Big Project ME February 2018

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FEBRUARY 2018 meconstructionnews.com

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Contents

Issue 143 February 2018 07

14

16

26

36

38

04 ME Construction News.com OnlIne

The biggest stories from Big Project Middle East’s home on the web

14 Calculating the impact of VAT 36 The Power of the Sun analysIs

Sameer Daoud breaks down the effect VAT will have on the UAE’s construction sector

07 DSI completes debt restructure 16 Airolink The bIg pIcTure

Contractor secures new credit lines and working capital facilities for project portfolio

10 Carillion enters liquidation InTernaTIOnal news

UK contractor forced to enter compulsory liquidation following failure of talks

In prOFIle

Big Project ME speaks to Dr Anil Pillai, chairman and CEO of Airolink, about its rapid growth in the market

26 Disrupting Construction sITe VIsIT

Big Project ME travels to India to see the KEF Infra One Industrial Park

12 UAE Construction Intelligence 32 Taking the Right Steps MarkeT repOrT

green cOdes and regulaTIOns

Faithful+Gould report examines impact of Federal, Dubai and Sharjah budgets on the UAE construction industry

Wayne Morgan of Cundall on the impact of green building codes and regulations

uTIlITIes

Big Project ME speaks to Fadi Nassif of GE about how solar energy is powering the GCC’s ambitions

42 The Big 5 Heavy & MEE 2018 shOw preVIews

Big Project ME previews upcoming trade shows for the construction industry

44 Top Tenders Tenders

Big Project ME lists the Middle East’s biggest construction tenders for February 2018

48 Selling Space based on Data lasT wOrd

Ibrahim Ibrahim on how big data is changing the face of retail development

February 2018 1

Introduction

Start of a revolution

L

ast month, I was invited to go down to Krishnagiri, Tamil Nadu, in India to be part of a media tour of KEF Infra One Industrial Park – an off-site manufacturing facility that seeks to be the answer to India’s construction woes.

Owned and operated by KEF Infra, itself a subsidiary of the Dubaiheadquartered KEF Holdings, the huge facility is the brainchild of Faizal E. Kottikollon, the founder and chairman of the firm.

When speaking to Kottikollon after the tour and interviews, what struck me was the level of commitment he has towards improving the way construction is done in India.

Highlighting the outdated concepts, poor health and safety and general inefficiency and waste that permeates the industry across the country, he hopes that the facility in Krishnagiri will be the starting point for a movement that will start a revolution.

Not only does the facility offer a more efficient and sustainable method of delivering construction projects, but it also offers local labour forces a real chance of progression, given that Kottikollon is a firm advocate of hiring from the surrounding area, and then training and upskilling staff.

Furthermore, there is a strong emphasis on hiring young and talented engineering graduates from across the country, offering them a chance to work on the latest construction technology, while delivering projects that will have a meaningful impact.

In addition to my trip to Krishnagiri, I was also fortunate enough to meet Dr Anil Pillai, the chairman and CEO of Airolink. Although he too is from India, he started his firm in Ireland at the turn of the century. It was fascinating

2 February 2018

GROUP MANAGING DIRectOR RAZ ISLAM raz.islam@cpitrademedia.com +971 4 375 5471 eDItORIAL DIRectOR VIJAYA CHERIAN vijaya.cherian@cpitrademedia.com +971 4 375 5472 eDItORIAL eDItOR GAVIN DAVIDS gavin.davids@cpitrademedia.com +971 4 375 5480 SUB eDItOR AELRED DOYLE aelred.doyle@cpitrademedia.com ADVeRtISING cOMMeRcIAL DIRectOR JUDE SLANN jude.slann@cpitrademedia.com +971 4 375 5714 SALeS MANAGeR CHERYLANN D’AbREO cherylann.dabreo@cpitrademedia.com +971 4 375 5482 DeSIGN

speaking to him and hearing first-hand how he brought his company to Dubai.

It’s definitely a tale worth reading!

Finally, as I alluded to in last month’s issue, there’s a lot happening this year for Big Project ME. Kicking things off is the debut of the Value Engineering Summit, which will be held in the first week of May, at the Habtoor Grand Hotel in JBR. I’m keen to begin a dialogue with individuals and experts from within the regional construction industry and start firming up an agenda.

Given how contractors’ margins are being squeezed and hearing how challenging it is for companies in the current market economy, I think this summit is pretty timely, so please do get in touch!

ARt DIRectOR SIMON CObON simon.cobon@cpitrademedia.com DeSIGNeR PERCIVAL MANALAYSAY percival.manalaysay@cpitrademedia.com PHOtOGRAPHY MAkSYM PORIECHkIN MARKetING MARKetING MANAGeR SHEENA SAPSfORD sheena.sapsford@cpitrademedia.com +971 4 375 5498 cIRcULAtION & PRODUctION DIStRIBUtION MANAGeR SUNIL kUMAR sunil.kumar@cpitrademedia.com +971 4 375 5476 PRODUctION MANAGeR VIPIN V. VIJAY vipin.vijay@cpitrademedia.com +971 4 375 5713 WeB DeVeLOPMeNt MOHAMMAD AwAIS SADIq SIDDIqUI FOUNDeR DOMINIC DE SOUSA (1959-2015) PRINteD BY ALALEf PRINtING PRESS LLC PUBLISHeD BY

Licensed by tECOM to registered company, CPI trade Publishing fZ LLC whose registered office is 207 – 209, building 3, Dubai Studio City, Dubai, UAE

Gavin Davids editor gavin.davids@cpitrademedia.com @MecN_Gavin

www.cpitrademedia.com © Copyright 2018 CPI trade Media. 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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Online

MOST POPULAR

fEATUREd

REAdERS’ COMMENTS

CONSTRUCTION

$1.4bN hIGhWAy TO KSA

Carillion crisis – Regional projects will continue

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

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

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

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

CONSULTANT

Chris Seymour appointed as MD of Mott MacDonald ME

Video: GCC Power Market Overview 2018

CONSTRUCTION

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

CONSTRUCTION

Abu Dhabi to build world’s largest desalination plant

CONSTRUCTION

Nakheel, AccorHotels to debut Raffles on Palm Jumeirah 4 February 2018

Video: What to expect at Middle East Electricity 2018

Name withheld by request

The Big Picture

DSI completes $154m debt restructure Contractor secures new credit lines and working capital facilities for portfolio Drake and Scull International (DSI), a Dubai engineering and construction services firm, announced that it has successfully completed the restructuring of its corporate general bank debt in the UAE, and that it has secured new credit lines and working capital facilities for its ongoing and new projects portfolio.

In a statement, the company said it has obtained support from all its creditors for the restructuring of its corporate general debt in the UAE. In Q4 2017, it reached a consensual agreement with nine regional and local banks to refinance $154 million – 56% of its total corporate general debt, which stood at $291.3 million as of September 30, 2017.

The tenor and maturity of the $154 million corporate general debt has been extended and re-termed on average for three years, the contractor added. Furthermore, DSI has successfully secured new credit lines and working capital facilities for its ongoing and future projects portfolio in the UAE, under the new term sheets signed on a bilateral basis with all the relevant banks.

“The latest deal with the banks reflects the confidence in the DSI turnaround plan, the resilience of the group’s business model and the positive outlook of the company in the MEP sector, despite the cyclical challenges that impacted the regional construction industry,” said Rabih Abou Diwan, investor relations director, Drake and Scull International. “Our main objective is to drive a consensual restructuring plan

Main objective Rabih Abou Diwan says that DSI’s main objective is to drive a consensual restructuring plan with all its creditors across the region, and to rebalance its capital structure to be more efficient and conducive for the contractor’s business plan and future prospects.

with all our creditors across the region, to rebalance our capital structure to be more efficient and conducive for our business plan and future prospects.”

The remaining tranche of DSI’s corporate general debt ($119.4 million sukuk) will mature in November 2019. The contractor will initiate talks with its sukuk holders to refinance

this tranche in the second half of the fiscal year 2018, it said.

As of September 30 2017, the total bank debt of the group was $795 million. Corporate general debt and projects debt comprise 34% and 66% of total bank debt respectively.

Another upcoming strategic priority for the company is the restructuring and refinancing

$291.3m DSI’s total corporate general debt

of its projects debt, with the initial focus on $272 million of funded projects debt in Saudi Arabia. The company said it is in advanced talks with its creditors in the Kingdom and expects to complete the refinancing of its Saudi projects debt this quarter.

“The completion of our debt restructuring in the UAE will enable us to accelerate projects performance and delivery in Dubai and Abu Dhabi. This represents a key priority for the group as we continue to streamline the business and unlock value across all operating segments,” said Diwan. “Furthermore, with the new corporate debt structure and the extended credit facilities along with the funding we have in place, the company will be able to improve productivity, secure substantial contracts and boost revenue generation.”

In conjunction with the completion of Drake & Scull’s debt restructuring, Tabarak Investment announced that it is moving ahead with its plans to support the operations of Drake & Scull International to achieve full operational recovery leading to sustainable growth. The company has assured that its investment in DSI is strategic and longterm, and that it will continue to support the latter by completing existing projects, studying new ones targeted through Tabarak, and looking for new opportunities to diversify and expand income.

Tabarak Investment confirmed a significant improvement in the efficiency of operations under the leadership of DSI’s new management, which will support the latter’s financial performance in 2018.

February 2018 7

The Big Picture

CSCEC to build Mirkaaz Mall in Ajman Ajman Holding agrees deal for the design and construction of $131m project

Significant boost Mirkaaz is expected to provide a significant boost to Ajman’s economy, with the retail industry in the emirate likely to see a boost in GDP growth.

Ajman Holding has signed an agreement with China State Construction Engineering Corporation (CSCEC) Middle East to develop and construct Mirkaaz, the recently launched $131.6 million shopping destination in the emirate of Ajman. Expected to have more than 10 million visitors in its first year of operation, Mirkaaz will be the first mall in the UAE to feature an atrium roof of more than 7,900sqm. Constructed using ETFE technology to provide natural UV light within the mall, the roof will allow the natural growth of plants within the mall, while also offering day/ night sky views for visitors.

8 February 2018

Construction is scheduled to start in January 2018, with the project to be built over 92,903sqm.

The target date for completion is the last quarter of 2019. The mall will host a hypermarket that will cover a total of 15,000sqm, while also encompassing more than 100 retail stores.

In the presence of HH Sheikh Abdulaziz bin Humaid Al Nuaimi, chairman of Ajman Holding, an agreement was signed by Yahya Al Jasmi, managing director of Ajman Holding, and Yu Tao, President and CEO of China State Construction Engineering Corporation Middle East LLC (CSCEC ME) on January 8 in Ajman.

“Mirkaaz is in line with the ambitious Ajman 2021 initiative, which will set unprecedented standards for Ajman’s economy”

“It is indeed a pleasure to have CSCEC on board to develop the mall. While this is a major milestone in the lifecycle of the mall, we are confident that CSCEC will deliver the highest standards of quality for shopping and leisure to all UAE residents and visitors,” said Al Jasmi.

“Mirkaaz is in line with the ambitious Ajman 2021 initiative, which will set unprecedented standards for Ajman’s economy.

