Bigproject july 2015 by Big Project Middle East

www.meconstructionnews.com

JULY 2015

112

fa m i ly business

David Richter, CEO of Hill International, is determined to carry out his fatherâ&#x20AC;&#x2122;s legacy, while putting his own stamp on the family business

CONTENTS

PAGE 22

Big Project ME tours one of the world’s most efficient gas power plants, Block Fortuna.

JULY 2015 09 the big picture UPC aPProves al reem island integrated ConCePt masterPlan plan will unify existing projects by island’s three major developers

12 Q&A with tAlAl Al Dhiyebi aldar sets the standard talal Al Dhiyebi, chief development officer of Aldar properties, says the developer is helping create a “paradigm shift” in sustainability

14 News ANAlysis energising egyPt Jerusha sequeira examines the possibility of renewable energy projects being the solution to egypt’s mounting energy crisis

18 iN profile family bUsiness gavin Davids has an in-depth chat about all things hill international with David richter, ceo of the construction consulting giant

22 site visit – block fortuNA bUilding effiCienCy big project Me tours what will be one of the world’s most efficient gas power plants, block fortuna. Jerusha sequeira reports from Düsseldorf

30 sustAiNAbility – solAr power sUn shines on solar James stewart, general manager of Alec energy, tells gavin Davids why the uAe-based contractor believes in the power of solar energy

34 coMMeNt 10 stePs to bim louay Dahmash outlines how Aec firms can prepare for biM mandates

38 teNDers middle east tenders big project Me lists the region’s top construction tenders for July

40 coNstructive criticisM will teChnology helP Us live UndergroUnd? David sammons argues that constructing underground environments

JULY 2015

MIDDLE EAST

could be beneficial to cities

Al Garawi Group

Al Garawi Galleria, Al Orouba-King Fahad Highway Junction Olaya P.O. Box 41122, Riyadh 11521, Saudi Arabia Tel.+966 1 4196096 / 4195058 Fax. +966 1 4196101 / 4196103 Email: Info@algarawigroup.sa / www.algarawigroup.com

Al Garawi Group an authorized distributor of the following licensee for Saudi Arabia, U.A.E., Bahrain, Qatar, Oman, Jordan, Lebanon, Kuwait and Yemen. Wolverine World Wide, the global footwear licensee for Caterpillar Inc.

P.O. Box: 17301, Jebel Ali, Dubai, U.A.E. Tel.: +971 4 881 8821 Fax: +971 4 8818944, Showroom: Al Kwakeb Building, (B-Block) Sheikh Zayed Road, P.O. Box: 2904, Dubai, U.A.E Tel.: +971 4 343 7400 / 343 7500 Fax: +971 4 3437600 Email: medco@algarawigroup.sa

Medco

www.cat.com / www.caterpillar.com © 2015 Wolverine World Wide. All Rights Reserved. CAT, CATERPILLAR, BUILT FOR IT, thier respective logos, “Caterpillar Yellow, ” the “Power Edge” trade dress as well as corporate and product identitiy used herein, are trademarks of Caterpillar and may not be used without permission. Al Garawi Group, an authorized distributor of Cat Footwear for Wolverine World Wide, a global licensee of Caterpillat inc

INTRODUCTION

MEconstructionnEws.COm

Awards on the Mind

Group Chairman and Founder Dominic De SouSa Group Ceo naDeem HooD

puBLiShinG direCtor RaZ iSLam raz.islam@cpimediagroup.com

We’re now officially in the second half of 2015 and time has certainly flown by this year. Like most companies are doing around this time of the year, perhaps it’s time to take stock of how things are shaping up regionally in construction. The recently released ‘GCC Construction Report 2015’ by Alpen Capital shows that the UAE and Saudi Arabia will continue to go from strength to strength, with project values worth $525.6 billion and $407.8 billion respectively. Kuwait, long considered a construction backwater, is set for a long-awaited revival, with $123.6 billion in project values pencilled in. However, it is to Qatar that the eye is drawn. With $113.8 billion of projects in the pipeline, Qatar is obviously a major player in the GCC construction industry. Despite recent speculation that the 2022 World Cup might be taken away, investment in Qatar will continue due to the need for existing infrastructure to be overhauled. Accordingly, the country has allocated a large proportion of its 2014-2015 budget towards infrastructurerelated projects (in excess of $20 billion), while transport projects worth $74.6 billion are currently in the planning or under construction stages. As some of you may have noticed, there have been recent mailers coming out from both Big Project ME and our sister magazine, ME Consultant, about our annual awards, which will be held in November and December respectively. Yes, you read that right, there will be TWO award ceremonies. Starting this year, we’ve decided to make our award ceremonies a reflection of the magazines they represent. Therefore, the Big Project ME Awards 2015 will be focused squarely on the region’s top contractors, while the inaugural ME Consultant Awards will shine the spotlight on the consultants, engineers and architects of the GCC. It’s certainly shaping up to be an exciting few months, and we’re already getting nominations coming through, so hurry up and start submitting already! More information can be found on www.bigprojectmeawards. com and on www.meconsultantawards.com. Good luck!

+971 4 375 5471 editoriaL direCtor ViJaYa cHeRian vijaya.cherian@cpimediagroup.com +971 4 375 5472 eDiToRiaL editor GaVin DaViDS gavin.davids@cpimediagroup.com +971 4 375 5480 reporter JeRuSHa SeQueiRa jerusha.sequeira@cpimediagroup.com +971 4 375 5477 SuB editor aeLReD DoYLe aDVeRTiSinG CommerCiaL direCtor micHaeL STanSFieLD michael.stansfield@cpimediagroup.com +971 4 375 5497 SaLeS manaGer faaju.abdulfatah@cpimediagroup.com

maRKeTinG lisa.justice@cpimediagroup.com

DeSiGn art direCtor Simon cobon ciRcuLaTion & PRoDucTion diStriBution manaGer SuniL KumaR sunil.kumar@cpimediagroup.com +971 4 375 5476 produCtion manaGer ViPin V. ViJaY vipin.vijay@cpimediagroup.com +971 4 375 5713 DiGiTaL WeB deveLoper moHammaD awaiS WeB deveLoper umaiR SHamim PubLiSHeD bY

Registered at imPZ

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+971 4 375 5498

Tel: +971 4 440 9100

JULY 2015

marKetinG manaGer LiSa JuSTice

Dubai, uae

+971 4 375 5495

Po box 13700

Gavin Davids Editor

FaaJu abDuLFaTaH

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.

CMY

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READERS' COMMENTS

First leg of Dubai Eye big wheel lifted into place

Contractor ALEC says leg sections of what is set to be world’s biggest Ferris wheel are expected to be completed by the end of June

Blatter resignation casts further doubt over

Qatar 2022 World Cup With construction of stadiums in full swing, loss of FIFA competition would cost Qatar about $16

PHOTO GALLERIES

Inside Siemens power plant being built in Germany MEConstructionNews.com gets an insiders’ view of the new combined cycle power plant being built by Siemens in Dusseldorf, Germany. See photo galleries at: meconstructionnews.com/photos

billion, according to estimates

Chinese construction firm “eyes $3bn Balfour Beatty takeover”

“The UAE appears to be even more serious about the enforcement of its midday work ban this summer, which is indisputably a good thing. This should be a great example to other countries in very hot regions of the world. However there should be some additional measures taken either side of the three-month period as it can also get extremely hot during those times” Oliver Whyte responds to the story, ‘Midday break for UAE construction workers to start on June 15’

China Civil Engineering Construction Corporation looking at feasibility of bidding for Britain’s biggest

READER POLL

contractor, the Sunday Times reports

What will be the major challenge for your company in 2015?

UAE employers will need permit to hire Indian workers

Foreign employers looking to recruit blue-collar workers will need to register online and declare terms and conditions of employment

VIDEO

strategic plan also involves

Watch this game of golf… played on giant moving Caterpillar trucks A Cat promotional video shows two Japanese golf pros tackle a course made entirely of heavy equipment.

extending marine lines to 450km

See videos at: meconstructionnews.com/videos

Dubai’s RTA to extend metro tracks to 421km by 2030

Roads and Transport Authority’s

10%

14%

30%

46%

Cost of raw materials

Poor contract margins

Competence of sub-contractors

Non-payment or slow payments by clients

MIDDLE EAST

Log on for the latest from across the Middle East construction sector. Write to the editor at contact@meconstructionnews.com

JULY 2015

Don’t you wish every project went this smoothly?

