JUNE 2013
ALSO INSIDE   can Falconcity really fly? Project Qatar Clarke Samadhin the hotel that moved
PUBLICATION LICENSED BY IMPZ
087
CONTENTS
M MIDDLE EAST
PAGE 48 Why the UAE has reclaimed the mantle of the GCC’s top construction market.
JUNE 2013 07
The Big picture
nitaqat blamed for ksa construction cost rise
Smaller firms say they lack workers to bid for projects.
14
News analysis
uae takes top spot
Why is the UAE the biggest construction market in the GCC?
16 In profile Patience always pays
Ali Rashid Lootah talks to Big Project ME about Nakheel’s return.
22
Site visit
taking flight
Big Project ME visits the mammoth Falconcity of Wonders site.
30
MAIN FEATURE
through the storm
Is Falconcity a viable project in the current market?
38 EVENT analysis
project qatar 2013
Big Project ME meets Qatar’s construction industry.
48
report analysis
good times are coming
What the resurgence of construction means for the region
60
Special features
Look out below
Why sustainable flooring is the way forward.
Sustainable Concrete
Laying the green groundwork.
68 Comment searching for change
Why software can take the guesswork out of cost estimation.
76
Tenders
top tenders
Listing the region’s top construction tenders.
82 Constructive criticism Qatar’s big challenge
JUNE 2013
MIDDLE EAST
Gavin Davids wonders if Qatar will be up to the World Cup task.
3
EDITOR’s COMMENT
M MIDDLE EAST
bigprojectME.com
Limitless appeal THE MAN CHARGED with leading Nakheel’s resurgence says that his company is coming out of its malaise because people are coming back to Dubai. When it comes to attracting international attention, foreign money and talent, he argues, there really is no alternative in the region. After an underwhelming Project Qatar in Doha I’m inclined to believe him.
A city of excessive growth, limitless imagination and awash with digital cash, Dubai was an inevitable casualty when the Global Financial Crisis hit the Gulf.
Publisher Dominic De Sousa GROUP COO Nadeem Hood Managing Director Richard Judd EDITORIAL GROUP EDITOR stephen white stephen.white@cpimediagroup.com +971 55 795 8740 deputy EDITOR GAVIN DAVIDS gavin.davids@cpimediagroup.com +971 4 440 9118 features EDITOR JONATHON SAVILL MARKETING & ADVERTISING PUBLISHING Director RAZ ISLAM raz.islam@cpimediagroup.com +971 4 440 9129 COMMERCIAL DIRECTOR MICHAEL STANSFIELD michael.stansfield@cpimediagroup.com +971 4 440 9128 SALES DIRECTOR CARLO MENEZES carlo.menezes@cpimediagroup.com +971 4 440 9151 SALES MANAGER CAROL D’SOUZA carol.dsouza@cpimediagroup.com +971 4 440 9163 MARKETING MANAGER CAROLE MCCARTHY carole.mccarthy@cpimediagroup.com +971 4 440 9157
As the organisation tasked with creating headline-grabbers like the Palm, Nakheel became synonymous with Dubai’s ambitions. By the time it reached out to the World it had over-stretched itself in the process and become synonymous with its fall.
DESIGN
With its debt troubles under control, it is making a profit again. Big Project ME’s Gavin Davids uses the phrase ‘back from the brink’ in his interview with Al Rashid Lootah (Patience always pays, page 18) and it appears to be wholly appropriate.
Database and Circulation Manager Rajeesh M rajeesh.nair@cpimediagroup.com +971 4 440 9147
SENIOR GRAPHIC DESIGNER REBECCA TEECE rebecca.teece@cpimediagroup.com +971 4 440 9168 JUNIOR GRAPHIC DESIGNER PERCIVAL manalaysay CIRCULATION & PRODUCTION Circulation and Distribution Manager ROCHELLE Almeida rochelle.almeida@cpimediagroup.com +971 4 368 1670
Production Manager James P Tharian james.tharian@cpimediagroup.com +971 4 440 9146 DIGITAL
What impresses me is the company’s comfort with its transformation from landmark to benchmark maker. It has gone back to the basics of property development and seems less interest in making a statement as it is making money. A large part of that process has been rebuilding trust with investors, financers, and, most hearteningly, world weary contractors. A former engineer Lootah may be bullish, but his company is listening again. If we’re going to avoid the mistakes of the past, it will have to.
Stephen White
Group Editor
www.bigprojectme.com Digital Services Manager Tristan Troy Maagma Web Developers JOEL AZCUNA online@cpidubai.com +971 4 440 9100 Published by
.
Registered at IMPZ PO Box 13700 Dubai, UAE Tel: +971 4 440 9100 Fax: +971 4 447 2409 Printed by Printwell Printing Press LLC © Copyright 2013 CPI All rights reserved While the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be held responsible for any errors therein.
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MIDDLE EAST
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JUNE 2013
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THE BIGGEST PICTURE
Saudi Arabia’s Nitaqat programME blamed
for rise in construction costs
big project, big numbers $62.68 billion contract awards during 2012 264.26 Construction Contracts Index at 2012 year-end $71.9 billion projected government expenditure for 2013 $70.39 billion 2012 capital expenditure by KSA government
Source: NCB report
Smaller construction companies say that their ability to bid for new projects hampered by lack of workers Saudi Arabian CONTRACTORS have said that the Kingdom’s Nitaqat programme has caused construction costs to rise, while wages have jumped up as much as 15%, leading projects stopping operations. In a report by Arab News, companies said that they have not submitted bids for new work because of the uncertainty over the legal status of foreign construction workers. This has caused further problems for the industry, particularly for smaller companies, developers claimed. Abdullah Alwan, CEO of SMT Properties, warned that many companies are afraid that their workers would be arrested and deported. “The problem lies with the sudden manner in which the decision was introduced, not with the decision itself,” he said. He urged the government to provide incentives for the construction industry because of the difficulty of finding Saudi construction workers.
On a positive note, he said the situation was likely to return to normal in “two to three years,” and that many runaway workers had returned to their sponsors. Bander Al Twaim, a private company owner, pointed out that a number of projects had stopped completely because property developers had been employing workers not under their sponsorship. This has caused massive losses and a rise in costs for developers, he said, in particular those projects that were close to completion. He added that there had been a 15% rise in wages. “It is very difficult to find a company offering construction work these days,” he told local media. Al Twaim said the government is serious about reforming the country’s labor market because no industry has been spared from having to comply with the Nitaqat programme. Abdulaziz Al-Shaiyqi, a contractor, said this was a “temporary crisis” and that the sector would bounce back.
JUNE 2013
MIDDLE EAST
Big Project ME talks to Ali rashid lootah, chairman of nakheel, about his company’s resurgence - page 16
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THE BIG PICTURE
bigprojectME.com
Rail projects fuel KSA transportation growth Projects will connect the west to east of Kingdom, officials say
Nakheel awards $28mN Jumeirah Village construction contract to UEC Work on the 90-villa project expected to begin by end of May 2013, developer says Nakheel has awarded a contract worth $28 million for the construction of 90 homes in its Jumeirah Village Circle Villas Project to United Engineering Construction (UEC). Mobilisation of the project was expected to begin by the end of the month of May, with an anticipated completion date at the end of 2014. The sold out Jumeirah Village Circle Villas project consists of 90 four bedroom villas, worth a combined total of $74.86 million. They will be constructed in a circular pattern, on a landscaped area within Nakheel’s 568 hectare master developed Jumeirah Village Circle community. Each villa will have a gross floor area of 3,655 sqft, along with extensive indoor and outdoor living space and an ‘expansive roof terrace’, Nakheel said. The developer had put the villas on sale in December 2012, with a spokesperson
saying at the time that investor confidence in Nakheel had returned. “The auction was a resounding success, and we are confident of high-levels of interest in the Jumeirah Village Circle villas. Recently we sold two plots of land at Palm Jumeirah for a combined price of $114mn and 122 residential villa plots in Jumeirah Village Circle for a total $30.7mn.” Over the course of the first quarter of the year, Nakheel has announced a number of projects, including its Azure Residences project, a collection of beachfront apartments and villas on the Palm Jumeirah. It has also tendered construction contracts for its $680 million Nakheel Mall, also on the Palm. Nakheel also announced that it had released a tender for the expansion of Ibn Battuta Mall, a new 28,000sqm retail hub that would bring another 150 shops to the existing shopping complex.
New railway projects will help grow regional transportation in Saudi Arabia by linking the west to the east of the Kingdom, government officials have said. The projects will also provide facilities to trade transportation by connecting Jeddah Islamic Port with Riyadh and Dammam. The contract is part of a plan that has been ordered by Custodian of the Two Holy Mosques King Abdullah to complete the railway infrastructure of the Kingdom and is in line with a decision of the Council of Ministers to construct a railway line connecting the Kingdom’s west
coast with its east shoreline. Cargo goods will be imported from east asian countries through King Abdul Aziz Port in Dammam and from North America and Europe through Jeddah Islamic Port, resulting in more transit cargo and savings in the regional freight economy. “The railway line would start from Jeddah Islamic Port to Riyadh and will be connected with the existing 450km line between Riyadh and Dammam. A second 115km new line is also planned to connect Dammam with Jubail,” said SAR board chairman Mansour Al-Maiman, in a report by Arab News. The $7 billion railway project linking Riyadh with Jeddah gathered steam with the state-owned Public Investment Fund (PIF) signing a $72 million contract with Fluor, a US company, to provide management consultancy.
Jeddah’s Haramain station 27% complete Head of Saudi Railways says that project will be completed on time
complete work on the Haramain Makkah station continues
More than 27% of the Haramain rail station in Jeddah and 13% in Makkah have been completed, Saudi Arabian government officials have said. The project will be completed on time, according to Muhammad Al-Suwaiket, the head of the Saudi Railways Organization (SRO), developer of the project. He said that the second phase of the train project will begin after construction of stations is completed, he said. Building four stations in Makkah, Madinah, Jeddah and King Abdullah Economic City in Rabigh is the second and last part of the project’s first phase.
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MIDDLE EAST
Big project me reports on the impact of project qatar on construction there - on page 38
JUNE 2013
THE BIG PICTURE
Five-star ‘monument to love’ will be ready by mid-2015, Link Global says Construction of the Taj Arabia, the $1 billion replica of the Taj Mahal, is set to begin this month in Falcon City, the sprawling mega-project on the outskirts of Dubai, the developer behind the project has announced. In a report by Gulf News, Arun Mehra, director of Link Global, said that the 400 room, five-star hotel, would be managed by Leela Palaces, Hotels and Resorts, an Indian based hotel operator with 15 palace hotels. He added that Link Global looked to have the project completed by mid-2015. Taj Arabia is being marketed as a wedding destination, Mehra said, adding that it would overlook a retail area that would specialise in gold and wedding outfits. He added that the developer had seen a strong response from retailers looking to set up shop in development. “The response has been very good, from local jewellers who own large chains and others outside Dubai,” he told Gulf News. “The Taj Mahal is a monument of love. Taj Arabia is designed on the theme of a monument of love,” Mehra said.
big project me explores whether
Oman’s Raysut Cement PBT gains 33% Sultanate of Oman’s largest cement producer sees profit grow as market value of investments increase
7 $17. on milli
Net Profit in Q1 2012
Net Profit in Q1 2013
21 60,1 es tonn
Amount sold in Q1 2012
$65 ion mill
$23 ion mill
Sales revenue in first three months of 2013
1.02 ion mill es nn to
Amount of cement sold in Q1 2013
560 996, es tonn
Amount of cement sold in the same period last year
Etisalat says it is targeting SME construction companies Telco unveils new set of business packages that will enable SME-sized construction companies to save on capital expenditure Number of rooms in hotel
Etisalat has unveiled a new set of business packages that will enable SME-sized construction companies to save on capital expenditure. Etisalat says it is accelerating its focus towards the SME sector in the UAE. The Business Ultimate plans are designed to offer businesses better network coverage, calling and messaging. The SME sector makes up 60% of the UAE’s GDP and Etisalat said that it was hoping its new mobile plans would be targeted for all qualifying companies. SMEs currently represent a significant part of the business community in UAE, explained John Lincoln, SVP, Business Marketing.
“The top priorities for SME customers is to lower capital expenses, economise international calling and also avail latest devices to increase productivity,” said Lincoln. “These users do not have to compromise on quality, after sales service and support to get better value from their money,” added Abdulla Ebrahim Al Ahmed, SVP, Business Solutions. “The packages are transparent providing these users offerings which are required for the long term growth of the organisation.” There are packages offered at AED99, AED199, AED399 and AED999. All have local and international calls, SMSs, local data and smartphones at zero upfront costs.
falconcity of wonderS is a viable development - on page 30
JUNE 2013
MIDDLE EAST
$1bn Taj Arabia to begin construction this month in Dubai
9
THE BIG PICTURE
Electricity Ministry says German giant did not implement terms of contracts
10
MIDDLE EAST
Iraq’s Electricity Ministry has disclosed that eight new contracts with Siemens, the German energy and electricity equipment manufacturer, were suspended for not implementing the terms of the contracts. In a press statement, the ministry tried to minimise tension with the German company by granting the company two weeks to implement the agreements reached to. Siemens director in Iraq, Na’il Ghali, stated that the company is trying to rectify the mistakes in order to solve pending questions. Siemens is active in around 190 regions, occupying leading market and technology positions worldwide with its business activities in the Energy, Healthcare, Industry, and Infrastructure & Cities Sectors. The company has over 370,000 employees around the world. The Ministry of Electricity of Iraq is the federal government ministry concerned with electricity. It is responsible for both the policymaking and the electricity supply throughout the country. The operational functions (power generation, transmission, load dispatch and distribution) are no longer autonomous corporate entities, but were reorganised into 18 geographically based directorates within the ministry.
JUNE 2013
GCC invests $40 billion into airport development The Gulf countries are investing more than $40 billion into airport development to help manage a surge in passenger traffic, which is being driven by six of the region’s major airlines, a report by the International Air Transport Association has revealed. $355 million Bahrain International Airport
airport projects
Iraq suspends eight Siemens contracts
bigprojectME.com
$1.2 billion Expansion of Muscat International Airport
$2.1 billion Investment into Kuwait International Airport
$15.79 billion DUBAI AIRPORTS
Millions/billions invested
Office oversupply in Dubai prompts developers to change plans Incomplete buildings being converted for residential and hospitality purposes
ContractS on Hold SAYS SIEMENS
An oversupply of office space in Dubai is prompting developers to change the use of incomplete buildings, from commercial offices to residential and hospitality purposes, according to a new report by property consultancy CBRE. Most of these conversions has happened in Business Bay, which has high office vacancy rates because of overdevelopment of strata buildings during the market peak, the report stated. Dubai’s office market is polarised with the best buildings in prime areas such as the CBD seeing pick up in rent growth while secondary and tertiary locations continue to suffer oversupply, it showed.
Average prime rents in the CBD rose by four per cent in the first quarter to reach $408 per sq. metre annually, according to CBRE analysts. In Jumeirah Lake Towers, the most attractive buildings are getting rates of about $326 per sq. metre annually but the poorest quality strata units are available from around $160 per sq. metre. “With landlords becoming increasingly bullish on the market outlook, we may expect to see further growth in prime rents over the remainder of the year, particularly as occupancy rates in the CBD slowly edge up,” the report stated. Looking forward, this polarisation of the office sub-markets is expected to continue.
