Bigproject September 2015

www.meconstructionnews.com SEPTEMBER 2015

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ALSO INSIDE vasanth kumar demolition contractors automation dubai real estate review

at the starting gate Core work begins on the first tower at The Residences at Marina Gate

M

CONTENTS

SEPTEMBER 2015 08 the big picture majid al futtaim sets policy on construction workers’ rights Developer makes commitments on accomodation and timely pay

12 news analysis new opportunities examining the impact the new suez canal will have on the region

16 in profile principles of success gavin Davids speaks to Vasanth Kumar, ceo of arabian Mep contracting, about how he’s shaping the company in his image

24 site Visit - the resiDences at Marina gate high-end gateway big project Me tours the construction site for the residences at Marina gate, a mixed-use project that will galvanise the Dubai Marina district

34 sector focus - eDucation Qatar education sector overview Mansoor ahmed of colliers international highlights the investment opportunities in Qatar’s education sector

40 inDustry focus - DeMolition demolition men Jerusha sequeira finds out what it takes to be a demolition contractor

46 it in focus - autoMation rise of the machines charles Dunk of aecoM outlines how automated machines can help civil engineering and infrastructure construction

60 tenDers middle east tenders big project Me lists the region’s top construction tenders for september

64 Q&a with alan MccreaDy Big Project ME is onsite at the Residences at Marina Gate construction site.

fit-out picks up pace big project Me speaks to alan Mccready of isg Middle east to find out where fit-out contracting is headed in 2015

SEPTEMBER 2015

MIDDLE EAST

PAGE 24

1

INTRODUCTION

MEconstructionnEws.COm

Keeping your Values This month, I had the pleasure of speaking to Vasanth Kumar, the CEO of Arabian MEP Contracting, for our main interview. What really stood out for me was hearing how passionate he was about his ideals and his convictions. Having worked his way from the ground up, quite literally, he certainly understands better than most what it takes to ensure worker welfare and safety.

Not only is he committed to the betterment of his workers’ welfare, but it was also intriguing to hear him talk about his plans for his Qatari-based company. While most contractors operating in Qatar are focused on the short-term gains that the World Cup and Vision 2030 will bring, Kumar is intent on creating a legacy at his company.

In an industry and economy as temporal as this, it’s not often you hear CEOs talk about planning for generations. The emphasis is usually on the here and now, but with Kumar, having been with Arabian MEP Contracting since the very beginning, it’s clear he intends to leave a legacy behind. One that mirrors his own integrity and commitment to delivering the best to his clients and partners.

Delivering the best is also the core theme of our site visit this month. The Residences at Marina Gate is the first collaboration between ALEC and the Select Group, and judging by what we’ve seen so far, I’d wager that it won’t be the last.

Of course, people will ask, does Dubai really need another luxury block of apartments? And I’m not sure I’d disagree, but when one looks at what’s on offer in that area of the Marina, it’s clear that it’s going to be the retail aspect of the project that’s going to open up some very promising avenues for retailers and consumers.

And finally, I’d once more like to remind readers that nominations for the Big Project ME Awards 2015 are open. The deadline is October 1, 2015, so do start putting your nominations together. We’ve already got quite a few entries and the competition is looking tough!

Group Chairman and Founder Dominic De SouSa Group Ceo naDeem HooD

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Gavin Davids Editor

SEPTEMBER 2015

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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Abu Dhabi approves 26 major projects in second quarter

Total floor area of developments given green light triples to 2.3 million square metres, Abu Dhabi Urban Planning Council says PHOTO GALLERIES

2

Jobs advice: What Gulf construction firms

look for when hiring Top trends driving recruitment in the sector

3

Dredging the New Suez Canal in Egypt

The new waterway marks a significant achievement by men and machines.

See photo galleries at: meconstructionnews.com/photos

Dubai set to break new records with world’s

tallest residential tower Planned 711m-tall tower to be part

“There were some impressive numbers being thrown around after [Indian Prime Minister] Narendra Modi’s visit to the UAE – not least the billions being put into a fund for much-needed infrastructure.

But to achieve such ambitious plans India will have to make doing business much easier for foreign firms. Buying land there is a nightmare and there’s a whole host of bureaucratic complications and legal oddities that firms need to grapple with.”

Name withheld; response to story ‘Modi visit: UAE, India aim to raise $75bn infrastructure fund’

of Meydan One development, which will also include world’s longest indoor ski slope

4

READER POLL

FIFA turmoil unlikely to impact Qatar project pipeline – experts

What is your view of the UAE property market?

Gulf state’s ambitious construction plans will flourish with or without 2022 World Cup, industry executives say

5

Dubai Parks and Resorts’ expenditure tops $1bn

VIDEO

Meydan One, Dubai’s latest megaproject

developer looks to meet October

Development is set to include the world’s tallest residential tower, longest indoor ski slope and largest dancing fountain.

2016 project deadline

See videos at: meconstructionnews.com/videos

Second-quarter costs came to $218m as theme-park

40%

26%

21%

11%

Another ‘bubble’ is about to burst

The ‘stabilisation’ is a positive sign

The boom is over, prices will fall further

Prices will start rising again soon

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MIDDLE EAST

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

SEPTEMBER 2015

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THE BIG PICTURE

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green strategy The five-year Sustainability and Green Building Strategy required the cooperation of 500 retailers in the City Centre Mirdif Mall.

Dubai’s MajiD al FuttaiM sets policy on construction workers’ rights policy makes commitments on timely pay, annual leave and accommodation Dubai retail giant Majid Al Futtaim has outlined details of a labour policy for construction workers on its projects while announcing its 2014 sustainability results.

Majid Al Futtaim Properties has successfully implemented the policy, which sets out commitments “to safeguard worker rights across its developments, including timely pay, annual leave and labour accommodation”, the company said in a statement.

As part of goals set for 2015, the company will aim to include labour standard policy requirements in all contracts with direct suppliers.

The firm’s construction sites did not have any fatalities in 2014, while overall accident frequency rates among direct employees and contractors plunged 77% in the UAE and Oman, and 31% in the Levant and North Africa.

The developer – which is behind projects like Deira City Centre and Mall of the Emirates – also managed to achieve 73% of its sustainability goals for last year, which included $1.8 million in community investments, it said.

The company’s Green Star rating system, based on LEED, BREEAM and Estidama standards, sets sustainability design criteria for shop fit-outs and is now a mandatory requirement of all lease renewals. The rating measures sustainability performance, from energy reduction to the quality of a tenant’s sustainability policies.

Majid Al Futtaim Properties has also increased green building certifications to seven buildings, reduced water consumption at its malls by 16% and launched a programme to ensure that all of its future developments are LEED Gold-certified or equivalent.

The US Green Building Council has

StatS n 0 – number of fatalities on maf properties construction sites in 2014

n 77% – Drop in overall accident frequency rates of maf properties employees and contractors

n $1.8m – amount spent on community investments

confirmed that Majid Al Futtaim’s City Centre Mirdif Shopping Mall in Dubai is the largest mall in the world to achieve the LEED Gold EBOM (Existing Buildings Operation and Maintenance) rating.

In a statement, the retail developer said the 278,709sqm mall is an example of its five-year Sustainability and Green Building Strategy.

The initiative at City Centre Mirdif required the cooperation of more than 500 retailers in the mall, including Carrefour, Vox Cinemas and Magic Planet.

The mall operations team, retailers and brands achieved targets across 110 categories, including alternative transport, water efficiency, waste management, green cleaning policies and efficient energy management.

The company also aims to achieve a 25% recycling rate across all operational malls, it said.

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Big project me talks to vasanth kumar about his principles of success – Page 16

SEPTEMBER 2015

THE BIG PICTURE

gulF relateD awarDs abu Dhabi Mall work to brookFielD Multiplex australian firm wins $425 million contract to Build the 400-store shopping mall The UAE’s Gulf Related, a joint venture between Gulf Capital and New York-based Related Companies, has awarded Brookfield Multiplex a $425 million contract to build the Al Maryah Central shopping mall.

The Abu Dhabi developer has announced that the Australian firm has been selected as the main contractor responsible for completion of the $1 billion Al Maryah Central shopping centre, a 214,000sqm project being built on Al Maryah Island.

When complete in March 2018, the mall will feature 400 stores, including the first Macy’s outside the US and the first Bloomingdale’s in Abu Dhabi. It will also include 145 restaurants and cafés, a 20-screen cinema complex, medical centre, health club, public library and three rooftop parks. Subsequent phases will include residential units and a hotel in two high-rise towers.

StatS n $425m – value of contract awarded to brookfield multiplex

n $1bn – value of al maryah central shopping centre project

n 214,000sqm – size of al maryah central

n 400 – number of retail outlets in the shopping mall

The Al Maryah Central development broke ground in November last year, and excavation of the site and foundation construction work is already complete, the developer said in a statement.

Brookfield Multiplex will carry out the remaining construction of the shopping mall, with vertical construction starting this month and full completion prior to the mall’s March 2018 opening date.

“We are thrilled to reach another milestone with vertical construction commencing this month,” said Kevin Ryan, managing director of real estate development at Gulf Related.

“As one of the premium construction firms in the region, Brookfield Multiplex has worked on some of the most renowned structures in the GCC and internationally. We are delighted to have them lead this critical phase.”

In an interview with Big Project ME in January 2015, Kenneth Himmel, CEO of Related Urban, the mixed-use development division of Related Companies, said he was optimistic about Abu Dhabi’s future as a tourism and retail hub, on account of the country’s location.

“India, China, Eastern Europe, North Africa – you’re talking a four-hour flight time [and] almost two and a half billion people.

“They’re going to come. There’s no question,” the CEO asserted.

Other Middle East projects undertaken by Brookfield Multiplex include Emirates Towers and The Gate at DIFC in Dubai, and the Eastern Mangroves complex in Abu Dhabi.

Internationally, it also has projects like the rebuilding of London’s Wembley Stadium and the building of King Street Wharf in Sydney under its belt.

preMiuM Destination The 400-store Al Maryah Central mall will look to attract visitors from all over the world.

SEPTEMBER 2015

MIDDLE EAST

Big project me visits upcoming luxury Development the resiDences at marina gate – Page 24 9

THE BIG PICTURE

MEconstructionnEws.Com

Financing agreeMent The agreement between Doha Bank and Leighton Contracting will support Kahramaa’s Water Security Mega Reservoirs Project.

Doha bank, leighton sign $604M Finance Deal For Qatar reservoirs agreement is for construction of world’s largest reinforced concrete reservoirs Doha Bank has signed a project finance deal with Leighton Contracting Qatar, a subsidiary of UAE-based Habtoor Leighton Group, for the construction of a water reservoir project valued at $604.1 million.

