director of PMWeb Services, HKA, responds: Advances in power storage will have the biggest impact. We will also see increased use and expansion of AR in the construction industry. Additionally, we’ve found that the need for collaborative tools for managing all stakeholders and increasing communication has been on the rise, and is becoming more embraced in the Middle East market. Through the use of these tools, we will see a greater desired use of mobile platforms and mobile apps to provide the necessary inputs for these systems.

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Wearable technology is a trend that is just coming into the market, and its use will continue to grow as the development improves. The industry is moving towards big data gathering and providing analytics for historical information, building performance and real-time reporting. The need to be able to report on all aspects of a PMO and the associated projects requires hundreds, if not thousands, of inputs from multiple stakeholders to provide the necessary analytics. This is being supported and driven by the increased acceptance of cloud-based collaboration platforms.

“HKA is focused on becoming the pre-eminent globally connected brand in our space, where we will continue to anticipate, investigate and resolve project challenges”

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INTERVIEW

A New Beginning Middle East Consultant sits down for an exclusive chat with Philip Gillard, KEO International Consultants’ new VP of Design, to discuss his role and goals for 2018 n the first week of January 2018, KEO International Consultants announced the appointment of Philip Gillard as vice president of design. As part of his role, Gillard becomes a full member of KEO’s Executive Leadership Board (ELB) and Direct Leadership Management Board (DLM). An accomplished design professional and a certified RIBA Chartered Architect with over 20 years of international design and project delivery experience, Gillard joins KEO from Gensler, where he was managing director of the Middle East office.

On a day-to-day basis, Gillard will have full responsibility for KEO Design and the delivery of architectural and engineering services to clients across the globe. In terms of clients, the consultancy has been involved with several high-profile projects including the Palm Jumeirah Villas in Dubai, the Louvre Abu Dhabi, the Marriott Hotel in Sharjah, the Prince Abdul Aziz Bin Mousaed Economic City in Saudi Arabia and the Kuala Lumpur International Financial District in Malaysia.

KEO is obviously well established in the region, and Gillard is quick to point out that the firm has distinguished itself through its expertise in design, architecture, engineering and project management services.

“Over its 50 years in operation, KEO has worked on some of the most iconic projects in the MENA region and has helped clients achieve their vision of delivering their most complex and distinguished developments.”

Gillard was drawn to the position for several reasons: “I was attracted to the firm because of its visionary leadership and for the opportunity to work with a talented pool of professionals to reach new heights in creativity, innovation and design depth. I see great potential in expanding the technical excellence within our architecture and engineering practice to further meet our client expectations.”

Speaking about his initial plans at KEO, he explains: “A strong emphasis will be given to talent management, strengthening client relations, fostering excellence in design and successful project delivery.

My vision of this role seamlessly aligns with KEO’s progressive vision and supports its strategic moves to enhance and consolidate its reputation as a global consulting powerhouse.”

Although less than three weeks into his role when Middle East Consultant spoke to him, Gillard already has a plan in place for his first

quarter. “As part of my 100-day plan, I will be focusing on creating a more holistic design approach across all parts of KEO. One key focus will be to support the division’s exceptionally talented pool of professionals and create impactful mentoring opportunities throughout the division and its disciplines, in line with KEO’s core values.”

Market Overview

2017 was a tough year for the UAE’s design and construction industry, which was impacted by low oil prices and political uncertainty. Many firms expected a tough first half of the year and believed a release of funds and approvals on projects would come in Q3. Although this was not the case, some industry stakeholders saw signs of recovery towards the end of Q4.

With regard to 2018, Gillard is positive and notes that sustainability will drive overall development within the UAE. “We are cautiously optimistic that 2018 will improve in terms of opportunities and revenue over 2017. Oil prices seem to be settling at a higher rate, while the impact of VAT is yet to play out, particularly where resources are located outside the

“From a design perspective, I see an increasing demand for creativity and innovations while focusing on simplifying the design process to achieve higher quality. For us in KEO, it’s about building the design professional experience and taking advantage of the fact that we’re already here” FEBRUARY 2018 33

ON SITE

01

01 DAMAC Towers by Paramount Hotels & Resorts was designed by KEO and is located in the Burj Area of Downtown Dubai.

UAE. GDP levels of spending suggest a more positive 2018 and into 2019. We continue to see sustainability at the core of the strategic development of the UAE vision.”