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THE BIG PICTURE
bigprojectME.com
Construction begins on Phase II of Doha Festival City Construction has begun on the second phase of the Doha Festival City project, which will create Qatar’s largest mall, says the CEO of BARSEC. The MIXED USE development north of downtown Doha, will have a major entertainment complex, a hotel and a conference centre and motor showrooms.
433,847 sqm
Size of Doha Festival City
260,000 sqm Gross Leasable Area
Emaar Middle East awards construction contract
32,000 sqm GLA that the flagship IKEA store covers
Azmeel Contracting & Construction to started work on project in May
Al Habtoor to construct water show theatre worth $15mn Theatre to be part of the Metropolitan complex project, CEO says
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MIDDLE EAST
The Al Habtoor Group will construct a theatre worth $15 million, expected to be delivered in January 2016, as part of Metropolitan complex rennovation project, the company’s CEO announced during a recent press conference. The theatre will be part of the Metropolitan complex (Habtoor Island) which also includes three hotels under the Starwood brand, owned by Al Habtoor Group. These are a Westin, a St Regis and a W hotel. The hotels are expected to be delivered in 2015, after the month of August. The overall cost of the project, including the theatre, is worth $1.2 billion. The theatre will host a permanent water show, expected to attract tourists to Dubai, according to Mohammad Al Habtoor, vice chairman and CEO of Al Habtoor Group. “The show will be ‘a destination’ and people from across the region will come to Dubai to watch it,” Al Habtoor said. “The theatre will give an added value to other landmarks in the city.” The water show will offer live entertainment, and will have special effects to create a giant waterfall, a cascade or rain curtains. It is expected to be the fourth of its type in the world, after Las Vegas, Macau and the future Han Show in Wuhan, mainland China.
JUNE 2013
449 sqm
The largest rooms at the Abraj Al Hilal 2 apartments
Emaar Middle East, a subsidiary of global property developer Emaar Properties, has awarded the construction contract for its newest project, the Abraj Al Hilal 2 residential complex in Jeddah Gate, to Azmeel Contracting & Construction Corporation. The Saudi construction company commenced work on the three-tower residential complex last month for scheduled completion and handover to customers in the first quarter of 2016. Abraj Al Hilal 2 is an integral part of Jeddah Gate, Emaar Middle East’s flagship integrated development. Ahmad Al Kulli, general manager of Emaar Middle East said: “Following the sales launch of Abraj Al Hilal 2, which received strong investor response, we are now commencing the construction work of the residential complex. Abraj Al Hilal 2 brings a new lifestyle experience to the Jeddah Gate community, we are developing it to highest global standards we adhere to all of our developments.” The three-tower residential complex of 17 to 21 floors has apartments ranging in size from 98sqm to 449sqm. Customers also have the option of villa-living within a high-rise with Abraj Al Hilal 2 featuring the Kingdom’s first of its kind lower villas and penthouses.
THE BIG PICTURE
THE RISING COST OF MATERIALS Earlier this year the Dubai Chamber released its Construction Materials Price Index for the first quarter of 2013 which monitors the price movements of 243 construction materials that are commonly used in construction projects in Dubai. The prices are collected regularly from 22 outlets by members of Dubai Chamber data management price collection team. The unweighted geometric mean of the price relatives were calculated for each item. These geometric means for each item in each group were then averaged across each group.
Construction Materials % change over last quarter The recently released report by the Dubai Chamber of Commerce found that a number of construction related products had seen significant price increases since the corresponding quarter of 2012. Aside from the top three materials, significant price rises also occured for materials such as aluminium sheeting, Portland Cement, White Cement and Lime. Correspondingly, materials such as wires and cables, sanitaryware, gypsum and high tensile steel saw significant price drops.
Largest price increases
Cement revenue jump
3.4% 1.9% Ready Mix Concrete 1.1% Waterproofing Products
Cement companies in the GCC saw a 24.3% increase in revenues in the first quarter of the year, touching $1.26 billion as construction activities began to pick up around the region. However, according to a Global Investment House report, net margins suffered a 90.4 basis points fall between the first quarters of 2012 and 2013.
Steel
Largest price decreases Timber -1.4% Bricks -1.4%
UAE firms sales revenue
-1.1%
Tiles & Flooring Materials
$258.1 million
UAE cement price in Q1 2013
$53.1/tonne 10.5%
Gross margiN Percentage growtH
7.7%
London Metal Exchange Price index The London Metal Exchange is the world centre for industrial metals trading and price-risk management. More than 80% of global nonferrous business is conducted here and the prices discovered on our three trading platforms are used as the global benchmark.
Omani firms sales revenue
$100.3 million Cost increase
$65.5 million
14,755.00
Net Profit
$31.1 million 27.5%
7,240.00
PRICE (US$)
Percentage growth Cost percentage rise
16.7%
Qatar cement price increase in Q1
$70.1/tonne
1814.50
Government price cap
$68.7/tonne
Qatar increase in sales revenue
130.00 16.6% 7.3%
Aluminium
Aluminium alloy
Copper
Nickel
Steel billet
(US$/tonne as of 24 May, 2013)
JUNE 2013
MIDDLE EAST
Qatar increase in net profits
1790.00
13
NEWS ANALYSIS
bigprojectME.com
The UAE is back on top Big Project ME examines how the UAE became the GCC region’s largest construction market in 2012.
E
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MIDDLE EAST
arlier this year Deloitte released a report that found the UAE had become the largest construction market in the entire GCC over the course of 2012, surpassing the region’s biggest country, Saudi Arabia. The study estimated that $16.2 billion in contracts were awarded in the UAE, 4% more than the $15.6 billion awarded in the Kingdom. The results marked the first time since 2008 that KSA had not recorded the largest value of construction awards in the region. The largest single value contract that was awarded in UAE was the joint-venture led by Turkey’s TAV to build the Midfield Terminal Building at the Abu Dhabi International Airport, which was worth $2.8 billion.
JUNE 2013
In contrast, the largest construction deal awarded in Saudi Arabia, in 2012, was the deal to expand the Masjid alHaram or Grand Mosque in Medina. The project aims to expand the capacity of the mosque from 600,000 people to one million. The estimated cost of the project is $1.5 billion. Qatar, which is rapidly growing in prominence, came third in the report, with $10.4 billion worth of
contracts awarded. However, the transportation sector dominated the construction sector, with four of the five biggest contracts awarded for major transportation projects. UAE construction breakdown According to Business Monitor International, the UAE’s construction industry value is forecast at approximately $41 billion for the
“UAe’s construction industry value is forecast at approximately $41 billion for the financial year 2013”
NEWS ANALYSIS
Industry breakdown The pie chart below shows that commercial projects will dominate the UAE construction scene.
financial year 2013. This represents a real value annual growth of 4.5%. Figures released by MEED put the total value of projects planned or underway in the UAE at $549 billion (as of 28 February, 2013). Although residential projects only account for 3% of the total UAE construction spend, the Deloitte report pointed out that there were major projects underway. Furthermore, the UAE’s president HH Sheikh Khalifa bin Zayed al Nahyan has announced that the country is set to embark on a massive housing programme to replace 12,500 residences built before 1990, at a cost of $2.7 billion. Meanwhile, transportation is set to take up 13% of the UAE’s construction spend, the Deloitte report pointed out, thanks to a number of major projects that are either underway or about to begin. Within the UAE itself, $58 billion worth of road and bridge projects are currently
Rail links Phase II of the Etihad Railway Network are currently tendering, Deloitte said, with construction scheduled to start this year. The $11 billion project is part of the wider GCC Railway Network, which is valued at more than $100 billion. It is expected to provide a significant boost to the local construction industry, the report said.
UAE construction figures: n $41 billion Value of construction industry in 2013
n $2.7 billion Cost of planned housing project
n $11 billion Cost of the Etihad Railway Network
n $6.8 billion Cost of expansion of Abu Dhabi airport
n $3 billion Cost of the 1,000MW Dubai solar park
Airport push The expansion in capacity of the Abu Dhabi International Airport is another project that is expected to have a significant impact on the growth of the UAE construction industry. The project aims to increase the capacity of the airport from 11 million passengers annually, to 30 million passengers annually. The project is expected to cost $6.8 billion and construction began in the second quarter of 2012. The scheduled completion date is expected to be in the first quarter of 2017. Energy growth However, the major growth areas for the UAE construction industry are now the energy and resources sectors, which account for 19% of the total construction spend. Part of these projects include an ambitious $3 billion, 1,000MW combined solar park in Dubai. If and when it is implemented, the project will become the largest of its kind in the world. There is cause for concern, however, about the nuclear power plant project in Abu Dhabi, which has been plagued by project delays and cost inflation. As a result of these hold-ups, the cost estimate for the project has ballooned by a massive $10 billion since the initial announcement. The total cost of the project is now $30 billion, Deloitte says. n
JUNE 2013
MIDDLE EAST
“the expansion of the abu dhabi international airport is expected to have a significant impact on the growth of the uae construction industry”
underway, or in the planning phase. In May of 2013, Abu Dhabi’s Department of Transportation announced that work on a $72.6 million, 80km-long, twolane highway, linking the capital to the Western Region, was set to begin. The project is expected to be completed somewhere towards the end of next year, or the beginning of 2015, the department said in a statement.
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IN PROFILE Ali Rashid Lootah
JUNE 2013
bigprojectME.com
IN PROFILE Ali Rashid lootah
Patience
Always Pays Big Project ME sits down with Ali Rashid Lootah, chairman of Nakheel, to find out how Dubai’s largest property developer by asset size came back from the brink. Gavin Davids reports.
I
t would appear that Ali Rashid Lootah is a hard man to please. Having just seen his company post a 36% growth in its net profit in the first quarter of 2013, the chairman of Nakheel asserts that he’s merely ‘satisfied’ with posting $133.6 million in net profit for the quarter. That’s up from $98.5 million during the same period last year. “You always want to do better, but I can say that we’re satisfied and that the team has really worked hard. You can always do better, but to be fair to the team, this is satisfactory to our board and even to our government. I think it was beyond even the expectations of the market,” he tells Big Project ME during an exclusive interview at Nakheel’s plush sales centre off Jumeirah Road in Dubai. Given the circumstances and restrictions that Nakheel are working under, one would understand if it took things slow. After all, it’s not every day that a company goes through a $16 billion restructuring phase and comes out swinging.
“Nakheel was the first company to be restructured in Dubai. If we come out of these conditions, it would give us more liberties and flexibilities in moving on to new projects”
But that’s never been the Nakheel way, and it’s certainly never been Ali Rashid Lootah’s way. Right off the bat, he says that his initial plan for 2013 is to post higher than the $544.5 million recorded as net profit at the end of 2012. Revenues stood at $1.11 billion for the year. “Well, the first quarter saw 36% growth, so for sure we’re confident that we’ll exceed 2012’s performance. I don’t want to disclose (what figures we’re aiming for) but it’ll be more than 2012 for sure. We look on track as per our budget and we will exceed that,” he asserts. “We see growth across the board and in all our areas. That’s in development, in leasing, in retail. We’re handing over and launching new projects and things are moving along just fine.” Driving this confidence to develop and grow has been Dubai’s resurgence over the last few years, Lootah says. With construction predicted to contribute a whopping 11.1% to the UAE’s Gross Domestic Product by 2015, there can be little doubt that the industry is back for good. “Dubai is really out of the slump - we see it,” he says. “Simply speaking, we see it through the sales. The trust is there and people are back to Dubai. There is no alternative to Dubai (in the region),” Lootah asserts. “I think tourism, commercial and retail have all played an important part in that (growth). Also, the real estate market is picking up, and it is the high end, that
Financial figures: n 36% Growth in net profit in Q1 2013
n $133.6 million Net Profit for Q1 2013
n $98.5 million Net Profit for Q1 2012
n $544.5 million Net profit for 2012
n $1.11 billion Total revenue for 2012
JUNE 2013
MIDDLE EAST
man with a plan Al Rashid Lootah says he wants Nakheel to do better in 2013/2014.
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IN PROFILE Ali Rashid Lootah
bigprojectME.com
“For a contractor, the most important thing is payment on time and we’re paying, for your information, ahead of time”
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Handover Nakheel plans to hand over 3,000 units to its customers in 2013.
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is, people with money (that is growing),” he explains. “So we see a healthy, solid growth. It gives us, as a developer, the confidence that the market is recovering. Everyday we’re launching new projects and all our old inventory is running out and we’re selling with the right prices.” Nakheel has big plans for 2013 with the developer planning to hand over 3,000 units to customers and invest a further $1.76 billion into projects that will be finished over a three-year period. These include a number of residential projects, with the likes of the Azure Residences scheduled to begin construction on the Palm Jumeirah in mid-2013. Also being built are 90 houses for the Jumeirah Village Circle project, the $28 million contract for which was
recently awarded to local contractor, United Engineering Construction. These projects are just the tip of the iceberg, Lootah says, revealing that the long-awaited Nakheel Mall is scheduled to go out to tender before the end of the third quarter of the year, with a contract to be awarded by the end of the year. Meeting Big Project ME in the middle of May, he emphasises Nakheel’s current pace of construction; rolling out a list of other tenders. “Palma Residences is busy, and DragonMart, and also we have the Palm View, we’ll have the first stage tender for The Pointe on Sunday, the soil stabilisation tender is out on Sunday. Things are rolling.” “(For Nakheel Mall), we’ll open the door to start leasing hopefully before the end of this month (it was announced during the last week of May - Ed). I think the tender will be out before the end of Q3 2013; before the end of the year it’ll be awarded. There was a bit of a delay as we revised the plan and increased the size of the mall. We increased the height (of the accompanying tower) it’ll be higher than 30 storeys tall now,” he explains. There’s clearly big plans afoot for Dubai’s largest developer in terms of assets. However, given the extent of the damage done by the real estate market crash, it’s only natural that outside observers have concerns that too much is happening, too soon. Unsurprisingly, Lootah is bullish about his company’s plans, pointing out that the figures don’t really support any allusions to doom mongering. He insists that not only Nakheel has learnt from the crash of 2008, but that the market as a whole has recognised that things can’t go back to the way they were. “I think that all of us learnt from that (2008) and I don’t think any of us will go back to that situation. Developers have learnt from it, investors have learnt from it, financial institutions have learnt from it, and let’s not forget, it was really a global crisis,” he says. “Yes, Dubai was affected, as was reported in the media, because we were growing faster than everybody else, so probably we were under closer scrutiny. We were under the spotlight because we
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IN PROFILE Ali Rashid Lootah
were outperforming everybody else. And I think this is happening now again, but at a more reasonable growth rate.” “I think it was really unfair because it was a global crisis. The wise decision of the government of Dubai, to meet all its commitments and compensate everybody (involved), got the trust back to Dubai. It was proof that Dubai was a worthwhile place to invest,” Lootah insists. “Everybody is back to Dubai and all the lenders are looking for opportunities in Dubai. So did they forget? I don’t know, they’ll have to answer that. If Dubai is not worth dealing with, then I don’t think that we would have so many people coming back to Dubai.” With the market revival underway, it was crucial that Nakheel made the right decisions to ensure that its carefully managed recovery didn’t falter. As such,
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Nakheel has floated a tender for ground improvement works at The Pointe, its 136,000sqm retail and entertainment complex on Palm Jumeirah. The Pointe at Palm Jumeirah will be located at the tip of The Palm, opposite Atlantis. The project will contain a diverse range of shopping, dining and entertainment facilities, including a spectacular fountain display. The scope of works for ground improvement includes vibro-compaction, topographic survey and factual site investigation work, to be carried out in preparation for construction to begin.