The construction of the mall will lead to more than 1,100 bluecollar workers and 50 engineers on-site, offering direct and indirect job opportunities.”

The construction management of the project will be by Funtastic Engineering Consultancy (FEC), a design and project management consultant incorporated in Abu Dhabi, he added.

“It is an honour to be appointed as the contractor on this prestigious project. At CSCEC, we are committed to delivering best-in-class services and we share the ambitious aspirations of Ajman Holding to revolutionise the retail prospects in the emirate,” said Yu Tao. Mirkaaz is expected to provide a significant boost to Ajman’s economy, with the retail industry in the emirate likely to see a boost in GDP growth.

The non-oil sectors recorded growth of 3.1% in 2017, with growth of 3.7% expected in 2018.

The project is the latest development in Ajman Holding’s portfolio. It is strategically located at the juncture of Ajman and Sharjah, near both the Sharjah and Dubai international airports, while also being easily accessible via Sheikh Mohammed Bin Zayed Road.

The Big Picture

SBG asserts private ownership status Shares may have been transferred to KSA government to settle dues Saudi Bin Laden Group (SBG), the Saudi Arabian construction giant, has asserted that it remains a private sector company owned by its shareholders, amid reports that some of those shareholders may be transferring their shares to the government as part of a financial settlement with authorities. In a statement, the company clarified the situation following media speculation that the Saudi government has taken over SBG, which has worked on a number of mega projects in the Kingdom over several decades.

SBG also confirmed that contracted work with the government, which remains a large part of its activities, is ongoing. This includes the projects currently underway at the two holy mosques and the Zamzam rehabilitation project, which began two months ago and is expected to end before the start of Ramadan this year.

“Based on information available to management, some of the shareholders may have agreed to a settlement that involves the transfer of some SBG shares to the government of Saudi Arabia against outstanding dues,” SBG management said in the statement.

In a Financial Times report, the Jeddah-based company was reported as saying that some shareholders may have handed over stakes in the company as the Kingdom’s anti-corruption drive starts to take effect.

HH Mohammed bin Salman, the Crown Prince of Saudi Arabia, launched a corruption crackdown in November 2017 which resulted in the detention of more than 150 princes, ministers and businessmen in

Riyadh’s Ritz-Carlton hotel.

Among the detained were SBG chairman Bakr bin Laden and some of his brothers.

Sources close to the family have told the Financial Times that Bakr bin Laden and his brothers have handed over stakes in the company to the government.

They added that the family is expected to transfer some of its property holdings over as part of the settlement. No specific corruption allegations against the family have been revealed, the report added. Some of the detained have been freed after

paying settlements, with the Saudi authorities expected to collect as much as $100 billion.

SBG management pointed out that it is currently restructuring its governance and executive management team to meet its commitments to all stakeholders.

In the statement, it said that restructuring efforts began two years ago, with the objective of separating ownership from management in accordance with best governance standards.

In order to support these efforts, SBG said a five-member supervisory committee has

been formed, comprising three independent members – Dr Abdulrehman Hamad Al Harkan, Dr Khaled Hamza Nahas and Khaled Mohammed Al Khowaiter – along with two members from the shareholders group – Yahia Mohammed Binladin and Abdullah Mohammed Binladin.

This committee will be tasked with restructuring the group and empowering the new executive management to lead the projects and overcome the challenges currently facing the company, leading it back to profit again, the statement concluded.

Meeting commitments SBG management has said that it is currently restructuring its governance and executive management team so as to meet its commitments to all stakeholders.

February 2018 9

The Big Picture

2

$68m

1. Masdar coMpletes Massive off-grid Moroccan solar power installation Abu Dhabi renewable energy company Masdar has successfully completed the installation of an offgrid solar power project for 19,438 homes in more than a thousand rural villages in Morocco.

The Morocco Solar Home Systems (SHS) project is a partnership between Masdar and Morocco’s Office National de l’Electricité et de l’Eau Potable (ONEE). Morocco has around 128,000 homes powered by solar home systems, and ranks among the top three countries in Africa for the adoption of this technology.

Each system delivered for the project consists of 290W solar panels and batteries, with sufficient storage capacity for up to three days, ensuring an uninterrupted power supply.

Each home is also provided with energy-efficient LED lamps and a 165l refrigerator.

Masdar will maintain the solar home systems for two years through its engineering procurement and construction (EPC) contractors. After that, ONEE will manage the network for an additional eight years. Each homeowner pays a small monthly fee.

10 February 2018

Mediterrania Capital Partners, DEG, Proparco and South Suez have invested $68.4m in Moroccan general contractor TGCC

2. carillion enters coMpulsory liquidation Carillion, the United Kingdom’s second largest construction company, has entered into compulsory liquidation following the failure of talks with the UK government, banks and other stakeholders to restructure its debt and gain the financial support needed to continue trading while the discussions continued.

“An application was made to the High Court for a compulsory liquidation of Carillion and an order has been granted to appoint the Official Receiver as the liquidator of Carillion,” the company said in a January 15, 2018 statement.

“We anticipate that the Official Receiver will make an application to the High Court for PricewaterhouseCoopers LLP to be appointed as Special

1

Managers, to act on behalf of the Official Receiver, and we further anticipate that an order will be granted to that effect.”

In addition to its engineering and construction operations, Carillion is also a major outsourcing partner in the UK public sector. Philip Green, chairman of Carillion, said the company would continue providing those services after funding is agreed.

The Big Picture

4%

4. Bee’ah first to order tesla seMi in the region Sharjah environmental

German construction companies expect sales to grow by 4% in 2018, reaching their highest level since 1995

management company Bee’ah says it is set to be the first company to own a fleet of Tesla Semi trucks in the Middle East.

The announcement was made to coincide with Bee’ah’s participation at this week’s World Future Energy Summit, and the organisation said it placed an order for 50 of the all-electric

4

vehicles immediately after its launch in November, “to underline Bee’ah’s steadfast commitment to sustainability

3

across its entire operations”.

$327m

Targeting regional expansion, the company said a larger transport fleet will “ensure” the new operational

Abu Dhabi’s NPCC has won a $327m contract from India’s ONGC to build offshore infrastructure on the country’s west coast

demands can be met.

The incoming Tesla Semi trucks, which enter production in 2019, will primarily be used for waste collection and transportation, including transportation of materials for recovery.

They will also add to Bee’ah’s growing fleet of

3. adfd earMarks $25M loan for two irena solar pv projects The Abu Dhabi Fund for Development (ADFD) has issued a statement announcing that it has set aside $25m in concessional loans for two solar PV projects.

The projects have been recommended by the International Renewable Energy Agency (IRENA), a global platform for

over a thousand vehicles international cooperation on renewable energy.

First announced at the eighth session of the IRENA Assembly, both projects will be financed through the IRENA/ADFD Project Facility.

One project will take shape in Mauritius, while the other will be based in Rwanda.

In Mauritius, the $10m loan will be used to help the Central Electricity Board install solar PV systems on the rooftops

of 10,000 households.

The initiative is part of the government’s efforts to fight poverty, while contributing to the national target of achieving 35% of renewable electricity in the energy mix by 2025.

An estimated 35,000 people in low-income communities could benefit from the project.

In Rwanda, the $15m loan will enable the installation of 500,000 off-grid solar PV home systems across the country.

and continue upgrading the organisation’s transport options in making the fleet as eco-friendly as possible.

February 2018 11

Market Report

construction intelligence report - uae update q4 2017

David Clifton and Donal O’Leary from Faithful + Gould analyse the impact of the federal, Dubai and Sharjah budgets on the construction industry

The recently announced federal, Dubai and Sharjah budgets show a large increase in expenditure from 2017 (federal + 5.4% to AED 51.4 bn, Dubai + 19.5% to AED 56.6bn and Sharjah + 6% to AED 22.1bn), with significant increases in project funding.

The three budgets commit $6.9bn to infrastructure and capital projects across the Emirates. The biggest increase is in Dubai, which in preparation for Expo 2020 has upped its

infrastructure spend by 46.5% to form 21% of total expenditure for 2018. This is positive news for the construction industry.

Although less exposed to oil price fluctuations than most of its neighbours, the price stabilisation and recent increases are welcome events for the UAE, enabling greater certainty over budget break-even and relative certainty that the Emirates won’t run a budget deficit. Furthermore, given the requirements of oil & gas

investments after three years of under-investment, it gives greater surety for investment decisions.

Q4, which historically has been the busiest quarter of the year for contracting awards, turned out to be relatively in line with expectations, but not as strong as some previous years. For 2017 we recorded just under $36bn of new awards versus an expected $45bn. The primary reasons for this revolve around a lack of liquidity at the levels the market

requires as well as a certain level of economic and geopolitical uncertainty. Moving into 2018, as the UAE is traditionally a regional flight to safety for capital, this could well be of benefit to the real estate and infrastructure development businesses. The outlook for 2018 is generally much brighter as we see growth in many areas, from the requirement to invest in capital projects in the oil & gas sector, to the previously mentioned increases in

“2018 through to 2020 is expected to see a sharp uptick in UAE growth as the country continues its economic diversification plans and oil prices remain buoyant relative to the preceding three years”

12 February 2018

Source: Faithful+Gould, IMF, World Bank, The Economist

Welcome events The price stabilisation and recent increase in oil price have enabled greater certainty over budget break-even and a relative certainty that the UAE won’t run a budget deficit.

Market Report

government expenditure and some keynote private sector clients known to be greatly increasing their portfolios in the new year.

With known budgets at client entities and government spending commitments aggregating at close to $30bn for 2018 and further growth expected in oil & gas as well as other developments coming to market, the forecast for awards is expected to be robust at c.$42bn. Buildings and associated infrastructure are expected to be a significant contributor with upwards of 40% of net awards, including significant developments in mid-range and affordable housing as well as continuation of funding for the national housing programme.

Certain schemes are expected to move ahead in the new year that have experienced delays, be it funding, approval or other industry-related reasons. With expected strong economic growth, regional banks, traditionally among the main sources of capital, should be able to be more active in the market.

Unlike many previous years, there has been a relative lack of awards in mega projects across the country, with the stand-out projects being the $3.9bn Dubai Solar Energy contract and Nakheel’s Deira Islands Mall. No one developer dominates the list of contracting awards. There has been a significant trend towards plotfilling – in essence, completing vacant areas in established master plan developments.

Tendering activity is starting to pick up in the UAE, although any delays in awarding works remain a concern. Moving into mid-2018, we expect to see a meaningful return of the oil & gas sector in country as years of constrained investment mean upgrades are required by oil companies

GDP growth, 2008-2018 ($bn) 400 350 300 250 200 150 100 50

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Average rebar price, 2017 (AED/tonne) 2000

1900

1800

1700

1600

1500

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

UAE construction as a percentage of GDP 14%

12%

10%

8%

6%

4%

2%

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

and their partners. This can be supported by the historical procurement of major schemes by oil majors at the bottom of the market (as in 2008/9 when major schemes were awarded).

Given the drop in awards, to survive the backlog drop, the industry needs to address productivity and utilisation, as there is little room for movement in the current competitive landscape, with low margins. We expect 2018 to be a significant year in moving through the innovation cycle for construction, as the industry has to adapt and adopt leaner processes and procedures with a focus on using analytics and new systems to enhance delivery.