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PROJECT COLLABORATION

THE BIG PICTURE

Planning aPProved The approval of the ICMP will allow the three main developers on Al Reem Island to complete their own schemes.

Urban Planning CoUnCil aPProves al reem master Plan plan is a core component of plan capital 2030, upc director general says Abu DhAbi’s urbAn Planning Council has approved an “overarching concept master plan” for Al reem island, which it says will unify existing projects by three major developers. The integrated Concept Master Plan (iCMP) will set out the upcoming developments and community facilities on Al reem island, the uPC said in a statement. The decision was made with the support and cooperation of developers Tamouh, reem investments and Aldar Properties. “The integrated master plan for Al reem island forms an integral part of Abu Dhabi’s path towards sustainable urban growth in line with Abu Dhabi Vision 2030 and is a core component of Plan Capital 2030,” said Falah Al Ahbabi, the uPC’s Director General. The iCMP will enable the developers to complete their own master plans, which in turn will help the uPC and other agencies to better manage existing developments on Al reem island, ensure quality and meet current regulations and standards, the council said.

ICMP FIgures n 11 – number of new private schools being developed

n 22,000 – Minimum number of students

n 6 – number of dedicated nurseries and kindergartens

n 3 – number of private hospitals being developed

n 500,000sqm – amount of park and open space

The major facilities detailed in the iCMP include plans for 11 new private schools that will accommodate a minimum of 22,000 students, six dedicated nurseries and kindergartens, the Paris sorbonne university, three private hospitals and a number of clinics. There are also nine mosques, Civil Defence and Police facilities, a major transit hub and 500,00sqm of parks and open spaces, including pedestrian promenades. Talal Al Dhiyebi, chief development officer of Aldar Properties, told Big Project ME that he welcomed the initiative by uPC, saying it would complement the work currently underway. “it’s a great initiative. it brings together the three key developers – Tamouh, reem investments and Aldar Properties. We [at Aldar] are obviously responsible for the shams Abu Dhabi section of Al reem island.” “[What] is very important is that section of the master plan integrates quite cohesively with the rest of the island – in terms of transportation, utilities and facilities. right now, there’s going to be

a lot of emphasis on open areas, public parks, schools and on healthcare.” Al Dhiyebi said Aldar Properties had already begun working on projects in those areas, highlighting the development of the repton school. “We’ve recently signed a 100,000 sq ft daycare centre with burjeel hospital, which is currently under fit-out, and we’re looking right now to spend a lot more on public and open areas, pedestrian walkways, bicycle paths et cetera,” he explained. The plan was submitted by bunya LLC in December 2014, after working closely with the uPC and the three key developers over the last seven years. it incorporates the objectives of the developers as well as the requirements of uPC. Final approval was granted by the uPC on April 8, 2015. The iCMP covers the total Al reem island land area of 8.869 million sqm, with a gross floor area (GFA) of almost 20m sqm. Of that, 1.442 million sqm will be office space and 873,576sqm will be allocated to retail (including the upcoming reem Mall).

JULY 2015

MIDDLE EAST

Big project me interviews david richter, ceo of hill international – Page 18 9

THE BIG PICTURE

MEconstructionnEws.Com

ContraCt wrangles Insurance companies may not pay out on contracts if the Russia and Qatar World Cups are cancelled.

doUbts over insUranCe PayoUts if qatar loses 2022 world CUP legal expert says proving fraud would Be extremely difficult in court of law insurAnCE COMPAniEs are unlikely to pay out on contracts if the Qatar or russia World Cups are cancelled in cases where policy holders were aware of alleged fraudulent behaviour, it was reported. but proving alleged bribery in the voting on where the 2018 and 2022 events would be held could prove extremely difficult, a legal expert has told Big Project ME. Any entity linked to the World Cup that took out cancellation insurance is highly unlikely to receive a payout if it was proven they knew about alleged corruption, Reuters reported. such entities could include governments, hospitality providers, sponsors and

organising bodies, it was reported. richard Leedham, insurance partner at law firm Mishcon de reya, said stateowned companies would face difficulties in claiming compensation if insurers thought they were aware of the fraud but kept it quiet, reuters reported. but a uAE-based legal expert with extensive experience of construction and contract law told Big Project ME that it was highly unlikely that fraud could be proven in the courts. Dr habib Al Mulla, chairman of baker & McKenzie habib Al Mulla, said that if the 2018 and 2022 World Cup tournaments were taken away from the host nations, it could lead to one of the most expensive litigations in history.

Qatar worrIes n $220 billion – estimated cost of Qatar hosting the 2022 world cup

n 12 – number of stadiums that were orginally planned for the 2022 world cup

“i agree that insurance companies won’t pay if fraud is proven. but the point is, how do you prove fraud or corruption?,” he said. “The problem that FiFA or any other authority will face is that in order to reach a stage where the World Cup will be withdrawn from either of the two states, they will need to prove – beyond any reasonable doubt – that there was fraud,” he added. “You can only prove that – not based on allegations, but through formal court processes. realistically, to prove that is almost impossible… Even if they manage to have some sort of evidence, or prima facie case, i think that the two parties will take it to war in the courts.”

MIDDLE EAST

Big project me tours block fortuna, sieMens’ environMentally friendly power plant – Page 24

JULY 2015

THE BIG PICTURE

Ksa to review nitaqat Programme as ContraCtors fret over Costs employers say saudi nationals are refusing to take up certain types of joBs sAuDi ArAbiAn authorities are likely to review the Kingdom’s controversial nitaqat (saudisation) programme following complaints from employers that saudi nationals are refusing to take up certain types of jobs. According to local media reports, the complaints, which have been endorsed by some ministries, state that the enforcement of nitaqat has created major problems for employers as they look to fill up their saudi quota, resulting in “work paralysis”. The majority of complaints focused on two issues – the lack of response from citizens to some professions due to the nature of the job, and places of work that are outside urban areas where employees have to stay for a specified period. A report in Arab News said that some ministries were forced to consider employer complaints after receiving studies and addresses from national committees affiliated to the Council of saudi Chambers, seeking a review of the system. The national committees have promised their readiness to grant saudis

saudI troubles n phase 3 – the beginning of the third nitaqat phase was delayed in april 2015 by the labour Ministry

n 8-10% – predicted increase in ksa project costs due to summer work ban

overall opportunities to occupy professions and jobs in the private sector if they have the necessary training and qualifications. in addition, the Ministry of Labour has raised the nationalisation rate in a number of private sector establishments through nitaqat by coming up with programs and projects that create more opportunities for saudi job seekers. in April of this year, the Labour Ministry postponed the nitaqat programme’s third phase of implementation to allow the private sector to “get more time to understand standards regarding this stage of nitaqat”. The news was greeted with relief by expatriate workers and by the private sector as a whole, local media reported at the time. The CsC has put pressure on the ministry to postpone the implementation of nitaqat’s third phase for three years, to avoid a labour shortage in the construction, manufacturing and sales sectors, which will be most affected as a result of this decision, reports added. Meanwhile, saudi Arabian contractors have said that the Ministry

of Labour’s decision to ban employees from working during peak summer temperatures for three months will raise project costs by 8% to 10%. According to reports in local media, the national Committee for Contractors in the Council of saudi Chambers has submitted a request to the ministry, asking for additional time to complete projects, claiming that work and productivity during night hours cannot be the same as during the day. “naturally, projects lose out on the benefits of daytime work during these three months, and if the project timeframe requires up to two or three years, contractors lose out on six to nine months of efficient daytime labour, which in turn creates additional problems and delays for the projects,” said hani Mufi, a member of the national Committee for Contractors in the Council of saudi Chambers. Mufi added that the change in scheduling mean that contractors will have to reorganise their project sites to create safe and efficient work environments.

nitaqat rethinK The controversial Nitaqat scheme may be reviewed due to a lack of Saudis taking up certain jobs.

JULY 2015

MIDDLE EAST

Big project me finds out why alec is betting on solar energy to go big – Page 30 11

THE BIG PICTURE

MECONSTRUCTIONNEWS.Com

aldar sets the standard

Big project me speaks with talal al DhiyeBi, chief Development officer of alDar properties, aBout how the aBu DhaBi-BaseD Developer is creating a paraDigm shift in how sustainaBility is consiDereD in the uae capital How does AldAr ProPerties view sustAinAbility?

wHAt is your relAtionsHiP like witH government bodies?