The financing agreement will support the construction of the Qatar General Electricity & Water Corporation’s (Kahramaa) Water Security Mega Reservoirs Project at Rawdat Rashed.

The reservoirs, with a capacity of 100 million gallons each, will be the world’s largest reinforced concrete reservoirs, according to a company statement.

“We are pleased at the opportunity to participate in a project that will form the bedrock upon which Qatar’s water security initiatives will be built,” said Dr R. Seetharaman, Group CEO of Doha Bank. The bank has already issued project-related guarantees, he added.

The Water Security Mega Reservoirs Project was launched in response to a huge increase in the demand for potable water in Qatar. It aims to provide seven days of strategic water storage within Kahramaa’s network, covering the new mega reservoirs as well as the existing and future secondary reservoirs.

According to Kahramaa, the project entails construction of five potable water mega reservoir sites and an interconnecting network of largediameter water pipelines. Each reservoir site will contain up to nine reservoirs.

Last year, the Qatari government announced details of new reservoirs and pumping stations to be built in five key locations around the country.

The sites in Duhail, Umm Qarn, Mesaimeer, South Doha and Muathier were first discussed in 2012, and are slated to be completed in 2017.

StatS n $604.1m – value of water security mega reservoirs project in rawdat rashed

n 100m gallons – capacity of the reservoirs

n 2.3bn gallons – storage capacity of first phase of project

The first phase of the project, currently being implemented, will deliver storage capacity of about 2.3 billion gallons of water in 24 concrete reservoirs, and some 480km of buried ductile iron pipelines up to 1.6m in diameter.

The second stage of the project, to be implemented after 2020, will include construction of additional pipelines and 16 new reservoirs within the five mega sites, in order to achieve ultimate total storage capacity of about 3.8 billion gallons of water.

The Habtoor Leighton Group is focused on two core market sectors, infrastructure and building.

It is one of the leading diversified international contractors in the Middle East and North Africa, and has an extensive track record in largescale projects across the region.

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Big project me finDs out how Demolition contractors carry out their jobs – Page 40

SEPTEMBER 2015

THE BIG PICTURE

Qatar installs weather station at 2022 worlD cup staDiuM site station at al wakrah stadium to provide meteorological data for cooling purposes Qatar has announced the installation of a weather station near the Al Wakrah Stadium, with foundation works nearing completion.

The station, which is on a surface of 10x10m and includes a 10m tower, will provide information about temperature, humidity, precipitation intensity and visibility, among other factors, Qatar’s Supreme Committee for Delivery & Legacy (SCDL) said.

The cooling systems designed for the World Cup 2022 stadium will modulate performance in response to local weather conditions, using data provided by the weather station. This will allow the stadium to be used for football year-round, even after the tournament, SCDL said in a statement.

The committee has installed the first of these stations at the Al Wakrah Stadium. The weather station was

StatS n 10m – height of the weather station tower

n 100sqm – surface area of the weather station

n 24/7 – weather station will monitor conditions around the clock

n 15 – air quality readings will be taken every 15 minutes

developed and installed by the Qatar Mobility Innovations Centre (QMIC), which has experience operating and maintaining national weather stations.

External climatic conditions need to be taken into account by cooling designers, explained Dr Nelson Chilengwe, a mechanical engineer and cooling expert at the SCDL. “We usually get this information from data based on national weather station measurements, like the one at the airport, but for our programme, we wanted to know exactly what the weather is like close to our stadium sites.”

The weather station includes a sun tracker, sensors for selected gases, solar-powered monitoring of particulate matter and temperature and humidity sensors.

The QMIC will install two more weather stations at the Al Rayyan and

Lusail stadiums, the SCDL statement said. After installation, data will be collected and analysed for three years.

“We have just completed installation at Al Wakrah Stadium.

The station monitors and collects information 24 hours a day, but we have configured the system to record meteorological data every five minutes, while air quality is recorded every 15 minutes,” Chilengwe said.

This information will enable SCDL experts to measure current temperatures and optimise the cooling system at the stadium so that it can be used even after the high-profile tournament, he added.

“With these localised stations, we will be able to determine exactly what the temperature is and automatically control operation of cooling systems against the external conditions, yearround in Qatar, as a legacy element.”

cooling Measures The weather station near the Al Wakrah construction site will gather data that will help developers come up with cooling methods for the stadium.

SEPTEMBER 2015

MIDDLE EAST

Big project me learns how automation can help contractors work more efficiently – Page 46 11

neWs ANALYSIS

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New OppOrtunities 12

MIDDLE EAST

Big Project ME examines the impact the New Suez Canal will have on the surrounding region

SEPTEMBER 2015

NEWS ANALYSIS

O

StatS n 35km – Length of the parallel waterway flanking the existing canal

n 37km – Length of the existing canal that was deepened and widened

n 72km – total length of the expanded route

n $1.5bn – Cost of dredging operations

n $8bn – total cost of the new suez Canal project

n 97 – predicted number of ships that can pass per day through the new canal

n 49 – Current number of ships that can pass per day through the canal

n $13.23bn – projected annual revenue by 2023 for the new suez Canal

n $5.3bn – revenue generated by suez Canal Authority in 2014

SEPTEMBER 2015

MIDDLE EAST

n August 6, 2015, Egyptian President Abdel Fattah al-Sisi oversaw the launch of the New Suez Canal, an $8 billion project that is expected to bring renewed economic growth to the North African country after years of damaging political instability.

Completed within just a year instead of the three years originally envisaged, the Suez extension was hailed by al-Sisi as a major national accomplishment on a par with the Aswan Dam and the nationalisation of the original Suez Canal in 1956.

The project includes a 35km parallel waterway flanking the 145-year-old canal, which has long been the shortest sea link between Asia and Europe.

In addition, 37km of the existing canal was deepened and widened, reducing transit times by seven hours for southbound ships, while larger vessels will have an easier passage. Ships will now be able to travel in both directions along all 72km of the expanded route.

More than 43,000 people worked on the project, according to the Suez Canal Authority. Dredging operations were carried out by a four-member joint venture called Challenge Consortium, consisting of UAEbased National Marine Dredging Company (NMDC), Boskalis and Van Oord from the Netherlands, and Jan de Nul from Belgium.

Dredging operations alone cost $1.5 billion, shared equally between the partners.

While the builders of the New Suez Canal project have received justified praise for its engineering feats, the main purpose of the canal is to generate trade and revenue for the Egyptian economy. The Suez Canal Authority expects revenues of $13.23 billion annually by 2023. In comparison, 2014 saw $5.3 billion in revenue.

Dr Theodore Karasik, a UAE-based geopolitical analyst, tells Big Project ME that he expects the New Suez Canal system to achieve its aim of helping the Egyptian economy, as the new system allows more ships to go through the canal, as maritime shipping grows over the next few years.

The number of vessels passing through the canal daily is expected to rise to 97 from the current 49, the Suez Canal Authority estimates.

“I think that this figure [$13.23 billion] is realistic, given all the projections for the growth of shipping over the course of time. But I also think that the figure may be slightly inaccurate and could actually be higher, based on the shipping to and from Iran and Europe, because by then the Iranian market will be opening and functioning

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NEWS ANALYSIS

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MIDDLE EAST

in a robust manner,” Dr Karasik predicts.

“The lifting of sanctions for Iran is going to go slowly, but people are already lining up to get into Iran across a number of different sectors. [The New Suez Canal] is going to be very valuable for not only Iran, but also for investors who haven’t had access to the Iranian market for more than 40 years.”

The GCC will benefit from the canal project in several ways. First of all, Karasik highlights the amount of investment from the GCC, particularly the UAE, in the New Suez Canal system.

This has created housing, jobs and other opportunities to help the Egyptian people and stimulate the local economy.

However, other experts are less confident about the positive impact of the New Suez Canal project, disputing the official numbers released by the Egyptian government.

Ahmed Kamaly, an economist with the American University of Cairo, tells Reuters that the projections are “wishful thinking”, suggesting that sluggish world trade will make it difficult for the project to deliver immediately on its promise.

“There was no viability study done, or known of, to assess the viability of the project,” he says.

The Reuters report adds that for the project to reach revenue targets, world trade will have to grow by 9% annually until 2023, quoting William Jackson of Capital Economics, far exceeding the 3% average over the last four years.

In fact, since 2011, Suez Canal revenue growth has failed to even keep pace with the growth in world trade, Jackson says, highlighting figures show global trade volume rising by an average of 2.9% from 2011 to 2014. Suez Canal revenue rose by just 2% during the same period.

Despite these pessimistic predictions, the region shows considerable optimism about

SEPTEMBER 2015

MEconstructionnEws.com

“ThE GCC BEnEfiTS BECauSE of ThE EnhanCEd TRadE RouTE, BuT alSo BECauSE ThE TRadE RouTE aTTRaCTS MoRE [MaRiTiME] SECuRiTy, PaRTiCulaRly in ThE MEdiTERRanEan, BuT alSo in ThE REd SEa and ThE Gulf of adEn”

the New Suez Canal project. With the Middle East undergoing a period of intense economic development, governments are investing heavily in infrastructure that will improve transport and trade links, both domestically and internationally.

The launch of the canal means ports along the GCC coast are likely to benefit from increased maritime traffic. This in turn means the likes of Saudi Arabia, Oman and Qatar will be spending heavily to develop their port infrastructure capabilities.

A report by IQPC entitled ‘State of the Market: Port Projects and Expansion in the Middle East’ finds that four mega-port projects in the Middle East will underline the importance of the region for the future of maritime commerce.

The Sohar Port and Freezone in Oman

will expand total capacity to 6 million TEU per annum, up from 800,000 TEU per annum. With $15 billion invested to date, the deep-sea port and free zone is one of the fastest growing in the world, thanks to its location and interconnectivity with the sultanate’s road, air and rail infrastructure.

Hamad Greenfield Port project is the second highlighted mega-project in the report.

Currently under construction, total capacity is expected to be 6 million TEU per annum.

The $7.4 billion project will cover an area of 26.5km and feature three container terminals, a naval base for the Qatari Navy and visiting naval vessels from around the world.

Dubai will develop Container Terminal 3 at Jebel Ali Port, expanding capacity from 15 million TEU to 19 million TEU a year. The project is expected to be completed in late 2015 and has an investment of $850 million.

Finally, Saudi Arabia’s Saudi Global Ports (SGP) Container Terminal at Dammam King Abdul Aziz Port opened in April 2015. Its current capacity is 5 million TEU per annum, but with development still ongoing, the $500 million project is expected to have a total capacity of 6.8 million TEU per annum.

“The GCC benefits because of the enhanced trade route, but also because the trade route attracts more [maritime] security, particularly in the Mediterranean, but also in the Red Sea and the Gulf of Aden,” says Dr Karasik.