With lower than expected awards in 2017, inflation in the industry moved little. When compared to general inflation, the actual effect is one of small contraction. This also plays into a slight contraction in the percentage the industry contributes to GDP. With backlogs for most of the industry shrinking, leaving nearly $15bn of work to be completed this year, a rapid period of awards is required to move the industry from a contracting state to an even keel or expansionary period. The signs from central and Emirates-level government are encouraging, though for the private sector, further funding is broadly required – though there are several bankable organisations. With further fiscal uncertainty with Brexit, it is expected that European ECAs will become a greater contributor to deal making in 2018 and 2019.

We expect inflation to be a little lower than previously forecast this year as the industry backlog has contracted more than expected.

However, commodity prices are still expected to be firm, so these costs will have to pass through.

February 2018 13

Analysis

CalCulating the impaCt of Vat The recent introduction of VAT across the GCC will affect business procedures for contractors on many levels. Sameer Daoud, chief development officer at Drake and Scull International, tells us what to keep in mind

Funding government services and infrastructure projects from (oil) cash reserves is no longer a viable option for GCC governments. Implementing VAT, and furthermore securing additional forms of revenue from housing charges and tourist fees, is hence under consideration.

I think many see VAT as adding a layer of complexity when the end goal is ensuring that contracts are clear and transparent, in addition to meeting overall accountability and compliance with regulations.

However, is that really the case?

I doubt that VAT will have any adverse effect on investment in the long run. The simple reason is that this has not been the case anywhere else in the world. In contrast to income tax, which has a negative effect because there is less money to 14 February 2018

unlikely to have an impact The introduction of VAT has not had an adverse impact on investment in the long run anywhere else in the world.

Analysis

invest, the introduction of VAT is a corporate tax that benefits the nation as a whole. As a VAT-registered company, this is a simple throughput that is not a complicated process at all, as long as it is clear what VAT applies to, and when.

Ensuring compliance across the supply chain with the new tax entails significant efforts both from within organisations and between business partners. The high number of parties involved with supplier and subcontractors quickly creates complexities, making it difficult to gain a proper overview of transactions.

Contractors also employ a large number of smaller subcontractors that may not be registered, and hence are unable to pass the VAT benefits along to their main contractors. Even in markets with well-established VAT procedures, the number of court cases relating to VAT in the construction industry is an indication of how common these types of issues are.

Construction projects have a long lifecycle and final payments can be delayed for extended periods. Typically, it takes more than six months to collect payment after completing construction work, making cash flow a major challenge. This challenge is further compounded when needing to account for VAT upon delivery, before receiving payment from the customer.

On the other hand, the same applies to barter transactions that need to be balanced. Therefore, companies are required to plan in advance due to the nature of prolonged projects, and are also advised to review their current contracts to ensure that their commercial position is clear and protected.

As a transaction-based tax, VAT applies to each stage of the supply chain. With many parties involved, from subcontractors to

“As a transactionbased tax, VAT applies to each stage of the supply chain. With many parties involved, from subcontractors to suppliers, VAT accounting errors can easily occur in the supply chain� suppliers, VAT accounting errors can easily occur in the supply chain. Disputes can arise, for instance, with projects already in progress. Here VAT may not have been contemplated from the outset, without any mention of it in the contracts. In such cases, it is important to figure out who will account for it, and under what circumstances, so as to avoid delays and disagreements leading to conflicts.

Both as companies and as the management of individual projects, it is essential to have accurate cash-flow projections in order to facilitate invoicing

and accounting. Each of these steps affects overall planning and management, and therefore it is vital that contracts address the new tax.

Some contractors have preemptively factored VAT into prices since even before 2017.

However, it is safe to assume that many projects due to be delivered over the coming years have not. It is thus likely that the contractor will need to renegotiate with the client as to how to charge VAT, or risk having to bear the cost thereof. How successful this is will likely depend on what agreements a developer has in place with end users.

All this makes creating a robust accounting and tax management system all the more imperative.

VAT is a tax aimed at the end user and, from that perspective, it can be seen as incumbent upon companies to collect VAT for the government. This role involves both cost and risk in that it requires administration and exposure to interest, potential penalties, cash-flow constraints and inadvertent non-compliance with new legislation.

The main priority is to avoid uncertainty, which can lead to misunderstanding. This is especially true when it comes to contracts. My advice is to maintain a continuous open dialogue where all parties feel comfortable to ask questions and are afforded the opportunity to iron out any wrinkles at the earliest stage possible.

Five percent is not a high tax rate by any stretch of the imagination. However, given the slim margins that contractors depend on in large contracts, calculating the VAT correctly and having proper management in place to avoid unexpected scenarios could well prove the difference between winning and losing.

February 2018 15

In Profile

16 February 2018

In Profile

“If you go to a consultant, they’ll gIve you hundreds of Ideas, but they can’t gIve you a contractor’s poInt of vIew. we are the people onsIte and we know where you can and can’t make a profIt” Big Project ME speaks to Dr Anil K Gopinathan Pillai, chairman and CEO of Airolink, a UAE contractor making rapid strides in the local construction industry, off the back of a proactive and considered approach to business February 2018 17

In Profile

I

t’s not uncommon to hear stories of individuals and companies in Dubai achieving rapid success, given the fast-paced nature of business in a city where anything seems possible.

Whether it’s tech start-ups, product suppliers or even homegrown engineering consultancies, entrepreneurs from all over the world have found a place to set up shop in Dubai and flourish.

However, achieving success is easier said than done, with the competition and challenges in the market enough to test the resolve of even the most strong-willed of entrepreneurs, especially in the wake of the infamous financial crisis. As challenging as it would be for any new business to survive in those conditions, it is doubly difficult for contractors, who have to deal with pressures from both sides – suppliers and clients – while also juggling project deadlines and deliveries.

Therefore, it may come as some surprise to hear of a homegrown contractor that has not only managed to surmount the obstacles before it, but also thrive, having carved out its own niche away from the spotlight. And all this while having been founded in 2008, right before the worst of the crisis hit.

This, then, is the story of Airolink, a contracting firm with ambitions to be a leader in Dubai construction, but also one determined to succeed on its own terms and at its own pace.

Back in 2001, Dr Anil K Gopinathan Pillai was just another postgraduate looking to establish himself in the world. Having graduated with a 18 February 2018

sensing an opportunity Dr Anil Pillai founded Airolink in Ireland when he sensed an opportunity in the local construction market, during an economic boom.

Master’s of Business Studies in Ireland, he says he felt that the moment was right to set up his own company in the country.

“There was a small boom going on at that time, and construction was the biggest industry in Ireland,” he recollects during an interview with Big Project ME at his offices in Business Central Towers in Dubai Internet City.

“I didn’t have any connection to construction at the time. In fact, I started my own restaurant as an initial construction package, and that’s where I got the idea. I got a couple of subcontractors involved and that’s when I came to know that there was a huge demand for construction. This was when I thought about choosing that path.”

Having received rave reviews for the construction and design of his restaurant, Pillai decided to take the leap into the construction business, starting with a small contract for building cladding.

“I started my own restaurant as an initial construction package, and that’s where I got the idea. I got a couple of subcontractors involved, and that’s when I came to know that there was a huge demand for construction”

“I didn’t even know what cladding was at the time. They told me that it was stone, so I said no problem and started looking at how I could source the stone, then called the exact people and went on from there. I did it as a business – it wasn’t construction. I would call it a construction business. I was just arranging and managing things like how much the fund was and how to best utilise it. That’s what I did.

“When I started, that was a small project, but because there was a huge demand for construction in Ireland at the time, suddenly we got a couple of new projects, along with the right resources. That’s the way we started in construction,” he relates.

Having begun by employing just two engineers, Pillai says that as demand continued to rise and everything came together, things began to progress rapidly over the course of the next few years – 2003, 2004 and 2005 saw the newly established company take on several important projects.

“Ireland was booming – real estate was huge, with the commercial and residential sectors hyped. But suddenly in 2005, we could see and sense that something was wrong. Clients were disappearing and we could see that a problem was coming.

“2006 was very bad – whatever clients promised, they couldn’t fulfil, whatever promises were made to our supply chain, it all collapsed. 2006 and 2007 were very difficult. We were dealing with China and Germany, we were taking stones and materials from different parts of Europe and Asia, but it was all collapsing, and we could see it happening.”

It was around this time that a friend of Pillai’s recommended that he visit Dubai, given the huge opportunities there at the time.

With projects like Dubai Metro and Burj Khalifa under development, the city’s reputation as a hub for

In Profile

construction was at its peak, with billions of dollars being poured into projects of all kinds.

However, having just experienced one financial crash, Pillai was in no mood to take on unnecessary risk. Despite hearing all the talk swirling around about the projects planned at the height of the boom, he remained steadfast in his decision that he would only come to the UAE if he had a job in hand.

Therefore, having had his company registered with NATO as a military contractor in Ireland, he decided to tie up

with a local company and won a global bid for a job at Al Minhad NATO Airbase in Dubai, allowing him to make the move over.

“When I came here, I didn’t get too many bad feelings, setting up the company was very easy. I thought it was going to be difficult, but it was very smooth and we did everything [with no issues]. I thought that maybe we would need six months to set up, but within two weeks, we were ready to go.

“But when I came from Ireland to here, I could see that people were selling their ideas. Whatever people had as an idea, they would

try to sell it. This was the way business was in the UAE, people were very flexible and everyone had a business idea. It was very challenging, everything was promised, but I felt that there was going to be problems – people were talking about millions, but they didn’t have a single penny in their pocket. You can smell it when people are just talking and not dealing in reality.

“I was very clever and clear when dealing with these types of people. I thought that we were not seeing the exact market, I felt we were being given a false idea.

So then when we got the project inside the base, I was very careful in dealing with the situation.

I thought it would be best if I didn’t go outside for a project.”

With this cautious approach in place, Pillai didn’t have to wait long for his hunch to pay off. By the time 2009 rolled around, while Airolink was working on the first of several projects on the Australian NATO base, the general construction market was in freefall with companies laying off workers in droves and struggling to stay afloat.

Having established itself as a military contractor, Airoloink

“It was always the client and the consultant, and then bring the contractor in later. That model has changed as the market has gotten more mature and competitive”

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In Profile

expanding the portfolio Having established its presence in the UAE, Airolink has been expanding its portfolio since 2012.

“It was very challenging, everything was promised, but I felt that there was going to be problems – people were talking about millions, but they didn’t have a single penny in their pocket” was able to expand operations to Al Dhafra Air Base in Abu Dhabi, working for the Americans armed forces. However, as market conditions calmed down, new opportunities were opening for the contractor.

“We were doing civil orientated projects inside the base and we suddenly got an inquiry from Abu Dhabi Municipality – there was a big tunnel being constructed in Abu Dhabi and they were stuck with contractors, so we got an inquiry about doing some huge diaphragm walls. We were doing taxi bases at the time – heavy concrete works – and we were good at it.

“So, we enquired with Samsung C&T [the main contractor] and they gave us a project. That’s how we came out from the base and into local projects. We were very careful in how we dealt with people. When we moved out of the base, suddenly people were coming to us and talking about doing towers and this and that.

We didn’t touch any of those areas – we came out on a mission, and we wanted to finish that.”