Aldar has always looked at sustainability as something integral to all of its developments. We’re one of the founding members of the Abu Dhabi sustainability board and work very closely with the Urban Planning Council in that regard. Our approach to development is long-term. We look at the full product and asset life cycle, not only the development and handover. And that’s where you really reap all the benefits of programs like Estidama – when you look at it in a holistic way. We set high standards on some of our big developments, such as Yas Waterworld, which was extremely complex, designing a waterpark that was 2 Pearl Estidama, or most recently as well, with the development of Yas Mall. We designed it quite efficiently to make sure that we achieved an Estidama 2 Pearl rating, it’s one of the first malls in the region to achieve that level of design and operational efficiency.

Aldar has an extremely positive and healthy relationship with the Urban Planning Council. They involve us in a lot of policy-making that they do. They take our feedback and even after the implementation, they come back to us to look at lessons learnt. That’s the benefit of having that great relationship, especially with us being the dominant player in Abu Dhabi. We’ve been extremely supportive with that, with the government, with the UPC and the municipality authorities, to really push forward in that regard. wHAt Are tHe mAin issues tHAt need to be Addressed?

How does A develoPer work witH contrActors And consultAnts to AcHieve tHeir sustAinAbility Aims?

It starts with your design brief, which is quite extensive when it comes to our Estidama requirements, and obviously with regard to the guidelines issued by the Planning Council. We then go through detailed and rigorous technical reviews. It’s very important that the consultant that comes and works for us has a clear understanding of what the Estidama requirements are for this region, and a clear understanding of what we want to achieve as a client. They need to have a track record, and give us a clear mission statement. Similarly with the contractor, it’s not only about the building. It’s also about how they source the material, how they dispose of the construction waste, which is something that a lot of people don’t really focus on a lot. People just care about getting it off-site. We’re concerned about what’s being done with it, whether it will be recycled, how it’s being disposed of, and we set high criteria for that.

paradigm shift The maturing of the Abu Dhabi market has caused a paradigm shift in attitudes towards sustainability, the Aldar CDO says.

One of the big things that we looked at was monitoring.What wasn’t there was the monitoring of waste, of building materials or energy consumption post-completion. When we looked at it historically that data wasn’t really always properly recorded, where you had years of statistical data looking at your energy consumption and all that. You were getting your utility bill at the end of the month and that was it. The only way you can really benchmark yourself is if you start to measure key aspects. So when we looked at it with our facility managers, our contractors and our consultants, it was a paradigm shift. Everyone was like, “Why do you want to do that? Why do you care about what I’m doing with my waste? Why are you putting in all of these additional restrictions?” There was always this phobia that if you want to do Estidama, it’s always going to cost more. We don’t see it that way. If you look at it in terms of your overall investment over a project’s lifecycle, then 70% to 80% of your costs cover a 30- or 40-year lifespan of a building. Not only the construction costs, but also your upfront costs. When you look at it that way, the paradigm shift in mentality was probably one of the biggest challenges we faced, but the market is becoming a lot more mature.

MIDDLE EAST

Big project me lists the 10 steps Aec firms should tAke to prepAre for bim mAndAtes – Page 34

JULY 2015

GREG JEROSZEWICZ PRINCIPAL ENGINEER - PUBLIC HEALTH

www.wspgroup.com I www.pbworld.com

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I AM WSP PARSONS BRINCKERHOFF

I AM DRIVING EFFICIENCIES IN PUBLIC HEALTH DESIGN

NEWS ANALYSIS EGYPT

MEconstructionnEws.com

EnErGisinG EgYpt

MIDDLE EAST

As Egyptâ&#x20AC;&#x2122;s rapidly growing need for electricity outstrips supply, renewable energy projects are the need of the hour. Jerusha Sequeira reports

JULY 2015

NEWS ANALYSIS EGYPT

or most residents in the Middle East, the thought of weathering a summer in the region without electricity and air conditioning is unbearable. For Egyptians, however, power cuts have become a fact of life in the past years, particularly in the summer, as the demand from air-conditioning units overwhelms the country’s power generation systems. Last year, the Guardian reported that Egypt was suffering one of its most serious energy crises for decades, with parts of the country facing around six power cuts a day, for up to two hours at a time. Electricity demand hit a record daily high of 27,000MW, 20% more than power stations in the country could supply, state media reported. “Egypt has lived through probably its most dramatic energy crisis last summer. There was frequent load-shedding, there were days of entire outage,” says Cornelius Matthes, managing director – MENA at Building Energy, an Italian clean energy firm. The severity of the blackouts led President Abdel Fattah el-Sisi to announce last September that the country would need to add 12,000MW to its grid over the next five years, at a capital cost of $12 billion. The problem of power outages goes beyond the discomfort of braving the heat for the roughly 88 million inhabitants of North Africa’s most populous nation. These outages also impact businesses, leading to a downturn in production and boding ill for the economy as a whole. The Egyptian government, therefore, has an uphill battle ahead to not just tackle the power crisis and address growing energy needs, but also work further on eliminating wasteful subsidies that are taking their toll on the national budget. The International Monetary Fund (IMF) estimates that in 2011, pre-tax subsidies for petroleum products, natural gas and coal reached 37.9% of government revenues, while subsidies for electricity accounted for 10.4%. This exceeds expenditure even on critical social services, such as healthcare and education. However, steps are already being taken in this direction, with the government cutting

subsidies last year, resulting in a dramatic increase in fuel prices by as much as 78%. While this hike may not have gone down well with the public, the step is much needed as the country finds its feet in the post-Arab Spring era. Egypt, historically an exporter of oil and gas, is now struggling to meet its own energy needs as reserves prove insufficient to meet local demand. ThE Push for rEnEwablEs

Analysts and experts have increasingly begun to call for a move away from oil and gas dependency into renewable energy sources. “On the energy side, I think Egypt is probably the most exciting country on the continent,” Matthes said at a panel discussion at the recent Africa Energy Forum. “Egypt is not only blessed with good gas resources, it also has world-class solar and wind conditions.” Despite these advantages, the country has been slow to tap into renewable energy because of heavily subsidised fuel, points out Mohamed Shoeib, managing director, Qalaa Holdings Energy Division. “Egypt has good reserves from the oil and gas point of view, but our utilisation of these resources was not good. We depend completely in Egypt on oil and gas as a primary energy source in all our consumption needs. For example, Egypt is dependent on oil and gas for almost 92% of its electricity. In summer, this percentage reaches almost about 95-96%.” This dependence on fossil fuels has hampered efforts to switch to renewable energy sources, which have been considered expensive due to the cheap fuel for conventional power plants, Shoeib says. But the price of fossil fuels is artificially low on account of subsidies, which not only hurt the economy but also deprive the country of using such resources in other industries, like petrochemicals. However, the government now seems to be taking note of the importance of renewable energy, and major wind and solar projects are set to add to the grid in coming years. One major project in the news recently

“EgYpt is dEpEndEnt on oiL and gas for aLmost 92% of its ELEctricitY. in sUmmEr, this pErcEntagE rEachEs aLmost aboUt 95-96%”

JULY 2015

MIDDLE EAST

EnErgY crisis Egypt is in the midst of one of its most serious energy crises in decades.

NEWS ANALYSIS EGYPT

is a $9 billion deal with Siemens AG to build gas and wind power plants in the country. The energy deal is the single biggest order Siemens has received to date, and is expected to boost Egypt’s power generation by 50%. It will add 16.4GW to Egypt’s national grid, 14.4GW of it supplied from three combined cycle gas plants and 2GW from wind. Under the agreement, Siemens will deliver up to 12 wind farms in the Gulf of Suez and West Nile areas, comprising around 600 wind turbines. The German company will also work with Egyptian partners Elsewedy Electric and Orascom Construction to supply three natural gas-fired combined cycle power plants, each with a capacity of 4.8GW. Although the country has favourable conditions for both wind and solar, Joe Kaeser, president and CEO of Siemens, says wind is possibly a more feasible source of energy for Egypt. “Wind is a very cheap source of energy in Egypt, and also in Saudi Arabia and desert countries,” he said on the sidelines of the second session of the German-Egyptian Joint Economic Committee in Berlin. Countries in the MENA region certainly receive a lot of sunshine, but solar energy is often not as practical because the efficiency of photovoltaic cells decreases the hotter it gets, he noted. Solar panels also need to be cleaned extensively to prevent dust from gathering. “If you have to build a desalination plant just to get the water to clean the solar [panels], you’d better go after wind.” Commenting on the deal, Kaeser says Siemens will focus not just on power generation but also on improving distribution capacity to ensure power reaches areas where it’s really needed. “It doesn’t matter how much power generation you build. It matters more how much power gets to the people,” he says, noting that Siemens has developed comprehensive grid and distribution planning for the contract.