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“I’ve noticed a lot of our old customers who faced the delays in the delivery of new projects are buying again on our new projects”
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Lootah was careful to ensure that he was always available to help his staff and customers. “I’m here and my door is always open and I’m very much accessible to people. I try to solve all legacy issues and I think that, in a way, helped people. (It helped) that there was somebody there listening to them. Sometimes people just want to talk and you have to be available to them to help overcome their grievances,” he says. “But a good thing that I’ve noticed is that a lot of our old customers who faced the delays in the delivery of new projects are buying again on our new projects. So if the same person who is complaining is buying a new property, then to me this person is trusting the company, or he won’t go back to who he’s suffered with before, will he?” he asks. Regaining the trust that Nakheel may have lost is clearly a priority for the chairman, and it’s not just customers that he’s worried about. Coming from an engineering background, Lootah says that he’s determined to repay the trust that Nakheel’s contractors have given to the company, despite all the challenges that they have faced over the years.
IN PROFILE Ali Rashid Lootah
“Our tenders are all public and we’re trying to be as transparent as possible. We get 20 to 23 contractors buying our documents and that’s really a sign of trust. It shows that Nakheel is a company worth working with.” “For a contractor, the most important thing is payment on time and we’re paying, for your information, ahead of time! Really, we’re doing that, and the way I look at it is that it’s part of the image rebuilding process,” he explains. “I think what also helped with contractors, and I say this as I come from the same industry, is that they know me, there’s a sort of trust there and (it helps that) I can speak the same language as them,” Lootah claims. Given that the developer is coming off the back of a $16 billion restructuring deal in 2011, that’s not a small claim to make. But with the firm now in talks to extend a $2.17 billion loan due in 2015, Lootah aims to push forward with plans to grow the company, rather than meekly accept what its lenders want. “The original plan was to sell some assets and pay the lenders. We don’t want to do that. We think it’s a good opportunity for the lenders, or new
“For a contractor, the most important thing is payment on time and we’re paying, for your information, ahead of time”
Nakheel has awarded contracts worth $13.6 million for work at Dragon Mart Phase 2 and the neighbouring International City master community. The Dubai developer has awarded a contract for $9.9 million to ADC Energy Systems for the design and construction
first company to be restructured in Dubai. So if we come out of these conditions, it would give us more liberties and flexibilities in moving on to new projects,” Lootah says emphatically. “I think we’ve managed to gain the trust of our customers, but we’ve also managed to really capitalise on our assets and market it with the right prices. Patience always pays and I think we’ve done very well in really selling our assets with a very good price.” “We have a very strong share and we’re very conservative in our conditions and people back that. At the end of the day, the numbers will speak for themselves.” n
of the cooling plant at its Dragon Mart extension project. The 7,500 tonne capacity cooling plant will serve the new mall, hotel and car park that make up the 177,000sqm DragonMart Phase 2 project. Mobilisation is expected within a month. In neighbouring International City, Nakheel has signed Ascon Road Construction for infrastructure and road works at a new 140,000sqm warehousing district, to be constructed next to the existing Textile City area. The five-month contract is worth $3.4 million.
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lenders, to come get a long-term deal, a long-term relation with Nakheel and it will be a win-win solution,” he says. “Banks have money and they have to lend it. And we give them a good opportunity to do that. We have a serious discussion going with different entities and we still have time, we have more than two years, because our loan is due in August 2015. But we want to negotiate from now and find a good solution.” “There’s another good reason to do the re-finance; to come out of the restructuring conditions. They are very stringent conditions, but we had no choice in the beginning. Nakheel was the
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ON SITE falconcity of wonders
Falconcity of Wonders
Location
Dubai, UAE
Site Area
3.7 million sqm
Project type
Mixed-use development
Construction cost
$36.5 billion (total estimated cost)
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Project Name
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bigprojectME.com
ON SITE falconcity of wonders
Taking
Flight
Big Project ME visits the Falconcity of Wonders project site to find out just what is going on with the longdelayed project. Gavin Davids reports. villas his firm will build will be around 1,000. Al Harith Salem Al Moosa, deputy CEO of Falconcity, says that at the moment there are some 366 villas that have been completed and occupied, with a further 214 under construction. “The full phase, the 366 villas, which are ready, have been sold. The ones that are under construction, half of them have been sold,” he explains. “If you want an exact number, it is 1,556 being built, and we’ve sold 366 villas, plus another 100 (that are currently being built). So that’s 466 villas, approximately, of the total 1,556.” The development of the infrastructure systems of Falconcity are perhaps the most advanced in the project, with Al Moosa pointing out that they had to be completed before anything else could be done. “That took up most of our time. Infrastructure for such a project is not an easy thing to do. The power plant, we built in two years. There was external infrastructure that we were supposed to get and we did not get. So we had to
n 5,500 Number
of residential units planned for the project
n 1,556 Number of residential villas being built by Falconcity
n $14.9 million Cost
of sewage treatment plant
n 15,000m3 Amount
of sewage the plant is capable of treating per day
n 3.5 million sqft Size
of the planned theme park in Falconcity of Wonders
Residential villas Al Moosa says 1,556 villas will be built on the Falconcity project.
“the 366 villas, which are ready, have been sold. The ones that are under construction, half of them have been sold”
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S
ituated between Sheikh Mohammed Bin Zayed Road and Emirates Road, the Falconcity of Wonders has been in development since 2005, when the project was first launched. Envisioned as a massive mixed-use development incorporating residential, tourist, commercial and retail projects, Falcon City has since been delayed by a number of setbacks, including changes to the master plan and the development of external infrastructure. That is not to say that work has not been progressing on the site, however, with the developer, Falconcity of Wonders LLC (FCW), pushing forward with a number of infrastructure related projects, as well as the development of 582 residential villas, says Salem Al Moosa, chairman and CEO of the developer. Founded under the umbrella of Salem Ahmad Almoosa Enterprises, FCW oversees the development of a project that covers more than 3.7 million sqm. The project aims to host replicas of the Seven Wonders of the World, along with commercial centres, a signature theme park, family centres, sports facilities, education institutions and more than 5,500 residential units of varying designs and layouts. “So far, we’ve built half the total villas that we’re going to build,” says Salem Al Moosa, adding that the total number of
23
ON SITE falconcity of wonders
bigprojectME.com
“When we started the project, we had to make it a level site”
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change to our Plan B and that took time. Then the financial problems came into the area and you know what happened there,” he explains. Al Moosa adds that more than $163.3 million has been spent on the infrastructure of Falconcity. This included the development of all the necessary facilities expected of a project of this size. “You require electricity, sewage treatment plants, roads, community centres, mosques, transportation links with the main highways around the project, and so on. We were successful in having our own power and electricity, and this cost us in the region of $34 million.” “Then we have a sewage treatment plant that is under the ground, it really is a masterpiece,” Al Moosa insists. “It doesn’t exist anywhere else in the Emirates and it cost us $14.9 million to build. It is capable of producing 15,000m3 of sewage per day, and it’s a sustainable green engineering project that is capable of irrigating our project completely, without using outside water,” he says. Mahmoud Rayyan, the general manager of the Falconcity project, adds that the sewage treatment plant is fully computerised, meaning that staff can be kept to minimum. “We have two contractors for this. We split it into two parts, one for electromechanical, which is Global Engineering Systems, and for Civil Works, which is ARABUILCO. So they have to coordinate with each other. We acted as project manager to ensure that coordination is taking place,” he tells Big Project ME during a tour of the sewage treatment plant. He adds that the main issues relating to the delays of the Falconcity project came about from the approvals process, which took much longer than anticipated due to a series of unfortunate events. “The project was delayed due to external factors,” Rayyan says, “When we got the approval in May 2005, we were
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the Falconcity wonders: n Taj Arabia n Dubai Eiffel Tower n Dubai Grand Pyramid
n The Tower of Pisa n Dubai Hanging Gardens of Babylon
n The Great Wall
Community centre SEC have been hired to supervise construction of the community centre.
waiting for the handing over of the land to Falconcity so that we could proceed with the work. However, the handing over was delayed and we couldn’t do anything. Then when we received the land from Dubai Municipality, the coordinates were not as we previously had, so we had to redo the masterplan!” “So we had to revisit them and this continued till the beginning of 2006 and then when we finished, they said that we now had to go get approval from Dubai Municipality. Previously, it was from the master developer and from TECOM, so that was another year gone.” Once work finally started on the project, the team faced another lengthy process when it came to preparing the site for construction work, he says. “When we started the project, we had to make a level site. Because it was down and then up, with differences of more than 10 to 15m. So that was the first task for us, to make it almost one level, with a slope as per the approved grading.” “The main issue here wasn’t the labour force, but the equipment. We needed particular equipment such as huge trucks, excavators and all this. That was the main issue for the contractor. So they used other sub-contractors to work with them. It was a massive amount of construction activity.” Al Moosa adds that after the sand was levelled out, the process of
ON SITE falconcity of wonders
appointing a consultant and choosing the right contractor for the project took a significant amount of time, which further delayed construction work on the multifaceted project. Given the eight year gestation period for the project, it’s understandable that there are reservations about its completion, however Al Moosa and his team are confident that the hard work has been done. “The complete sales that we’ve done are the Cities of Rome, Venice and London. They’ve been sold and the developer is doing all the work to have the plans in his name so that he can start construction,” Al Moosa asserts. There are also plans to build a mall at the top of the Falconcity plot, in the ‘Falcon’s head’ as Al Moosa puts it. He plans to make it ‘different to normal malls’. In addition, he plans to build a 300,000sqm theme park in the left shoulder of the Falcon. The appointment of AREX and Engineer Adnan Saffarini Offices to design and supervise the planned ‘Small and Medium Pyramids’ respectively, is further indication that Falconcity could be about to soar, says Al Moosa. With Shadid Engineering Consultants appointed to design and supervise the Community Health Club being built, Rayyan says that his team have long been in preparation for that particular project.
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“We were then surprised because when we received the land from Dubai Municipality, the coordinates were not as we previously had from the master developer”
“For the community centre, we have appointed a specialised contractor for shoring. The larger the size of the building, the greater the need for shoring to be maintained, until the basement is finished. “We have also appointed specialised contractors for piling. They’re used to work with design build. They do the design based on preliminary designs of construction. They approach the municipality for approval and then execute what they have designed,” he explains. “The plan was to complete this project within five years (by 2010). Then this plan was adjusted to 2011 and then to 2012. We’ve now decided to extend it by another five years, because of influences and circumstances created by other parties.” “(But) we have monuments that will be announced and will start construction within the year. The design is almost finalised and we’re waiting for building permission. Once we get that, we’ll immediately start construction so that at least by this year, we’ll start one of these Wonders,” Rayyan asserts. n
Sewage plant Al Moosa says that the sewage treatment plant is the first of its kind in the UAE.
Taj Arabia to be built by 2015 Taj Arabia project in Dubai’s Falconcity of Wonders will be opened to the public in 2015, according to its developer. Link Global Group company director, Arun Mehra says that his firm plans to complete the project in a ‘phased manner’ by 2015. He added that negotions with construction companies were ongoing. Taj Arabia Palace Resort, they key component of the project, will consist of a 400-key five-star resort and over 300 service apartments. It will be managed by The Leela Palaces, Hotels and Resorts, a palace hotel chain from India. The resort will feature wedding boutiques, a gold jewelry souk and banquet halls to accommodate 3,000 people. The promenade will have eateries, bars and lifestyle outlets. The Land of India project has over 200,000sqm of built-up area, with large acres of greenery and at its heart is the Taj
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Arabia Resort.
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FALCONCITY IN FOCUS
JUNE 2013
bigprojectME.com
FALCONCITY IN FOCUS
through the
Storm
Big Project ME examines the case for the Falconcity of Wonders and asks the experts whether the megaproject is truly viable in the current real estate market environment? Gavin Davids reports.
With these words Salem Al Moosa outlines his vision for the gargantuan mega project that is being built on the outskirts of Dubai. The project, designed in the shape of a falcon, will house larger-than-size replicas of the Seven Wonders of the World alongside residential developments and retail and commercial outlets. Heralded as one of the most ambitious real estate projects in the world when it was launched in 2005, Falconcity of
“The needs of the people, the demands of the authorities, all of this has completely changed”
Wonders has since endured a troubled inception as it looked to move from off the drawing board and into reality. Al Moosa tells Big Project ME that the problems that beset his project were myriad; from financial markets collapsing around the world to the lack of established infrastructure around his project. Despite these setbacks he was determined to bring his vision to completion. “Due to the unforeseen circumstances that took place in the past in the financial and economic world, the seasonal variations in the economic cycle, we’ve had to accommodate such events into our plans and revisit our building plans,” he explains during a tour of the project. “In 2004/2005, the estimated cost of the project was $1.36 billion. At that time, we were living in our honeymoon. Dubai was living in a very promising business environment and suddenly things went away from our feasibility plan. We had to revisit it and change the numbers.” “It (the construction landscape) has changed tremendously. The price of materials has changed, the specifications have changed, and so have the codes, now we have to go green (for example). The needs of the people, the demands of the authorities, all of this has completely changed,” he says. Craig Plumb, head of research at Jones Lang LaSalle, agrees with Al Moosa, adding that the project has had to adapt to a very different market to when it started out, which has necessitated a careful reevaluation of what needs to be done.
Eight-year project: n 2005 Year the project was announced
n 2008 Year the
global financial crisis hit
n 2009 Dubai’s real
estate market drops
n 2013 Falconcity
community centre launched
Matt green
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“
People think that this project isn’t working, they are using all kinds of rumours against us and we’re being faced with a vicious attack from others. I don’t why. They want to say that Falconcity no longer exists, is no longer alive. Well Falconcity of Wonders is going strong and Falconcity of Wonders exists. Falconcity has plans and one day Falconcity is going to be one of the best commercial, tourist entertainment projects in the whole world. I’m not just talking about Dubai or about the UAE or about the region, I’m talking about the whole world. There’s no project like this anywhere in the world. You’re talking about something beyond the imagination.”
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“Like many projects launched before the GFC in 2008, Falcon City has had to adjust to the changed market circumstances. The project has been successful in terms of delivering high quality villas, but many of the more ambitious components of the scheme have been delayed until such a time as their financial viability improves,” he tells Big Project ME. Al Moosa adds that another reason the project was delayed was because there was no infrastructure in place to support the construction. This mean that before a single block was laid, everything, from roads to sewage and drainage pipes needed to be installed. “We’ve done something like $108.9 million worth of work under the ground, of infrastructure. There are sewage pipes, manholes, power lines, storm water, irrigation water and potable water lines. You don’t see these, when you see the top, you only see the buildings. All the roads have been done, the power has been done, the sewage has been done,” he explains. However, one of the major stumbling blocks in the development of the project has been the wait for external infrastructure works to be completed, Al Moosa says. “We’re waiting now for the external roads and the external power to be completed, because you have to link the project with the external infrastructure. It’s not there, but we went ahead and developed our own infrastructure so that our project stayed alive,” he insists, adding that he expects the planned Blue Line of the Dubai Metro to pass near the ‘left shoulder’ of the Falconcity, which will house a 300,000qm theme park. A metro station is pencilled in to be built there, he adds. This touches upon one of the most important factors about the Falconcity project. Given its distance from the heart of Dubai and the lack of currently existing infrastructure around it, what exactly will attract visitors to the project? Furthermore, with projects such as Mohammed Bin Rashid City in the pipeline, how will Falconcity compete? Matt Green of CB Richard Ellis Middle East, says that the pipeline for the next three years is set to be around 40,000
JUNE 2013
bigprojectME.com
“Many of the more ambitious components of the scheme have been delayed until such time as their financial viability improves”
Falconcity of Wonders, signed an agreement with Shadid Engineering Consultants (SEC), a consulting engineering firms in Dubai, to design and supervise the Community Health Club within the mega project. The Community Health Club, with a built up area of approximately 10,000 sqm, will be a hub for sports activities, beauty treatments, entertainment and recreation. Located within the Western Residences, it is conveniently located and is easily accessible through the development’s main entrance and the rest of the community.