Only after they had successfully completed that project did Pillai and his team look at the opportunities in the market and conduct in-depth 20 February 2018

research into where they might be able to best succeed.

“There were a huge number of projects that people were talking about, both residential and commercial. We did our research about what was the exact market we wanted to cater for. There was a huge demand for schools at the time. Dubai was very shabby at the time – there wasn’t much work, people were bankrupt and most of the construction and material supply companies were putting up notices.

“On the other hand, we thought that Abu Dhabi was a silent market. We enquired there about what was a good market – residential was one, but could we do residential? We looked at government projects, which were good, but then we thought, what about the education sector?”

This led to the start of the contractor becoming known as the go-to firm for the construction of educational facilities, with several projects under their belt and currently underway. The first

ready for delivery Airolink intends to deliver a variety of projects worth a total of $190.5 million over the course of 2018.

was a design and build project that allowed the firm to showcase itself at the ministry level, Pillai says.

“The concept for the project was good and the ministry was very happy with us. We got the green light from all the departments involved. In fact, we made a big noise at the ministry level, across all the departments, because in 93 days we finished phase one of the project. We gave them an exact construction plan and schedule, we guided the client throughout the process – telling them not to

In Profile

education specialist Pillai has positioned the contractor as a specialist in delivering educational sector projects, with more than 32,000 students now studying in facilities built by the firm.

spend large amounts of money, giving them exact amounts [in terms of materials and supplies].

“We made a design according to the construction plan and explained everything to Abu Dhabi Education Council. We showed them that we could do a school in 93 days. So suddenly, from there, we got six schools from here and there. We finished all of them on time, and I think we now have more than 32,000 students studying in our facilities.”

Last year, it was reported that Airolink had an order book of $1.08 billion, with several prestige projects in the pipeline.

Looking at the current state of the market, Pillai feels developers are performing quite well despite the challenging conditions. As a result, he says there are opportunities available for contractors who are clever and capable.

“The demand for contractors is huge, but most of the contractors are overstretched. I can see that the liabilities are huge. All the old players – the top 10 or 15

companies – are overstretched and have liabilities. Either they’ve become degraded or they have stretched themselves out and now have to downsize.

“At Airolink, we don’t have the same liabilities because we’re relative newcomers to the market. Whoever comes in with good ideas and intentions and a proper management, they are the one performing right now.

“We’re a good-sized company and we’re eager to go for bigger types of projects. Our capacity was $272 million, now we’re at $1 billion. We’ve created a good set-up and we won’t have any additional costs for setting up. We can merge with other sets of people [in a joint venture] and go for projects.

We have a good facility with the banks and we’re performing.

Right now, we’re planning on achieving $2.72 billion as project value. We’re focusing on a couple of good projects in the $272 million to $545 million range.”

Pillai reveals that the contractor is set to deliver projects worth

“There were a huge number of projects that people were talking about, both residential and commercial. We did our research about what was the exact market we wanted to cater for. There was a huge demand for schools at the time”

$190.5 million in 2018, adding that 2017 and 2018 have been quite healthy, with a rough estimate of projects worth $1.63 billion in the pipeline.

Although the plan is to expand the project order book and grow organically, Pillai asserts that Airolink will continue to operate as a true EPC contractor. Having established a subsidiary - Airolink International Construction - in 2012, he has no plans for further diversification.

However, having acquired a reputation as a design and build contractor, he is adamant that his experience has taught him that this is the way forward for the company and the industry. With costs an increasingly important factor in the decision-making process, he believes clients are starting to come round to the idea of having a one-stop shop for design and construction.

“Clients themselves are starting to come to us with ideas, but they can’t coordinate them well. That’s where we step in and give them February 2018 21

In Profile

an idea of how to do things. If you go to a consultant, they’ll give you hundreds of ideas, but they can’t give you a contractor’s point of view. We are the people on-site and we know where you can and can’t make a profit.

“Developers are now tapping into that knowledge. We are educating clients about the ways they can do it. They’ve even given it a name – early contractor involvement. They have matured and decided to tap into the knowledge that design and build contractors have.”

Looking ahead, Pillai says this attitude is only going to continue, with developers increasingly aware of the money spent, especially with VAT now a factor to consider.

“Before 2015, people had passion. They weren’t thinking about profit or loss, it was all about prestige. Now, people are very careful. Whatever they’re spending, each penny is being counted. I don’t think people have that old passion anymore, they’re more focused on profit-making.

“But if you’re not thinking about profit-making, then you

design and build expert Pillai says that enquiries from developers about design and build contracts are increasing, as understanding and knowledge about the benefits of that approach grows.

won’t succeed as a business. As such, clients are giving more value to the contractor’s perspective than they did in the past. It was always the client and the consultant, and then bring the contractor in later. That model has changed as the market has gotten more mature and competitive.”

Despite the changes all around the construction industry, Pillai says one thing that remains constant for him is the staff that make up Airolink. He asserts that one of the core values he’s instilled in the company is that of understanding the value of people.

With more than 18 nationalities under the company

plans for expansion Pillai says he intends to have 5,000 employees by the end of 2018, a sizeable increase from the current figures of 2,700.

22 February 2018

umbrella, there are around 2,700 employees working for Airolink. By the last quarter of 2018, he intends to nearly double that number.

“I know the value of people.

When I take on board a new employee, I don’t say that a new employee has come into my company. Instead I say that a new family has come into my company. I have my schoolmates working with me, I have my college mates working with me.

These are 20-year relationships.

I have employees hired in 2008 working with me till today. When I registered my company, there were eight people – of them, six

are still working with me now.

“We never terminate people without a reason and I always tell my employees that we show our strength by recruiting people.

We never say that we don’t have projects and that we have to terminate people. For the last 10 years we’ve been growing, and now my idea is to come up to an employee strength of 5,000 by the last quarter of 2018.”

Pillai points out that Airolink offers employees numerous educational processes and opportunities, creating a culture of support for professional development across the board, whether for construction jobs or support staff in Admin or HR. Furthermore, it’s a policy for the company to recruit fresh graduates and people with limited experience, so as to develop employees who are committed and steeped in Airolink’s culture and ethos.

“We motivate them. If someone wants to leave within a year, we never say no. It’s their right to leave or continue. Our staff retention is quite high, but then again, it’s not a massive footprint. We’re quite a tight little bunch that are adaptable to both big projects and smaller ones.

“That’s another reason why we’ve been here for the last ten years, because we haven’t overextended ourselves on projects or staff,” he asserts.

Bringing the latest

construction news from across the GCC

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Site Visit

DISRUPTING CONSTRUCT Big Project ME heads down to Tamil Nadu to visit KEF Infra One Industrial Park, an Indian off-site manufacturing facility that aims to transform construction around the world 26 February 2018

Site Visit

ION February 2018 27

Site Visit

W

hen one thinks of hubs of construction innovation and technology, India may not immediately spring to mind as a leader and pioneer in the field. After all, a visitor to a construction site anywhere in the country can spot a plethora of health and safety violations and inefficiencies within minutes.

If the general impression of construction is that it is a traditional and change-resistant industry, the way it operates in India takes that cliché to extremes. Not only is manual labour the primary driver of the

building process, but the use of technology and systems remains fairly limited, especially beyond the major cities and metro areas.

However, this could be about to change, following the launch of KEF Infra One Industrial Park, an integrated off-site manufacturing park in Krishnagiri, Tamil Nadu.

Since it opened its doors in December 2016, the facility has become a benchmark for India’s construction industry, delivering a number of high-profile projects across India and highlighting how technology can be used to meet the country’s massive demands.

This is borne out by the announcement that KEF Infra, a division of KEF Holdings, a multinational diversified group with operations in strategic investments, infrastructure manufacturing and healthcare development across India, the UAE and Singapore, had revenue

PROJECT DETAILS Total Site Area: 92,900sqm on a 42acre campus Total Investment: $100 million Service Area: Within a 300km radius of Krishnagiri Accessibility: Railway station – Krishnagiri, Tamil Nadu Seaport – Chennai Port (264km) and Pondicherry Harbour (188km) Airport – Kempe Gowda International Airport (75km)

of $150 million in 2017. This was due to robust growth in the company’s order book since the launch of the park, the world’s largest and first-ever fully integrated facility of its kind.

Of the projects delivered last year, the company highlights the 37,161sqm Meitra Hospital (500 beds in two phases; 209 completed) in Kerala as a particular highlight, given that it was completed within a record time of 18 months.

Furthermore, the company also manufactured and delivered 175 public canteens and 20 kitchens as part of the Bruhat Bengaluru Mahanagara Palike’s Indira Cantreen Project in Karnataka.

KEF Infra also handed over the Embassy 7B project, a 157,935sqm commercial building for the Embassy Group which was completed in 13.5 months, and Infosys Building Phase 2, a 46,451sqm building

Setting the standard Since its launch in 2016, the KEF infra One Industrial Park in Krishnagiri has delivered a number of high-profile projects and highlighted how technology can be used to meet construction demands.

“Time is money. Normally, what happens is that in conventional construction, you have to deal with consultants [which eats up a lot of time]. Here, we’re eliminating all of that” 28 February 2018

Site Visit

Creating a one-stop shop The facility has factories that will cover a wide range of services and sectors for the construction industry.

completed in 15 months. Both projects were developed in Bangalore, just two and a half hours from the Krishnagiri site.

In the wake of all these achievements, Big Project ME was invited to tour the 42-acre flagship facility along with a select group of journalists from the GCC and India.

“We are at an exciting crossroads today, as we see a global wave of technology-led innovation that is changing the way we do business. Our operations underpin this ambition to disrupt sectors through the use of world-class technology that can deliver value more than ever before,” says Faizal E Kottikollon, founder and chairman of KEF Infra and KEF Holdings, during a presentation to the invited media.

“In the short span of three years, KEF Infra has demonstrated our ability to bring world-class proficiency in design, engineering, manufacturing, assembly and project management all under one roof, thereby transforming the traditional construction industry by significantly reducing costs and increasing efficiencies.”

Operations have already begun on the construction of India’s first prefabricated mall in Lucknow, Uttar Pradesh. Know as The Lulu Mall, the project will cover 185,806sqm and is part of a $150 million investment by the UAE-based Lulu Group. Over the course of the coming year, KEF

Infra will manufacture hotels, homes and schools, along with additional manufacturing facilities in Lucknow, Andhra Pradesh and Maharashtra to help deliver projects all over the country.

The firm is currently executing a 92,903sqm college hospital for KMCH in Coimbatore, Tamil Nadu, Kottikollon adds. Also in the works is Phase 2 of manufacturing for 262 Indira Canteens and Kitchens across Karnataka. Furthermore, the firm has signed on GKNM Hospitals in Coimbatore as a client.

Among the other projects in the pipeline, Kottikollon says there is considerable interest from both state and central

government bodies in using offsite manufacturing technologies to improve and upgrade existing infrastructure facilities, from schools to sewage treatment plants, all over the country.

KEF Infra is also delivering a number of specialised projects in bathroom pods, MEP, joinery, aluminium and glazing for a variety of clients, including Sands Infra, Malabar Gold, Brigade, Mahindra and Leela.