Drilling deeper into how the market may shape up in 2018, Gillard points out that social, hospitality and mixeduse complex projects could be responsible for driving the construction sector forward.

“Despite market challenges, a number of market drivers will 02 continue to have a positive impact into 2018 and beyond.

Some of the potential drivers will be the volume of project awards, the government’s budget refocus and spending plans, with a focus on those segments to equip the country as it transitions towards a knowledge- and tourism-based economy. All these drivers are expected to stimulate the UAE’s economy in 2018 and beyond.”

VAT was introduced in the UAE and across other GCC countries on January 1, and although it has yet to have a significant impact on the construction industry, Gillard notes that it will become important for SMEs to manage the process effectively, as its impact becomes more profound.

The UAE continues to be a competitive market and Gillard notes that KEO will have to address challenges in 2018. “Keeping our best talent while meeting increasing client expectations in an extremely competitive market is one of the key challenges. However, one of KEO’s key strengths is the ability to adapt and be flexible to respond to the changing needs of the client and the increasingly demanding market conditions. Our progressive vision, which is coupled with an integrated and multi-disciplinary approach, enables us to respond to our client’s maturing expectations.”

He adds, “We give great value to the development and retention of our people, which also reflects our commitment to equip KEO with world34 FEBRUARY 2018

02 The headquarters for the Kuwait Investment Authority was designed by KEO and is 231.8m tall, consisting of 48 floors above ground.

class talent. This strengthens our ability to respond to evolving and challenging market conditions in the Middle East region. In that regard, I am truly excited to be leading KEO’s exceptionally talented team of building design professionals, and I am passionate about this opportunity to work closely with our clients to deliver incredibly successful projects across the region.”

In order to stand out in competitive markets, some consultancies are stepping up their use of advanced and innovative technology to meet client expectations, gain approvals and ultimately deliver better projects.

Gillard expects that trend to continue: “Virtual and augmented reality and BIM visualisation techniques will play an increasing role in meeting clients’ expectations, and this will filter down to the construction industry through an accelerated use of off-site modular and 3D printing techniques.”

Going forward, KEO will continue to invest in talent and leadership in order to tackle key issues, with the goal of improving quality and supporting its vast array of clients within the GCC and beyond. Gillard concludes: “From a design perspective, I see an increasing demand for creativity and innovations while focusing on simplifying the design process to achieve higher quality. For us in KEO, it’s about building the design professional experience and taking advantage of the fact that we’re already here. We’re in a great position, with 2,500 people already servicing the GCC market, and it’s a responsibility to serve the communities in which we do business for the long term.”

ON SITE

SHOW PREVIEW

Middle East Electricity

Leading power industry event undergoes major expansion

M

iddle East Electricity (MEE), the region’s leading annual international trade event for the power industry, is undergoing major expansion in 2018 to service the shifting demand dynamics of the regional sector. To aid growth, Informa Exhibitions, the event organiser, has launched a dedicated Energy Storage & Management Solutions sector, which is hosted by the UAE Ministry of Energy and runs at the Dubai World Trade Centre March 6-8. Informa will also debut the thought-leading Global Smart Energy Summit alongside the mega exhibition.

“Middle East Electricity is evolving with the industry, which is now one of the world’s most vibrant,” says Anita Mathews, group director – Industrial Portfolio at Informa Exhibitions. “Our new product sector will launch as the region’s most comprehensive coming together of local, regional and international energy storage and management providers, with international manufacturers demonstrating the latest technologies transforming industry practices to regional audiences.”

Energy Storage & Management Solutions will join four other specialised sectors at the show, which over 43-years has ignited and then maintained a reputation of being a bellwether for regional development.