Staying alive Infrastructure work for the project needed to be laid before anything else could be done on site.
residential units, with the majority of these units set to be delivered in secondary areas such as Dubailand, Sports City and Business Bay. “These are locations that are still emerging residential destinations, with supply in freehold locations remaining quite tight, compounding recent growth pressures,” he explains. “The launch of master plan projects such as Mohammed Bin Rashid City have to be viewed as long term and part of the strategic plan for the future of Dubai. We do not expect to see significant completions for a number of years, with major infrastructure works required before projects can really start to take shape.” However, Craig Plumb points out that there is room for ambitious large projects, but certain considerations have to be made. “Falconcity is dwarfed by the more recently announced MBR City, but the important issue is one of timing/ phasing. No one now believes that you can develop such large projects over
FALCONCITY IN FOCUS
Future growth Dubai’s tourist market is set to grow in the near future.
night and developers are adopting much more realistic time lines – with different components of the project being phased in line with occupier and investor demand,” Plumb says. He adds that the impact Falconcity of Wonders will have on Dubai will depend on the pace of development there, but points out that such large ambitious projects aimed at the tourist sector are likely to be a key part of the Dubai real estate market in the future. “While I’m not sure you would classify Falconcity as a tourist-related project – the only components to have been built to date are residential villas targeting resident not tourists – there are clearly tourist related components to the project. However, they are only one component within the overall project,” Plumb says, “There is strong demand for touristrelated real estate in Dubai – which is one of the world’s fastest emerging tourist markets. The most successful projects
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“There is a strong demand for tourist related real estate in dubai – which is one of the world’s fastest emerging tourist markets”
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bigprojectME.com
in many sectors of the market are those targeting tourists – such as Dubai Mall in the retail sector and Palm Jumeirah in the Hotel sector.” “The future of the tourist market in Dubai looks set to increase further given the government’s recent 2020 Tourist vision – aimed at doubling the number of tourists visiting the city between 2012 and 2020. If Dubai wins its bid for the World Expo in 2020 – this will provide another major boost for the tourist market in the city,” he asserts. Al Moosa adds that he believes that for real estate projects such as his to succeed, there needs to be a reason for people to come and visit them, thereby adding value to the investment. “I thought about the Wonders of the World. Most of them are scattered all over the world and you’re required to go to known and unknown areas to see them. So I thought that if I did this (project) and also make commerciality through them, then my investment has value added (to it) and it will become a one stop shop for people to come to Falconcity and see these monuments,” he explains. Sean McCauley, director of Agency Services at Asteco Property Management, adds that he expects projects like Falconcity and MBR to have a massive impact on the future growth of Dubai’s gross domestic product.
FalconCity facts n 7 – Number of
replica ‘Wonders of the World’ being built in Falcon City
n 3.8 million sqm
– Total size of the Falcon City of Wonders
n 2006 – First phase of development began
n 1,400 – Projected
number of villas in the project
n 54 – Projected
number of towers in the project
n $1 billion – Value
of the Taj Arabia project being built
n 400 – Number of
hotel rooms in the Taj Arabia project
n 62,212 m2 – Plot
size of the Medium Pyramid being built on site
n $36.5 billion –
Estimated total cost of the entire Falcon City Project
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FALCONCITY IN FOCUS
bigprojectME.com
breaking ground Falconcity has broken ground for the project’s community centre.
Salem Al moosa
“These projects shall have a massive impact on the economy of the emirate”
THE not as great pyramid Falconcity of Wonders (FCW) has appointed Arab Experts Engineering Consultants (AREX) to design and supervise
“These projects shall have a huge impact on the economy of the Emirate. The improved property market shall boost GDP and in turn the overall economic success of Dubai,” he says, highlight another reason as to why these projects are vital to Dubai’s future plans. “Thousands of new jobs shall be created, not only in the construction and infrastructure related industries, but also through new businesses that shall be attracted by the birth of these new communities,” he continues.
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Determined vision So clearly then, this project won’t be a wasted endeavour for Salem Al Moosa and his team. The challenges that lie ahead of are numerous, but it is clear that he is determined to see his vision realised and his dream become a reality. Al Moosa says that he expects to finish the project within another seven to ten years, but concedes that a large part of this isn’t up to him.
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Due to the resurgent construction market in the UAE, he now faces a challenge quite different to the ones that initially stalled his project. “If I’m building this project, I’d sincerely love to do it in no time, but the contractors are not free in Dubai. The sub-contractors are not free either. The contractors who are going to give you performance bonds are so few in Dubai,” he says, bemoaning the fact that contractors seem to want to work without any responsibility. “How can I give somebody a big project without a performance bond?” he asks. “The contractor has to come forward and give me a 10% performance bond so I can feel relaxed about giving them the contract. Only a few on hand can do the job,” he insists. “There are so many hindrances in life that cause delays to everything. I don’t know how to put it, but as an investor, I’ve put my money and my life into this project and there’s only one thing (left for me to do), which is to go ahead and finish it.” n
the Small Pyramid. The Small Pyramid will be one of the permanent attractions at the Falconcity of Wonders. It will be part of a multifunctional complex featuring offices and other recreational venues, such as museums that will showcase past civilizations and the grandeur of the wonders of the world, as well as other tourist attractions and children’s ‘edutainment’ facilities. AREX will also design and supervise a multi-purpose event hall located within the Small Pyramid site, which will be used for events such as weddings, conferences, theatre productions and other functions. The Small Pyramid will be adjacent to the Medium Pyramid, within the Pyramid Park area. It has a strategic location, parallel to the Sheikh Mohammed Bin Zayed road in the outskirts of the Upper Western Wing of the mega development.
EVENT ANALYSIS
Project Qatar 2013 Big Project ME went down to Doha for the 2013 edition of Project Qatar and found a sense of anticipation growing in the country as construction work on a number of major projects is set to start
E
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very May, thousands of construction firms and companies descend upon Doha for Project Qatar, marking the biggest annual construction event in Doha, and one of the largest events in the GCC region. With more than $110 billion in projects announced but not awarded in the Gulf Arab state, Project Qatar is a vital opportunity for regional companies to grow and deepen their roots in the country, says Shery Adel, general manager of Stadia Qatar, a key local exhibitor and a Platinum Sponsor of the event. “Our main objective is to maintain our position in the MENA region, as being the pioneer and leader in Sports and Leisure Infrastructure. In preparation and anticipation of the FIFA World Cup in 2022, the face time with the industry insiders and decision makers we get at this show is a critical piece of our growth strategy,” she added. It’s clear then that Project Qatar is of major importance to both local and regional firms. And with more than 2,000 exhibitors and thousands of visitors (including 11,000 on the first day) showing up for the 2013 edition, it’s easy to see why this event is being taken seriously by the regional industry. “I think Project Qatar is a very good platform for you to showcase your products, your innovative solutions,” says Amer Bin Ahmed, managing director of the GCC, India and East Africa for Knauf. “Doha is a growing market that has huge potential.” Part of this potential is that the market does not have the required skill sets that more advanced markets may have, he points out. Rather than being a deterrent,
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EVENT ANALYSIS
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EVENT ANALYSIS
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he says that this opens up an opportunity for companies to come in and set up operations from the ground up. Citing his own company as an example, he explains how a challenging situation is turned to his company’s advantage. “I certainly think there’s a lack of skills,” he tells Big Project ME. “So we promote training solutions. We go to contractors and tell them, ‘give us your people, we’ll train them and certify them to install the system’. So the quality isn’t from top to down, but down to top. We’re getting a lot of positive output from this, a lot of big projects are asking for it,” Ahmed asserts. Related to this, Ahmed Baker, business development manager for the Harco Group, says that there needs to be a stronger emphasis on education in the market if Qatar is to progress further. A specialist supplier in high-tech security systems, the Belgian company has seen a strong growth in the first quarter of the year in the Qatari market. While he says that there’s definite interest and a growing market in Qatar, there remains a lot to do in in the build up to the FIFA World Cup 2022. “We can call it a booming market. The issue is the amount of companies, we’re
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afraid that the amount of offered projects is less than the amount of companies that are trying to establish their legs in Qatar. So for the meantime, and I would say, till 2015/2016, there will be a lot of things to do around here,” Baker explains. However, he points out that in terms of security, there remains a lot to be done for the country to catch up with its neighbours. “If we’re going to talk about security, it’s about awareness and education of the technology. How to educate the customer and show him a live workable solution.” “Of course there are a lot of challenges always, the pricing for instance. However the timeframe of the projects are also challenging, the present products and the discontinued products in the future, also is a challenge some times. So there are too many factors to look at,” he points out. “Especially when you talk about security, you need to renovate your
security system every three years, because it’s not like a building that will last for 15 years. Bad guys, they’ll always find a way to do harm and find a way to penetrate your premises, so that’s why your systems to be updated every year or renovated every three to four years. So yes, that’s something we have to educate the Qatari market as well.” Although contractors and consultants are understandably cautious about rushing forwards, the fact remains that Qatar is going to be a huge project market over the next decade or so. With projects likely to be tendered over the next several years, predominately in the transportation sector, and with $70 billion in transport projects already planned, there is a tremendous amount of work to be done. No one is more aware of this than Brian Stanforth, an advisor and senior contract specialist with the Assets Affairs
“We’re actually writing history now and you only get one shot to get it right. you need to go down to the lowest level and see how things can be improved”
EVENT ANALYSIS
A DECADE ON Projet Qatar has grown immensely in the past ten years.
n $10.4 billion –
Worth of contracts awarded in Qatar in 2012
n $150 billion –
Qatar’s expected infrastructure spend
n $60 billion –
Estimated worth of ongoing transportation projects
n $240 billion –
Estimated total worth of ongoing projects in Qatar
n $197 billion –
Qatar’s estimated GDP in 2012
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Department with Ashghal. With Qatar announcing multi-billion dollar road projects, Stanforth says that the focus will soon shift to the asset management side of the market. “When you talk about major projects, that’s primarily delivered by the infrastructure team, and as I said earlier, you’ll be aware of the expressways and so on, most of those tenders are in the process of being done, the next bigger ones are when we move on to the asset management side,” he says. “Currently, we’ve already let a five-year contract out on the asset management side, as well as this, we’re looking at contractors to come on board to undertake that actual physical work.” “I think the benefit we’ve got, in the way Ashghal are working, is that we’ve got the best on board. We’ve got the best people, we’re bringing the best companies on board, and that gives us every confidence that we’ll deliver on our commitments,” Stanforth adds. “I think that everyone knows that there
are a number of key milestones ahead. There’s not just the World Cup. There’s the 2016 vision, there’s 2022, there’s 2030. Those are three key milestones. Where are we in relation to meeting those targets? We’re on progress and we’ve got the best companies in the world to help us get there,” he says. “We’ve got a very close working relationship with QRail and with the World Cup committee, so it’s very integrated, and that’s the key to success.” Amer Bin Ahmed agrees with this and points out that Knauf has been encouraging their clients to look at the supply chain in a deeper, more meaningful, manner. “Doha has a deadline for the World Cup, and that’s quite a lot of pressure. What I see is that we’re part of history. We’re actually writing history now, and you only get one shot to get it right. And to do it right, you need to go right down to the lowest level and see how things can be improved,” he explains. “We need to find solutions, we have solutions, we have experience and we need to clear this. What I’ve asked stakeholders, and that means project owners, developers and realtors, to look at the supply chain a little bit deeper.” “What we’ve seen was a trend of ‘oh the material isn’t available, we can’t supply, we can’t do this’, that’s not 100% true. There are several layers in between that are causing the delays, which is creating a bottle neck. It is a challenge and I think we’ll have to work around it to find a solution. Be proactive. Our market is growing!” he asserts. n
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special feature mep consultants
bigprojectME.com
Getting
first gulf bank arena Clarke Samadhin is working on the 5,000 person capacity project.
personal
Big Project ME meets MEP consultant Clarke Samadhin, a specialist firm that has been punching above its weight in the UAE
C
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larke Samadhin is a very successful MEP consultancy, by any measure. Established in 2006 and with offices in Dubai and Abu Dhabi, they now employ over 40 staff, but the biggest selling point is the two partners’ knowledge. It is a cliché to say that the company is boutique but their scale of work means that the duo are in control of all their projects. They are finding things better than they used to be but Neil Clarke remains cautious: “In comparison to this time last year we have quoted 35% more projects. As the market improves prices for staff will inevitably go up, but hopefully will not get
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out of hand as with the pre-2008 (years). We have been squeezed on fees over the last couple of years, but now some developers are trying to lock us into fixed rates for the next couple of years. This is a risk as we can see the Dubai market is starting to move again.” Another changing aspect of Clarke Samadhin’s business that will have a cost impact is the move from certain clients to procuring for projects on a Building Information Modelling (BIM) platform. “This means the MEP consultant will need to produce documentation that can integrate with this process. Part of that is to produce drawings in three
dimensions using design software such as Revit,” says Clarke. “Whilst we have embraced this approach and have started to deliver projects using Revit and MEP 3D, there needs to be a change in the skill set in order for the ‘MEP product’ to be sufficiently detailed and to be used effectively by other consultants in a complete BIM process. At present we use CAD operators to produce drawings, but for drawings to be produced in Revit, we need to employ technicians and engineers as the Revit model requires engineering decisions to be made which CAD operators are not qualified to do. This will have an impact on fees.”
special feature Mep consultants
n Saadiyat Island District Cooling design work
n Palm Jumeirah District Cooling design work
n Limitless HQ
MEP design and construction supervision
n The Grove CFD
analysis for retro-fit comfort cooling
n Verde MEP design and construction supervision
neil clarke
able to serve Phase 3 of the Mall, the Wafi Residences, the Pyramids complex and still has 1,000t spare capacity. “The removal of around 2,500t of less efficient air cooled chillers gives annual savings of millions of dirhams on water and electricity consumption and the payback period for connection works was less than two years,” Clarke explains. “This sort of work is not the most profitable but it establishes a strong personal and technical relationship with our clients and puts us in a strong position for future work. Our success in this field has attracted the attention of other hotel and mall operators and is driving the development of joint venture between ourselves and a firm who specialise in energy modelling and performance contracting.” He’s fairly sanguine: “We are comfortable with the expansion realised to date and expect to increase the workforce
Saadiyat Island The Abu Dhabi project is one of the biggest the MEP firm has undertaken.