Kottikollon explains that the Krishnagiri factory has specialised individual factory units for these projects, with technology, machinery and systems imported from around

the world to help deliver them.

KEF Infra will be expanding its offering into the hospitality, retail and other commercial sectors through these new units.

“The year 2017 was monumental for us at KEF Infra, during which we have gained the trust of numerous top companies.

This has helped us to cement our position as industry leaders in the off-site construction space and fuel our drive to create sustainable and inclusive development,” he asserts, adding that the company has an aggressive growth plan in place, targeting revenues of $1 billion by 2020.

With an investment of more than $100 million, the KEF Infra One Industrial Park covers a total area of more than 92,900sqm and features a diverse range of high-end technology and machinery that aims to transform the manufacturing and delivery processes in the construction industry. To do so, the facility integrates automation and data exchange with manufacturing technologies, creating a network of smart factories driven by human enterprise and cyber-physical

Hiring local talent KEF Infra says it will look to hire young talent and train them as it looks to open several facilities around India.

February 2018 29

Site Visit

Sustainability in mind The KEF Infra One Industrial Park has been built and designed to be LEED Gold-certified.

systems. This approach creates durable and sustainable products in an environment that prioritises performance speed, efficiency and precision, Kottikollon says.

“Today, India is at the cusp of growth led by innovation. We are witnessing an age where technology is being effectively integrated into infrastructure for the first time, thereby heralding the Industrial Revolution 4.0.

Our aim is to fast-forward this progress through radically changing the infrastructure landscape in India. Off-site manufacturing of infrastructure reduces delivery time by up to two-thirds and considerably

Minimising wastage The facility has an average wastage percentage of 2%, 10% lower than the national average.

30 February 2018

expedites the construction process,” he explains, telling Big Project ME that adopting off-site manufacturing means project developers will see considerable benefits due to the reduction in time spent on construction.

“Time is money. Normally, what happens is that in conventional construction, you have to deal with consultants [which eats up a lot of time]. Here, we’re eliminating all of that. We use sophisticated design software which allows us to do the architectural, structural and MEP designs – and then we can modularise it. This allows us to do all the clash detection at the design stage, and we can do everything in-

house through our own designers.

“That’s one aspect of the cost reduction. The second is the material wastage – construction wastage in India is 12% on average. Our facility reduces it to 2%. That’s a 10% saving, which is in itself huge.”

Another benefit of moving construction processes off-site is the positive environmental impact: “If you ask me, I think that’s the biggest benefit – protecting the environment. [At KEF Infra One] we can use the right materials that are suitable for the environment, and there are no debris, no dumping and all that, which is a huge carbon negative.

KEF INFRA ONE UNITS: Precast Prefabricated Bathrooms, Modular Rooms and Modular MEP Joinery Glazing Stone Processing TEChNOLOgy ON-SITE: Automation and robotics BIM – building information modelling Level 6 Internet of Things and sensors Automated double wall technology Mobile precast technology Graphic concrete Modular MEP (mechanical electrical plumbing)

Site Visit

“For example, we built the Infosys campus in Electronic City. They just moved in last month and they’re showing a 40% saving on energy – that project is LEED Platinum-certified.

In fact, this park itself is going to be LEED Gold-certified.

“A lot of people talk about new technologies and software that have come forward [over the last few years]. But the challenge is implementation. Everything fails on the ground, but that’s what we’re solving now. Unless and until this is resolved, we won’t see the value coming in. It’ll only be on paper.”

One of the major challenges facing the facility is the acquisition of resources in terms of both materials and manpower. The Krishnagiri facility has a workforce that is made up of 80% qualified skilled labour, along with 650 engineers. However, with expansion and new facilities on

“The challenge for us now is to move resources into various places. Right now, we’re looking at only Hyderabad and Lucknow for this year as we build the team”

the cards, Kottikollon says KEF Infra is aggressively recruiting.

“The challenge for us now is to move resources into various places. Right now, we’re looking at only Hyderabad and Lucknow for this year as we build the team up.

We’re recruiting many young, fresh engineers so that we can train them and then move them on to the next locations in Bombay and Delhi.”

Another challenge to overcome is the acquisition of materials. While India has a lot to offer, Kottikollon concedes that quality control is an issue.

“For example, wood. India doesn’t produce a lot of good white or beech wood. Everything comes from Bosnia or France.

A lot of sanitary fittings are also being imported from Australia for the hospital projects,” he says, pointing out that while the company currently sources these materials from overseas, he also sees it as an opportunity for foreign

firms to come down to India and build a base around KEF Infra’s facilities, so as to bring down costs.

“Our aim is to bring technology to a mass market like India,” Kottikollon says, explaining that significant investment is being put into research and development, with an R&D facility currently under construction which will be ready within six months.

“We’re also building a research facility with the Manipal Institute of Technology, where I did my civil engineering. The aim of creating this facility with the university is to help us develop new materials.

It will be opening in March of this year. We’re constructing everything off-site now.

“We’re also helping to train architecture and civil engineering students so that they go into off-site manufacturing learning, as well as also into the research and development of different materials,” he concludes.

Finding quality materials A major challenge for the facility is sourcing the right materials, with wood and fittings currently imported.

February 2018 31

Green Codes and Regulations

Taking The RighT STepS

Big Project ME speaks to Wayne Morgan, sustainability consultant at Cundall, to understand what sort of impact the introduction of green building codes and regulations has had on the UAE’s construction industry What sort of impact has the introduction of green building codes and regulations had on the way buildings are being designed and built in the UAE?

Over the last five to seven years, the increase in both the number of green building codes and their implementation has seen an

increase. Originally, the LEED certification process was used, along with Estidama’s Pearl Rating System from 2010. In recent years, however, there has been a drive towards further localisation of standards, with the introduction of the GSAS Sustainability Rating System in

Minimum rating Once implementation of the Al Saafat Rating System starts in Dubai - from 2018 onwards - all buildings will be required to achieve a minimum rating of Bronze, by using the system.

32 February 2018

other GCC countries, and more recently the newly released Al Saafat Rating System in Dubai.

Once implementation starts within Dubai – from 2018 onwards – all buildings will be required to achieve a minimum rating of Bronze, by using the system. This is a clear drive by Dubai Municipality

to reduce the energy consumption of all new buildings, which in turn will force developers and designers to more closely consider the impact of the design and construction of the building. While previous regulations and rating systems have been in place and used, this is the first mandatory requirement put

Green Codes and Regulations

in place, which will ensure that minimum reductions will be met.

Initiatives like this demonstrate a step in the right direction for ensuring sustainable practices are used throughout the UAE. Currently, not enough emphasis is being placed on the use of sustainable practices – whether it’s developers, consultants or contractors. Having the Al Saafat Rating System in place will now ensure that this is achieved on all buildings in Dubai.

In the wake of these changes to the rules and regulations, how are developers now working with

consultants, designers, engineers and contractors to create buildings that are efficient when it comes to energy and water consumption?

Despite it being early days still for the Al Saafat Rating System, there are developers, consultants and contractors who are looking to implement sustainable practices on projects that desire LEED certification. Developers and owners are now looking at the control and implementation of sustainable design – not just through the original construction, but also for future fit-outs. Previously, there was less control of the fit-out process.

For example, Cundall has delivered numerous office fit-outs within the One Central development in the Central Business District and implemented LEED certification for multiple office spaces, so as to align them with the base building design. This is being carried on through to fit-out development, with fit-out works also requiring LEED certification.

This imposes limitations on the use of water within the entire development, with the target set out by the developers being that all tenants achieve a water use reduction of at least 20%, while also encouraging a reduction in overall energy consumption and achieving CO2 reductions through the utilisation of materials available within the UAE. Has the introduction of these regulations encouraged a shift towards buildings that use new technologies and methodologies to become living, breathing and adaptable spaces that react to the environment around them?

The recent introduction of the WELL building standard has only had a small impact within the region, with only a few buildings looking to achieve any level of

“Despite it being early days still for the Al Saafat Rating System, there are developers, consultants and contractors who are looking to implement sustainable practices on projects that desire LEED certification” certification at this time, although we are seeing an increased interest in it. The WELL standard is more occupant-driven and ensures the health and well-being of the building’s occupants. This will help drive the technologies within buildings to be more adaptive to the occupant and their overall experience. There are a small

number of designers who take this into consideration, mostly driven by internal global standards of individual companies.

Cundall has implemented WELL standards in its London offices and was the first office to achieve WELL certification in the UK and Europe. Since then, we have seen an incredibly positive impact on our people and business, with the statistics showing that absenteeism has dropped by 50%, while staff turnover has dropped by 27% within the first year. We are now in the process of implementing the same standards into our Dubai office, where we’ll also utilise all our experience and knowledge.

Designers are now incorporating more systems that promote occupant well-being. This is being implemented through lighting solutions that utilise circadian rhythms to align with the body’s own cycles, promoting productivity. The design of the air conditioning systems to provide greater thermal comfort within the space and provide more occupant control is another example. Also, this has seen the implementation of a number of practices to make the building environments more improved for occupants.

Biophilic design is increasingly being considered, with green or living walls, or by providing occupants with access to external garden areas, either within the development or at rooftop levels. Clients are also looking at ways to provide employees with facilities that improve their well-being, such as by providing gym facilities on-site or creating more innovative breakout spaces.

While there is still a long way to go in terms of achieving full sustainable design within the region, Dubai is starting to take the right steps towards achieving tangible results in reducing energy consumption.

February 2018 33

Utilities

A New erA

Following the publication of Siemens’ Middle East Power – Outlook 2035 report, Big Project ME summarises some key findings to highlight how renewable energy can help power electricity generation in the region Share of renewables in the Middle East expected to triple by 2035

483Gw

Total power generation capacity by 2035 Enablers of future energy mix Power generation capacity from renewables 100GW (2035) 16.7GW (2016)

Over the last two years, the energy markets have witnessed significant shifts, ranging from drops in the price of oil to massive cuts in the pricing of renewables.

As a result of these changes, oil-rich countries in the Middle East are making plans to step up their economic diversification programmes to ensure a future for their populations.

These shifting dynamics have also led to a transformation of the regional power market as energy independence and economic diversification continue to play a larger role, and as a result the world’s largest oil

34 February 2018

Natural gas Expected to be No.1 fuel for power generation Combined cycle power plants To dominate energy landscape

producing region is making a switch, ushering in a new era for electricity generation.

Given their economic ambitions and the needs of their growing populations, these countries are in need of significant additional energy capacity. In fact, the Middle East is expected to require a total of 483 gigawatts (GW) of power generation capacity by the year 2035, a recently published report by Siemens reveals.

Within this, the share of renewables in the power mix is expected to more than triple from the 5.6% (16.7GW) recorded

in 2016 to 20.6% (100GW) in 2035. This increase highlights the need for reliable and efficient energy storage solutions, as well as mixed power generation sources, to overcome the intermittent nature of renewables and achieve grid stability.

“There is no doubt that renewable sources of energy, especially solar, will play a major part in the Middle East’s future power mix,” writes Dietmar Siersdorfer, CEO of Siemens Middle East and UAE, in the Middle East Power – Outlook 2035 report.

“Nevertheless, we believe

Digitisation and cloud tech Firms to require cyber security Growth of decentralised energy systems

that natural gas will continue to be a dominant source of power generation through to 2035.