“With the Saudi-led operations in Yemen, it’s going to be very important to keep this sea lane open. A final reason for the GCC is how the GCC will be using new port facilities that are popping up in Kenya and in Somalia in the future, and this will become part of the international maritime trade.” n

In ProfIle Vasanth Kumar

MEconstructionnEws.com

PrinciPles for SucceSS

Vasanth Kumar, CEO of Arabian MEP Contracting, is a man of principle and integrity.

He tells Gavin Davids that he’s determined to leave behind a company moulded in his image

I

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MIDDLE EAST

t’s often said that a leader should never ask someone to do something the leader wouldn’t do. When it comes to construction in the GCC, this is often forgotten, with certain construction firms guilty of pushing their crews and their staff to the absolute limit in the pursuit of profit and payment.

Luckily for Arabian MEP Contracting, their chief executive officer is someone who has been through the ranks and worked in the trenches.

Hailing from Coimbatore in the Indian state of Tamil Nadu, Vasanth Kumar tells Big Project ME that one of the toughest periods in his life was also one of the most crucial, as it taught him to appreciate and understand the value of a happy, satisfied and appreciated workforce.

“I did my mechanical engineering degree at the Coimbatore Institute of Technology, and through the campus interviews I got a placement as a graduate engineer in training at India’s largest steel plant. I was put in as a quality control/assurance engineer, and within a few months I realised that it wasn’t my cup of tea,” he recollects during a telephone interview from his office in Doha, Qatar.

“I discovered that my area of interest was in project management. I wanted more thrills and challenges. I quickly quit the steel plant job within six months and joined another company that undertook HVAC contracts.

I worked in a few Indian cities at that time – Mumbai, Chennai and Coimbatore – and within two years, I thought that it was time for me to move to the Middle East.

“So when I got an opening in Saudi Arabia, I joined a company there as an HVAC engineer

SEPTEMBER 2015

at the very grassroots level, as a site supervisor.

I was staying with the labourers, I was going along with them to work, eating with them, I lived with them for almost a full year, and even though it felt that I was being exploited, that part of my life made me a successful person today.

“I understand their feelings and what the expectations of the labourers are. In a business like ours, skilled manpower resources are the key to success. If you fully understand what their expectations are and if you can keep them well, then that can give you continuous, steady growth,” he says.

“In a busIness lIke ours, skIlled manpower resources are the key to success.

If you fully understand what theIr expectatIons are and If you can keep them well, then that can gIve you contInuous, steady growth”

Given the issues swirling around Qatar as the country builds to the 2022 World Cup, Kumar’s attitude can only be applauded. However, he says it’s merely good business sense to pay attention to your workforce, pointing out that less than 5% of his staff want to leave the MEP contractor, while those who do leave almost always express a willingness to return to the fold.

Having got his start in Saudi Arabia, Kumar moved to Bahrain in the mid-to-late 1990s to work for a construction group as a project manager on the City Centre Manama project, as well as the Gulf Hotel Convention Centre.

On the back of the successful delivery of these projects, he was given a mandate by senior management to explore opportunities in the Qatari market. The joint venture there was a small operation with just three employees – a draughtsman, an AC technician and Kumar himself. Despite having managed major projects in Bahrain, he says he had no qualms ‘demoting’ himself to do the grunt work on the ground that is required when building a new company up.

“As a start-up company, you should sacrifice, you have to earn for your expenses,” he says. “That’s the slogan we had. Whatever jobs came to us, we took them on, earned the money and paid our salaries from that.

We went through a step by step process.”

Unfortunately, the joint venture eventually faltered and the two partners went their separate ways. With local Qatari Salim Al Malki already owning 51% of the company, he now had complete control of the burgeoning MEP contracting firm. At this point, Kumar made the decision that would lead to him

SEPTEMBER 2015 september

MIDDLE EAST

In Profile in ProfIle Vasanth VaSanth Kumar

17

In ProfIle Vasanth Kumar

becoming CEO of one of Qatar’s most respected and well-known MEP contractors.

“I decided to stay along with him [Salim Al Malki]. Together we continued from 2003 until now, and we plan to take the company to much greater heights,” he promises. “At the time when the split happened, our turnover was in the region of $27.45 million per year. Then when we became independent and made autonomous decisions, we’ve blown up to almost $137 million, from 2003 to 2014 – last year.”

“Not only were we able to grow, but we’ve also been able to increase our efficiency and our profitability. Whatever experience I’ve gained from the three companies [I worked at previously] I brought here to Arabian MEP, and I can say that this job is the culmination of everything I’ve learnt. I’ve brought the good things and left out the bad things.”

That’s not to say that the last decade and a few years have been an easy ride for Arabian MEP. Despite being just a halfhour flight from Bahrain, Kumar soon learned that he was dealing with a very different business environment in Doha.

“The ground conditions are entirely different in Qatar. Business is done here more on trust, while licensing requirements are extremely cumbersome. Separate licences are required for HVAC, electrical, plumbing, drainage and so on. Each and every employee needs to be interviewed and certified.

The procedures are mind-boggling!

“We started as a Grade-B company, then moved to a Grade-C, then back to B and

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learnIng curve Kumar says that Arabian MEP faced a steep learning curve when it started, as they took the time and effort to build the company.

SEPTEMBER 2015

MEconstructionnEws.com

“the ground condItIons are entIrely dIfferent In Qatar. busIness Is done here more on trust, whIle lIcensIng reQuIrements are extremely cumbersome”

then finally to a Grade-A company, even though we were a Grade-A company in Bahrain. It took us 12 long years to reach an A-grade, so you can understand the lengthy procedures that we had to undergo.

“These are the challenges. Without an A-grade licence, it’s not possible to execute a large project. Even though the A-grade certification stands for a large project, people interpret it as being ‘top-most quality’, and so, even for a small project, they want an A-grade contractor,” he explains.

To counter this perception, the nascent firm had only one option: hard work. In the initial stages, Arabian MEP had to pick up jobs in bulk and focus on doing the work quickly and efficiently, while maintaining a focus on quality delivery and service.

“This was all part of the learning curve, and we decided not to take any shortcuts. We decided to invest our time and effort [in this].

We put in the effort, we put in the money and we underwent the complete process, and now I can say that we’re one of the few companies in Doha to have all the required licences in our name.”

As well prepared as Arabian MEP is, significant challenges in the Qatari market remain, with the country still struggling to cope with the enormous demands being placed upon it by heavy government investment.

While the World Cup continues to dominate the headlines, Vision 2030 is also putting pressure on the construction industry, with huge infrastructure and development projects to be implemented throughout the country.

“On the labour front, the registration for the visas, the bank financing facilities, all these cause issues,” says Kumar. “But anyhow, having spent almost 20 years [in Qatar], I would not complain, because we know what the bottlenecks are. Everyone is complaining about Qatar now, but not us. We know what’s required and have taken steps to ensure that we’re comfortable now,” he says, though he does concede that delayed payments is an issue that needs to be addressed sooner or later, for the good of the industry.

“The main challenge here is that projects get delayed, and when they get delayed, there is no compensation for the costs incurred. They do give compensation for time, in that they give you extra time to complete a project, but not for the prolongation of costs. There are no fixed price contracts and there are no provisions for cost escalation or price adjustment.”

Another concern that Kumar raises is the lack of competitiveness between Qatari companies and the international firms entering the market.

Not only do Qatari companies charge more than their international counterparts, but they also offer less in terms of skills and quality.

“Recently, the question was asked to me: ‘Why is it that Qatari companies cost more?’

We know what the problems are. When you open the bids, you see that most of the jobs are going to international contractors, and not just on merit. It’s often to do with price.

We’ve seen bids that are 15%, 20% or even 30% lower [than those of local contractors].

“One of the reasons is what we call risk mitigation through provisions in our costs.

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in Profile VaSanth Kumar

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put a premIum on It Having clients come to you means you can put a premium on your work, Kumar says.

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That’s why local contractors – Qatari contractors – are more expensive than international contractors. It should be the other way around, right? Local companies should be cheaper than their international counterparts.

“Qatar is a place where if you wanted to grow by 100% or by 200% in a year, you’d be able to. It’s not a question of booking a project, it’s a price-driven market. You can give a price and get a job. The main challenge is how you’re going to deliver the project.

“I’ve done a quick study of the market, just to see generally how MEP contractors are doing, and when you look at the survey, you notice that the majority of the companies are able to complete or invoice their clients only 20% to 25% of the jobs booked. The remaining 75% go into the next year.

“When you keep a huge backlog of your work into the next year, that’s very high-risk. Inflation is high, steel costs are going up, labour costs

SEPTEMBER 2015

are going up, and the penalties are extremely stiff,” Kumar warns, adding that Arabian MEP’s strategy to counter this is to limit its exposure and proceed with reasonable growth targets of around 20% per year, while focusing on handing over projects on time, getting proper recognition from clients and getting repeat orders.

Winning repeat business from clients is a key part of Kumar’s strategy for the MEP contractor, and he continues to stress its importance to his staff.” Those clients that are willing to come back to you and give you the job, you should understand that the mark-up is better than you chasing a job. When you chase a job, you have to compromise on your net margins, but when a client is willing to give it to you, then I think it’s because he wants you and is willing to pay a little premium for it,” he asserts.

“I’m happy to share with you the news that we recently won three contracts in one day. Our client just called me and said, ‘Check your mail.’

“when you chase a job, you have to compromIse on your net margIns, but when a clIent Is wIllIng to gIve It to you, then I thInk It’s because he wants you and Is wIllIng to pay a lIttle premIum for It”

In ProfIle Vasanth Kumar

n Development of Barracks buildings for internal security force – Package 7b – Mechanical Works n 132/11 KV substations for 2022 World cup, Al Khor stadium and Al Wakra stadium – MeP n 132/11 KV substation for salwa resort – MeP n lusail coM 20 Tower – MeP n souq Wafiq Underground car parks (West) – MeP n Milaha logistics city – Package 5 & 5A – Mechanical n Al Meera Mall @ Wakra – MeP n Al Meera Mall @ Um slal Ali – MeP

A curious aspect of Qatar’s growing construction market is the relative lack of major local subcontractors in the market.

Of course, the likes of Drake and Scull have a significant presence, but local contractors capable of dealing with the high-profile projects in the pipeline are thin on the ground.

To Kumar, this represents an opportunity not to be missed, and he has moved quickly, setting up a joint venture company with two other international MEP contractors to take advantage of the surging growth in the Qatari market.

“As Arabian MEP, what we’ve done is study the market and bring in two large companies.

One company is called Cobra, it’s from Spain.

They’re one of the largest MEP contractors in the world and operate in 45 countries around the world, with 28,000 employees and turnover of about $4.57 billion, just in MEP alone. We partnered with them to bring the technology and experience, as they’ve done a lot of metros, LRTs and stadiums. We formed a partnership with them to participate more

Qatar vIsIon Arabian MEP’s focus will remain on Qatar for the time being, given the number of projects available in the market.