MEconstructionnEws.com

winds of changE Joe Kaeser, president and CEO of Siemens, says wind energy could be a viable source of power for Egypt.

“it doEsn’t mattEr how mUch powEr gEnEration YoU bUiLd. it mattErs morE how mUch powEr gEts to thE pEopLE”

rockY road ahEad

Egypt’s energy needs will not be met by renewable sources only anytime soon, but the country needs to head in that direction to be self-sustaining and reduce reliance on fossil fuels, the experts agree. However, the road ahead is

rocky and challenges persist, key among them being the issue of currency convertibility. Under the government’s feed-in tariff scheme, announced last year for wind and solar projects, the power purchase agreement tariffs for large-scale projects have been set in US dollars but will be payable in Egyptian pounds. The government will guarantee 15% of each invoice amount converted at a fixed rate of 7.15 pounds to a dollar, while the remaining 85% will be converted at the prevailing rate. Thus, the government will more or less assume exchange risk, according to a report by New York-based law firm Chadbourne & Parke, which is advising companies looking at Egypt’s power sector. This has raised investor concerns on the convertibility of the Egyptian pound, amid scarcity of available US dollars in Egypt, the National reported. Despite these issues, renewable energy is the long-term solution to the troubled nation’s economic woes, as it will reduce the amount of fuel imported for electricity generation, Shoeib says. This will in turn improve Central Bank reserves, he notes. “When Egypt will reach a balance and have the capability to export its resources, this will improve completely.” Other issues with renewables that the nation will need to tackle include electricity storage and fluctuations in output. To combat the latter, Kaeser says the country’s energy needs will need to be addressed by a mix of renewables and clean, conventional power plants for base load supply. What’s clear for now is that the country will need a lot more energy going forward, for which renewable sources will need to be increasingly harnessed. Egypt’s electricity demand will be almost 120GW by 2030, Shoeib estimates. “This of course needs a lot of energy sources. Renewable will play a big role in that. Egypt could then utilise its reserves and production of gas to increase its downstream industry, especially in petrochemicals.” n

Egypt’s FEEd-in tariFF schEmE in september 2014, Egypt’s cabinet approved

redistributes electricity through the national grid,

to resort to foreign financing for lower costs. In this

new feed-in tariffs to encourage the production

Shaker said, quoted in Egyptian daily Al-Ahram.

case, projects producing 500KW-20MW are

of renewable energy. According to electricity

the tariffs depend on production categories, with the

paid 13.6 cents per kWh and those producing

minister Mohamed shaker, the tariffs allow

government paying Egp0.848 for each kilowatt-

20-50MW receive 14.34 cents per kWh.

the government to guarantee a fixed price

hour (kWh) produced by households; Egp0.901

for energy produced, in order to encourage

per kWh for commercial producers under 200kW;

Although the rates are set in dollars, they will be paid

investment in renewable energy.

and Egp0.973 for producers of 200-500kW.

in domestic currency according to the exchange

Under the scheme, commercial and household

For large-scale projects, however, tariff rates were

regularly reviewed, as the cost of renewable energy

producers supply the government, which

calculated in US dollars as they would be expected

production is expected to decrease, Shaker added.

MIDDLE EAST

rate at the time of payment. tariffs will also be

JULY 2015

Don’t you wish every project went this smoothly?

#viewpointcanhelp

PROJECT COLLABORATION

MIDDLE EAST

In ProfIle DAVID RICHTER

JULY 2015

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In ProfIle DAVID RICHTER

FA MILY BUSINESS

Six months after David Richter took over as CEO from his father, Big Project ME sits down for an in-depth chat with him about all things Hill International and how he intends to take the company forwards Richter from his father, Irvin Richter, the founder and former CEO of Hill International. “I would say that the most important lesson I’ve learnt from my father is a lesson he learnt very early on. I think it was primarily driven by the fact that he was not a technical expert in construction. That’s no disrespect to him, he really built the company up because he was one of the best salesmen and public speakers in the industry. But because he wasn’t a technical expert himself, he was forced to surround himself with the best people he could find.” Having taken over as CEO of Hill International from his father at the start of 2015, Richter is mindful of the responsibilities that entails. Although he has been involved in the company

“when I go Into a meetIng, I want the smartest people I can fInd to be In the meetIng wIth me, to gIve our clIents the best advIce possIble. we have a company fIlled wIth people lIke that”

for nearly 20 years, 10 of them as chief operating officer, he says that stepping into his father’s shoes has been a chance for him to put his own stamp on the company and its mission. “A big part of my father’s strategy was growth. It was a mutual strategy, we always saw the longterm possibilities for the company, being a much larger player in its markets. That small consulting firm he started in our home, he always saw that it had tremendous potential. When I joined, Hill was about 200 people doing $20 million a year in revenue. This year, we expect to break 5,000 people for the first time, and do about $750 million in revenue. So it’s a very different company and you don’t manage that business in the same way.” Despite these ambitions, Richter is keen not to lose sight of what made Hill such a success in the first place – the culture that his father built up, that of a small business, with a sense of family and belonging. He’s keen that the individual offices of Hill International scattered around the world continue to enjoy the freedom they had under his father. “We operate in a very decentralised way. We give our local and regional managers a lot of autonomy and authority, and we keep the organisational structure as flat as possible so that there aren’t a lot of levels of communication between, let’s say, the head of the Dubai office, and me. Decisions can be made very quickly. They do not get made by committee. “We do everything we can not to have our company run by committees, because a) it causes the wrong decisions to be taken, and b) it takes a much longer time. We believe

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MIDDLE EAST

ack in 2003, during a speech to new graduates at the University of Texas, Michael Dell, founder of Dell Computers, first said what was to become one of his most famous and repeated quotes. He told the crowd of young listeners that one of the keys to success was to: “Never be the smartest person in the room. And if you are, I suggest you invite smarter people… or find a different room.” It’s tempting to wonder if David Richter, the CEO of Hill International, has listened to this speech. In an interview with Big Project ME at Hill International’s Dubai offices, he has very similar sentiments when he outlines his philosophy for business. “You see a lot of companies in this industry where the founder’s name is on the door, and he’s the smartest guy in the room. And as a result, most of the other people in the company are lesser lights. The lesson [we’ve learnt] at Hill is that you have to go and find the best and the brightest and bring them into the company. I’m a civil engineer and I’m finishing up my Master’s degree in Major Project Management at Oxford, but I can tell you, you don’t want me managing your construction project! I consider myself a management expert, but I’m not a construction expert,” Richter says. “So when I go into a meeting, I want the smartest people I can find to be in the meeting with me, to give our clients the best advice possible. We have a company filled with people like that. And the great thing is that it becomes a self-fulfilling process, because great people attract more great people.” That philosophy was handed down to

In ProfIle DAVID RICHTER

that the speed of the process is paramount. That means single points of responsibility and as little bureaucracy and governing by committee as possible,” Richter states. This approach is clearly paying off handsomely for Hill International. In May this year, the project management and construction risk management specialists announced first quarter results for the year ending March 31, 2015. Total revenue for Q1 2015 was a record for the company, with $171.6 million posted, an increase of 14.4% on the same period in 2014. Consulting fee revenue alone was $152.5 million, an 11.1% increase from last year. Operating profit for Q1 2015 stayed unchanged from last year at $6.0 million, but net earnings were up 1,966%, to $1.1 million, or $0.02 per diluted share, from net earnings of $0.1 million, or $0.00 per diluted share in Q1 2014. The company’s total backlog stood at $1.039 billion, compared to the $1.080 billion registered on December 31, 2014. The 12-month backlog on March 31, 2015 was $445 million, compared to $470 million at the end of 2014. The Middle East contributes up to half of the company’s revenue, while approximately 20% of revenue is generated from US operations.

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money maker The Middle East contributes up to half of Hill International’s revenue, with 20% coming from US operations.