Highly-efficient gas turbines, from large to small, will cater to these requirements. A healthy energy mix of renewables and natural gas will achieve the optimal grid stability to supply uninterrupted power to the region’s industries and homes.”

According to the report, despite the growing share of renewables, natural gas is expected to remain the number one source of power generation in the region, representing 60% of installed capacity

Utilities

through 2035. With economic diversification and population growth accelerating, the growth in power demand in the region – approximately 3.3% per year – will be realised predominantly through increasingly efficient natural gas-fired power plants.

Capacity additions will primarily be highly efficient combined cycle power plants (CCPPs), which are expected to dominate the power plant landscape by 2030. The report also assesses upcoming challenges to the diversification of energy sources as well as enablers such as digitisation and decentralised energy systems.

“A reliable, efficient, flexible and affordable power supply is the backbone of economic and social development in the Middle East. While the energy mix will see significant diversification over the next 20 years, natural gas will remain the prime energy source for power generation in 2035,” says Siersdorfer. “We expect the majority of new power generation capacity to be via highly efficient combined cycle power plants, but renewables will also gain a substantially increased share of the energy mix.”

Main source of power in the Middle East Saudi Arabia

UAE

Egypt

60% oil

98% lNG

Oman

75% oil 97.5% lNG

Kuwait

Bahrain

Iraq

Jordan

Lebanon

64% oil

100% lNG

72% lNG

51% oil

97% oil

He adds that there is also greater potential if CCPPs are considered instead of planned steam power plants. Aside from new capacity additions, an extra 45GW could also be realised through efficiencies brought about by upgrading facilities more than 30 years old.

By 2035, solar power is expected to account for additions of around 61GW, the report adds, while also highlighting the

significant potential for wind power generation in Saudi Arabia and Egypt. However, it does note that this potential is not entirely reflected in the moderate capacity additions expected. Furthermore, the report points out that costcompetitive storage solutions continue to remain an obstacle to the widespread adoption of renewable energy technologies.

“The convergence of technologies is promising a

Trends in power generation in the Middle East 277GW of additional generation capacity required in Middle East by 2035

Significant increase in power generation - 3.3% p.a.

2016-2035

Around 61GW of capacity additions from solar power

Further potential for CCPP market from converting planned steam power plants

Highly efficient combined cycle power plant technology to comprise main capacity additions

High potential for wind power, not entirely reflected in moderate capacity additions, mainly in Saudi and Egypt

Fast adoption of new technologies: proven H-class gas turbine

paradigm shift in the way in which we produce and consume energy, and there is no question that the Middle East will be at the heart of the transformation taking place,” says Mohamed Jameel Al Ramahi, CEO of Masdar, which also contributed to the report.

Finally, the report identifies digitisation as a key enabler, explaining that a gas turbine can produce 30GB of data a day.

As such, using digitisation tools to harness the data and use it intelligently will be an important factor in increasing the efficiency and flexibility of the energy supply in the region, while also cutting down production costs.

“Digitisation is an essential part of the future energy landscape, and turning big data into smart data will enable us to be more reliable, energy efficient and cost-effective,” concludes Siersdorfer. “However, we must remember that with greater interconnectivity, use of data analytics and cloud technologies comes greater exposure to cyber security threats, so organisations need to be well prepared.”

February 2018 35

Solar Energy Abundant supply Solar power has tremendous potential in the MIddle East due to the 3,000 to 3,500 hours of sunshine that the region receives annually.

The Power of The Sun

Fadi Nassif, executive commercial leader of GE’s Power Conversion business in the MENA and Turkey, discusses how solar energy is shaping up to power the GCC’s ambitions What solar energy techniques and technologies are being looked at and deployed in the GCC?

One of the defining technologies that we deploy in the region is the LV5 1,500-volt inverter.

Compared to the last generation of 1,000-volt peers, they enable savings of up to 3% capex and up to 15% opex. They are currently being deployed in the landmark Mohammed bin Rashid Al

36 February 2018

Maktoum Solar Park (Phase III).

Once the combined 1GW project is completed, it will be ready to power 250,000 homes in Dubai.

At GE, we also provide full turnkey solar contracts, offering innovative approaches and capabilities in one basket. Our full engineering, procurement and construction approach includes financing, plant equipment and control, grid integration and digital

solutions, which also extend to the photovoltaic modules themselves.

This integrated system package is designed to offer peace of mind for a comprehensive plantwide development strategy. We recently signed our first turnkey solar contract with Fas Energy to build the 50MW solar plant for Egyptian Electricity Transmission Company (EETC), including both financing and equipment.

Is the technology feasible and effective in this region?

Solar power has tremendous potential for the region. 3,000 to 3,500 hours of sunshine yearly in the region offer an abundant energy supply, and we now have the technology to harness its true potential.

In fact, GE’s LV5 inverter solutions have been deployed in Phase 2 of the Mohammed

Solar Energy

which we are continuing to demonstrate in the UAE, Saudi Arabia and other markets. This is helping to drive sustainable energy growth, support the local economy and protect the environment by reducing greenhouse gas emissions.

What are the challenges of this technology, and how can they be overcome?

While the UAE has made definite advances in promoting solar power, there are still a number of challenges that need to be addressed. The low price of solar power at $0.0299/kWh means that profit margins are considerably slimmer for suppliers. Operators will need to find ways to cut costs, and the savings offered by GE’s LV5 make it an inverter of choice for cost-efficient solar plants, as it responds to such challenges.

The harsh desert environment could present challenges to equipment too. Our LV5 series solar inverters have been designed to meet the specific requirements of the local environmental conditions of the Middle East.

Is the infrastructure (off-grid, self-contained units, etc) in place to support the use of solar energy in this manner?

bin Rashid Al Maktoum Solar Park. This 200MW park is currently producing electricity at the low cost of $0.0584/ kWh. Powered by GE’s LV5 1,500-volt inverters, Phase III of the solar park was signed at what was then a record price of $0.0299/kWh, making solar more competitive than coal in Dubai.

Solar projects in the region are now both feasible and effective,

The region is putting in place the right infrastructure to support the use of solar energy. DEWA’s Shams Dubai initiative is a great example of this. The programme encourages customers to install rooftop photovoltaic solar panels to generate electricity for their household consumption, while also exporting excess power back into the grid.

What support is being provided by authorities (DEWA, for example)? Is it enough?

Last year, Dubai announced its Clean Energy Strategy 2050, which includes the target of generating

Solar power has tremendous potential for the region. 3,000 to 3,500 hours of sunshine yearly in the region offer an abundant energy supply, and we now have the technology to harness its true potential” 75% of total power from clean energy sources by 2050. Solar energy will generate 25% of the total energy mix by 2030.

There are concerted efforts to drive this strategy forward, especially by authorities such as DEWA, which has not only spearheaded the Mohammed bin Rashid Al Maktoum Solar Park but is also promoting solar power generation and consumption at

the micro level through its Shams Dubai initiative. Masdar’s Abu Dhabi Rooftop Solar Programme is another key initiative that promotes solar energy. These initiatives are significant starts and with strong support from the public, they will enable the country to achieve its clean energy vision.

In January, we participated in the World Future Energy Summit. This key annual event in Abu Dhabi contributes to the government’s clean and renewable energy visions by operating as a global marketplace that advances solutions to the world’s most pressing challenges.

Support like this is crucial to developing the local and regional renewables sector.

Discuss the future of the technology and how it can be developed further.

Solar power offers an unprecedented opportunity to build a cleaner future, and we are working across the spectrum to develop more efficient, reliable and cost-effective means to further implement these technologies.

As part of these developments, digital solutions such as asset performance management (APM) will play a key role to further boost solar efficiency. For a solar farm, APM gives operators the ability to monitor real-time performance remotely. By creating a digital twin of the solar farm, we ease the detection of early failures of components such as inverters to effectively reduce unplanned downtime, enabling predictive maintenance and ensuring continued operational efficiency.

GE and Invenergy have partnered to build a digital solar farm with GE’s APM solution, targeted to achieve over 99% plant availability, allowing the 20MW farm to benefit from optimised plant performance and profitability.

February 2018 37

Comment

Prakash Senghani

Digital Oil

Prakash Senghani – Digital Project Delivery lead, Construction Services, at AECOM – explains how the digital transformation of the construction industry will be fuelled by marrying data and technology to create efficiencies across the board In an increasingly digital world, the phrase ‘data is the new oil’ is fast becoming a cliché. But there is truth in the idiom, especially with the digital transformation of the construction industry.

With the push to deliver projects faster, smarter and to a better quality while at the same time improving site safety, technology is seeing a greater focus. And with advances in both hardware and software, data is key.

Those that can collect or mine it, store it, analyse it and subsequently make informed decisions from it will win 38 February 2018

out in the new world order.

Mobile phones are now ubiquitous on construction sites and we are also seeing tablet devices become ever more prevalent. Cloud-based technology, apps and software are being used to gather information about health and safety, quality, compliance and commissioning. All this data is helping to drive efficiency in automating the traditionally manual process of moving paper from one desk to another for approvals and signatures.

Most of these apps incorporate workflow engines which automatically alert

the next approver in the chain of command that their digital signature is required, allowing them to review all the information digitally on a desktop or mobile device. The data captured in this way is more accurate as it is captured at source and, more importantly, can be searched, categorised, filtered and analysed much more efficiently than with the current manual process.

The project site is not the only area in construction being affected by automation. The design office, through the use of parametric design philosophies, is seeing a remarkable change.

Using the computational power that now sits at most of our fingertips, engineers and architects are able to define constraints and requirements in software programs, which then output every possible permutation automatically. These can then be refined to find the optimal one based on the specific needs of a project. Optioneering in this way saves valuable time and can often produce results that the human inputters may never have thought of.

On the hardware front, the augmentation of 3D models and robotics is leading the industry to explore the practical use of

Comment

autonomous construction is safer The introduction of autonomous construction plants will improve safety onsite, as sensors can identify and respond to danger quicker than humans.

“The move towards a digital construction industry is fuelled not by oil, but by data.

In order to get the most out of it, it needs to be accessible and connected”

3D printing in construction.

Having already disrupted the manufacturing industry, the lessons learnt from 3D printing smaller parts are being scaled up and applied to an industry in need of improvements in both safety and productivity.

3D printing has the perception of being a far-off dream. However, here in the Middle East we are in the midst of a revolution driven by the demands of pioneering and ambitious leaders. This is epitomised by the Dubai 3D printing vision to see 25% of building elements use 3D printing technology by 2030, with incremental targets such as 2% by

2019. Again, data is at the core of this technology. Ensuring its flow from design intent to physical realisation without corruption or interpretation is essential to fulfilling 3D printing’s potential.

The much-anticipated arrival of autonomous vehicles on our roads is continually in the headlines as the technology reaches new milestones and achieves heightened levels of autonomy. This same technology is also being adapted for use on construction sites, but with much less fanfare. All heavy equipment manufacturers have or are developing autonomous construction plants, from

bulldozers to excavators, mobile cranes to piling rigs. With construction sites providing a more predictable and easily controlled environment, many believe that we will see the acceptance of autonomous construction vehicles before they become common on the roads.