“Solar is now undoubtedly one of the fastest growing sectors in the region, with the Middle East Solar Industry Association putting the number of solar projects under execution throughout MENA at 3,610 with another 1,300 under tender,” adds Mathews. “Mega projects are

being jump started across both North Africa and the GCC, while there is increasing acceptance and uptake of rooftop solutions, which have witnessed a ten-fold demand surge in the UAE in the last 12 months alone.

This advancing sector holds enormous opportunities for developers, EPC contactors, equipment suppliers and financiers.”

The 2018 edition will host more than 1,615 companies from 66 countries, supported by 24 dedicated country pavilions. Covering the entire value chain of electricity products and services across the show’s five sectors, Informa anticipates the highest turnout for MEE 2018, reflecting the transformation underway in the MENA power industry.

Alongside MEE 2018, Informa will also debut the Global Smart Energy Summit, a high-level summit featuring some of the biggest corporate champions in sector transformation, including Tesla, the US National Renewable Energy Laboratory, the US Department of Energy and NASA. The Summit sessions will lay out the future of the international sector and are expected to attract over 700 attendees exploring reform patterns across the entire power spectrum.

“The Summit will unite the region’s government energy leaders, regulators, utility companies, contractors, consultants and energy end users for three days of dialogue, thought leadership and networking with smart energy pioneers from around the world,” explains Ryan O’Donnell, programme director at the Global Smart Energy Summit.

For more information, please visit www.middleeastelectricity.com.

FEBRUARY 2018 35

ON SITE

Educate ME

Equipment Maintenance

Nehru Dalavai, services operations manager (Dubai & Northern Emirates) at KONE, discusses the critical topic of elevator and escalator maintenance Take us through KONE’s process and approach to elevator and escalator maintenance in buildings.

KONE has four individual services that make up the overall KONE Care packages for elevators and escalators: KONE PREVENTIVE MAINTENANCE

KONE preventive maintenance helps prevent problems before they appear. We maintain equipment based on its usage, age, environment, technical platform and as per customer needs. A tailored plan ensures that all individual components are checked and 36 FEBRUARY 2018

serviced at the right time as per the periodic maintenance modules, by ensuring all safeties and local regulations for all brands.

situation from the customer and then dispatch a service technician to resolve the problem in quick time.

KONE CUSTOMER CARE CENTRE

BREAKDOWN SERVICE

When end users need assistance with equipment issues, the KONE customer care centre is the first port of call. Contacting our dedicated customer care centre is easy – you simply dial the relevant phone number in the country you are in. KONE’s professional staff speak multiple languages, are trained on a vast array of equipment, can learn about the current

With KONE breakdown service for elevators and escalators, a service technician is quickly dispatched to deal with cases of unexpected equipment failure, stoppage and erratic operation. Just by making a call to the customer care centre, a technician will be sent to fix the problem based on the agreed response time in their contract.

ON SITE

For further information, please contact: +971 (0)4 279 4500

+971 (0) 4 425 4394

www.kone.ae

If elevators or escalators malfunction or have damaged components, KONE technicians can fix them. They will even identify repair needs during regular maintenance visits, often managing to fix the problem before there is any disruption to the equipment.

safety and HSE training, quality as well as customer service. They also have access to our global technical knowledge base and technical help desk, which enables fast problem-solving for all brands and types of equipment. Due to this advantage, they resolve most issues they encounter in a single visit.

How quickly can KONE’s maintenance

How

team resolve an issue in cases where

management

equipment stops working?

maintenance firm to work with?

KONE service teams are on call day and night and they can resolve most problems within a few hours. The KONE customer care centre provides round-the-clock support for any equipment-related issues.

The best way to start the search is to think about the needs of the users and equipment, as well as those of the building. They should look for reliable and trusted partners with a solid track record, and make sure that the company allows them to speak to a professional quickly when there is a problem. The maintenance company should also be able to assist on a 24/7 basis, so that equipment can be fixed and is safe as soon as possible after a breakdown.