JULY 2015

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These are highly positive figures, but Richter insists that he sees room for improvement and evolution within the company, despite having “hit the ground running” since he took over at the turn of the year. “I was happy with how we did in the first quarter, but we definitely need to do even better. Not because we’re a public company that has shareholders that want improved quarterly performances (which we do), but for our own internal purposes and goals. “We have a company that has been, by all measures, one of the most successful in the global construction industry. If you look at our stock chart you wouldn’t think that, because the stock hasn’t performed as well,” he states frankly. Given that the company only went public in 2006, it has had to deal with a lot of external turmoil that was out of its control. Not only did the global financial recession have a major impact, but a bold move into the untapped market of Libya caused serious repercussions and an over-leveraged balance sheet, thanks to the revolution and ongoing civil war there. However, Richter points to the Q1 financial results to show where the company is now headed. “We’re in a position this year to see our

third consecutive year of double-digit revenue growth. We need to make sure that our bottom line reflects that success. While we’ve had a good first quarter, we want to have a great 2015, and so we’ve gone through an effort to right-size our overhead costs so that we can deliver, not just strong revenues this year, but far and away record earnings, and I think that if we can do that to the level that we’re projecting, then we’ll have a fantastic year and the stock will react accordingly.” Despite the issues Hill faced in Libya, Richter says he hasn’t been dissuaded about expanding his company’s reach into countries that may be considered more trouble than they’re worth. With the Middle East contributing significantly to overall revenue, he’s determined to follow through on plans, even if it means adjusting and adapting to changing circumstances in the region. “We’ve wanted to be a global company and we’ve pushed very hard to be so,” he explains. “That’s going to put us, sometimes, in markets and countries that are going through various problems. Whether it’s revolutions like we saw in Egypt and Libya. Fortunately, in Egypt things got back to normal rather quickly. In Libya, they didn’t. “We’ve certainly had some challenges in

In ProfIle DAVID RICHTER

key to success Hill’s recent acquisition in Turkey will be key to its success in places like Azerbaijan.

“we’ve already had Internal conversatIons about both Iran and cuba as countrIes that are goIng to open up to us fIrms, and we’re Ideally posItIoned to enter both of those markets” to 130. The buyout of IMS comes as part of a well thought-out move into Turkey and its neighbouring countries, Richter explains, adding that the country is central to Hill’s plans for Africa, Europe and the wider Middle East. “We see Turkey being a really strong market for us in the long term. Not just because the internal Turkish economy is growing, but because Turkey is so central to the markets that we’re in – the Middle East, North and Central Africa, Europe and especially the former Soviet Union republics – Kazakhstan, Azerbaijan and places like that.” Interestingly for an American firm, there are two other countries that are being looked at with considerable interest. “We’ve already had internal conversations about both Iran and Cuba as countries that are going to open up to US firms, and we’re ideally positioned to enter both of those markets. Our early success in Libya is a good indicator

of what happens once a country opens up to US companies doing business there. We can move in very quickly to build our brand, hire a local team and start to win work very quickly. “I think that will be true in Iran, if it’s the next country to open up, or Cuba, or anywhere else.” For now, however, the focus remains on the Middle East, and on the GCC in particular. Having been in the region for more than 30 years, Hill is established and well-regarded by the local industry. However, the bulk of its business still comes from four countries – Saudi Arabia, the UAE, Qatar and Oman. The next task, Richter says, is to expand and grow into the rest of the GCC. “Growth is part of our corporate culture, and we have grown significantly in the Middle East over the past 10 to 15 years. We have been in the region for nearly 30 years and we still see the biggest growth opportunities for our company in this region. Nearly half of our

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MIDDLE EAST

Iraq this year, but the way we deal with that is by looking at the very first part of our strategy, which is being a global firm. Then you’re not too reliant on any one country for your revenues. Even back in the year Libya went to civil war and we shut down our entire operation there, we still grew that year. We still saw revenue growth throughout the company. So the diversification strategy that comes with being a global company has certainly mitigated some of those risks,” he asserts. With the company’s primary costs centred around payroll and rent, this expansion strategy allows for an easy upscale in markets that are performing well, and easy downsizing when things go wrong. As befits a global company, the Middle East isn’t the only area of focus for Hill International. The company recently bought one of the largest project management firms in Turkey, growing their business from 30 people on the ground

IN ProfIlE DAVID RICHTER

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revenues come from the Middle East today, but we see even greater opportunities ahead.” Despite this, Richter says that he doesn’t believe mergers and acquisitions are the way forward for Hill in the Middle East. Having had such success under its own steam and through organic growth, he sees no reason for that not to continue. “We’ve actually never done an acquisition that solely did business in the Middle East. All our growth here, ever since we opened the first Hill office in Abu Dhabi in 1985, has been organic. We’ve typically seen so much growth here that we’ve tried to acquire elsewhere to balance out the over-concentration over here. Over the years we’ve bought companies in Brazil, Scotland, South Africa, Australia and other places to try and balance it out.” Richter adds that there is an ongoing drive within Hill to hire people who bring a high level of skills to the company, a consequence of the “organic” growth that he anticipates will continue to happen in the GCC. “I often have to explain to investors on Wall Street, who view the Middle East as a fairly risky, politically unstable part of the world, that where we do business, it’s not. Where there’s construction happening, you’re not going to be in the middle of a war zone. It’s typically places where investments are flowing in, capital is flowing in and it’s stable, with opportunities for more development and growth. “There’s no question of that, having watched Dubai rise up for the last 20 years. This is a place that is going to continue to see growth.”

MIDDLE EAST

organIc growth David Richter says that the Middle East has seen, and will continue to see, organic growth that has driven Hill International forwards in the region.

JULY 2015

“where there’s constructIon happenIng, you’re not goIng to be In the mIddle of a war zone. It’s typIcally places where Investments are flowIng In, capItal Is flowIng In and It’s stable, wIth opportunItIes for more development and growth”

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Site ViSit Lausward Power PLant

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Learning Lessons As the GCC explores clean energy and environmentally friendly solutions, Germany’s Block Fortuna power plant provides some valuable guidelines.

BUILDING EFFICIENCY

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Siemens is building what will be one of the world’s most efficient gas power plants in Düsseldorf. Jerusha Sequeira takes a tour of the new facility

JULY 2015

PROJECT

Lausward Power Plant

CliEnT

Stadtwerke D端sseldorf

TOwER aRChiTECT

kadawittfeldarchitektur

COnTRaCTOR

Siemens Energy

PROJECT ValuE

$562 million

TOTal PROJECT OuTPuT

595MW

PROJECT TyPE

Power generation/Infrastructure

JULY 2015

MIDDLE EAST

Site ViSit Lausward Power PLant

s the population in the Middle East continues to grow and cities in the region expand, it follows that governments will have to invest more in infrastructure – everything from public transport to healthcare and education – to cope with the scale of growth. Hardly any urban expansion is possible, however, without electricity. The region will need not just more energy, but cleaner and more efficient ways of generating it. In a typically fossil fuel-dependent region, it will be a while before renewables contribute significantly to the energy produced. However, due to possible fluctuations in the output of renewable energy, clean plants powered by conventional sources could be key to satisfying base load requirements. For this reason, it’s worth looking west to see if some lessons from Europe – which leads the way in clean energy – can be adopted. Big Project ME was recently invited to tour a combined cycle power plant currently being built

by Siemens in the German city of Düsseldorf, which is expected to be among the world’s most efficient and environment-friendly facilities of its kind. The Lausward power plant, named Block Fortuna, will replace an old coal-fired plant and will be a combined cycle gas turbine (CCGT) plant scheduled to enter service in 2016. In combined cycle power plants, the gas turbine generates electrical energy and exhaust heat from the turbine is then used to generate steam. This then drives a steam turbine, generating additional electricity and increasing efficiency. Companies are often eager to talk about how eco-friendly their operations are. Siemens, however, is going a step further and looking at breaking three world records for output and efficiency. The plant will have an electrical output of 595MW, the highest ever for a single combined cycle unit. Its net energy conversion efficiency will be over 61%, also a first, exceeding the previous record of 60.75% achieved by the Ulrich Hartmann

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CCGT plant in the town of Irsching in Bavaria. Additionally, the Block Fortuna plant’s waste heat energy will be used for district heating in the city of Düsseldorf, further boosting its efficiency. The new plant will allow up to 300MW of thermal energy to be extracted for district heating (the third world record), raising the overall efficiency of the natural gas fuel to around 85%. Another advantage of the plant’s location on the banks of the Rhine is that river water can be used for cooling, further boosting efficiency, Siemens executives say. Even as renewable energy projects increasingly become the norm in Germany and the rest of Europe, projects like the Lausward plant are still significant, says Roland Fischer, CEO of the fossil power generation division at Siemens Energy. “The energy turnaround in Germany requires a whole range of perfectly orchestrated measures. Highly efficient combined cycle power plants significantly reduce greenhouse gas emissions and can respond quickly enough

“The opTimum arrangemenT wouLd be To pLace The buiLdings as near as possibLe around in order To have shorT ways of The eLecTricaL Lines, of The sTeam Lines. buT here in Lausward, we don’T have The pLace for iT”

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sTiLL reLevanT Projects like the Lausward plant are still relevant despite a shift towards renewable energy projects in Europe.