“Clients are not paying the fees they used to. There is a real challenge now to do that efficiently. It’s all down to experience”
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project list
Prior to the start-up of the firm, Neil Clarke and Michael Samadhin were engineers working for a much larger international consultancy. As Clarke explains: “Mike and I have been practicing engineers in the UAE since 1997. We were getting enough enquiries asking for us to be heading up projects we thought, well we can do this for ourselves, we can make a difference. The biggest thing about starting a business is making that first step. But we had the testimonials and we had the confidence of our clients and the support of our families, so we knew we could make it work. “All we’ve ever really done is to market ourselves and the team that deliver our product. It is a personal relationship, we’re not a multinational company, it’s just us but we want to do the best job for the best clients and architects.” Discussing current workload and client base, Clarke explains that the consultant is currently busy with new build work, corporate fit-out and district cooling plant design. “At the moment new build work is challenging for fees. Clients are not paying the fees they used to. There is a real challenge now to do that efficiently. It’s all down to experience,” he remarks. “Some of the notable projects we are currently working on (including); The First Gulf Bank Arena in Abu Dhabi which is a 5,000 people capacity multipurpose arena and the MMA Training Centre which is a design and build project with German contractor Max Boegl; The Beach at JBR which is a leisure, dining and entertainment complex being developed by Meraas; and The Opus at Business Bay which is a mixed-use development designed by Omniyat and Zaha Hadid, the lead architects.” They also tend to specialise, around 10% of Clarke Samadhin’s work is to problem solve existing systems. “Take the Wafi City Mall, for example. We were commissioned to optimise the central chilled water plant and Mike Samadhin headed the project.” The plant, he says, was designed for a capacity of 6,000t to serve the majority of the mall and the 5-star hotel. Through detailed cooling load assessment and hydraulic analysis, that same plant was
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Capital Planning Budget and Cost Management Progress and Communication Management
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special feature Mep consultants
Resurge in Dubai Clarke is quite upbeat about Dubai, less so other near-by markets. “When Dubai went down everybody began to concentrate on Abu Dhabi. But Abu Dhabi didn’t deliver the projects that everyone hoped,” he comments. “And then Qatar came on the rise but the workflow in Qatar hasn’t happened. We know that the focus is coming back to Dubai and consultants from Abu Dhabi and from Qatar are coming here. Even during the downturn our focus has always been on the UAE and the achievements and relationships we have cemented during this period, will provide a solid foundation for continuing success in the
“Mike Samadhin and I attend project meetings. We put a senior person onto every project,” he says. “We are proud of several aspects of our work but one of the biggest (aspects) is the quality of the companies we do work for. These include Building Design Partnership, Brewer Smith Brewer Gulf, DSA Architects, Jumeirah, EMAAR and MKM Holdings.” Finally, Clarke is also proud of their CSR policy. Like many multinational companies Clarke Samadhin sponsor a football team, the mighty Clarke Samadhin Athletic, an under 12-team in the IFA league. The firm also sponsors Richard Mitchell, whose Healing Hearts Journey will cover 22,000km across Europe for 90 days in a bid to help raise funds to build a cardiac centre in Gaza. Through sheer attention to detail, the firm punches way above their weight in the work that a company of their size would normally be awarded. They are proof that a combination of attention to detail, determination and perseverance can build a reputation which leads to commercial success. n
coming years.” Talking briefly about how a shortage of materials can engender a price rise and whether a skills shortage in Dubai could engender a hike, he seems unconcerned. “I don’t think there will ever be a skill shortage in our business because there are a lot of people around. And while there’s a boom here there generally isn’t in the rest of the world. Australia and the UK are very quiet, for example. We know the way this market is - very quickly salaries could go nuts again. It’s up to the construction industry to keep a grip on it, last time it really got out of hand.”
Palm jumeirah Clarke Samadhin has provided district cooling design for the mega project.
We know our limits. We couldn’t do an airport for example, because the labour demand would be too great
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by 20% this year. But this size of business enables us to tackle a certain level of work and for Mike and I to be involved on a project basis. Nearly 70% of our staff have been with us since the early years of the business and this promotes a family relationship. And we are the same with our clients. We have the ability to be flexible. If we need to do some stuff for zero profit, we can take a view.” He continues: “Around 85% of our clients come back. We have strong retention and it’s because of our personal approach to what we do. And we know our limits. We couldn’t do an airport for example, because the labour demand would be too great. We would never put more than 30% of our workforce onto one project. Each strand has different cash flow implications. And we mainly work in this country. We will work in other countries by invitation, but we don’t market it heavily outside of the UAE.” He is aware of the art of specialisation: “We are getting a lot of detailed calculation and analysis work for contractors. We are doing this for BK Gulf at the moment. While there is a large museum contract being designed by the large multi-nationals, we can still be involved in these types of projects and are instrumental in making it happen. BK Gulf are using our services and are procuring a plant based on our detailed calculation work and its great experience for the next project that we design.”
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ON SITE eastern mangroves hotel and spa
bigprojectME.com
Project Name
Eastern Mangroves Hotel
Location
Abu Dhabi
Site Area
1.2km
Building type
Hospitality and Eco-Tourism
The hotel
that moved
Big Project Middle East looks at the extraordinary effort that went into ensuring the Eastern Mangroves Hotel helped not damaged Abu Dhabi precious coast
eastern mangroves fact sheet n 1.2km - Area
occupied by the project
n 150 - Deluxe and
twin rooms available in the hotel
n 66 - Club rooms
available in the hotel
n 220 - Residential
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apartments which are part of the development
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I
n past times construction had something of a smash and grab approach to the environment. Most companies offered slightly tongue in cheek green credentials. However, Abu Dhabi has utilised both the 2030 Vision and Estidama building codes to make sure that does not occur in the Emirate. Mangrove swamps are not just spectacularly beautiful, they are essentially the lungs of the ocean. They provide a rich natural habitat and safe breeding grounds for marine species. In fact, mangroves are natural habitats for 75% of all tropical juvenile commercial fish species in the world. Sea birds also find safe nesting and egg laying areas in the vast mangrove forests of the UAE. When TDIC decided to build a hotel in the middle of these swamps the original development proposal included building on the mangrove itself, but studies quickly identified that the project would hurt the delicate ecosystem. The channel tributary which sits adjacent to the site was moved from its original location to where it is now,
enabling the site to be adjacent to the mainland. Moving the water channel also allowed the cutting away of dead mangroves and replanting of new mangroves, which has helped the flow of the water course. Water can now travel much quicker which maintains the mangroves better. Moving the whole development to its final location on the mainland has not only maintained, but resurrected the mangroves. It also allows an unobstructed and unaffected natural outlook from the whole development, as opposed to the usual urban context in this region. At this point TDIC had done more than could possibly be asked of them.
“Integrating a commercial development inside a green environment within Abu Dhabi has been quite an achievement�
ON SITE eastern mangroves hotel and spa
even allowed a column to be removed for the folding wall. All the glazing was upgraded to a unique noise reduction specification, requiring engagement of a specialist curtain walling manufacturer. The curtain walling has glazed panels installed that are over 50mm thick, required to reduce 50dB of sound transmission. This upgrade was a major change in the design which again had to compensate for the additional weight of glass on the designed and built structural frame. Hyder, as a company, has a habit of being adaptive. There is other construction cleverness on the site as well. A sustainable feature of the development includes the Energy Centre. This consists of a reticulating cooling system of one central energy plant to provide chilled water to the whole of the development rather than standalone systems for each of the buildings. It was a difficult decision for TDIC to make as it took up a large chunk of the overall development, in terms of construction and cost. On thinking about it they considered this solution to be more economical, greener and also that it would keep future running costs down. Much of the development of the modern emirates is based on a combination of wealth and vision. Arguably, the Eastern Mangroves project should act as a blueprint for the rest of the hotels in the UAE to ensure that future generations can benefit from the wisdom of their predecessors. n
PORS: A new look Estidama Estidama launched its new Pearl Operational Rating System (PORS) at Cityscape Abu Dhabi 2013 as it continues to refine its sustainability programme. The PORS is a mandatory process developed with the assistance and input fromorganisations including the government, the UPC committee, developers, consultants, contractors and representatives of the communities. Building owners and managers are given the responsibility of adhering to the PORS through mandatory credits divided into four main sections: Integrated operation management; Systems and procedures; Building performance; and O&M. According to the UPC, the new system complements the existing Estidama ratings for villas, building and communities. “The assigned objective of the Estidama Pearl Rating System is to set out, monitor and assess the sustainability of development throughout the building lifecycle from design through construction to operation,” said Mohamed Al Khadar, UPC executive director.
future blueprint Hyder hopes the project will act as a gudie for future projects like it.
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They had made the site environmentally friendly, even though, at that time there were no municipality requirements for such. As there were no directives in place for a ‘sustainable project,’. consultant Hyder considered the ideals set out in methodologies such as LEED and BREEAM. During the design period TDIC introduced its own base guidelines which were then incorporated into the schematic and detailed design processes. In 2008, TDIC decided to adopt Estidama and requested Hyder to carry out a review of how compliant the project would be should they apply this accreditation system. Hyder’s report highlighted that the project was eligible for a Pearl classification. So to sum up there was a sustainably sensitive site which had received utterly sympathetic treatment to standards not yet even envisioned, never mind implemented. What could possible go wrong? In this case it was Al Bateen Airport. The former military airport has been newly designated as the Al Bateen Fixed Base Operation (private jets). The new airport’s flight path went literally over the top of the hotel and right in the part of the sky where aeroplanes transform forward motion into flight, in a noisy way. This happened during the final design and initial construction stages of the hotel. Ian Strudley, project manager, quickly divined that his open top roof bar would be less pleasant with the resort is now directly under the new routing. The lounge on the fifth floor was designed as an open rooftop, but had to be redesigned with a full enclosure, incorporated in Hyder’s remit of detailed design. This added structural and additional weight to the existing architecture. Furthermore, mechanical and electrical loads which had previously been designed and were under construction and fully approved by the authorities had to be altered to meet the changes. The enclosed bar was designed with a 10m-long opening folding glass wall to maintain the open feel of the space and glazing round three sides to allow as much natural light as possible. The lightweight roof had no weight to support except itself so the load was carefully spread across as much of the frame as was available. This
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Report Analysis
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bigprojectME.com
Report Analysis
good times are
coming Jonathon Savill breaks down Deloitte’s latest GCC Powers of Construction report to find out what we can expect in 2013
“it is now more relevant than before to balance the focus on costs”
Despite the optimism on display, Deloitte are quick to strike a note of caution: “However, regional economies are facing different priorities from political stability to economic sustainability. Their treasury functions are under increasing pressure to save costs and increase revenue, whilst at the same time pushing an infrastructure agenda that doesn’t necessarily ‘pay back.” They add, in fairness, to recoup some of the costs of that hard work: “With everyone focused on the spending, it is now more relevant than before to balance the focus on costs.” “With significant investment in major infrastructure programs increasing over the coming years across the GCC, contractors, consultants and clients alike need to rethink the way they engage each other if they are to truly realise the benefits each can bring to the process,” says Cynthia Corby, audit partner at Deloitte and Construction Industry leader for the Middle East. In the past some projects during the boom times resembled an untidy smash and grab, with some contractors using every legal tactic in the book to delve into loose controlled budgets. But the industry has grown from those wild days, cautioned by their recent experiences with austerity. So what Deloitte are saying is that there needs to be individual responsibility for our actions.
GCC construction figures: n $1.5 billion Largest construction deal in KSA in 2012
n $10.4 billion Value of contracts awarded in Qatar in 2012
n $8 billion Value of contracts awarded in Kuwait in 2012
n $16.2 billion Value of UAE construction contracts in 2012
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T
here seems to be definite potential for celebration in Deloitte Middle East’s newly released annual report on the sector: GCC Powers of Construction: Meeting the challenges of delivering mega projects. “With 2013 forecasted to be a year of optimism and opportunity for construction in the Middle East, all eyes are back on governments in the region and how they propose to manage their spending,” the report says. Having hooked the reader in it continues: “In a region where there is an acute deficit in terms of infrastructure, the ingredients for capital projects could not be better.” The I&CP (Infrastructure & Capital Projects) market is growing rapidly with governments announcing projects across the Middle East region, utilising trillions of petro-dollars over the coming years. Big Project ME, and its accompanying website, has been reporting faithfully on these projects. If you total the list of new cities, dwellings, malls and even Ferris wheels of recent months then we should consider changing our name to Big Promise Magazine.
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Report analysis
“Clients’ increasing need for transparency, predictability and sustainability of what they spend, provides contractors with an opportunity to reflect on how they can meet this by better operational performance, improved procurement, schedule management and cost reporting,” says the report. “All will be acutely aware of the single most important factor in a project i.e. ‘getting the number right’, referred to herein as Survival Mathematics. This accuracy can make the difference between a ‘marginal return’ and a ‘catastrophic loss.’” “If one assumes an internal rate of return for a private organisation of c. 20% then by saving $1 off the cost base, it is similar to generating $5 of additional revenue. Therefore by saving $1 and making $1, it is the same as making $6, which suddenly gets everyone’s attention,” the report explains. “By leveraging best in class internal controls, contractors too can deliver ‘more for less’ whilst still retaining existing or improved profitability,” says Andrew Jeffrey, director, Corporate Finance, Deloitte Middle East. “Additionally by engaging more intelligently with clients, contractors should look at more innovative ways of sharing savings, risks and opportunities to the benefit of all,” he tells Big Project ME. In addition to articles and interviews examining key industry trends, the Deloitte GCC Powers of Construction report includes a country by country analysis of statistics, key projects, and a SWOT (Strengths, Weakness, Opportunities and Threats) analysis. UAE: In terms of contract awards, the UAE replaced KSA as the GCC’s largest construction market in 2012 with $16.2bn, four percent more than the $15.6bn of contracts awarded in Saudi Arabia. This is the first time since 2008 that KSA has not recorded the largest value of construction awards in the region.
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Saudi Arabia: The largest construction deal awarded in Saudi Arabia in 2012 was the deal awarded to expand the Masjid al-Haram
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bigprojectME.com
“contractors, consultants and clients alike need to rethink the way they engage each other if they are to truly realise the benefits each can bring to the process
Biggest market The UAE has become the biggest construction market in the GCC.
So where is the money going to come from? American finance is largely drying up in the region and European banks struggle with their own problems. The tide of Islamic finance has taken a while to turn but is now flooding in a good way. A recent report by the Organization of Islamic Cooperation (OIC) confirms that the global market for Islamic financial services, as measured by the total volume of Sharia’a-compliant assets, is estimated to have reached $ 1.1 trillion at end2011. OIC countries, with a collective share of 98% in these assets, continue to be the main actors in the industry’s
in Medina. This will increase the capacity of the mosque from 600,000 to a million worshippers at an estimated cost of $1.5bn. Qatar: Qatar was the third most active GCC construction market in 2012, with $10.4bn worth of contracts. Transport infrastructure dominated Qatar’s construction sector. Hosting the FIFA 2022 World Cup should yield considerable contracts across the construction and infrastructure sectors. Ahead of the 2022 FIFA World Cup, and in line with the country’s 2030 Vision, Qatar’s infrastructure spend is expected to reach $150bn. Kuwait: Kuwait was the fourth most active construction market in 2012, with $8bn worth of deals awarded. The largest of these was the long-awaited $2.6bn Subiya Causeway, which had been in the pipeline for almost a decade. Transport construction accounts for 76% of total construction spend in the country.
impressive growth story.
It seems that the good times are coming. n
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CPD modules
bigprojectME.com
Application of pump boosting to water services in buildings This CPD module covers the application of pump boosting to water services in buildings
P
ressure boosting is increasingly used in a range of applications in HVAC&R. The application of appropriate pump sets and ancillary devices will be determined by the type of application in residential, commercial and industrial developments. Here we will review the performance of pumps and focus on applications of pressure boosting for cold water supplies in buildings.