REPAIR SERVICE

How does KONE differentiate itself from other firms offering similar maintenance services in the local market?

KONE service technicians are dedicated and highly trained professionals who keep elevators and escalators working smoothly and safely. They receive periodic training and attend toolbox talks on technical matters,

should

building companies

owners select

or a

What advice can you give building owners and management firms with regards to upkeep of equipment?

Knowing when to modernise equipment is very important. Component upgrades are a quick and cost-effective way to make small improvements to the eco-efficiency, performance, safety and code compliance of equipment. KONE offers a wide range of upgrades covering areas like water protection, automatic rescue devices, elevator door operators, signalisation, new technology upgrades and even energy-saving cabin lighting systems. Making sure elevator passengers and maintenance personnel are safe is the number one priority, and upgrading components will improve safety and help you better manage risk in a building.

How important is preventive maintenance on elevators and escalators? What is KONE’s recommendation in terms of maintenance intervals?

Preventive maintenance is very important, and we are committed to preventing problems before they appear. Our highly trained technicians maintain equipment according to a uniquely designed plan based on its usage, age and other relevant factors.

FEBRUARY 2018 37

ON SITE

OPINION

01 Derek Rush is head of development at aRaDa.

The Mid-Range Housing Approach aRaDa’s Derek Rush explains the importance of mid-range housing and highlights the importance of a developer’s relationship with contractors during construction

01

I

t’s no secret that one of the biggest challenges facing governments in the Gulf is finding enough housing for their residents. Demand for mid-range housing, specifically, in many parts of the region has now reached a critical level.

Governments are taking steps to address this need – in Dubai, local authorities recently announced that they will consider enacting legislation to enable the provision of middleincome housing in certain core areas of the 38 FEBRUaRY 2018

city – but the onus is also on developers to be ready and capable of taking on these kinds of projects.

How do we define mid-range housing?

Consultant JLL defines middle-income housing as property provided by the market which is affordable to the middle tranche (4060%) of households, on the assumption that they spend no more than 30% of their gross household income. The consultant says that in the UAE, an affordable sales price is about $215,000 with an affordable annual rate of $20,000 (around $1,630 a month).

The first issue developers should be aware of is that the demand is certainly there. Historically, there has been a tendency to focus on luxury property among some developers and in certain parts of the Gulf, as the returns tend to be higher. However, a different approach is needed. At ARADA, for instance, we believed that there was significant unmet demand for well-designed master communities in Sharjah at an accessible price point. We therefore launched our first project, Nasma Residences, in March 2017, and it quickly became Sharjah’s fastestselling community.

We followed that up with Aljada, the emirate’s largest mixed-use mega project, in September 2017. Again, we’ve ensured that a

significant proportion of the homes we have on offer in Aljada are priced at what JLL would term a middle-income level, and this has ensured an outstanding response from the market. Our experience with both projects therefore tells us there is strong demand for this type of housing.

But like other developers working in this field, we need to work harder than ever to ensure successful delivery. There are a number of challenges companies face while building mid-range projects, starting right from the outset with the cost of the land. That is only the beginning, however; our experience tells us that efficiency is the watchword.

Everything, from finishes to design processes, from procurement processes to planning, needs to be that much tighter.

I would argue that one of the most important issues in this context is the relationship between developer and contractor. In many markets around the world, the mentality on the part of developers is to squeeze the price down to the lowest possible level before putting pen to paper. However, this approach often leaves contractors nowhere to go. In a perfect world, where projects run smoothly and on time, this policy is arguably viable. However, as everyone reading this article knows, there

ON SITE

are very few actual projects unaffected by delays, snags or other issues, many outside the contractor’s control.

Developers and even consultants should understand that contractors need to price in some risk, or the risk you run is that if the contractor hits a snag, he may walk off. It’s a case of looking at how to incentivise the contractor to meet both your targets and your project objectives. Money is the primary consideration here; some developers may promise more work in later phases in an attempt to drive the price down, but we all know contractors can’t necessarily take account of that. Contractors also need to be allowed to price as best they can and leave some room, especially if matters are left to the last minute and the delivery schedule is tight.