JULY 2015

Site ViSit Lausward Power PLant

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to compensate for the fluctuations in power generation with renewable energy sources.” When the tour bus finally reaches the power plant and the facility comes into sight, it’s unsurprisingly not the most visually appealing of structures at first glance. However, this will be addressed by the inclusion of an architectural highlight in the project designed by German firm kadawittfeldarchitektur: a glass tower that will be a ‘window’ to the city of Dusseldorf, open for public viewing and offering a bird’s eye view in the heart of the city. Before the tour of the facility begins, we are given a comprehensive safety presentation. After all, on-site safety is taken very seriously at the power plant. Last October, the project celebrated more than a million working hours and 500 days with no reportable accidents or injuries. The track record continues this year, with an impressive 1.78 million working hours achieved without incident. Once the safety presentation and Q&A session for journalists have concluded, the tour kicks off. It’s surprisingly quiet for a construction site, probably because the project is nearing completion and progress currently stands at about 95% complete, says Andreas Senzel,

project manager for the site. Work is progressing smoothly, and roadwork is ongoing. The workforce currently on-site is about 150-200 people. The client for the Lausward power plant is Stadtwerke Düsseldorf (SWD), a utility company founded 145 years ago. In 2012, SWD awarded Siemens Energy the order for turnkey erection of the Lausward plant, to be built at the Düsseldorf port on the existing Stadtwerke Düsseldorf power plant site. After the old coal plant was demolished, the site was cleared and handed over in July 2013, since when work has been ongoing. The value of the contract awarded to Siemens, including long-term maintenance for the supplied components, is around $562 million.

Project timeline for construction of the lausward Power Plant n May 18, 2015: Gas turbine achieves first firing

n May 30, 2014: Arrival of the gas turbine

n February 26, 2014: Presentation of

n January 8, 2014: Construction of the steel smokestack

n January 8, 2014: Steel construction of the large machine floor

n November 5, 2013:

at the Siemens

Construction of the stair tower

plant in Berlin

n October 16, 2013:

the gas turbine

n February 20, 2014: Presentation of

The h-class Turbine

the nearly finished

While the exterior of the plant may not currently be too exciting, as with many other things, it’s what’s inside that counts. At the heart of the plant rests the latest in Siemens’ power generation technology: an SGT5-8000H gas turbine. The turbine, which is 13.2m long, 5m high and 5.5m wide, weighs 440t. For perspective, that’s as much as an Airbus A380 with full fuel tanks. The gross power output of the H-class turbine is now

steam turbine at the Siemens plant in Mühlheim

n February 19, 2014: Installation of the surrounding walls of the heatrecovery boiler

Completion of important foundations

n July 31, 2013: Site handed over to Siemens

n May 16, 2012: Stadtwerke Düsseldorf AG selects Siemens to build the facility

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OUR SOIL IMPROVEMENT SOLUTIONS ARE APPLICABLE FOR: Oil And Gas… Tank Farms… Heavy Industry… New Cities… Reclamations… Ports And Airports… Roads And Railways… Platforms And Logistics

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400MW, capable of providing electricity for more than 1.3 million people. In combined cycle mode with a steam turbine, however, the gross power output rises to 600MW, which can provide electricity to a population of over three million people. Despite its power generation capacity, efficiency and sustainability are at the core of the turbine. Compared to previous combined-cycle power plant standards, the H-class can reduce CO2 emissions by 43,000t annually, the equivalent of taking over 10,000 cars off European roads. Moreover, the new generation of combined-cycle power plants needs about one-third less natural gas per generated kilowatt-hour than the global average of installed combined-cycle power plants. The turbines are produced in Siemens’ factory in Berlin, which has delivered over 950 machines so far. Sixteen of the H-class turbines it has manufactured are already in successful commercial operation worldwide. Alongside production, the Berlin factory also offers field and factory repair and maintenance, speciality services and diagnostic solutions. From the Berlin factory, the turbine to be used in the Lausward plant was loaded onto a vessel and shipped along the Rhine to the Dusseldorf harbour – not an easy task, given its sheer size, Senzel says. Besides the SGT5-8000H turbine, Siemens will also supply other main components as part of its contract: an SST5-5000 steam turbine, an SGen5-3000W generator and a Benson heat recovery steam generator.

emissions reducer The H-class turbine will help reduce CO2 emissions by 43,000t annually, the equivalent of taking 10,000 cars off European roads.

ChallENgEs

A long wAy since gutenberg The invention of the printing press in the

In the process, a laser beam hits a bed of

15th century was probably one of the most

atomised metal powder, releasing high energy

significant technological breakthroughs of the

in the form of heat and melting the metal,

modern world. Centuries later, the process

layer by layer. The metal then cools relatively

of printing is no longer confined to two

quickly into a solid shape. This is quicker than

dimensions, and 3D printing is increasingly

pouring hot, liquid metal into a mould and

finding applications across the board, even

waiting for it to fully solidify and cool.

in the manufacture of gas turbines.

production methods, because slow cooling

and components grow increasingly sophisticated.

increases ductility. Researchers at Siemens are

With 3D printing, shapes can be produced

now working on processing techniques that would

that would be impossible using traditional

also endow 3D-printed objects with high ductility

processes like casting and drilling, Siemens

– a requirement if turbine blades are ever to be

says. The German engineering firm is already

printed. High ductility is required because of the

using 3D printing to produce small parts for

high centrifugal forces acting on turbine blades.

which components can be manufactured.

Despite the limitations at the moment, it’s hard to deny that 3D printing is the way forward

Someday, it may even be possible to print

for Siemens. The process allows for rapid

turbine blades with delicate internal air ducts,

prototyping, repair and manufacturing. The

which would improve blade cooling. This

time required for developing prototypes is cut

permits higher temperatures in the combustion

by 75%, while repair times can be reduced

chamber and thereby increases efficiency.

by up to 90%, with cost savings of 30%.

MIDDLE EAST

However, this is an advantage of conventional

As turbines become more complex, their parts

its turbines, which increases the speed with

JULY 2015

MEconstructionnEws.com

Although work on-site has been smooth, the project isn’t without its challenges. Building the power plant on the site of an earlier plant posed some constraints, Senzel acknowledges. The power plant had to be built on the narrow space occupied by its coal-fired predecessor. This affected the layout of the building and the efficiency of the design. The high-pressure steam pipes, for instance, have to be laid over a longer distance, which isn’t ideal. “The optimum arrangement would be to place the buildings as near as possible around in order to have short ways of the electrical lines, of the steam lines. But here in Lausward, we don’t have the place for it.” Interestingly, however, one challenge that was anticipated but not actually faced was local resistance to the project, Senzel notes. Although there was initially resistance to plans to build another coal-fired power plant, the decision to build a gasfired combined heat and power plant drew broad public and political support from the outset. Thus, subsequent efforts to reach out to the public and get them on-board were found to be unnecessary, proving to be a pleasant surprise for Siemens, he says with a smile as the tour draws to a close.

SUSTAINABILITY SOLAR

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SUN SHINES ON SOL AR Big Project ME sits down with James Stewart, general manager of ALEC Energy, to discuss how he intends to take ALEC’s newest division to the construction market. Gavin Davids reports

MIDDLE EAST

he introduction of green building regulations in both Abu Dhabi and Dubai has had a significant impact on how the UAE’s construction industry views environmental issues. Companies and governments are now thinking about how they can implement sustainable strategies to increase energy efficiency and

JULY 2015

cut down on the use of vital resources. This increased sensitivity to environmental issues means a renewed focus on the concept of solar power. For a long time, solar technology was considered somewhat of a vanity project, with few gains in return for enormous expenditure. However, as the technology has developed, so have the returns.