The introduction of autonomous construction plants will improve safety in two ways. First, sensors can identify and stop dangers quicker and more extensively than human operators. Secondly, because instructions such as setting out or the assessment of quality can be completed remotely, we would put fewer people in harm’s way in the first place. As more of this type of equipment is used, more data is gathered to improve the prediction algorithms and therefore the desire to use the equipment in the future, thus creating a virtuous circle.

Automation and robotics isn’t coming, it is already here. It will change the way our industry works, from the complexity of projects we undertake to the types of people we employ. This drive towards automation isn’t without risks and uncertainties. However, the more imminent danger comes from the lack of awareness and appreciation of cyber security.

The move towards a digital construction industry is fuelled not by oil, but by data. In order to get the most out of it, it needs to be accessible and connected, bringing with it the risk of abuse.

Currently the industry isn’t a major target for cyber criminals and vandals. Inadvertently, our industry’s inertia to adopt technology has sheltered it from the risks of cyber crime. As we become more digitised, we must become more digitally secure – we must protect our digital oil.

February 2018 39

Events

MIDDLE EAST RAIL 2018

The largest and most exclusive rail conference and exhibition across the Middle East, Africa, South Asia and Central Asia

Gateway to key projects Covering $614bn worth of railway projects, mega trade corridors and smart cities, Middle East Rail will provide attendees with access and insight into key projects happening across the region.

Now in its 12th year, Middle East Rail has grown to become the most significant rail event in the region, not to be missed.

Dedicated to the heart of rail developments across some of the most exciting regions in the world, Middle East Rail is recognised as a leading international event. It is the only rail event to be run in partnership with the UAE government, hosting more regional and international government representatives and buyers than any other rail show.

The event holds official patronage with the United Arab Emirates’ Federal Transport Authority and Ministry of Infrastructure Development and is opened annually by His Excellency Dr Abdulla Belhaif Al Nuaimi, Minister of Infrastructure Development and Chairman of the Federal Transport Authority 40 February 2018

– Land & Maritime, UAE. As populations and freight demands continue to grow and urbanised areas increasingly converge into large networks of mega regions, Middle East Rail is strategically positioned to reflect the ongoing developments and updates in the region. Within the next 10 years we will see a complete reform of mobility across emerging markets in the Middle East, Africa, Central and South Asia. Covering $614bn worth of railway projects, mega trade corridors and smart cities, Middle East Rail is your gateway to the key railway projects happening across the region – the most exciting new networks in the world.

Middle East Rail is the unrivalled platform for the region’s railway industry to come together, to learn, network and do business in just two days. Global companies come

together to help build and operate brand-new rail infrastructure, as well as upgrade legacy networks across the Middle East, North Africa, South Asia and Central Asia.

In 2018, Middle East Rail will once again deliver an unrivalled conference, hosting over 150 speakers across three conference tracks.

As the leading rail conference for the regional markets, our project overviews include those in South Asia and Central Asia – some of the most untapped markets globally.

Middle East Rail will not only bring together transport ministries from the regional markets, but will also welcome rail developers, transport operators, government, contractors and suppliers to talk strategy, technology and innovation for passenger and freight projects.

Our partners and solution

providers are global leaders and innovators. They use Middle East Rail as their annual opportunity to meet and do business with new and existing customers.

From modernising legacy networks to building transport corridors of the future, upgrading signalling and telecommunications systems, and financing new networks: Middle East Rail has it all. From the latest developments of the GCC connectivity network to the modernisation of Egypt’s rail lines, from the Belt & Road links in Central Asia to the boom in Indian passenger and freight efficiency, operators from across the world bring updates in the form of interactive roundtables, panel discussions and presentations.

In 2018, the conference agenda features more content on digitisation, modernisation, privatisation and pioneering the

Events

future of Mobility 4.0. You can hear from leaders of innovation, big data, cyber security, digital transformation and more from global heavyweights such as RATP Dev, SMRT Trains, Deutsche Bahn and SNCF. KEYNOTE SPEAKERS: Patrick Ropert, CEO, SNCF Gares & Connexions & Chairman of the Supervisory Board, AREP Group, France Niko Warbanoff, CEO, DB Engineering & Consulting & Chairman of International Business, Deutsche Bahn AG, Germany James Cowan, President, The Greenbrier Companies, USA Rolf Härdi, CTO, Deutsche Bahn, Germany Jean-Jacques Thomas, Chief Innovation Officer, SNCF, France Shahrin Salam, SVP – Plans & Development, SMRT Trains, Singapore Harj Dhaliwal, Managing Director – Middle East & India, Virgin Hyperloop One Mathieu Dunant, Head of Innovation, RATP Group, France LATEST PROJECT UPDATES FROM THE GCC COVERED AT MIDDLE EAST RAIL UAE Abu Dhabi Metro & Light Rail Project: Phase 1A comprising 17 stations and 18km of metro rail.

Tenders for Phase 1B and Phase 1C of the city’s light rail network project are also in place, both of which will be tram lines. skyTran Yas Island: MOU signed in 2016 for a planned magnetic levitating transit pod system around Yas Island in Abu Dhabi.

UAE National Rail Network: Etihad Rail’s 1,200km network will extend across the UAE from the border of Saudi Arabia to the border of Oman. Stage 1 (264km) has been operational since 2015, Stage 2 will consist of 628km and

Stage 3 will extend the network from the Emirate of Dubai to the northern regions of Fujairah, Ras Al Khaimah and Sharjah.

Dubai Metro: Red Line Route 2020 extension is ongoing and scheduled to be completed several months in advance of the Expo 2020 event.

Al Sufouh Tram: The Al Sufouh Tram, operational since 2014, has 11 stations and 10.6km of track. The second phase of the Dubai tram will extend the track by 4km and link the network to Mall of the Emirates in Dubai.

GCC Rail Network: The construction timeline for the 2,117km, $200bn GCC railway network has been pushed back to 2021 from 2018 in the aftermath of the oil price plunge.

KEY PLAYERS: Federal Transport Authority, UAE Ministry of Infrastructure Development, UAE Department of Transport, Abu Dhabi Roads & Transport Authority, Dubai Etihad Rail KEYNOTE SPEAKER: Ahmed Jasem Al Mansoori, A/CEO, Etihad Rail, UAE OMAN Oman National Rail Network: Oman Rail plans for a national network of 2,135km, part of the GCC rail network, and to connect southern parts of the country where main ports are located.

Mineral Line: In December 2017, Oman Rail announced it is looking to mandate an international consultant to provide advisory services on PPP funding for its mineral line project – a single track bulk freight railway connecting mines to ports.

KEY PLAYERS: Ministry of Transport & Communications, Oman Asyad Group Oman Rail

KEYNOTE SPEAKER: Nathan Wiles, General Manager – Projects, Oman Rail KSA KSA National Rail Network: 2,400km of railway links the northern border to the central region and eastern coast. The line has been operational for mineral freight exports since 2011.

Landbridge: 1,065km of new line to connect the two major cities in KSA – Riyadh in the east and Jeddah in the west. The KSA government will grant concessions to the private sector via a buildoperate-transfer contract.

Haramain High Speed Rail: Saudi Arabia’s first high-speed train connecting major holy sites Mecca, Medina and the major eastern city Jeddah. The Haramain Express includes 453km of track, achieved speeds faster than 300km/h in 2017 and will be fully operational by mid-2018.

North-South Railway: Contributing to a total of 3,000km, the North Railway project is an expansion of the national network launched in February 2017 to support the massive development of the mining industry, prioritised as KSA’s third pillar of the economy after oil & gas.

Riyadh Metro: In summer 2017, it was reported that the Riyadh Metro project had passed the halfway mark. Manufacturing of 86 driverless train cars has been completed and they have been delivered to the capital.

Testing of trains on tracks is scheduled for mid-2018.

KEY PLAYERS: Ministry of Transport, KSA Public Transport Authority, KSA Saudi Railways Organisation (SRO) Saudi Railway Company (SAR) Arriyadh Development Authority KEYNOTE SPEAKERS: Bashar Al Malik, CEO, Saudi

Railway Company (SAR) Alwalid Alekrish, VP – Programs & Projects, Arriyadh Development Authority, KSA BAHRAIN Bahrain Light Rail: Feasibility studies have been completed and Bahrain is currently in the tendering phase to appoint an operator to run the Bahrain Light Rail project. The monorail project is planned to consist of 105km of light rail.

Bahrain National Rail Network: Planned 84km, double-track line to connect Saudi Arabia and Bahrain with a new causeway in its first phase of construction.

KEY PLAYERS: Ministry of Transportation & Telecommunications, Bahrain KEYNOTE SPEAKER: HE Mariam Jumaan, Undersecretary, Ministry of Transportation & Telecommunications, Bahrain KUWAIT Kuwait Metro: A 160km transport network consisting of four lines and 68 stations. In 2017 the feasibility study for the project was completed and its tender for public bidding began.

Kuwait National Rail Road (KNRR): An integrated rail network with 511km of track to serve freight and passenger needs. The plan is to link Kuwait City and airport, as well as other GCC countries.

KEY PLAYERS: Ministry of Communication, Kuwait Public Transport Authority, Kuwait Kuwait Authority for Partnership Projects (KAPP) KEYNOTE SPEAKER: Mohammad Saud Alhadbah, Board Member, Public Authority for Roads & Transportation, Kuwait For more information, visit www.terrapinn.com/merail February 2018 41

Events

The Big 5 heavy

Event to showcase solutions and products for Middle East construction market From 26-28 March 2018, The Big 5 Heavy will bring the whole heavy construction industry together with over 350 local and international exhibiting brands at the Dubai World Trade Centre. The event will showcase innovative solutions and products clustered into five product sectors: Middle East Concrete, PMV Live, Foundations & Geotechnical, Mining & Quarrying, and Road Construction.

Caterpillar and Al-Bahar have chosen The Big 5 Heavy to showcase their latest products for construction and infrastructure in the Middle East, and are expected to have the biggest stand at the exhibition to showcase a wide range of their machines.

Broad educational agenda The Big 5 Heavy will offer a broad educational agenda with free CPD-certified workshops, along with the ACI Concrete Essentials Seminar Series.

More than just an exhibition, The Big 5 Heavy will also offer a broad educational agenda with free CPD-certified workshops, as well as the ACI Concrete Essentials Seminar Series held by

the American Concrete Institution.

The two-day series will provide participants with an in-depth look into topics including concrete repair, self-consolidating concrete, mass concrete and more.

Ahead of the event, HE Eng Hassan Jumaa Al-Mansoori, Undersecretary of the Ministry of Infrastructure Development, inaugurated the first edition of The Big 5 Innovation Precast Summit in November 2017, reiterating the significance of heavy equipment to the UAE’s objectives to push the field of infrastructure and housing towards excellence and leadership status.

The Big 5 Heavy is the largest dedicated heavy construction industry exhibition in the region.

Organised by dmg events Middle East, Asia & Africa, it is a relaunch of the Middle East Concrete and PMV Live events.

For more information, visit www.thebig5heavy.com.

Middle easT elecTriciTy

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

“Middle East Electricity is evolving in line with the regional industry, which is now one 42 February 2018

Thought leadership The 2018 edition of MEE will see the debut of the thought-leading Global Smart Energy Summit alongside the exhibition.

of the world’s most vibrant,” says Anita Mathews, group director – Industrial Portfolio at Informa Exhibitions.