In addition, if the price has been driven down too far and the project runs into problems, the contractor has no room to accelerate, due to cashflow issues.

Another key concern is that of payment.

Payments for me are critical; if developers have agreed to a contract and the contractor is performing, then they should be paid. We are all aware that the issue of late payments has become more and more prevalent in recent years, with some contractors even forced to rely on debt financing to make ends meet.

Our position is simple: we look to create beneficial, long-term partnerships with our contractors. You’ve got to make sure that connection is made and it must be a winwin for both parties, otherwise you’re already on the back foot before the project is even

off the ground. While these are important considerations for any type of project, they are especially vital when it comes to midrange housing projects, where margins are inevitably tighter.

The coming year promises to be exceptionally busy. At ARADA, we have already begun construction at Nasma Residences and will start enabling work on the Aljada site towards the end of Q1 2018.

The onus is on us to ensure that we carry out our work efficiently and quickly, while incentivising our partners to perform at their best. That way we can ensure that we are all able to work towards meeting our delivery schedules on time, fulfilling our promise to provide our buyers with the keys to their homes at the right time.

“Efficiency is the watchword. Everything, from finishes to design processes, from procurement processes to planning, needs to be that much tighter” FEBRUaRY 2018 39

THE BACK PAGE

LAST WORD

01 Ramy Sfeir is a partner at Strategy& Middle East.

Landowners Should Unearth Land Value Rather than sitting back and waiting for offers from investors, landowners should be proactive and strategic in extracting value from their dormant land, says Strategy&’s Ramy Sfeir

01

I

n the GCC, owning land has traditionally been a means of safeguarding wealth for governments and the private sector.

However, this land often lies dormant and unexploited. Growing economic pressure calls for a new approach in order to unlock the land’s true value.

For governments, that value resides in generating income and plugging budget deficits, as well as the potential to develop land to meet the needs of citizens. For private sector owners, the goal is the same: to commercially exploit and develop dormant land. However, these players will do so due to the need to avoid idle land taxes, to hedge against slower growth 40 FEBRUARY 2018

of their core businesses, and to diversify their portfolios further.

The region has been hit by lower oil prices and political uncertainty has risen, so we now need to generate value through all means available, which includes dormant land banks.

Here are five approaches to extracting value from land, all of which offer a range of potential returns and corresponding levels of risk.

• Mortgaging property or selling and then leasing back: This is the fastest means of releasing capital, with limited requirements and transferring all risk of the property to the buyer. However, this often eliminates the opportunity to create long-term value.

• Leasing property under a long-term arrangement: This approach is often used, particularly for hotels and malls.

It generates recurring income for the duration of the lease, requires limited capabilities and funding and preserves long-term usage rights for the owner.

However, its success depends on the investor, which could be a risk of its own.

• Selling property outright: Historically, this has been the preferred strategy of large institutional landowners, as it requires little capability or funding. However, its popularity has led to limited real estate

investment and development activity in the region, and is one of the key reasons for the housing shortage in Saudi Arabia.

• Contributing land to a development project with a partner: Here, the landowner partners with an investor and contributes the land as equity in return for partial ownership of the project, while the investor puts in the capital. When the property starts generating income, the landowner and investor split proceeds based on ownership. The disadvantage is that the approach does not guarantee returns and can introduce significant risk.

• Contributing land and equity to a project: This complex approach asks that the landowner shifts from a passive investor to an active developer. Besides land, the owner also contributes equity in return for a larger share of the development proceeds. Although this offers the highest potential returns, it also presents the greatest risk.

Unlocking value from land is not easy and landowners have to consider four factors: they should be proactive and strategic; they should seek the right deal and partner; they should structure the agreement to align with their incentives and retain control; and they should consider all viable financing mechanisms.

A big sAlute to DubAi, this is home to us now.

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