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Projects secured In Q2 2015

by ArAbIAn MeP contrActIng

That’s the kind of relationships that we have, rather than me chasing them down! In the last seven months, we’ve got almost 12 new projects.

“Most of these jobs are repeat business.

The most notable one is the development of the Barracks for the Qatar Security Force.

We’ve also got a couple of towers. We’ve been awarded the eastern side carpark at Souq Wafiq [Arabian MEP worked on the western side carpark]. Most of these jobs are repeat business.

“Booking projects has never been an issue for us. We just focus on how to go out and do the job. The ones mentioned are not so big, I would call them medium-sized projects, and when I look at the issues faced by other contractors, the major problem is that everyone goes after the mega-projects and then if one or two payments are delayed, the whole company suffers,” he continues.

“Our strategy is to have a mixed basket of jobs. Two mega-projects, four medium-sized projects and around 10 small-to-medium-sized projects. That will keep our workforce fully engaged and will keep our cash flow in order.”

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25 chAllenges fAcIng QAtAr n lack of workable visas/visa restrictions hiring from indian subcontinent n not many willing to join construction industry, as a result shortage of skilled workers in market, many are young with little experience n High salary expectations n low productivity n retaining talent by offering better remuneration, facilities, bonuses n shortage and high cost of Qf and Q22 worker welfare compliant labour accommodation facilities n new law for air-conditioned buses for worker transport

partnershIp potentIal Arabian MEP has joined up with Cobra and AE Arma Elektropanc to target mega-projects in Qatar.

in all the tenders related to the railways, stadiums and the huge mall projects.

“In addition, we brought in another Turkish company called AE Arma Elektropanc. They operate in Russia, Azerbaijan, Lebanon, Algeria, Northern Cyprus and obviously Turkey. They have about 5,000 employees. With Cobra having about 28,000 employees and us having 5,000 employees, this joint venture gives us more than 100 years of experience in the MEP industry and a combined turnover of $6.86 billion per year. We believe that we can cater to these mega-projects with these joint ventures. The average value of mega-projects in the market is around $412 million. We thought a threemember team would be the ideal choice, sharing $137 million each in investment and risk.”

As ambitious as these moves are, Kumar insists that with 20 years on the clock, things aren’t going to change too extravagantly for Arabian MEP Contracting. The qualities and values that brought them to the forefront of the Qatari MEP industry will continue to hold sway over the firm’s future decisions.

“Our focus has always been that the customer is the topmost priority. We want

n MMUP engineer certification process is lengthy and only graduate engineers are considered

to deliver the best to our customers, with no compromise on integrity. This is something that I’m extremely proud of. When I entered the contracting business, many people said that this is a business where you need to be flexible.

“I said, yes, I’ll be flexible in terms of progress and change, and in terms of the project, but nothing else. We adopt a zero tolerance policy towards corruption, and I’m proud to say that we have completed 600 projects [since 2003] and all of those projects have been won in a professional, legitimate way. We conduct our business with utmost care, and while executing a job, we respect all stakeholders and deliver the results,” he emphasises.

“Customer focus and integrity. These are the two things I’d like to have left as my legacy to the future generations of this company. There were very testing times, and we could see that we were missing out on huge opportunities, but we believed that our principles would be worth it in the long run. We sacrificed those projects, but now I can sit back and relax and conduct my business without any fear whatsoever, and plan for the future,” he says with the quiet confidence of a man with a carefully planned vision.

n To attract professionals is becoming a major issue due to family visa process for six months, bank account, shortage of affordable family housing, extremely difficult situation to get school admission for children and limited options to pursue university education for expatriates n BiM knowledge/expertise new to the region n Material shortage, non-availability, longer lead times n Delay in port clearance n High inflation/rising cost of materials and services n Poor after-sales service support by local vendors, spare parts availability n contract disputes, poor contract administration is root cause of dispute n Alarming increase in construction disputes, 87% year-on-year in Me as per 2015 ArcADis report n Delay in payments including advance, progress payment and final account n negative cash flow as payments for materials on-site are not paid, maximum 60% of BoQ rate or 50% of invoice value, whichever is less n final 10% retention is not paid for years n Unrealistic milestones, completion period and stringent penalty clause n A contractor can easily reach the 10% penalty cap within few weeks of delay

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“our strategy Is to have a mIxed basket of jobs. two mega-projects, four medIum-sIzed projects and around 10 small-to-medIum-sIzed projects. that wIll keep our workforce fully engaged and wIll keep our cash flow In order”

SEPTEMBER 2015

n Delay in project completion due to delay in statutory approvals (QcD/ KM) due to ever-changing regulations n Projects end up in eoT, only extra time given but not the prolongation cost n no price escalation clause (lump sum fixed price contracts) n Difficulty in accessing financing for projects through banks, lc, overdraft, refinancing, etc

Site ViSit Marina Gate

MEconstructionnEws.coM

missing link The Residences at Marina Gate will be the missing retail link at the top end of the Dubai Marina community.

HigH-end Gate way

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As work on the core of the first tower begins, Big Project ME tours the Residences at Marina Gate construction site to get a sense of what it will bring to Dubai Marina.

SEPTEMBER 2015

PROJECT

The Residences at Marina Gate

CliEnT

Select Group

Main COnTRaCTOR

ALEC

MEP COnTRaCTOR

ALEMCO

EnaBlinG WORKS

Swissboring

PROJECT ValuE

$1.08 billion

TOTal BuilT uP aREa

371,612sqm

PROJECT TyPE

Residential mixed-use development

SEPTEMBER 2015

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Site ViSit Marina Gate

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Site ViSit Marina Gate

I

n the 12 years since Dubai Marina was established, the district has become synonymous with towering, futuristic skyscrapers. Reminiscent of classic science-fiction movies, the artificial canal city is spread over three kilometres and home to 120,000 people in residential towers and villas, making it one of the most sought-after areas in the Dubai real estate market.

As impressive as the overall district is, the most eye-catching section is what is referred to as the Tallest Block in the World – the western side of Dubai Marina, home to some of the tallest buildings on the planet, including the famous 414m Princess Tower, the second-highest residential tower in the world. Standing shoulder to shoulder with the Princess Tower are some of Dubai’s best-known architectural landmarks, including 23 Marina, Elite Residences and The Marina Torch.

There will soon be a new addition to this distinguished list, with the first tower of high-end mixed-use project The Residences at Marina Gate set to be delivered in 2017.

Developed by The Select Group, a Dubai developer, the $1.08 billion project consists of three towers situated at the northern entrance

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start of a relationship Residences at Marina Gate is the first project between ALEC and Select Group.

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MEconstructionnEws.coM

“We also paid attention to efficient energy systems that Would reduce noise levels and energy consumption”

of the Marina and is one of the most intriguing properties being developed in the area.

Envisioned as a missing retail link, the Marina Gate project has a total built-up area of 371,612sqm (of which 106,190sqm will be Marina Gate 1) and will provide close to 1,300 apartments and 4,645sqm of retail space to the Dubai Marina community. Designed with the high-end market in mind, the developer says that the end user experience was paramount during the planning and conceptualising of the project.

Therefore, rather than going for an extravagant design, The Select Group says that attention to detail and “building from the inside out” was the core focus during the planning stage.

“Aside from the obvious details like functional floor plans for smarter interior décor, intelligent storage solutions and allowance for maximum

daylight, we also paid attention to efficient energy systems that would reduce noise levels and energy consumption,” the developer explains. “Careful attention was also paid to the access points and traffic flow to ensure that the development will add value and convenience for residents and neighbours of Marina Gate alike.”

Work started in April, and the last five months have seen considerable progress. With a 28-month construction schedule leaving little leeway, speed and maintaining high quality throughout the project will be key to its success.

This was a large factor in the selection of ALEC as a main contractor, according to Select Group, with the renowned Dubai contractor taking on the challenging task of delivering three massive buildings in a congested, busy and highly visible area of Dubai Marina.

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Site ViSit Marina Gate

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Work on the project is in full swing and as construction of the building core begins, Big Project ME was invited by the contractor and developer to tour the construction site and get a sense of the immense challenges facing the project team as they strive to bring the project to fruition.

“As ALEC, this is our first project with Select Group, and it is the start of our partnership with them. We have an agreement on this project to deliver a first-class, grade-A project that will be the best residential project in the UAE. We’re heading in this direction, and it’s going very well,” says Tony Hanna, senior contracts manager at ALEC and leader of the Marina Gate construction team.

“One of the mandates or agreements [with Select Group] is to deliver this project with top quality and right on time. It’s a nice design, but the way we look at it is how we can deliver it efficiently and on time, and how to do clever things on this job. When you talk about the tower, there’s a lot of repetition. So we’re just looking at the ways and means of doing the job without wasting time and materials.”

A spokesperson from Select Group, also present during the site tour, tells Big Project ME that the developer wanted an “exceptional building” that would become the flagship development of the group. “The idea was to basically design the building from the inside out.

Basically, it was about providing good efficiency of the layouts and maximising the view. I think that has been delivered by the consultant, and we’re very happy that the construction is going to go ahead with ALEC, who will ensure that the building will be delivered as planned and to a high-quality standard.”

“Most of the buildings in the region are designed to be iconic. We were more interested in a development that focused on the end user experience. In this case, the Marina Gate towers are basically rectangles, they’re super simple. But the plans inside are really well thought-out. The idea is to offer maximised views of the Marina. Therefore, it’s almost fully glazed, with the glazing 2.7 metres high. It’s in the bedrooms, the living rooms, everywhere.”

With the construction process clicking into gear, Tony Hanna and his team have a few logistical challenges to sort out. Although foundation works on Marina Gate 1 have been completed, the construction schedule for the whole project means the other two towers will be picking up the pace of their own progress.

“The project is going to be delivered

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start of the core With foundation works on Marina Gate 1 complete, ALEC has commenced work on the core of the tower.

in three phases. The first tower will be ready for handover by the end of Q3 or the beginning of Q4 of 2017. The second tower will be handed over in 2018, and the third tower is tentatively scheduled for handover in 2019. However, this has not been launched as yet, so the final delivery date will be announced at the time of launch,” the Select Group spokesperson explains.

ALEC has been appointed to build all three towers, with the first priority being Marina Gate 1. The job consists of two basement levels, a ground floor, an eight-level podium and 45 storeys above. Marina Gate 2 will be 11 storeys higher, and unlike the first tower, ALEC has been appointed as a design and build contractor.

Piling work on Marina Gate 2 is nearly complete, Select Group says, adding that construction is pencilled in to start early next year.