“Our new dedicated product sector will launch as

the Middle East and Africa’s most comprehensive coming together of local, regional and international energy storage and management providers, with international manufacturers

demonstrating the latest technologies transforming industry practices to regional audiences.”

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

The 2018 edition will host more than 1,615 companies from 66 countries, supported by 24 dedicated country pavilions.

Covering the entire value chain of electricity products and services across the show’s five sectors, Informa anticipates its highest turnout ever for MEE 2018.

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

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Tenders

Top tenders Ain SokhnA RefineRy Development pRoject Budget $2,000,000,000 project number MPR1558-E territory Egypt client Egyptian General Petroleum Corporation (EGPC) Address Palestine Street, 4th Sector, New Maadi Area city Cairo 11742 phone (+20-2) 2703 1438 fax (+20-2) 2703 1457 email info@egpc.com.eg Website www.egpc.com.eg Description Development of a refinery with capacity to produce 155,000 barrels per day period 2021 Status Current Project tender categories Gas Processing

& Distribution, Oilfields & Refineries tender products Refinery/ Offsites & Utilities

Website www.emaar.com Description Construction of a district cooling plant period 2019 Status New Tender tender categories Construction & Contracting tender products District Cooling Plants

DiStRict coolinG plAnt pRoject (Dcp 4) – DoWntoWn DuBAi

GizA city – 6th of octoBeR city monoRAil pRoject

Budget $95,000,000 project number WPR2801-U territory United Arab Emirates client Emaar Properties PJSC (Dubai) Address Emaar Business Park, Bldg. No. 3, Near Interchange No. 5, Shaikh Zayed Road city Dubai phone (+971-4) 367 3333 fax (+971-4) 367 3000 email customercare@emaar.ae

project number MPP3158-E territory Egypt client New Urban Communities Authority (Egypt) city Cairo phone (+20-93) 228 6870/1 Description Construction of a monorail Status New Tender tender categories Public Transportation Projects tender products Railways

jeDDAh GAteWAy houSinG pRoject project number WPR2783-SA territory Saudi Arabia client Ministry of Housing (Saudi Arabia) Address Mather Street city Riyadh 11527 phone (+966-11) 4070100 fax (+966-11) 4070030 email info@housing.gov.sa Website www.housing.gov.sa Description Development of a housing scheme featuring 30 buildings with eight to 16 floors consisting of 3-bedroom and 5-bedroom apartments, covering a total space of 192,000sqm Status New Tender tender categories Construction & Contracting, Prestige Buildings tender products Residential Buildings

GABAl el zAyt GAS inSulAteD SuBStAtion extenSion pRoject project number WPR2735-E territory Egypt client Egyptian Electricity Transmission Company (EETC) Address Abassia, Nasr City 11517 city Cairo phone (+20-2) 2261 8579 Website www.eetc.net.eg Description Carrying out extension of 22/220kV gas insulated substation connecting an additional 120MW of power period 2018 Status Current Project main contractor GE Power Systems tender categories Power & Alternative Energy tender products Substations

INTEGRATED ESTIMATING, PROJECT CONTROL AND ERP SOLUTION FOR CONTRACTORS www.ccsgulf.com | Tel: +971 4 346 6456 | info@ccsgulf.com

44 February 2018

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Tenders

Middle East tenders UAE pixel toWeRS mixeDuSe Development – mAkeRS DiStRict project number WPR2782-U territory United Arab Emirates client Imkan Real Estate (Abu Dhabi) city Abu Dhabi Description Construction of seven mixed-use residential towers with a total built-up area of 83,000sqm offering 480 residential units period 2020 Status New Tender main consultant Ramboll Middle East Ltd (Dubai) tender categories Prestige Buildings tender products Residential Buildings

commeRciAl/ReSiDentiAl BuilDinG pRoject – Al khAn Budget $30,000,000 project number WPR2807-U territory United Arab Emirates client Private Investor (Sharjah) city Sharjah Description Construction of a commercial/residential building comprising a ground floor, 5 parking levels and 24 floors period 2019 Status Current Project main consultant Mazaya Consulting Engineers (Ajman) main contractor Fajr Al Sharq Construction (Fasco) LLC (Sharjah) tender categories Prestige Buildings

tender products Commercial Buildings, Residential Buildings

Saudi Arabia RoADS & infRAStRuctuRe WoRk – RiyADh inveStment pARk Budget $10,000,000 project number WPR2802-SA

territory Saudi Arabia client Dubai Investments PJSC city Dubai phone (+971-4) 812 2400 fax (+971-4) 812 2344 email info@dubaiinvestments.com Website www.dubaiinvestments.com Description Construction of roads and infrastructure at an investment park

period 2020 Status New Tender main consultant Rafik El-Khoury & Partners (Saudi Arabia) tender categories Power & Alternative Energy, Roads, Bridges & Infrastructure, Sewerage & Drainage, Water Works tender products Infrastructure, Roads Construction

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46 February 2018

Tenders

the RADiSSon Blu hotel pRoject – DAmmAm Al fAiSAliyAh project number WPR2808-SA territory Saudi Arabia client Fifth Dimension Investment Company Ltd (Saudi Arabia) Address 4342, Al Dhahran-AlJubail Expressway, Al-Dabab Unit No 6 city Dammam 32261-6875 country Saudi Arabia phone (+966-13) 811 2225 fax (+966-13) 811 4760 email info@5dholding.com Website www.5dholding.com Description Construction of a hotel comprising 200 guestrooms and 60 serviced apartments, 2 restaurants, conference facilities of almost 650sqm, a businessclass lounge, a gymnasium and a kids’ day care centre period 2019 Status Current Project main contractor Abdulla H. Al Mutawa Sons Holding (Saudi Arabia) tender categories Construction & Contracting, Hotels tender products Hotel Construction

Status Current Project main consultant Khalid Ghoneim & Partners Engineering Consultant – KGP (Saudi Arabia) main contractor Ghaya Contracting Group (Saudi Arabia) tender categories Industrial & Special Projects tender products Factories

Oman Al minA WAteRfRont ReSiDenceS AnD yAcht cluB pRoject – BARR Al jiSSAh project number WPR2770-O territory Oman client Barr Al Jissah Resort Company (Oman) city Muscat PC 113 phone (+968) 2477 6888 / 9191 9229 email info@barraljissah.com

Website www.barraljissah.com Description Construction of residential homes comprising a range of sleek duplex apartments, penthouses and stylish villas with landscaped gardens, each of which comes with a host of benefits befitting the luxury lifestyle for home and yacht owners period 2020 Status New Tender tender categories Construction & Contracting tender products Residential Buildings, Villas Construction

Bahrain the DiStRict toWeR pRoject – Seef project number WPR2708-B territory Bahrain client Noor Enterprises

Holding SPC (Bahrain) Address Sehab Executive Tower Floor 20, Building 3550 (Tower A), Road 2849, Block 428 city Al Seef District, Manama Website www. noorenterprisesbh.com Description Construction of a 15-storey mixed-use development comprising an office property, extensive retail space and a high-end residential tower period 2018 Status Current Project main consultant Architecture 360 (Bahrain) Specialist consultant Savills (UK) main contractor Cebarco Bahrain WLL (Bahrain) tender categories Construction & Contracting tender products Commercial Buildings, Mixed-use Developments, Residential Buildings

GhAyA GlASS fActoRy – jeDDAh inDuStRiAl AReA Budget $5,000,000 project number WPR2342-SA territory Saudi Arabia client Saudi Industrial Property Authority (MODON) Address Al Kharj Industrial City city Riyadh country Saudi Arabia phone (+966) 920000425 Website www.modon.gov.sa Description Construction of a factory period 2019

INTEGRATED ESTIMATING, PROJECT CONTROL AND ERP SOLUTION FOR CONTRACTORS www.ccsgulf.com | Tel: +971 4 346 6456 | info@ccsgulf.com

February 2018 47

Last Word

Developers Must Sell Space Based on Data

Portland Design Associates’ Ibrahim Ibrahim on the changing face of retail development and why data will shape the way shops are designed and built In an ideal world, design processes would all be based on research and a rich understanding of the end user. Couple that with market, sector and technology insights, and you’ve got a winning formula. There are key ways to ensure this both happens and is effective – for example, we created a dedicated insights team to perform the sole function of ensuring our designers are thoroughly informed about future behaviours and mindsets of consumers.

For us, it’s consumer journeys and missions that drive the concept and should be the focus of developers and architects.

In fact, this data capture ability led us to the realisation that the space race is over for retailers.

For anchor stores, the idea of needing more and more space is no longer the case.

What has in fact happened is a percentage of sales has moved online and space is evolving from transactional use to experiential.

48 February 2018

I am a firm believer that the internet will not kill shops – it will liberate them, as increasingly we are looking at money not changing hands in-store.

When it is no longer the focus of a space, that space evolves creatively. Retail is about three things: recruitment (sourcing customers), transaction (sales) and retention (loyalty). Increasingly, we are looking at transactions happening online and physical stores being about recruitment and retention.

The space retailers do have will be used more and more for experiences rather than transactions, much like the Apple Store, which is designed to be entertainment- and leisure-driven. You can buy an iPhone as you walk down the Avenue, enjoy a seminar with artists in the Forum, fix your laptop under the trees in the Genius Grove and get some training in the Boardroom.

You’ve been in an Apple Store the whole time.

Retail will take on more of a hybrid role, for the most part anchored by food and beverage, while turning into more of a social destination. Good examples of retailers turning experiential are beauty stores. Brands will create a hybrid of products and services, like makeup stores selling products as well as offering services like manicures and pedicures on-site. Think of it as a lifestyle destination for a specific requirement.

Shoppers are changing, so shopping mall tenants are changing, which means developers have to change too.

The issue for the developer is the changing net-to-gross ratio, whereby there will be a convergence of public and tenanted spaces, without a clear demarcation of spaces owned by a retailer and public space. Sales-persquare-metre will no longer be how one values a piece of real estate – developers need new ways to show a

tenant the value of taking space within a specific mall or destination.

Developers are able to capture granular data with the use of modern technology and hence charge based on the quality of audience. A developer’s asset is also its audience, not just its space, and like it or not, this shifts developers from the property business into the media business, where they must begin to think and behave like media brands that own media platforms.

If you look at a publishing house, it charges for digital advertising based on impressions – how many of what very specific type of person will see a brand by paying to be in this location. This is what developers need to adopt and support with statistics.

Let’s now look at the future planning of retail destinations. As designers looking to design a retail destination, we must understand the shopper.

To future proof a retail

destination, you need to understand how the aforementioned data will affect design. If we say retail destinations are to become media platforms and brands need physical space to engage with customers, we are looking at very different designs. These are designs which will ultimately include hybrid, soft, programmable spaces, acting as destinations which are not limited to transaction but also include engagement and experiential opportunities.

These spaces need to be versatile and reactive.

Smart architecture will be designed with anthropology, not architecture, at its core. It really is people and places, not building and spaces.

As a result, we are increasingly working with our partners to ensure that we provide developers in the region with valuable insight and design, in order to keep the region at the global forefront of retail.

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