In April of this year, the Renewable Energy Roadmap 2030 report was released by the International Renewable Energy Agency, Abu Dhabi’s Masdar Institute and the Ministry of Foreign Affairs. It says that the UAE could see potential savings in the “billions of dirhams” if it developed its solar energy projects ahead of other finite energy sources.

SUSTAINABILITY SOLAR

By boosting its renewable energy capacity to 10% of its total energy mix and 25% of its power generation, the UAE could save up to $1.9 billion annually by 2030, reducing the consumption of fossil fuels as natural gas prices continue to see rapid increases while renewable energy costs continue to fall, the report explains: “When accounting for health and environmental

benefits, additional net annual savings of $1bn to $3.7bn by 2030 could be generated.” This attitude is starting to seep into the construction and real estate development sectors as well. Building regulations in Abu Dhabi and Dubai now encourage and reward designs that embrace sustainability and energy efficiency, while mandating energy savings. The Dubai Electricity and Water Authority has also stepped up the pressure through the introduction of Shams Dubai, part of a new wave of ‘smart city’ initiatives in Dubai. Given the climate of change engulfing the UAE, it’s no surprise to see construction companies getting in on the act. While consultants and specialist firms have been exploring the limits of sustainability, contractors in general have avoided looking at renewables and efficiencies as a serious business revenue generator, preferring instead to focus on the bread and butter of actual construction work. However, this may be all about to change. Big Project ME sat down with James Stewart, the general manager of ALEC Energy, a new division of ALEC, the renowned Dubaibased contracting giant. With perceptions of sustainability at such a high in the market, Stewart explains that launching an energy efficiency-focused company, as part of a major contractor, has never made more sense. “Just over a year ago, we as a business were casting around for opportunities for us to grow the business. We looked at different options and decided that energy efficiency in the market was a rising topic. It was becoming more and more apparent that buildings in Dubai are not as energy-efficient as they need to be,” he relates. “We decided that energy efficiency was a market that we would look to enter. We made an investment into a company called Smart4Power. It has been focusing on energy efficiency in this market, auditing buildings and recommending where people can save money. Essentially, it’s about improving the efficiency of the system and saving money for the client.” Fast forward to January this year, and plans are well underway for ALEC to enter the building efficiency and solar rooftop markets, in support of the UAE and Dubai governments’ vision for green building and energy efficiency. DEWA’s solar initiative covers both utility-scale solar projects and a rooftop solar programme; ALEC Energy is focusing on the latter as it aims to develop a strong base for its offering. “[The solar rooftop programme] comprises two elements: housing, which DEWA is going

to handle in smaller packages with consumers, while the other is the rooftop market for commercial and industrial warehouses, which is JAFZA and Jebel Ali and all the large warehouses out there. We’ve decided, in line with our energy efficiency offering, to provide solar power to these buildings,” says Stewart. “It [solar] is supported by the Supreme Energy Council and DEWA, but it’s not very well supported here by companies because it’s a new initiative. One of the competitive advantages that we have is that we’re a large local business, with an excellent brand and reputation. When you’re signing solar deals with companies, because they tend to be longer-term deals of 10 to 15 years, that reputation gives clients who are signing on to those deals some comfort, because they’re signing them with a large, responsible brand with a reputation for quality.” The reputation of ALEC will be crucial to ALEC Energy’s success. While the division will be starting off small, it intends to grow very quickly. By the end of 2015, Stewart expects to have at least three deals signed for rooftops in the UAE, while the division is using ALEC’s contacts and connections to develop a strong pipeline of opportunities for 2016. The division will initially use ALEC’s vast workforce to install projects while it builds up its own workforce and develops specialist competencies. “We have recruited people from outside, and we have people within our businesses going on DEWA training courses at the moment. It’s a combination [recruitment process].

“i think that part of being one of the fore-runners in this business is that we have an obligation to educate our clients on the benefits of this. it really does have financial benefits”

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MIDDLE EAST

chasing the sun DEWA has introduced Shams Dubai, an initiative that it hopes will push the use of renewable energy resources.

SUSTAINABILITY SOLAR

MEconstructionnEws.cOm

financial incentive James Stewart says that ALEC Energy will offer financial aid to companies willing to install solar power systems.

“our research shows that if we’re able to offer good-quality clients a solar system on their rooftop, in terms of a solar lease, essentially they’re getting power at a discounted rate to the dewa rate”

MIDDLE EAST

Solar is a specialist field, so you need some background in it. Obviously, we don’t have that yet, but we do have people with strong electrical engineering backgrounds, and that’s an easy transition to solar,” he explains. “This year, we’ll have six or seven people, but we’ll see how it grows. The installation teams will build up over time, but initially we’ll probably use our ALEMCO division to support us. We’re fortunate that we’ve got a large resource pool to choose from.” If the division is successful, the aim then will be to integrate with ALEC’s assorted offerings and provide a full-service package to its clients. “It would be our intention, as we tender on large construction projects, that should they be suitable for solar – because not all buildings are suitable – then it would be something we could offer as part of our tender package, as an added value element.” Often, the most challenging part of getting clients to take on solar is convincing them in the first place. Stewart and the team at ALEC are aware of this, and have come up with a number of solutions to help shift perceptions and change minds. ALEC Energy’s first rooftop solar project will be at ALEC’s own yard at DIC. By backing the technology with its own investment, the team hopes to showcase their belief in it and the benefits it can bring to a company. “I think that part of being one of the fore-runners in this business is that we have an obligation to educate our clients on the

JULY 2015

benefits of this. It really does have financial benefits. It’s not just nice to have, it’s got nothing to do with costing you money to go green. This has real financial benefits. “One of the challenges for us as a business is to get to the people at the right level, which tends to be at the upper management, board level, and being able to sit down with them and put this offering in front of them. I think once you see the simplicity of the offering, backed by ALEC as a large contractor, it’s almost a no-brainer,” he reiterates. As part of this plan to push solar into the forefront of the market, Stewart explains that ALEC Energy is prepared to finance companies interested in putting solar power plants on their rooftops. “One of the problems with putting solar on the rooftop is that when you go to the owner, they have to make that investment and recoup that cost over time. Many companies don’t have the budget for that, or they won’t be able to [afford it]. That was one of the key stumbling blocks that we recognised early on.” “You would be faced with questions about how much it’s going to cost, and once you start talking about ‘years and years’, you’ll see them start to lose interest. They’re focused on quarter-to-quarter in terms of their business. We decided the best way to tackle this would be to develop a financial model where we’d be able to finance the system, they’d gain the benefit of the solar system on their roof, reducing their energy costs, and we’d take the risk on the long-term operations on that.

“We believe quite strongly in this as a business model, and our research shows that if we’re able to offer good-quality clients a solar system on their rooftop, in terms of a solar lease, essentially they’re getting power at a discounted rate to the DEWA rate.” The long-term aim, should solar rooftops take off, is for ALEC Energy to invite investors into the model. However, Stewart concedes there is a long way to go before this happens, with estimates of the size of the market varying wildly, from 500MW to a huge 1GW, or even more. For now, however, the focus remains firmly on the UAE market and turning ALEC Energy into a major success for both ALEC and the renewable energy sector as a whole. “It starts with governments having the will and the ability to communicate to their commerce and industries that this is something that they need to do. The UAE government has been very good at that, and now as a business, we need to take up that initiative and run with it. “In the other markets, they are a couple of years behind where we are here, but they certainly have a massive interest in solar, especially in Saudi Arabia and Jordan. But those tend to be very large-scale plots, they’re not rooftop-type things that we’re looking at currently. I’m sure that will come, and we’ll look at those markets, but for the moment, we’re not focusing on markets outside the UAE. We need to establish a strong base here and then we’ll move outwards,” Stewart concludes.