The third and final tower is still under design, so details have yet to be released, but Select Group says more will be revealed within the next few months.

Speaking about the foundation works, Hanna

peak operations At peak construction for Marina Gate 1, there will be 1,400 workers on the construction site.

Site ViSit Marina Gate

aiming to have a four- or five-day cycle for the jump. For sure, as we progress and go higher, we’ll be aiming to reduce the time taken. Initially, it will be seven days when we start with the basement and the ground floors. Once we hit the higher floors, our aim is to have four-day cycles, which is quite quick,” Hanna says.

He adds that the façade of the building will be built using a combination of unitised systems and a stick system. The balconies will be built using stick systems, while the cladding will be unitised.

ALEC will be providing an all-service package for the Marina Gate project, with MEP delivered in-house through its subsidiary ALEMCO. The contractor’s fit-out arm, ALEC Fit-Out, will work on the interiors.

“It’s like a joint venture partnership on this project,” says Hanna. “It’ll be executed by ALEC, ALEMCO and ALEC Fit-Out. Some subcontracts will have to be let out, for example, the facades contractor is on board now. Waterproofing

“the main issue is With the noise. What We’ve tried to do is Work during the day as it’s not that bad because the Whole area is busy, and if there is noise, We’re Within the acceptable noise range” on the raft The foundation raft sits on top of piling work carried out by enabling works contractor Swissboring.

and conveyance systems are subcontracted.

Most of the packages have been procured. We may have around 20 subcontractors on the project, between finishes, MEP and so on, [but] we are doing a lot of in-house work as well.”

Given the tight schedule of the project, a key factor in success will be organisation and planning. With ALEC’s extensive experience in working on high-profile demand projects, it’s no surprise that Tony Hanna and his team are already thinking well ahead about the various challenges that will crop up over the coming months.

“One of the challenges on this job is its location. This job is located in the Marina, and all around us are residential buildings.

It’s not like a construction area, by which I mean that the whole area is developed, with only a few construction projects going on.

“That poses some logistical challenges. We’ve got to plan a lot of deliveries ahead of time as there is no lay-down area outside. The piling is progressing on plot numbers 2 and 3 as well, so this poses more and more challenges for us, in terms of the restricted areas,” he says.

To counter this, there is a dedicated logistics team on-site that works with project and planning managers to ensure that everything works according to plan. “We try to get just-intime deliveries. For our material, this is very important, as we plan to work 24/7,” Hanna adds.

As the site is in a heavily populated residential area, extra care is being taken to ensure minimal disruption to the surrounding neighbourhood.

Dust control measures have been put in place, while the construction team ensures that waste is segregated and ready to be recycled.

“The main issue is with the noise. What we’ve tried to do is work during the day as it’s not that bad because the whole area is busy, and if there is noise, we’re within the acceptable noise range.

But during the night, it’s a bit of a challenge.

“What we’ve tried to do is limit it only to night activities that are not noise-generating. We’ve involved the stakeholders and we’ve tried to talk to people – the residents around us. We’ve also involved the police and Dubai Municipality, and we’ve explained our point of view.

“At the end of the day, this is a flagship development that’s being done on the Marina and we’re trying to finish it on time, while also not disturbing other people. So yes, it has been a challenge, but we are overcoming it and gaining the trust of Dubai Municipality and the residents,” Hanna stresses.

Select Group certainly doesn’t seem

SEPTEMBER 2015

MIDDLE EAST

explains that a raft that sits on piling is being used for the project. The piling work was done

by Swiss Boring, the enabling works contractor, prior to ALEC being awarded the contract and starting work on the foundation, he says.

“We’re talking about 500kg per cubic metre that goes into that raft foundation. That’s because it’s a tower, it goes up to 56 levels in total, including the basement and the podium. But as you go up, it’s a core that’s done with reinforced concrete. The two basements are conventional and reinforced concrete slabs, while the ground floor and the podium have post-tensioned slabs.

“The 45 storeys are going to be post-tensioned slabs, which normally has a lighter ratio of steel.

You’re talking about maybe 50kg per cubic metre, when you start talking about the post-tensioning.”

The core of the building will be built using jumping formwork installed in mid-August, just a few days after BPME visited the site. “We are using jumping formwork for the core. We’re

29

Site ViSit Marina Gate

to have many concerns about this, as the spokesperson says they’re content to leave ALEC to carry on with what they’re doing in this regard. “ALEC has been doing a good job in terms of satisfying the authorities and the residents. I wouldn’t say that we’re keeping an eye on things, but we’re present.

So far, we haven’t needed to get involved.”

In order to complete the job on Marina Gate 1, ALEC will be bringing on board up to 1,400 workers as work hits its peak. Once again, this will pose some major questions, and once again, Hanna says the contractor has been laying the groundwork for this well ahead of time.

“ALEC is known for its safety reputation in the market. And for every job, you will have some specific measures that you have to implement. In general, we have high standards for all our projects. But, for example, for this project, because it’s a high-rise project, we’re going to have to look at it differently.

“This is in terms of conveying people to the top and making sure that we have all the safeguards on all floors. As soon as a slab is finished, the safety systems should all be in place. Because it’s a high-rise tower, there are specifics associated with it. The safety systems are different to other jobs that we’ve done. [But] we’ve got the safety measures

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site safety ALEC has put in place specific safety measures for this high-rise project and will ensure the construction teams are trained.

SEPTEMBER 2015

MEconstructionnEws.coM

“i think in terms of the product, marina gate is the best example of urban development. We have the dubai tram just five minutes aWay and We have direct access from the highWay”

and plans already in place. We just need to make sure that they’re implemented.”

Yet another crucial aspect of the project will be its integration with the surrounding infrastructure. As a residential project with retail elements on the podium level, it’s fair to expect some significant traffic – both pedestrian and vehicular – in and around the development once it’s complete.

“I think in terms of the product, Marina Gate is the best example of urban development.

We have the Dubai Tram just five minutes away and we have direct access from the highway. In terms of access and position to the city’s transport network, it is optimum.

“For the development itself, we’ll be providing a lot of parking. We’ve enhanced the requirement from Dubai Municipality to offer some parking, which will hopefully benefit the development of the Marina, so people will have a bit more access,” the Select Group representative says.

“In Marina Gate 1, we have 600 parking spaces. The requirement from Dubai Municipality was around 540. We wanted to be able to offer an additional level of paid parking for shoppers and visitors. The project has been designed with a focus on ample parking and easy access,” he adds, pointing out that the developer also conducted a Traffic Impact Study to make sure the neighbourhood would be able to sustain the rise in traffic.

Once all work is completed, the Marina Gate project buildings will be connected through a raised promenade with stairways at both ends to give pedestrians access to retail outlets in the development.

As work looks set to continue at a rapid

Site ViSit Marina Gate

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site congestion The Marina Gate site is surrounded by residential skyscrapers, making access in and out of the site a challenge for the team.

pace, Hanna says that ALEC has been mindful of its responsibility to comply with Dubai Municipality green building codes. Not only is the construction waste collected, segregated and recycled, but the contractor’s MEP subsidiary, ALEMCO, is putting together an MEP system that will require less energy, thereby making the development more sustainable and in line with the green building requirements.

“We have to obey the green building regulations,” says the Select Group spokesperson. “It’s obviously a great approach for Dubai, to build greener. In addition, in the Marina there is a load restriction in terms of development. We had to think of new ways of making the building more energy-efficient. Therefore, we will introduce heat exchanger water heaters.”

“These are really high performance and will reduce the workload. We have used gas lines as well, so as to try and reduce the overall energy footprint of the building. All the lighting within the developments is LED as well,” he adds.

Given the scale and complexity of the project, it’s no surprise to learn that ALEC is heavily invested in using Building

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Information Modelling (BIM) to help bring the project to fruition. Both developer and contractor are confirmed advocates of the construction technology and highlight its benefits on the Marina Gate project.

“In terms of design, the BIM model was there. At ALEC, all our construction projects are turning to BIM. We have our internal BIM capabilities, so we’re using them on this job. We’ve developed the master BIM model and all the design development, the shop drawings and so on will be integrated into the BIM model, so that we have a master BIM model for the project,’ explains Hanna.

“At Select Group, we’re firm believers that BIM will improve the construction process. The consultant and the contractor are fully implementing it, for clash detection and to ensure a better building,” adds the spokesperson for the developer.

“Once completed, the Marina Gate project will provide the missing retail link on the original section of the Marina Walk. It will add value to the entire Marina community.

The overwhelming response from buyers has reinforced our dedication to quality.”

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sector Focus education

MEconstructionnEws.com

Q atar Education Sector overview 34

MIDDLE EAST

Qatar’s education sector offers significant opportunities for investors and operators.

Mansoor Ahmed Ahmed of Colliers International outlines the key contributing factors

SEPTEMBER 2015

sector Focus education

n High population growth rate – The

n

n

n

n

n

n

population of Qatar reached 2.2 million in 2014 from 1.55 million in 2008, a CAGR of 6.3%. Current projections anticipate the population will further increase to 3.09 million at 4% growth rate and 3.53 million at 6% growth rate by 2022.

Population of Qatar mainly consists of expatriates – The majority of the population falls between Generation X (1965-1980), Generation Y (1981-2000) and Generation Z (2001-present), which translates into a wide base of young parents and school-attending population.

Transient nature of Qatar’s population – This has resulted in an apparent preference for international curricula, due to their transferable nature.

High returns on private education investments – High quality, efficient international schools could achieve 15-20% net profit margins after initial stabilisation years.

Significant growth in the private education market share – Growth has been supported by preferential shift towards international education, generated by the national population and international residents.

International operators are expressing keen interest in establishing regional presence in Qatar – Due to positive demographic and socioeconomic indicators.

Supply of education facilities struggles to keep pace with the burgeoning population – A situation recognised by the government, which has introduced a number of initiatives in the recent past to encourage the private sector to match the shortfall and benefit from this potentially lucrative sector.

PoPulation n The population of Qatar was approximately

SEPTEMBER 2015

MIDDLE EAST

2,003,700 as of 2013. Qatar’s population witnessed a CAGR of 15% from 2004 to 2009, before slowing down to a CAGR of 5% from 2010 to 2013, mainly as a result of the effects of the global financial downturn. n Colliers estimate that population is expected to reach 3.53 million with a population growth rate of 6% by 2022. n High growth rates and young population base coupled with high levels of urbanisation translate to a lucrative market for education services, especially primary and secondary level of education.

Moreover, both Qataris and expatriates

35

sector Focus education

n

n

n

n

place great emphasis on private education, mainly focusing on British, IB, American and Indian curriculum.

76% of Qatar’s population belongs to Generations Y and X, which indicates the forthcoming rise in demand for primary education.

Due to the transient nature of the expatriate population in Qatar, parents prefer enrolling their children within international schools.