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The pump characteristic The centrifugal pump as typically used in the pumping of water in buildings would generally have one of the pump characteristics as shown in Figure 1. The “head”, h, can be readily converted to pressure, P (Pa), from the relationship P = 9.81 rh, where r is the water density (kg/ m³). (Also remember that 1 bar = 100 000 Pa = 100 kPa.)
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The pump can operate at any point on the curve. The “operating point” is determined only when a pump is connected to a system. For example, on Figure 1, Point A would be when the pump is connected to a low-resistance system with resulting high flow and Point B is a high-resistance system and low flow. The actual shape of the pump characteristic will be determined by the internal pump geometry and the choice of appropriate characteristic is important for consistent system operation. Figure 2 includes a system characteristic for an open system, such as a boosted drinking water system for a high-rise building. At the design flowrate, the pump is matched to provide the design flow. The actual pump should be selected so that the pump generally runs at a point of high efficiency (see Figure 2), since pump
CPD modules
parallel. Multiple pumps allow a more controllable minimum flow and will help to ensure that pumps run in the most efficient part of the operating curve. Figure 4 shows the operating curves for such a system where the pump set is providing a constant outlet head regardless of flowrate (as discussed above). Although Figure 4 shows some discreet operating points (for each of the pumps working at full speed) the variable speed controller would provide all intermediate points along the horizontal line by continuously varying individual pump speeds. The control regime needs to maintain stability by not, for example, repeatedly cycling from one pump at full speed to two or more pumps at part speed and then back to one pump. Flat characteristic pumps should not be used for such multiple pump sets as they are prone to suffer from such instability. Practical application: The demand for pressure boosting has grown consistently in recent years for a number of reasons: increasing numbers of taller buildings; inconsistent pressure on site; and an increasing demand for high water pressure requirements during industrial processing. Another major factor is that water authorities have reduced mains pressure to reduce leakage in distribution systems. A pressure boosting system will typically comprise one or more vertical multistage pumps. The pumps have a common manifold on both suction side and discharge side, non-return valves, shut-off valves, manometer and pressure switch for each pump or pressure transducer. The system is usually delivered on a common base frame in a preassembled packaged booster assembly and, in most applications, a membrane tank to reduce pump cycling will also be included.
FIGURE ONE
FIGURE TWO
FIGURE THREE
FIGURE FOUR
FIGURE FIVE
Graph figures Pump power is a critical element.
“Since the pump more closely represents the system requirements, there is less wear and tear thus extending system life and reducing maintenance”
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power accounts for significant energy consumption in buildings. The approximate pump shaft power in kW for water flow may be determined from: (QH)/(102 hpump) where Q is the flow in l/s, H is the head in metres and hpump is the pump efficiency. In a real application of a cold water distribution system, the draw-off will rarely be at maximum design flowrate. Looking at Figure 2, a reduced flowrate has been shown; however, at this reduced flowrate there is excessive head being produced by the pump – if this were a simple single pump booster then a flat characteristic pump could be advantageous to reduce this excessive head (this can be seen by comparing the flat and steep characteristics in Figure 1). The excess pressure would practically cause high pressure at water outlets that could be alleviated by pressure reducing valves; however, the system would still be using excessive pump power. Variable speed pumps can be used (as shown in Figure 3) to regulate the flow to reduce the power used. Variable speed pumps can provide large energy savings as the pump only absorbs the power required to meet the duty that is directly proportional to the pump head, H. Also, by matching the duty of the pump to the system, there is less noise throughout the system and there can be less need for commissioning and bypass valves as well as starters in the control panels. Since the pump more closely represents the system requirements, there is less wear and tear thus extending system life and reducing maintenance. In practical applications of water boosting there are difficulties in providing appropriate signals back to the pump controller to vary the speed so that the pump output can follow the system curve. This means that a booster pump system controller will be set up to provide a constant outlet head (the head at maximum demand). This will ensure that the system can always supply the required flowrate; however, it will be more wasteful of energy. Depending on the application, the “booster pump set” may range from a single pump to larger systems where several variable speed pumps operate in
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CPD modules
Water authority legislation will not allow booster sets to be installed directly on the incoming mains supply. This is to prevent back siphonage from any terminal outlet into the supply mains and is achieved through the use of a break tank. The overall size for storage tanks (including the break tank) can be established from basic assumed data for each application. A manufacturer’s recommended guidance (Table 1) has been established from historic data and is aimed at providing adequate storage quantity while avoiding excessive storage time and potential stagnancy. This is similar to the data in CIBSE Guide G equating to 24-hour use (more detailed data are available from The Institute of Plumbing). However, current practice is that the storage is much reduced from this guidance – a commonly used figure is to be able to store 13 minutes’ supply of water. The rationale behind this precise figure is uncertain, however, the overall driver is the high volumes and weights of water that would otherwise be stored and the resulting cost in terms of construction and loss of net lettable areas. Figure 5 shows an example outline schematic of a boosted cold water supply to a multistorey building. However, where a guaranteed supply is needed there will be a requirement for high level (and possibly intermediate level) tanks that can store water as a means of supply in case of mains or booster system failure.
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Booster set sizing The actual system configuration, for example, the volume and position of storage (such as basement, rooftop or intermediate), and so the type of booster application needs to be established to be able to size the appropriate system. This may be based on factors as previously discussed or may be an iterative process following the initial steps below. Define the maximum flow – This can be established from actual data from similar buildings, manufacturers’ guidance or data available using standard probability methods such as that in the Plumbing Engineering Services Design Guide. A common error when sizing a booster
MAY 2013
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set is to overestimate system demand by assuming all appliances will run simultaneously, which is rarely the case. Define the consumption profile and load profile – This is a more challenging process to determine the appropriate “stages” that are required within the booster set. Although this information is not essential to provide an overall booster specification, it can help to establish how many pumps (or pump sets) are required. An energy consumption profile would show the minute-by-minute expected water use and a load profile would summarise how many hours per day a particular flowrate is likely to be needed. Determine the pump duty – Depending on the particular application, the booster set needs to overcome: first, static height, h, of the building and hence head required (using P= 9.81 rh to convert to kPa); second, friction losses through pipework system (calculated at peak demand), using standard pipe sizing techniques; and third, end pressure required, typically up to 200 kPa for a direct shower/tap outlet and 30 kPa for a ball valve feeding a tank. The resulting booster pump pressure is given by adding all three together. Some useful examples of system sizing are given in Keith Moss’ Heating and Hot Water Services Design in Buildings.
Practical aspects of installation: As the popularity of pressure boosted systems increases – with direct water take-offs from the boosted supply riser – difficulties have been experienced when power interruptions and other faults have stopped the booster pumps. Following a pump failure, as the supply riser is drained(as occupants use water from that being held in the rising pipework) and is not made up from the booster set, a partial vacuum is created in the riser pipe. Upon the power being restored, the booster set tries to make up any water loss as fast as possible. The sudden increase in water flow will rapidly pressurise the partial vacuum in the empty pipework, and will then stop the liquid flow suddenly, just like a fast-acting valve. A surge will pass through the liquid until it can find something to absorb the force, for example a weak joint, resulting in potential flooding. By using a valve at the top of the riser – an air release and vacuum break valve – in conjunction with a properly controlled booster set, this problem can be prevented (Figure 5). If a partial vacuum were to occur, this valve takes in air (through an unobstructed large orifice) filling the riser with air. When the pumps restart, the resistance of this air cushion in the riser acts to dampen the surge, resulting in the
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CPD modules
pumps slowly filling the system back up, and the valve venting the air. During times of system maintenance, pumps can suddenly be switched fully on so causing massive pressure surges. When a variable speed booster set is switched from “auto control” to “hand control” (as it may be during maintenance procedures), the set will usually only operate at full speed. Potentially, if the booster set is switched on in this state when there is very low demand, the system pumps will operate at Point A in Figure 1 introducing a much higher system pressure than is required, with a potential “hydraulic shock” wave travelling up the system,
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resulting in damaged pipe joints/fittings and potential flooding. By adding a potentiometer to the controller when activating any pump in the “hand control” position, each potentiometer would need to be manually switched to “zero” and then slowly turned on by hand, before the pump would activate. Such control can be set up so that it prevents the pressure ever going beyond the normal maximum working pressure of the booster set. Advanced control There are a number of increasingly sophisticated control features available for packaged booster sets that can control
up to six pumps connected in parallel to ensure constant pressure in the system. With better monitoring systems, this can be improved by controlling the outlet pressure so that not only do the systems provide an appropriate water flowrate, but they also match the system frictional pressure drop. The units can be supplied ready wired with interfaces to building control systems so that advanced control, monitoring and diagnostics may be undertaken remotely from site. Whatever the complexity of control, setting up the booster set needs to be undertaken by an experienced commissioning team.n
Questions for Module 3: Application of pump boosting Choose one answer per question.
C The system is likely to be noisier
NAME (capitals)
D The outlet pressures are likely to be more
JOB TITLE
1) What is the approximate equivalent
controlled
COMPANY NAME
pressure produced by a pump if the required
E There is less requirement for commissioning
ADDRESS
head is 50m and water density is 1000kg/
and bypass valves
P.O.Box:
m³?
MOBILE:
A 5 Pa
4) A packaged booster assembly in the UK
FACSIMILE:
B 5 bar
will typically comprise all of the following
EMAIL:
C 5 kPa
except one – which one?
D 50 bar
A Non-return valves
E 50 kPa
B Direct connection to mains water supply
n Information you supply to CPI may be used
2) Which one of these is true when
D Pressure switch or pressure transducer
for publication and also to provide you with
comparing a flat characteristic centrifugal
E Membrane tank
information about our products or services
pump (FCCP) with one with a steep
in the form of direct marketing by email,
characteristic?
5) Which one of the following is unlikely
telephone, fax or post. Information may also
A The FCCP is always more efficient
to be true when using booster sets in a
be made available to third parties.
B The FCCP has a more constant head across
high-rise building to provide an efficient and
a range of flowrates
reliable system?
n “This module will contribute 30
C FCCPs are more stable when used in
A Air release and vacuum break valves
minutes(general) towards your CPD
parallel pump sets
installed at the top of risers
obligations. If successfully completed,
D FCCP shaft power cannot be calculated
B Potentiometer on controller to gradually start
certificates will be distributed two weeks after
from the standard equation
the pumps under hand control
the module closes.
E FCCPs have a more constant flowrate across
C Multiple variable speed pumps connected
a range of heads
in parallel
n Email carlo@cpidubai.com if you have
D Capacity to serve all the appliances in the
any questions about our CPD programme.
3) Which of these is unlikely to be true when
building being used simultaneously
using variable speed pumps as opposed to
E Booster pressure calculated from static head
n You can also contact us on:
constant speed in a water pressure boosting
+ friction losses + end pressure
Corporate Publishing International
application?
P.O. Box 13700, Dubai, UAE
A The wear and tear on the system
Tel: +971 4 440 9100
components will be less
Fax: +971 4 447 2409
B There will be lower yearly energy use
Web: cpidubai.com
MIDDLE EAST
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Privacy policy
C Manometer
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special feature flooring
bigprojectME.com
The floored future Big Project ME examines the growing trend of sustainable flooring and asks manufacturers what the latest developments are in the industry
A
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s the green building movement rumbles on and becomes increasing prevalent in the Middle East, consultants and architects are insisting on the adoption of sustainable products and materials for their projects. This has led to a proliferation of building materials being adopted that wouldn’t have been used a mere 10 to 15 years ago due to their cost and the lack of awareness from clients. One such building product is sustainable flooring, which hasn’t really been a majority priority for contractors or clients, says Ali Maarrawi, general manager of the Middle East operations for the Cosentino Group. “I would say that, in the Arab World, it has been inherited from previous
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generations, that natural stone is the best thing. But life evolves, technology evolves and now for the past year, we’ve begun to see a change in trends in the markets,” he tells Big Project ME. According to the experts, sustainable flooring is flooring material produced from sustainable materials, in a sustainable process, that reduces the
demands on environmental ecosystems during its life-cycle. A sustainable floor can bring a number of benefits to the building it is installed in, with studies showing that sustainable flooring helps create safer and healthier building environments. Sika Flooring Systems say that a sustainable flooring system not only
“If you have a building that’s already certified as green, you’re going to want to use this. You’re going to want to pay the extra money, because you need your building to be certified green”
special feature flooring
“in the Arab World, it has been inherited from previous generations, that natural stone is the best thing. But life evolves, technology evolves”
Silestone advantages: n Anti-bacterial Silver
ions used to prevent the propagation of bacteria
n Quartz: 94% of make is natural quartz, creating a high level of durability
n Stain resistant Non
porus surface makes Silestone highly stain resistant
Reusability Silestone can be reused even after its building has been torn down.
flooring and the interior cladding. He adds that a number of other projects use the product, such as the Burj Al Arab and Barcelona Airport. However, he concedes that his products remain relatively niche due to their higher costs, which can put off customers, but says that the situation is slowly changing, driven by the industry itself. “If you have a building that’s already certified as green, you’re going to want to use this. You’re going to want to pay the extra money, because you need your building to be certified green,” he explains. And added advantage of the Silestone product is its durability, he says, pointing out that even after 50 years, if the building is torn down, the flooring can be reused again and again. “(One example) is the FIFA World Cup in Qatar. They’ve mentioned that a few of the stadiums, they’re going to dismantle them and send the whole thing to Africa,
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helps create a healthier environment in a building, but also contributes to its overall Green Building Certification. “Sika flooring systems contribute to multiple points in Green Building Certifications systems. This is because low VOC emitting Sika systems provide LEED points and improve the indoor air quality,” the company says in a statement. “Underfoot and noise reduction with our systems improves the building acoustics in programs,” it adds. The company says that its flooring systems can help reduce floor life cycle costs thanks to its coating systems, which extend the life of the floor and further reduce the carbon footprint. Maarrawi adds that two of his company’s biggest brands are Silestone and Eco, two flooring products that offer proof that sustainable materials can be successfully sold in the UAE market. He explains what makes Eco so special: “Eco is proof that you can still continue to innovate in the field of materials for decorative and construction purposes. It has 75% recycled content and is LEED certified,” he says. “It comes in slabs and each slab is made up of broken glass, mirrors and porcelain, this is the 75% of recycled materials. There’s another 25% of mixture, a resin that has corn in it. Why corn? Because corn has starch in it and starch gives it a bonding element,” Maarrawi explains to BPME. He adds that Silestone is another product that Cosentino Group that has high expectations for, pointing out that they’re targeting the healthcare and medical market in particular for this flooring product. “Silestone, all the manufacturing process is LEED certified, however it’s not recyclable. However, it has something that is very unique. It has an antibacterial treatment, which is patented for us.” Although the product is made out of 94% natural quartz, there are particles of silver embedded into the stone during the manufacturing process. This inhibits and prevents the growth of bacterial cultures on its surface, Maarrawi says. “That’s why we used it on a hospital project in Doha last year,” he says, adding that Silestone was installed as part of the
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SPECIAL FEATURE flooring
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so that people can reuse them. Qatar won’t need 12 stadiums, so this product fits perfectly into that concept,” he asserts. A drawback of these products is that they can’t be used on exteriors, due to the presence of resin in them that cannot withstand ultraviolet light, rather than heat, as one would normally assume. However, he says that the Cosentino Group is in the process of developing a new product that will hopefully resolve this issue and expand the firm’s horizons. “The new material, called Dekton, can absorb ultraviolet light and can take direct, continuous exposure. So you can use it for interior and exteriors, you can use it for both interior and exterior flooring. You can even use it for swimming pools, because it does not react with chlorine. Furthermore, it’s A1 fire-rated as well,” he explains. Maarrawi says that Cosentino has spent more than five years on research and development of Dekton, at a cost of more than $166.4 million. With such significant invesment into the technology, it is clear that the Cosentino Group believes in the potential of sustainable flooring. What is also becoming increasingly clear is that the local market is also beginning to respond to the multitude of benefits that it offers. Therefore, it seems likely that sustainable flooring technology could here for good, which can only be a good thing for everyone concerned. n
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“The new material, called Dekton, can absorb ultraviolet light and can take direct, continuous exposure. So you can use it for interior and exterior flooring”
healthcare benefit Silestone’s anti-bacterial properties make it ideal for hospital use.