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louay dahmash

10 Steps to BIM: How AEC firms can prepare for coming mandates Louay Dahmash, Head of Middle East, Autodesk, explains what the construction industry should be doing to be best prepared for the introduction of BIM mandates

MIDDLE EAST

“When facing a mandate, the important things are to get started With an adoption plan that firm leaders support, and to keep focused on your goal”

JULY 2015

ver the last decade, Building Information Modelling (BIM) has transformed design and construction projects, helping to drive time and cost from the building process. Governments around the world have noticed its advantages, and increasingly are mandating the use of BIM on public projects. For instance, by 2016 public projects in the UK will require fully collaborative 3D BIM. Other countries, including Brazil, China, South Korea, Singapore and the United States, have issued similar BIM mandates of varying scope, and the European Union recently issued a directive to its 28 member states recommending the use of BIM on public projects. Here in the UAE, Dubai Municipality was the first to mandate the use of BIM for architectural and MEP works for all buildings 40 storeys or higher; facilities/buildings that are 27,871sqm or larger; all hospitals, universities and other similarly specialised buildings; and all buildings delivered by/through an international party. The announcement also states that the decision to mandate BIM is based on the (proven) ability of BIM tools and work flows in improving construction quality, enabling collaboration between project participants across project phases, lowering cost and reducing time. It’s not just governments looking to BIM, however. As the public sector mandates BIM, private industry has shown more interest in working with BIM-ready teams. Increasingly, lead contractors demand BIM on particular projects, even in countries where government mandates are not yet in the works. For example, Qatar Rail awarded the BIM services contract to Autodesk. Under the terms of the agreement, Autodesk will provide BIM implementation, consultancy and advisory services to Qatar Rail, which is responsible for the design, construction,

commissioning, operation and maintenance of the entire rail network and systems within Qatar. Private industry wants to realise the benefits of BIM on projects, and it’s easy to understand why. BIM helps project teams explore designs before they’re built. The intelligent 3D models and data that drive the BIM process make critical aspects of projects, such as coordination, communication and collaboration, easier. Better visualisation of projects speeds up approvals. The proactive sustainability analysis that BIM enables also reduces environmental impact. M aking the Move

All over the world, design and construction firms that have yet to adopt BIM are planning their move. Many of these firms worry that their ability to compete will suffer if they don’t make the transition soon. But some firms are also concerned that adopting BIM will prove difficult and disruptive. This could be holding them back, or leading them to over-plan their moves. At Autodesk, we’ve talked to many firms about how they successfully adopted BIM. While there’s no one right way, we’ve identified 10 common steps that help to both accelerate the process and reduce the disruption that can accompany change. 10 steps to BiM

Step One: Get to know BIM. Designate one or two people to learn more about how BIM will affect the way your team works. For instance, in the 2D world, many firms leave the details to the later stages of the design process. With BIM, many design details need to be worked out much earlier. Step Two: Communicate the change to your people. High-level leaders should take a leading role in letting people know the firm is definitely moving to BIM. The message is

COMMENT bim

start today With BIM mandates becoming concrete, construction companies need to get on board as soon as possible.

more pilot projects. A firm with just a few massive multi-year projects might prefer to capture lessons learned from an initial pilot as it happens, while also initiating all new projects in BIM. Step Six: Document preferred processes. As your pilot project (or projects) progresses, have the team document BIM processes. Consider your preferred outputs and how your team needs to do BIM to support them. It’s tempting to try to create standards during or before running a pilot, but your ideas about standards will evolve as you use BIM. Starting with standards could slow your team down and complicate the BIM adoption process unnecessarily. Step Seven: Cultivate BIM champions. You’ll find that some people in your firm are excited about BIM – perhaps they even learned about BIM as part of their education or while working at another firm. Try to put BIM champions on every pilot project, and provide them with the additional training and support they need to help teammates adopt BIM. Step Eight: Train and transition other teams. It is important to provide training to people who are about to begin a BIM project. A common mistake is to train the whole firm at once, but then transition to BIM project by project over the course of a year or two. People on later projects will have forgotten much of what they learned in training.

Step Nine: Integrate with other models. You’ll see the most benefits from BIM when you share models with other firms that are also working in BIM. Many firms find that integrating models into a single, shared model accelerates the coordination process and opens the door to a new level of collaboration. Step Ten: Expand and innovate with BIM. As you use BIM, you’ll find that it enables new visualisation, coordination and analysis capabilities. Look for ways to turn these new capabilities into value – and new service offerings – for clients. Communicate the value of BIM to current and potential clients in your marketing, and let them know you’re ready to meet the requirements of looming BIM mandates. start today

Refer to the steps above to get started, but don’t view them as rigid suggestions. Follow the steps in the order that makes the most sense for the types of projects you do. Many steps will overlap, and you may decide to skip or alter some. When facing a mandate, the important things are to get started with an adoption plan that firm leaders support, and to keep focused on your goal, even if you need to modify the plan along the way. n Louay Dahmash is Head of Middle East, Autodesk

JULY 2015

MIDDLE EAST

“we are moving to BIM because it’s critical to our future”, not “we’re trying BIM”. Be sure to communicate the anticipated benefits of BIM for your firm and clients. It will be easier to rally the team around a compelling future vision than by talking too much about mandates. Step Three: Account for software and hardware needs. BIM isn’t software; it’s a collaborative process that relies on intelligent 3D models. But you’ll need software to create those models. Take the time to explore available software, and consider whether your current hardware has sufficient processing power. Some older, less powerful hardware may need to be passed on to team members outside the design department. Step Four: Develop a change management plan. This plan should document at a high level how your team anticipates BIM changing established workflows, who needs training and when they’ll get it, and how you’ll support people when they have questions and issues. Support is probably the most important item; organisational change happens faster and more successfully when you help people adopt new ways of working. Step Five: Start a pilot programme, and train the pilot team. For most firms, it makes sense to run a BIM pilot. If you do dozens of small projects each year, consider completing one pilot and capturing lessons learned before running several

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david sammons

Will technology help us live underground? Constructing underground environments could bring a number of benefits to cities, argues David Sammons

MIDDLE EAST

A 40°C DubAi summer is a far cry from the minus 30°C winter of Toronto. However, both make it equally difficult for citizens and businesses to continue their normal dayto-day activities. There may be a common solution to allow business as usual. Toronto’s PATH network comprises 30km of tunnels that allow pedestrians to walk in comfort between metro stations, malls and offices. As Toronto’s skyline surges, the subterranean city is growing with it. Such underground environments can deliver environmental and financial benefits to a city. Linking transportation hubs such as metro stations directly to adjacent residences and commercial assets makes public transport more competitive with the end-to-end mobility offering of the car, thus reducing the associated congestion and emissions. The car is unlikely to disappear any time soon with rapid advances in electric, connected and driverless vehicles. i believe that the adoption of the latter will predominantly lead to people using their extra time to further their entertainment or productivity via mobile devices, essentially doing anything except simply look out the window. Perhaps the future of roads is also underground? Decoupling the weather from street activity would allow a city to function all year. Dubai and

JULY 2015

Toronto suffer economically from slow retail sales in summer and truck deliveries in winter respectively due to extreme weather. Dubai has an underground service tunnel running the length of its financial district, however the construction of the pedestrian area above is on hold. if Toronto needs to take a leaf out of Dubai’s book on logistics, conversely Dubai would benefit from Toronto’s thinking on walkability. Walkability is something that PATH actually needs to improve. users complain of poor wayfinding and critics argue that keeping people below ground detracts from the street level activity above, what long-time Toronto resident Jane Jacobs would refer to as “the ballet of the good city sidewalk”. There are a plethora of virtual reality technologies, from smartphone apps and Google Glass to stereoscopic displays, which can provide compelling wayfinding options. Furthermore, a data-driven solution using sensors or live video footage could dynamically link underground users to points of reference and activity above ground and vice versa. Personally, i think that the lack of natural light and a visible horizon are prohibiting factors, presumably shared by the british public, who would rather live in floating cities than those underground. banishing the feeling

of claustrophobia will be key to changing this viewpoint. While immersion (scale) and stereoscopy (depth perception) can be addressed by the latest display technology, often it is the content displayed on these screens that lets them down. Rather than repetitive looping footage, at LAX the departure boards channel real-time data visualisations from destinations as planes take off. Lack of fresh air and greenery are other potential drawbacks. Creative architects and designers such as Daan Roosegaard are increasingly exploring how technology can link humans, nature and space. His Smog Free Project ionises air and would likely render an underground walkway complex cleaner than the city above. His hypnotic Lotus Project, comprising hundreds of ‘smart’ leaves that interact with human proximity, arguably displays more ‘natural’ beauty than anything likely to be found on a crowded street. ultimately these underground spaces, as with any city investment, will require a solid business case that hinges on attracting users and subsequent revenue. The reduced cost base that underground land provides is a good foundation for this business case. As for attracting users, technology can play a key part in ensuring such spaces complement and augment the street level above and are comfortable, convenient and appealing to citizens. n David Sammons is project manager and ICT engineer at Atkins MIddle East.

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