This is mainly attributed to the pursuit of a curriculum that is globally transferable.

The rise of Generation X and their dependents from Generations Y and Z continues to dictate the trends in the private education sector in Qatar, especially as 88% of Qatar’s population is expatriates.

As a result, the private education sector in Qatar is expected to maintain a growth pattern over the upcoming period.

Overall, Qatar’s economy has been performing well, which translates positively towards the healthcare and education industries. Anticipated strong GDP growth forecasts will help to strengthen the market and provide impetus for sustainable population growth in Qatar, resulting in a continuous increase in demand for education facilities. The increase in demand is expected to encourage private sector investment in the education sector, resulting in establishing new K-12 schools in Doha.

Qatar’S Education SEctor n There are four broad categories

MEconstructionnEws.com

n

n

n

n

of schools operating in Qatar: Independent, International, Community and Private Arabic Schools.

Independent Schools (Government Schools) comprise 48% of the schools in the country. However, the fastest growing segment is International Schools, which as of academic year 2013 comprise 35% of the schools in Qatar.

Tuition fees charged by private schools in Qatar vary significantly in terms of curriculum, type and quality of facilities offered, and staffing standards. Fees can vary from approximately QAR 70,000 ($19,000) to QAR 9,000 ($2,500) for a 12thgrade student studying in an American and an Indian Curriculum School respectively.

American Schools command the highest range of tuition fees across private schools in Qatar, with fees ranging from approximately QAR 38,000 ($10,500) to QAR 70,000 ($19,000), followed by IB and British curriculum schools.

Indian School fees are the lowest among the rest of the curricula, ranging from approximately QAR 4,000 ($1,100) to QAR 9,000 ($2,500) per annum between pre-KG and Grade 13.

supply (the number of student seats available based on school supply). n As the graph on the following page shows, by 2022, at 4% population growth rate Qatar will require approximately 82,000 new seats, or an average of 11,700 new seats every year. n Whereas, by 2022, at 6% population growth rate Qatar will require approximately 131,000 new seats, or an average of 17,400 new seats every year. n It should be noted that between 2007/08 and 2013/14, approximately 71,000 new seats were added, an average of 16,000 per year. If the Qatar education section maintains the current supply level, in this case at 6% population rate, another 112,000 new seats will be added, compared to a demand of 131,000 new seats, reflecting a shortage of approximately 19,000 seats.

StudEnt PoPulation in Qatar n Considering market dynamics

and average school capacity per curriculum, a number of new schools will be required in Qatar by 2022. concluSionS

During the period between 2014/15 and 2021/22, the education market in Qatar will require 123 new schools at population growth rate of 4% per annum and 196 new schools at population growth rate of 6% per annum across multiple curricula, which translates into annual demand of 18 to 28 new schools.

dEmand & SuPPly analySiS n Based on the trends in the education

sector, growing population, demographics and foreseeable supply of schools, the graph below presents the demand (students requiring education) and

Types of school

school fees (QAR) Other curricula Indian

35%

curriculum

IB

48%

British curriculum

7%

SEPTEMBER 2015

70,000

60,000

50,000

40,000

30,000

20,000

Community school

10,000

Private Arabic school

International

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Independent (govt) school

American curriculum 0

10%

6 December 2015 The Terrace Between the Towers, Jumeirah Emirates Towers www.meconsultantawards.com The inaugural Middle East Consultant Awards will celebrate the GCC’s foremost construction specialists in a unique and engaging format. Reflecting the diversity of the monthly magazine by CPI Media Group, the awards will recognise the region’s best multi-disciplinary consultants as well as specialists in structural engineering, MEP, architecture, interior design, urban design, landscaping, project management, quantity surveying, cost consulting, construction law and other niche disciplines.

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sector Focus education

MEconstructionnEws.com

school demAnd & supply 400,000

300,000

200,000

100,000

0 07/08

08/09

09/10

10/11

4% Population growth rate

critical SuccESS FactorS For thE Education SEctor in Qatar n 1. Securing Qualified Teaching Staff

The success of the Proposed Private School is profoundly interconnected with the quality of teaching staff available on campus.

However, similar to other countries in the GCC, attracting and retaining quality staff is a major challenge in Qatar. n 2. Offering Diverse Facilities & Services Hosting a unique variety of extracurricular activities, in addition to committing to high construction quality and

11/12

12/13

13/14

14/15

6% Population growth rate

15/16

16/17

17/18

Number of new seats (4%)

planning within the proposed school facilities, would highly appeal to the targeted demographic profile, though it substantially increases the set-up cost. n 3. Demographic Landscape Qatar has a young population, in addition to a growing expatriate population. This demographic makeup presents a prime opportunity for growth within the education sector across the Gulf Arab country. n 4. Creating a Gateway to Top-Tier Universities Existing and new schools can benefit if a link between leading universities and

18/19

19/20

20/21

21/22

Number of new seats (6%)

the schools is established, which could possibly lead to students continuing into further education cycles, as students and parents realise the potential opportunities. n 5. Maintaining a Proactive Relationship with the Supreme Education Council Sustaining a good relationship with the SEC helps any school maintain a positive reputation in the market, in addition to contributing to operational success in aspects such as receiving approvals on future expansion plans and requesting an increase in tuition fees.

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HIgH returNs High quality, efficient international schools could achieve 15-20% net profit margins after initial stabilisation years.

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MEP

industry focus demolition

MEconstructionnEws.com

Demolition Men As the GCC property sector expands, older and unfit structures often need to be taken down to make way for new projects. Jerusha Sequeira speaks to demolition experts

A

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drive around the neighbourhood of Karama in Dubai offers a glimpse of several old buildings erected decades ago, none of them over three storeys high.

Now, however, Karama seems to be undergoing a face-lift of sorts as older buildings are razed to make way for newer structures, and the community – popular among tenants looking for affordable options – gears up to accommodate growing residential demand.

This is by no means unique to the area.

As demand for housing picks up in the UAE and wider GCC, new developments will have to be built not just in uninhabited areas, but also in place of existing buildings that are, in many instances, no longer fit for use.

Enter demolition contractors. These firms play a vital role in taking down buildings that are old and often structurally unsafe or dangerous.

While it’s tempting to think of demolition as just destroying buildings, it’s more complicated than that. Big Project ME decided to speak to companies carrying out this work, to garner some insight into the process and the challenges and risks involved.

Goldline Building Demolition, a subsidiary of the UAE-based Goldline Group, was established in 1999 and has carried out work for clients including Meraas, Juma Al Majid, DEWA and Al-Futtaim Carillion.

So how does the demolition process work?

Once an agreement has been reached for a particular project to be taken down, the firm first has to obtain a series of permits from various entities, explains Mirza Munawar, project manager at Goldline Building Demolition, at the firm’s Karama office.

“First of all, we need to get permission from Dubai Municipality, [for which] we have to process certain NOCs. Once

SEPTEMBER 2015

the demolition permit is approved, we have to apply for a fencing NOC. After that, we have to take an entry-and-exit NOC from RTA and start the work.”

NOCs (no-objection certificates) are issued by entities like Etisalat, the Dubai Electricity Water Authority (DEWA) and the Roads and Transport Authority (RTA). This is typically to alert the firm of the locations of underground utilities that need to be accounted for when demolition work is being carried out.

Although most of the company’s clients are contractors or government entities like Dubai Municipality or DEWA, sometimes private landowners also approach the firm when looking to redevelop their land.

After obtaining the permit to demolish, the company may also need to apply for a permit to remove and transport

“Demolition actually DepenDs upon the planning anD coorDination between the foreman anD the operator. the machine operator shoulD be well experienceD”

hazardous substances like asbestos.

Some demolition contractors, like Al Rasheed Demolitions, often hire specialised firms to carry out asbestos removal if the contract requires them to do so, says Mohammed Yaghoub, manager at the firm.

“The demolition we do ourselves, but for the removal of asbestos, sometimes we hire other companies that we have an agreement with.”

In addition to the regular permits from Etisalat, DEWA and the like, contractors also need to approach the municipality for permission to take down old buildings that may have historical aspects, particularly in areas like Deira or Bur Dubai, says Biju John, project manager at PKD Demolition. If the buildings are historical, permission would be denied, he says.

The actual demolition process, as one would expect, entails a significant degree of planning.

“We first secure the site,” Munawar says, explaining that fencing and scaffolding is erected for safety purposes. “Generally we’ll put scaffolding in a crowded area, just to control dust and to control the flying debris. We’ll put scaffolding, we’ll cover it with cloth, and we’ll start demolition.”

In terms of equipment, crawler cranes are often deployed where possible, and are faster and easier means of carrying out demolition work without the use of explosives. However, space constraints in crowded neighbourhoods may prevent their use, forcing firms to use smaller machines like excavators or undertake manual demolition with jackhammers.

So how has the industry evolved over the years in the UAE? Munawar and Yaghoub agree that regulation has grown a lot more stringent with regard to the safety of the pedestal and neighbouring structures.

Currently, a significant portion of the

SEPTEMBER 2015

MIDDLE EAST

industry focus demolition

41

industry focus demolition

projects being taken down in the region are under 12 storeys high. Firms like Goldline have a G+12 permit, allowing them to take down buildings of up to 12 floors.

The above-mentioned methods are generally a viable option for projects of this height or for those in densely populated areas. But for the high-rise buildings and towers increasingly becoming the norm, other options may be more feasible.

Maryland-based Controlled Demolition (CDI) has decades of expertise in the use of explosives to carry out demolition work, both in the US and internationally. Explaining how the process works, Mark Loiseaux, president of the firm, says it all starts with a site assessment and examining blueprints, if available, of the structure to be taken down.

After determining whether a project is technically and commercially viable for controlled demolition, the firm works with local contractors to approach regulatory authorities, utility companies and even adjacent property-owners to discuss their concerns.

Once that is done, CDI comes up with an implosion plan, which includes preparation of the structure as well as taking into account how to protect surrounding properties and utilities.

The equipment and labour required is procured locally, or as locally as possible for international projects, Loiseaux says.

“My desire is to have minimum Western

MEconstructionnEws.com

steve carpenter The main causes of accidents during demolition is the premature collapse of buildings.

involvement. What I like to do is find a local contractor in the country where the work is going to take place,” says Loiseaux, whose firm has experience handling projects around the world, including the Middle East.

CDI can even partner with civil contractors that may not be in the demolition business but have the necessary heavy equipment required to clear debris after the implosion.

Demolition sAfety: A consultAnt’s perspective Demolition is risky business and presents

demolition execution plan which incorporates

its own unique challenges. Accidents in this

the approaches to be adopted during the

type of work are more likely to be fatal than

demolition phase, including risk assessment and

in any other industry, says Steve Carpenter,

a detailed method statement. Assessment and

principal consultant – Health, Safety & Risk

monitoring of the arrangements for demolition

Management at WSP | Parsons Brinckerhoff.