Hardwood an option Anita Howard, chief operating officer of the National Wood Flooring Association is an advocate for wood flooring, terming it as the most sustainable option to use in a building. “When wood is manufactured into an enduse product (flooring, cabinets, furniture, even picture frames), the wood continues to sequester carbon throughout its service life. When the wood is no longer usable, it can be recycled for another use, or even burned as a fuel. No other flooring option compares. “ In terms of performance, wood is very easy to maintain, and can be renewed numerous times throughout its service life. Other flooring options need to be replaced when they start to look worn out or old. Wood can be sanded and refinished to renew its luster, which means it has a significantly longer service life compared to other flooring options.
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SPECIAL FEATURE concrete sustainability
bigprojectME.com
A concrete plan for sustainability
The building material has a high sustainability quotient already, but new technologies can enhance it, writes Sona Nambiar
W
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hile concrete is a sustainable material in terms of its life cycle, reducing the cement content in concrete with other alternatives such as fly ash is a good solution. Besides, the production of Portland cement leads to the release of significant amount of carbon and this is a concern that is being addressed globally and in the GCC. “Concrete is a sustainable building material, which ensures durable and long-lasting structures that will not rust and burn. It also ensures longevity – an integral part of reducing cost and use of resources in a project,” says Dr Huiqing He, corporate sustainability manager at Al Fara’a Group and deputy operations director (SME) at Unibeton. “Besides, the thermal mass of a concrete
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building means reduced requirements for heating and cooling systems, which in turn means an energy-efficient building. In addition, concrete is manufactured using many post-industrial by-products and it can also be recycled and reused to save material resources,” she says. Concrete is one of the most widely used construction materials globally due to its sustainability properties, agreed Rabih Fakih, managing director of Grey Matters. “However, the production of Portland cement leads to the release of significant amount of carbon emissions. One ton of Portland cement clinker production creates approximately one ton of carbon emissions and other greenhouse gases (GHGs). Hence, environmental issues will play a leading role in the sustainable
development of the cement and concrete industry in this century.” Still, concrete, as an end product, is a sustainable material. “It is produced with very little waste, made from some of the most plentiful resources on earth (limestone), and minimizes the effects that produce urban heat islands, among other benefits,” Fakih said. “At the process level, the re-use of post-consumer waste and industrial byproducts in concrete produces a ‘greener’ form of concrete.” “The use of coal ash, rice-husk ash, wood ash, natural pozzolans, GGBFs, silica fume, and other similar pozzolanic materials can reduce the use of manufactured Portland cement clinker and simultaneously produce a more
SPECIAL FEATURE concrete sustainability
Carbon Emissions So, will replacing Portland cement with
Construction codes: n NRMCA Sustainable Concrete Plant Certification US based code
n ESTIDAMA Locally formed UAE code
n LEED US based code n GSAS Qatar specific construction code
Cost driven Experts say that initial costs are driving the implementation of standards.
fly ash (by-product of electric power generation) or other materials solve the carbon emissions problem in the long run? Dr. He agrees that using fly ash reduces embedded carbon emission in the long run and ensures a higher resistance to chemical attack, which also extends the life span of the product. “Slag cement (ground granulated blastfurnace slag or GGBS) is another common supplementary cementitious material (SCM) used in manufacturing concrete.” “A by-product of a controlled process from iron production, it results in a very uniform composition, increases concrete durability and enables a higher volume replacement of Portland cement (by up to 70%).” Tadros agreed that reducing the cement content in a concrete mix results in significant sustainability. “Modern mixes are using cement replacement materials such as fly ash and rice ash in a proportion of above 70%. New varieties of cement are also in the development stages. Again, when a
“Regionally, two major bodies making a tremendous impact in this area are Estidama in the UAE and GSAS in Qatar”
structure runs its lifecycle, the reinforced concrete used in the building can be recycled as aggregates and recycled reinforcing bars. But since reinforced concrete is a structural material, one has to be careful about what is put into the concrete mix. It has to be carefully specified and regulated to avoid potential long-term durability problems,” he noted. Researchers at Missouri University of Science and Technology said recently that increasing the amount of fly ash in concrete up to 70% can also prevent millions of tons of the waste product from ending up in landfills. Fakih added that replacing Portland cement with fly ash also improves the plastic behaviour of the concrete. “Other SCMs have been widely and
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durable concrete,” he explains. Local and international design and construction are governed by codes and certifications such as the NRMCA Sustainable Concrete Plant Certification (US), GreenStar, Estidama (UAE), LEED (US), GSAS (Qatar), Breeam Gulf, ASTM published technical standards and ASTM sustainability committee (E60), and ACI 318 building code requirement for structural concrete. Green concrete can contribute to earning points for the certification of the structure. “Regionally, two major bodies making a tremendous impact in this area are Estidama in the UAE and GSAS in Qatar,” Fakih said. According to Estidama’s Pearl rating system in Abu Dhabi, concrete is covered within credits SM-9 (regional materials) and SM-10 (recycled materials). “In June 2010, all new development applications for communities are mandated to satisfy all required credits to achieve a minimum 1 Pearl level of compliance,” Fakih said. However, Maher Tadros, managing partner of the US-based firm, e.construct, and a professor emeritus at the University of Nebraska, said: “Currently, initial costs are driving the implementation of most standards.”
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SPECIAL FEATURE concrete sustainability
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intensively used in the GCC for more than a decade. Recycled aggregates from demolished buildings and returned concrete can also be used to replace the natural aggregates,” he said. In order to ensure that concrete production also ensures energy efficiency and reduction of valuable water resources in the GCC. He suggests that companies implement the NRMCA comprehensive programme called “Concrete Sustainable Plant Guidelines”, which addresses a sustainable operation and practice through life cycle perspectives. It covers process control and evaluation from material purchasing, production and delivery, product use, to waste reduce, recycle and reuse. He added that currently, only Unibeton Ready Mix has achieved this certification in the region. “Following our management requirement, waste water and waste concrete are recycled and reused through in-house developed water treatment plant and concrete recycling plant to enhance
“recycling process water is a common phenomenon in most GCC countries, where water is recycled/treated to be used in the concrete process”
A sustainable Saudi? Despite big ticket projects worth $806 billion till 2030 in Saudi Arabia, according to Zawya Projects, data
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sustainable development and practice, and further reduce CO2 emission, waste disposal and resources usage. All recycled water is reused to reduce water consumption,” she says. Additionally, chemical liquids (admixtures) are used to reduce the water demand needed for mixing while improving the fresh and hardened properties of the concrete, adds Fakih. “Also, recycling process water is a common phenomenon in most GCC countries, where water is recycled/treated to be used in the concrete process,” he says. Tadros noted a new trend emerging in North America as an alternate to reduce the usage of concrete – using precast concrete insulated panels (sometimes called sandwich panels). “The insulation
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layer not only reduces the volume of concrete used but also adds considerable insulation value to the building envelope. Using fiberglass connectors across the insulation ensures that the two outside wythes of concrete work together in composite action,” Tadros says. “Thus a 75-100-75 mm sandwich wall acts like a solid 250 mm wall while using only 150 mm concrete. It also provides an R rating of 20 (US units).” In addition to these features, one could use a concrete mix with very little cement and a lot of fly ash, and still get the required capacity,” he said.n
on projects that are in the design, bid or construction stage, awareness of sustainable construction and development is still in the nascent stages, according to sustainability professionals. While the green building materials sector has been developing environmentally friendly products, the higher costs deter clients who choose traditional construction materials – thus dampening the growth of sustainable construction. Recent information on the progress of the new Saudi building code implementation that would mandate the use of efficient materials and design practices in the near
Article was written by Sona Nambiar, who is a writer for Zawya.
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COMMENT Estimating Costs
John Conmy
Searching for change Software can take some of the guesswork out of estimating project costs, says John Conmy of COINS Middle East Construction software is the collection of programs, processes and information used to perform tasks within the building or assembling of a structure, as a means of increasing productivity, efficiency, and competitiveness of a project. Tasks previously administered by a project manager, construction manager, design engineer, construction engineer and project architect can be performed by construction software applications. John Conmy is commercial director of COINS Middle East, a construction industry software solutions for construction and engineering, facilities management and service, home building and property development, supply chain and e-commerce, design and BIM. So how do you estimate a job properly?
It is actually a very interesting question. In fact, the question is made more interesting by the advances that are being made right now with the advent of BIM and 3D modelling at the design stage, he says. “I am going to assume that we are talking about a ‘traditional’ contract where the project is tendered for by a number of contractors on a single stage process. I also assume they are the main contractor and will complete the main building works using their own labour, equipment and plant. They will also use speciality subcontractors for the likes of elevators, glazing and so on,” Conmy explains. Scenario One All construction projects will comprise
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C
ontractors have a hard job when it comes to estimating the cost of a project. There are so many variables. These can include your competition doing the work at cost or even a loss just to keep their payroll going. They can also include contractors who pitch in at rock bottom, knowing that they can rely on tactical events such as delays or disputes to bump up the ante. There are also refugees from other markets who arrive prepared to undercut to establish themselves. There is obviously a focus on Qatar at the moment with the promise of huge projects to support the growth of that country but competition is still extremely keen in Dubai and contractors need to have all the aces in their hand.
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COMMENT Estimating Costs
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of an element of five main components – Labour, Plant & Equipment, Materials, Subcontractors and Overheads (Staff costs, temp buildings etc). Basic economics should dictate the cost of local labour is similar across all bidders but if one contractor has been in the region longer than the others, it is possible that output from that labour is better and may give a competitive edge. Plant & Equipment should also be a similar price assuming that each contractor either owns their own plant or they are all hiring it in the local market. What may make a difference here is the quality of maintenance of plant that is being used especially when the asset is owned by the contractor. What can make a massive difference is in the material and subcontract part of the
“Having modern software that can quickly and accurately take-off what is to be priced and then create an estimate is critical to the process”
tender because the contractor with the best supply-chain management should be able to be more competitive than others for this element.
Forward planning Estimating software allows contractors to predict the costs of a project.
Where having good systems can help...
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Tendering Having modern software that can quickly and accurately take-off what is to be priced and then create an estimate is critical to the process. Modern estimating systems can use all the information at an estimator’s disposal interactively. For example, COINS Estimating powered by CostOS can work interactively with either 3D models or 2D drawings to ensure accurate take-off of quantities. If BIM models are available, COINS Estimating not only can work out the volume of concrete, say, but can also immediately work out the amount of formwork required to place that concrete. A process that used to be quite labour
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Coins solutions: n Construction and Engineering
n House Building & Property Development
n Facilities Management and Services
n Business Intelligence n Supply Chain & eCommerce
n Design and BIM
intensive (days and weeks) is now completed in a matter of minutes using modern technology. Once there is something to price, getting accurate prices for elements is the next stage. Again, technology has evolved such that prices for components can be stored centrally but an uplift can be added dependant on geographical location or other such factors. There are also a number of online databases available that not only hold prices of components, but the specification data associated with those particular components. Modern tendering systems, such as COINS Estimating can use GIS data to work out where the job site will be, and use location factors for pricing and can also access online databases (either subscription based or internally created) using web services so that information can be quickly added to the estimate. Using Supplier Relationship Management is also very important in a competitive tendering world. Knowing which suppliers/ subcontractors perform best and are trusted ensures that only approved vendors are used for both tendering and project procurement. Being able to compare what prices the estimator has used in the tender compared to what the procurement team
COMMENT Estimating Costs
COINS breakdown n 50,000 Number of users worldwide daily
n 13 Number of COINS offices globally
n 30 Number of years COINS has been in operation
n 4,000 Accumulated number of man-years of knowledge
have been able to procure those items for recently is another important check at tender adjudication stage. Finally, many companies sometimes forget the time element of the time/cost/ quality triangle. A modern estimating system should be able to communicate effectively with the planning tool that is being used such that time-related elements of the estimate can be updated interactively. COINS Estimating is fully integrated with Primavera P6 planning such that the work breakdown structure can be held within P6 and any amendments to the time element can be immediately reflected in the estimate. Scenario Two Projects will cost different prices in different parts of the world for a number of factors but mainly because of the price of resource, the output (or quality) of that resource and the particular building code that is to be used (different areas of the
BIM Predictions BIM models help speed up the rate of progress on a project through accurate predictions.
world have different standards when it comes to building). A modern tendering system should be able to support multi-currencies for pricing (including a mixture of currencies within a single tender) and ensure that the exchange rates are kept up to date. COINS Estimating, for example, uses a web service to any of the main FX rates sites to ensure that exchange rates are kept current. Every day, around 50,000 people log onto the COINS platform. According to the Construction Financial Management Association’s 2008 Information Technology Survey, the majority of all contractors are now using software for functions such as cost estimating, accounting, project management and scheduling and CAD, or computer-aided design. The larger a construction company, the more likely it is to use construction estimating software. Companies in specialty construction fields use construction estimating software most frequently. Other leading construction estimating software packages include Sage Timberline Office, Microsoft Excel and HeavyBid, which is popular among heavy and highway firms. According to one statistic software drives 15-25%+ reductions in procurement cycles, six to ten times faster estimating, reduce overall project times, as a significant reduction in change orders and the virtual elimination of contract related legal disputes. Each project is unique but various elements of it are not. For example all buildings have a slab and varying forms of construction involve various engineering subsets of ability. It should be possible to reduce these to a set of data which confirms to a norm. Software uses this information to standardise deliverables and save money in the long run. Even in these times any money a contractor saves goes onto his bottom line and can make the difference between another tick and a messy ending. n
John Conmy is the commercial director of COINS Middle East. He can be reached at John.Conmy@coins-global.com.