During the process, the main causes of accident are premature collapse of buildings and structures

zones and hard-hat areas, clearly marked and with barriers or hoardings; covered walkways;

and falls from workplaces and access routes,

using high-reach machines; reinforcing

he says. “these invariably stem from a lack of

machine cabs so that drivers are not injured;

planning, resulting in operatives devising their

and training and supervising site workers.

own methods of work and means of access.” in order to manage the health and safety aspects of a demolition project, WSP | Parsons Brinckerhoff ensures that some measures are implemented across the board.

First, thorough structural surveys and assessments

meanwhile, for the contractor’s part, regular toolbox talks are carried out on-site, and third-party training is also conducted every year, tackling issues like safety and work standards, munawar says.

are undertaken before any load-bearing parts of

“Demolition actually depends upon the planning

the structure are altered. next, the competencies

and coordination between the foreman and the

of contractors are evaluated via a thorough pre-

operator. the machine operator should be well

tender health and safety assessment process.

experienced,” he adds, noting that all of Goldline’s

the firm then oversees the preparation of a

operators have over ten years of experience.

MIDDLE EAST

42

include the following: establishing exclusion

SEPTEMBER 2015

mark loiseaux Planning for a demolition contract starts with a site assessment and examining blueprints.

“If a civil contractor has the equipment and they also have a concrete crusher, they can become a demolition contractor with my help.

I would only send a maximum of two people.

We would simply provide the guidance on how to prepare the building to CDI specifications, and then we would handle the explosions, because that’s a very precise operation.”

Safety is naturally a critical element of the process, Loiseaux firmly asserts.

“We’re an engineering company involved in the demolition of structures that happens to use explosives as one of our tools. Our primary tool is gravity.”

The energy used to lift the construction materials in place when building the structure is stored within it, so CDI designs the systematic removal of the supports holding up the structure, in order to let gravity have its way with the building, he explains.

“The key is placing the minimum amount of explosives strategically in support columns and walls throughout the building, to generate the collapse mechanism that we need to properly control the building, causing it to fall in the available area.”

Despite the level of careful planning involved, his firm doesn’t work miracles, he notes. “I’m not a magician. Often there’s no room for the debris, so we can’t take the structure down.”

Moreover, protection also needs to be set up around the explosives to ensure that debris does not fly from detonation.

industry focus demolition

MEconstructionnEws.com

local labour Loiseaux says that he prefers to use locally sourced labour and equipment for his international projects.

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MIDDLE EAST

“we’re an engineering company involveD in the Demolition of structures that happens to use explosives as one of our tools. our primary tool is gravity”

SEPTEMBER 2015

Surrounding buildings then need to be protected from what is known as an air blast.

“When you bring a building down, you compress all of the debris, and the air inside the building rushes down at speeds of up to 80-90mph, so the biggest thing to worry about in protecting adjacent improvements is what we call the air blast. That’s the air rushing out of the building as debris falls to the ground.”

To safeguard structures from the air blast, trucks are often parked in the street to take the brunt of the air rushing out of the building. Other means and methods specific to the structure being taken down and the site can be used.

Detonation of the explosives is carried out by hard-wiring them to a command post, to prevent human error causing a premature implosion.

“We make sure everything is safe, and then someone pushes the button. You also don’t set off all those explosives off at once. They are set off over what is called an implosion sequence, where the charges are detonated not only over seconds but over microseconds.

You have primary implosion delays that control the fall of the building, and you have micro-delays that are installed in the initiation sequence to reduce noise level.”

The process involves a great deal of technical expertise. However, in regions like the Middle East where labour is relatively cheap, it can be tough for specialist firms to compete, Loiseaux admits. Conventional methods can reach a building of up to 10-12 storeys with cranes, a wrecking ball or high-reach excavators.

But for projects built higher, it’s worth contractors considering implosions, he says.

A key advantage is time. Conventional or manual demolition techniques might take weeks or months to complete, subjecting surrounding areas to a prolonged period of noise levels and dust.

“The quantity and type of dust that is generated by conventional demolition is the same quantity and type of dust that is generated by an implosion. It is far preferable to have one event that takes five seconds on a morning, that is going to create least inconvenience to traffic and businesses,” Loiseaux concludes.

“You just bring the building down, you clean up the dust, and the community goes back to normal. There’s a tremendous advantage in reducing the impact of demolition of a major building on the community, where implosion is the right method over all the others.”

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IT In Focus AutomAtion

Rise of the Machines

MEconstructionnEws.com

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MIDDLE EAST

Charles Dunk, civil BIM manager, Civil and Infrastructure at AECOM, outlines the applications for automation in modern-day civil engineering and infrastructure construction

SEPTEMBER 2015

IT In Focus AutomAtion

W

hat is automation in a civil engineering context?

Automation suggests a level of decision-making by a machine in the course of doing work. An individual using a roller to compact sub-base is not automation, because while the machine is carrying out physical work, the individual is making decisions about where to operate and how much load to apply. Autonomously working machines need sensory input to compare against a plan or model, make a decision and then perform a task.

In the familiar knowledge triangle, data is at the bottom and wisdom/intelligence at the top.

An autonomous machine needs to gather data, process it into compatible information, compare this information to a model or instruction, make a decision, action that decision and go back to step one, gathering data to check itself.

Some examples today of automation in construction are: semi-autonomous earthwork machinery, such as graders, dozers and rollers; self-driving dumper trucks; autonomous house-building robots; unmanned aerial vehicles; pre-fab machinery such as CNC machines and lathes; steel pre-fab using robotic welders or riveting; and rapid prototyping with additive or subtractive 3D printers.

These all fit the definition: they have sensors, a model to compare against, a decision-making process and actions they can perform.

There are also examples of innovative machinery that are not quite autonomous but provide significant time saving and improved safety: road pavers, including tarmacadam and block paving; mesh-laying machinery; typical compressor-based machinery; and cranes, hauling and mobile lifting equipment.

So why select automation?

• Health and safety Land remediation may require autonomous machinery if contamination is too high to expose people to, even wearing PPE. Demolition and working near unstable

implement formulate apply communicate analyse process

acquire

KnoWleDGe Value cHain slopes may require autonomous working.

Self-driving dumpers can work in mines.

• Improved value Large civil engineering projects need a lot of input from a surveyor to mark out and check ongoing work. Using machine control removes the need for a surveyor, pegs and manual QAQC processes. Brick-laying robots can build houses where labour is expensive or hard to find. Autonomous machinery can work 24/7 with a reduced labour force.

• Faster delivery Short programmes such as runway construction in a live airport or emergency slope stabilisation may require autonomous vehicles working 24/7, especially when security or safety restrictions prevent large numbers of workers.

Pre-fabrication with automation has obvious advantages, including a compressed programme and high repetitive quality production.

• Quality Autonomous machinery repetitively provides a consistent level of quality, especially in prefabrication. Machine-controlled earthwork equipment not only builds but also records everything it does, automatically creating detailed QAQC records without human input.

SEPTEMBER 2015

MIDDLE EAST

“Machines are duMb but can be prograMMed to do sMart things. if an unplanned event or scenario occurs, the autoMation May stop, or worse still continue constructing the wrong way”

47

IT In Focus AutomAtion

MEconstructionnEws.com

DesiGn Data

feDerateD moDel QaQc & PROGRess inFORMaTiOn

QaQc & PROGRess inFORMaTiOn

eaRThWORK Machine cOnTROL

aUTOnOMOUs sURVeYinG PRe-FaBRicaTiOn anD RaPiD PROTOTYPinG

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MIDDLE EAST

• Physically impossible otherwise Robot welders can reach places a human cannot. Unmanned Aerial Vehicles (UAVs) can fly over sites. Decision-making machines can work in areas inaccessible to people.

Despite these advantages, there are pitfalls.

There is usually a large capital expenditure to add automation to heavy plant and machinery, usually greater than can be recouped over one or two projects. It may take years to recoup the cost, even with the machine fully utilised.

Machines are dumb, but can be programmed to do smart things. If an unplanned event or scenario occurs, the automation may stop, or worse still continue constructing the wrong way.

This requires the erroneous work to be spotted, removed and rebuilt. If an autonomous machine is used for health and safety reasons, but breaks down in an area hazardous to humans, how is it recovered and repaired, especially if it weighs 20 tonnes or more?

Automation requires maintenance, software upgrades and experienced users. Such users typically command higher wages and must be fully utilised for the overall financial benefit of machine control to be realised.

If the design data fed into an autonomous

SEPTEMBER 2015

machine is wrong, the machine may not spot it, whereas a human is more likely to.

Options today for automation – vendor offerings: US heavy plant company Caterpillar formed a partnership with Trimble to provide their vehicles with optional automation. This means a selection of their civil engineering plant is pre-installed with wiring and ducts for machine control, without the sensors or computers.

If a client wants machine control, it is easy to install later or at the time of purchase. Other companies provide fully-automated machines such as UAVs, 3D printers or robotic welders

that include all the sensors, decision-making hardware and machinery. Machine control and automation can be retrofitted to earthwork equipment and vehicles. TopCon and Leica provide machine control sensors, computers and communication equipment for retrofitting earthwork equipment, pavers and vehicles, as well as other sensors for pre-fabrication.

Sensor vendors such as Trimble provide the connection between office and site machinery via connected autonomous machines and cloud storage. Decision-making happens within each autonomous vehicle (there is no overarching AI controlling them all), and design data is fed to each using wireless technology such as Wi-Fi, civilian band radio or a cellular network.

Each machine reports its position over a network to central command. Geo-fencing prevents machinery straying into unwanted areas. An operator in central command compares each machine’s progress to an overall model and pushes revised information back to the vehicle. All as-built, design, progress and QAQC data is fed back into a single repository, forming a rich repository of information for a client at project completion.

Offering clients added value using BIM and automation: AECOM already incorporates BIM and 3D models into the design process and works with clients to leverage this information.

With a single source of truth storing design data and live autonomous equipment data, clients, contractors and stakeholders are empowered to make rapid informed decisions.

Cloud storage, such as ProjectWise or Trimble Connect, provides the important link between a growing design stream and real-time data from autonomous machines. AECOM Middle East works with clients and contractors on GCC sites to make automation a reality, providing real value, time-saving, quality and safety benefits for everyone involved.