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“Technology has evolved such that prices for components can be stored centrally but an uplift can be added dependant on geographical location or other such factors”
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COMMENT Project Management
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Paul woutersen
Bringing International Best Practice to Management of Capital Programmes in the Middle East Paul Woutersen of Faithful+Gould Middle East and India, outlines the approach the GCC is taking towards achieving best practices
I
nternational best practices in project management (PM) are influencing the Middle East’s approach to the built environment, but the phrase ‘best practice’ remains misunderstood by both Middle East clients and international consultants serving those clients. The upswing in GCC government capital programmes amidst a global recession has brought sharp focus to the need for governments, and semigovernment organisations, to deliver better value for money to their citizens and customers and for this ethos to cascade through their supply chains, including international project management consultants delivering a more effective and efficient service. Whereas the previous cash rich environment allowed both partners, the local client and the international project management consultant, to be unfocused in selecting relevant ‘best practice’, the downturn in the global economic climate is now dismantling those outmoded and inefficient attitudes. Lack of focus is now an expensive luxury which can be ill-afforded, from the client’s cost perspective and from
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“PM skills must therefore be adapted to suit local conditions, while targeting the client’s project goals”
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the project management consultant’s business reputation perspective. Larger portfolios with high budget and high volume programmes have the most urgent need to deliver best practice project management benefits. Governments and semi-government organisations are therefore driving this change. This is strategically important for organisations seeking to procure international contractors, who are familiar with best practices and otherwise may be prevented or dissuaded from joining the organisation’s list of approved contractors. Government aspirations are often very high and there may be keenness on all sides to bring international best practices to the ongoing project. However the government division is not always entirely clear on what this entails, so there is often scope for education at all levels across the organisation. Cultural nuances are very important in this market. It can be hard to break through the long-standing reliance on old-school hierarchical civil service structures. Even where this change is considered desirable by the client, there can be an expectation gap between the client and the international project management consultant. In practice it can take time before new methods are understood, accepted and implemented. Local legislation can complicate the built environment arena. For example, government procurement laws do
COMMENT Project Management
“We encourage an evolutionary approach with our clients for the successful introduction of ‘best practice’”
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not always lead to an evenly balanced and transparent contracts and many contractors run into litigation from day one of the project. Government rules regarding the funding of projects can prevent the contract terms being improved, so the international project management consultant should not waste effort in this regard, where he has no influence and no chance of affecting any significant change. We encourage an evolutionary approach with our clients for the successful introduction of ‘best practice’. Firstly we take time to properly understand the client, working with suspected expectation gaps such as the legislative example above, to ensure actual gaps are identified and closed early in the service, in order to provide real improvement in the client’s project management practice.
JUNE 2013
Evolutionary approach Faithful+Gould encourage clients to gradually introduce best practices into their projects.
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Having taken appropriate care and due diligence to identify and close expectation gaps, we then work with the client to define a series of achievable improvement steps and quick wins. Quick wins provide confidence in the service and to deliver early, tangible benefits from project management process improvement. A quick win can be attained in any area of project management, ranging from a value management initiative linked to the CEOs office to a safety initiative rolled out across construction sites. Project management skills must therefore be adapted to suit local conditions, while targeting the client’s project goals. A properly empowered international project manager has learned where change can be most effectively applied and which cultural sensitivities cannot be easily altered. In the Middle East market, corporate government hierarchies are a significant barrier to communication and timely action and this needs sensitive management to achieve buy-in by everyone involved Faithful+Gould has provided project management services in the Middle East since 2005. Our combination of global project management experience and local market-specific knowledge enables our clients to apply a lean and effective approach to a wide variety of projects. We have seen that clients are now increasingly engaging with our Project Management Office (PMO) service. We are currently working with Kuwait’s Ministry of Public Works, to undertake a review of its existing organisation and the methods used to manage its projects which will oversee its multibillion dollar infrastructure development programme. Saudi Arabia’s National Water Company is another recent example, where we provided a programme and project management framework to facilitate timely completion of projects, appropriate utilisation of financial resources and delivery of business benefits to NWC. n
Paul Woutersen is the regional director of Faithful+Gould’s operations in Kuwait.
TENDERS
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TOP TENDERS Project name: Korean Healthcare Facility Project Meydan
Budget $163,000,000 Client Meydan LLC Region Dubai DescriptionConstruction of a Korean Hospital comprising two buildings offering (170) beds, seven operating rooms.
Status New Tender
Project name: Residential Apartments, Public Buildings & Infrastructure Works Project Jaber al-Ahmed City
Project name: Headquarters Construction Project-14
Budget $70,000,000
Project name: Damac Towers by Paramount Project Downtown Dubai
Budget $150,000,000
Client South Oil Company (Iraq)
Client Public Authority for Housing & Welfare
Region Iraq
Budget $1,000,000,000
Description Construction of new headquarters for
(Kuwait)
Region Kuwait
an oil company
Client Automated People Mover System Project Education City Complex
Description Construction of 640 residential apartments, public buildings and infrastructure works at Jaber al-Ahmed City Project.
Status New Tender
Region Qatar
Status New Tender
PROJECT NAME: Karbala Town Development Project
Budget $192,000,000 Client National Investment Commission (Iraq) Region Iraq Description Development of a complete town comprising 40,000 housing units, hotels, schools, clinics and other facilities in the city of Karbala
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Status Current Project
JUNE 2013
Description Construction of an automated people-mover system spanning 11.5 kilometres within Education City complex
Status Current Project
TENDERS
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MIDDLE EAST TENDERS Provided by Tel +9712-6348495 Web www.MiddleEastTenders.com Email sales@MiddleEastTenders.com
UAE Railway Terminal Project Jebel Ali Port
Project Number MPP2160-U Territory Dubai Client Name DP World (Dubai) Address 5th Floor, lob 17, Jebel Ali Free Zone City Dubai Postal/Zip Code 17000 Country UAE Phone (+971-4) 881 1110 / 881 5555 Fax (+971-4) 881 1331 / 881 7777 / 881 6093 Email sales@dpworld.com Website www.dpworld.ae Status New Tender Description Construction of a railway terminal within a port Tender Categories Public Transportation Projects Tender Products Railways
Perfume Factory Project Dubai Industrial City
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Project Number MPR1419-U Territory Dubai Client Name Rasasi Perfumes Industry L.L.C (Dubai) Address Jebel Ali City Dubai Postal/Zip Code 16878 Country UAE Phone (+971-4) 881 6655 Fax (+971-4) 881 6429
JUNE 2013
Email customercare@ rasasiperfumes.ae Website www.rasasi.com Description Construction of a perfume factory in an Industrial City Status Current Project Tender Categories Industrial & Special Projects Tender Products Factories
Saudi Arabia Abraj Al Hilal 2 Residential Towers Project - Jeddah Gate Development
Project Number NPR023-SA Territory Saudi Arabia Client Name Emaar Middle East (Saudi Arabia) City Jeddah 21482 Postal/Zip Code 8299 Country Saudi Arabia Phone (+966-2) 699 9555 Fax (+966-2) 699 9988 Website www.emaar.com Description Construction of Abraj Al Hilal 2 residential complex comprising three towers Period 2016 Status Current Project Main Contractor Azmeel Contracting & Construction Corporation (Saudi Arabia) Tender Categories Prestige Buildings Tender Products High-rise Towers, Residential Buildings
Medina Metro Project Project Number MPP2757-SA Territory Saudi Arabia Client Name Madinah Development Authority (Saudi Arabia) City Madinah Country Saudi Arabia Description Construction of an urban metro system in Medina aimed at easing congestion in the Holy City during the pilgrimage season Budget $1,000,000,000 Status New Tender Design Consultant Khatib & Alami Consolidated Engineering Company (Saudi Arabia) Design Consultant-2 Istanbul Ulasim (Turkey)
Tender Categories Public Transportation Projects Tender Products Metro
Power Cables Installation Project - Hasbah Gas Field
Project Number MPP2762-SA Territory Saudi Arabia Client Name Saudi Arabian Oil Company (Saudi Aramco) Address Saeed Tower, DammamKhobar Highway City Al Khobar 31952 Postal/Zip Code 151 Country Saudi Arabia Phone (+966-3) 872 0115 / 810 6999 Fax (+966-3) 873 8190
TENDERS
Oman Frontier Town Development Project Phase 2
Project Number MPP2756-O Territory Oman Client Name Oman Tourism Development Company SAOC (Omran) City Muttrah PC 114 Postal/Zip Code 479 Country Oman Phone (+968) 2477 3700 Fax (+968) 2479 3929 Email enquiries@omran.om Website www.omran.om Description Development of Frontier Town, covering 29 hectares and comprising (446) homes, a shopping mall, a wholesale centre and a school Status New Tender Tender Categories Construction & Contracting, Education & Training, Leisure & Entertainment Tender Products Educational Developments, Residential Buildings, Retail Developments, Villas Construction, Retail Developments, Villas.
Sohar Sugar Refinery Project
Project Number BIP131-O Territory Oman Client Name Sohar Industrial Port Company - SIPC (Oman) City Sohar PC 327 Postal/Zip Code 9 Country Oman Phone (+968) 2685 2700 Fax (+968) 2685 2701 Description Construction of a 1-million-tonne capacity sugar refinery at Sohar Budget $200,000,000 Period 2015 Status Current Project Main Contractor Bosch Projects (South Africa) Tender Categories Industrial & Special Projects Tender Products Food Processing Plants
Muscat - Sohar Pipeline Project
Project Number BIP085-O Territory Oman Client Name Oman Refineries & Petroleum Industries Company (ORPIC) Address Sohar Industrial Port Area City Sohar 322 Postal/Zip Code 282 Country Oman Phone (+968) 2685 1000 Fax (+968) 2685 1211 Email info@orpic.om Website www.orpic.om Description Construction of a new 280-kilometre-long pipeline to connect Sohar and Muscat refineries Status Current Project Main Contractor Compania Logistica de Hidrocarburos CLH
S.A (Spain) Tender Categories Gas Processing & Distribution, Oilfields & Refineries Tender Products Crude Transportation, Storage & Distribution, Gas Distribution
Qatar Freight & High-Speed Rail Lines Project
Project Number MPP2727-Q Territory Qatar Client Name Qatar Railways Company (QRC) City Doha Country Qatar Fax (+974) 4497 4333 Email info@qr.com.qa Website www.qr.com.qa Description Construction of longdistance freight and high-speed passenger lines Status New Tender Tender Categories PublicTransportation Projects Tender Products Railways
Bahrain DoubleTree Suites by Hilton Hotel Project
Project Number BIP149-B Territory Bahrain Client Name Hilton International (Dubai) City Dubai Postal/Zip Code 500200 Country UAE Phone (+971-4) 391 5363 Fax (+971-4) 391 6790 Website www.hilton.com Description Construction of fivestar DoubleTree Suites by Hilton Hotel comprising (350) rooms, which will be surrounded by cafes, shops and restaurants Period 2015 Status New Tender Tender Categories Construction & Contracting, Hotels Tender Products Hotel Construction
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MIDDLE EAST
Website www.saudiaramco.com Description Engineering, Procurement and Construction (EPC) contract for installation of about 80 kilometres of 230kV cables to provide power for an offshore nonassociated gas field Budget $300,000,000 Status New Tender Tender Categories Power & Alternative Energy Tender Products Cables & Accessories (All Types), Transformers & Spares (All Types)
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DIARY JUNE
bigprojectME.com
MENA 2013 Hospital Build 2013 Dubai, UAE 3 – 5 June, 2013 Hospital Build & Infrastructure is the fastest-growing, global business-tobusiness platform dedicated to bringing together investors, commissioners, backers and managers of healthcare-related building projects with key players in planning, design, construction, operations, management, supply and refurbishment.
Tools + Hardware Middle East 2013 Dubai, UAE 11 – 13 June, 2013 The region’s only dedicated trade fair for Tools, Hardware, Materials and Machinery. Over the years, Hardware + Tools Middle East has firmly established itself as a solid networking platform for international manufacturers, suppliers and trade professionals within the industry.
Energy & Water Conservation Expo 2013 Manama, Kingdom of Bahrain 17 – 19 June, 2013 The Electricity & Water Authority, in association with the Bahrain Society
of Engineers and supported by the National Oil and Gas Authority (NOGA), is organizing the 4th Energy & Water Conservation Expo.
Automechanika Dubai, UAE 11 – 13, June 2013 Renowned as the region’s largest and most comprehensive trade and networking exhibition for the automotive aftermarket, Automechanika Dubai offers you a unique spectrum of products from the fields of automotive parts, car washing, workshop and fillingstation equipment, IT products and services, accessories and tuning.
HAPPENING THIS MONTH... International
Project Procurement & Contracting Abu Dhabi, UAE 9 - 12 June, 2013 This course examines the processes of sourcing, tendering and contract award, as well as the fundamental elements of contract development to ensure compliance with contract terms and conditions and avoid cost overruns and late delivery.
ENR Global Construction Summit New York, USA 6 – 7 June, 2013 The ENR Global Construction Summit brings together industry professionals from major construction markets around the world to explore growth opportunities and investigate solutions to the most pressing challenges on the international
playing field.
AGC Contractors Environmental Conference
Arlington, Virginia 13 – 14 June, 2013 The 2013 AGC CEC speakers will give attendees need-to-know information on the major compliance requirements and sustainability initiatives.
EDITORIAL Clarification In reference to the ‘International Rescue’ cover feature in the May 2013 issue of Big Project ME, Hill International has raised concerns that the article creates the impression that the New Muscat International Airport project was faltering before its intervention. Hill International would like to emphatically state that this is not the case. The project has always been live and moving towards a successful conclusion. Any indication otherwise would be misleading, the project management firm has said. Big Project ME would like to clarify that it was not our intention to cast doubts on the completion of the New Muscat International Airport project and would like to apologise for any confusion our article may have caused.
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We wish them every success with what we are sure will be a success for both Oman and Hill International.
JUNE 2013
BOOK YOUR STAND TODAY To enquire about exhibiting email Patrick Gedeon on patrickgedeon@dmgeventsme.com or call +971 (0)4 445 3639
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Qatar’s Big Challenge Gavin Davids asks if Qatar will be ready in time for the 2022 FIFA World Cup, given the amount of work that still needs to be done ahead of the event? GAVIN DAVIDS
In the first week of May, I had the opportunity to spend a few days in Doha as part of the Project Qatar exhibition. Since it was my first visit to the country in more than 10 years, I was quite excited to see how things were progressing, given all the news we’ve been hearing. As regular visitors could have guessed, I was in for a rude awakening. While I certainly didn’t expect Qatar to be anywhere near ready for the World Cup, I did expect things to be further advanced. While it’s clear that there are a lot of plans in place, the alarming fact is that they’re not progressing as quickly as interested observers would like. The talk around Doha is that 2014 will be when everything happens. But is that a realistic date when it comes to planning for a major event like the World Cup? Any contractor worth his salt will tell you that no project ever runs as smoothly as envisioned, especially not ones that have to cater to tens of thousands of people. The scale of the projects are
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“there’s been real acceptance that these challenges are going to be significant and a real want to address them”
JUNE 2013
immense, and that’s before you factor in the accompanying road works and infrastructure that need to be done. With around nine years left before the World Cup begins, we’re looking at least half of that time being consumed by construction and development. A further few years will be taken up by making sure the stadiums and their accompanying areas meet the standards laid out by FIFA. That doesn’t take into account delays and redesigns of course, so clearly, time is a precious commodity for the contractors working on the projects. Contractors are worried, as they should be. While speaking to a few of them at Project Qatar, I was told that 2014 is the absolute latest Qatar can wait. If work doesn’t start by then, then it’s going to be nigh on impossible for work to be completed on time. However, Brian Stanforth of the Assets Affairs Department at Ashghal tells me that Qatar’s government has already considered the implications of this and have begun putting plans in motion to ensure that their key milestones will be met. “Personally, I’ve been enthused by how Ashghal has started to address the challenges, there’s been real acceptance that these challenges are going to be significant and a real want to address them for the good of Qatar,” he says. For Qatar’s sake, I hope he’s right. n
NOVEMBER 25, 2013 JUMEIRAH EMIRATES TOWERS, DUBAI
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