“autoMation requires Maintenance, software upgrades and experienced users. such users typically coMMand higher wages and Must be fully utilised for the overall financial benefit of Machine control to be realised”

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The Middle East solar industry Dr Raed Bkayrat, research director and board member at MESIA, outlines the status of the Middle Eastern solar industry in 2015, and what more needs to be done by both local governments and industries

T

he solar industry is going through what can be considered a revolution in the Middle East: while progress in distributed and centralised solar power plants has been slow to take off, recent developments show that the situation is changing rapidly, and as expected, we are now seeing solar emerge as a significant new sector in the power generation. While the world has ramped its overall solar photovoltaic (PV) capacity from about 1.5GW to about 150GW in the last 15 years or so, the region has increased its project portfolio of existing and projects in development from just about nothing to about 3GW today in about the same time span.

Despite the fact that the Middle East is home to some of the world’s largest hydrocarbon reserves that have built up over millennia, countries here are now beginning to tap into the power of sunlight, created just under nine minutes before it is transformed into electricity by photovoltaic panels that can be installed on roofs or ground-mounted. For an oil-rich region, this is a remarkable shift, and the Middle East is setting new benchmarks in the cost of electricity generated from solar energy.

A number of recent solar projects in the Middle East have been breaking records. In 2012, developed by Saudi

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MIDDLE EAST

“DEWA hAs AnnouncED thAt thE nExt solAr phAsE, to bE tEnDErED lAtEr this yEAr, Will bE for An Astonishing 800MW, MAking it onE of thE lArgEst solAr poWEr projEcts to EvEr bE tEnDErED in A singlE phAsE”

SEPTEMBER 2015

Arabia’s ACWA Power, the solar thermal project in Ouarzazate, Morocco – Noor 1 – was, at the time of its contract being awarded, the largest concentrated solar thermal project in the world at 160MW. In the UAE, the Dubai Water and Electricity Authority (DEWA) commissioned the largest ground-mounted solar PV plant in the Middle East in 2013. At 13MW, this facility may seem small in comparison to some of the solar PV plants being built in Europe and North America. Yet it was merely a stepping stone onto bigger ambitions.

In 2015, DEWA broke records when it managed to secure the world’s lowest levelised cost of solar energy for a large-scale solar PV plant, with the 100MW second phase of its ambitious solar park. Faced with a tariff of $0.0584 per kilowatt hour (kWH), DEWA decided to double the capacity of the project to 200MW, making it one of the world’s largest solar power plants, providing the cheapest cost for electrical energy generation from solar energy ever achieved without government support schemes.

Building on an already impressive track record, DEWA has announced that the next solar phase, to be tendered later this year, will be for an astonishing 800MW, making it one of the largest solar power projects to ever be tendered in a single phase. In neighbouring Abu Dhabi, Abu Dhabi Water and Electricity Authority (ADWEA) has announced a 320MW solar PV project to be tendered soon on a Power Purchase Agreement (PPA) basis, ushering in the era of large-scale solar power plants in an emirate that is already home to Masdar’s 10MW solar PV plant and the 100MW Shams 1 concentrated solar thermal power plant.

In Jordan, the second round of the kingdom’s renewable energy independent power

COMMENT Dr. raeD Bkayrat

solAr intEgrAtion There is likely to be an increase in infrastructure projects that integrate solar technology.

A review of recent developments of the solar market in the Middle East shows optimism about oil-rich countries alongside oil-poor countries adopting more solar energy to diversify and strengthen their energy mix, but at the same time it also reveals a very dynamic phase in the timeline for market development.

It remains to be seen how different banks will react to this wave of aggressive bidding at low LCOEs and whether projects will be finally able to achieve financial close in markets like Jordan.

One could argue that these sizeable initiatives and projects need strong support from a local industry that is still developing expertise across the solar industry value chain, from technology development and manufacturing, to engineering procurement and construction (EPC), to operations and maintenance.

Without a developed local industry, one could argue that these new initiatives are taking on

significant risks that could have an impact on the realisation of the project at hand.

The region is also likely to see more groundbreaking projects, such as hybrid power plants where solar PV or concentrated solar thermal are co-located and integrated with conventional power plants. It is also likely to see the integration of solar technologies for sustainable water treatment and desalination, such as using solar PV plants to run seawater reverse osmosis filtration systems. These are indeed interesting and exciting times for solar in the Middle East, which will surely shape a bright future that is full of well harvested sunshine. n Dr Raed Bkayrat is research director and board member at MESIA; he is also the vice president of Business Development for the Middle East at First Solar, a leading global provider of solar energy solutions.

SEPTEMBER 2015

MIDDLE EAST

production programme saw three developers bidding under $0.069/kWH. Egypt has also been very bullish about its energy needs; placing its focus on clean renewable energy, it has announced a 2GW feed-in-tariff (FiT) programme for Solar PV in Binban, while also signing several MOUs for solar PV power plant developments across Egypt with multiple international developers and financiers.

At the same time, other oil- and gas-rich countries such as Kuwait and Qatar are taking notice of current market pricing of solar energy, and for good reason: solar is, today, comparable to the in-country average cost of electricity generated from their current fossil fuel-heavy mix of resources. The Kingdom of Saudi Arabia is also reportedly deliberating these recent groundbreaking prices, as it works on revamping its plans in solar and renewables that were initially announced in 2010.

51

Comment Michael arMstrong

MECONSTRUCTIONNEWS.coM

miChael armstrong

Sustainable Strategies: Developing Businesses for the Future Michael Armstrong, regional director, ICAEW Middle East, Africa and South Asia, explains why sustainability needs to be embedded at the heart of business operations at every level

D

espite fiscal pressure due to low oil prices, construction businesses across the Middle East currently have cause to be positive about their prospects; on the back of increased investment in infrastructure, the sector is booming, with almost $3tn of projects at design, bid or construction stage over the next decade. Over half of these are already in the construction phase, including a number of high-profile developments, such as the 2022 World Cup in Qatar. However, the focus is now on sustainable and environmentally responsible projects, right across the region.

This should not come as a surprise. While the Middle East has attracted its share of criticism from ecologists for the central role it plays in the oil industry, the scarcity of other resources means the region has long been ahead of the curve in terms of matching development to sustainability. The UAE places sustainability near the top of its policy agenda, boasting the highest share of green buildings in the Middle East and North Africa, and Abu Dhabi Sustainability Week is established as a leading global forum.

Last year, the Saudi Presidency of Meteorology and Environment (PME)

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â&#x20AC;&#x153;Companies need to inCorporate sustainability as a Core part of their business operations. rather than a marketing add-on or a pieCe of brand positioning, it needs to be embedded at the heart of business operations at every levelâ&#x20AC;?

SEPTEMBER 2015

announced a decree giving all companies five years to meet rigorous new air, water and noise pollution standards. In Qatar, social infrastructure projects have been given significant budgets to raise environmental living standards, and green codes of construction have been adopted for the building of World Cup infrastructure.

However, increasingly, global thinking on sustainability is shifting. No longer is it something that is tacked onto the end of a business or operational plan. It now seems to be the case that large projects must start from a sustainable proposition.

So what does this look like, and how can the construction industry show leadership?

Time is Ticking

The lesson of the last decade is that both business and society can no longer rely on small incremental changes. Companies need to incorporate sustainability as a core part of their business operations. Rather than a marketing add-on or a piece of brand positioning, it needs to be embedded at the heart of business operations at every level.

This is especially important for construction firms in the GCC. The largest developments will be government-funded, and governments are already sending distinct signals that only eco-friendly projects will get the go-ahead.

Saudi Arabia has already made this the law, while Qatar has hinted that its Global Sustainability Assessment System (GSAS) could soon become mandatory. It may not be long before all construction companies have to be sustainable, which means building it into business strategy from the start.

Comment Michael arMstrong

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How can business embed sustainability as an integral part of strategy?

In the past, becoming sustainable usually meant considering how to reduce resource use or emissions. Nowadays, companies are starting to ask bigger questions. Can they survive if natural resources become constrained? Do they rely on unsustainable commodities or natural resources? Does the company act responsibly?

These questions are central to business strategy. They are about whether a business can operate at all in the future.

All evidence suggests that resources are getting scarcer, regulations â&#x20AC;&#x201C; especially environmental ones â&#x20AC;&#x201C; are becoming more stringent, and public opinion is becoming sterner on wastefulness. Policy-makers, in turn, are becoming stricter.

This means businesses cannot leave sustainability to the end of their business strategy; they must plan it in from the very start.

Companies would be very short-sighted to hope that they can react to challenges as they arise. The time to start planning is now.

53

Comment Michael arMstrong

MECONSTRUCTIONNEWS.coM

striCter poliCies Public opinion is becoming sterner on wastefulness, which in turn is making policy-makers stricter.

more ThAn one boTTom line

54

MIDDLE EAST

An increasingly common term now heard in business is the ‘triple bottom line’, meaning accounting for social and environmental outcomes as well as financial ones. How this is best achieved is still being debated, but it does recognise that there is an existing framework for how business can examine and evaluate the most effective ways to use and manage their resources – in the finance function.

Finance professionals are used to measuring and monitoring performance, and then reporting the results in a way that can inform strategic planning. This means that they are well placed to take a lead in managing risks and resources where sustainability is concerned.

There is an additional benefit to having such initiatives led from the finance function.

Many businesses are wary of sustainability; they may have encountered it in the past as a vague piece of marketing or branding.

They may even feel that it has little to contribute to sound business strategy.

SEPTEMBER 2015

For the construction industry, sustainable initiatives may even be seen as complicating or slowing business strategy. By taking the lead in this area, finance professionals can demonstrate that this is a concrete basis for long-term business planning, with real, tangible outcomes for success and real risks for failure. no compAny is An islAnd

Every business, regardless of size or sector, eventually needs to ensure that sustainability is at the heart of how they operate, if they are to respond to new challenges and manage risk. For the construction sector, which is

at the front line of how we interact with our natural environment, the consequences may need to be faced more immediately than for other industries. However, in the long term this is a benefit, as it means putting in place strategies and safeguards that may come as a shock to other industries in the future.

The only way businesses can survive in the long term is by delivering long-term benefits for society and a light touch to the natural environment. Many companies are experts at planning for their business environment – it is perhaps time to consider that this only exists as part of the wider world.

“Companies would be very short-sighted to hope that they Can reaCt to Challenges as they arise. the time to start planning is now”

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Real estate RepoRt Dubai Market

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Fall in demand There has been a fall in demand for apartments in the Dubai residential markets, with residents preferring townhouses and smaller villas.

SEPTEMBER 2015

MEconstructionnEws.coM

Real estate RepoRt Dubai Market

gap in the m arket

Big Project ME talks to analysts to discover the changing trends investors should be aware of in the Dubai real estate market the residential real estate market, says Harmen De Jong, partner – Development Consultancy and Research at Knight Frank.

“When it comes to residential, we see a lot of supply being constructed. We’ve done quite a bit of work with developers of residential real estate communities along Mohammed Bin Zayed Road and in Meydan. The appetite we’ve seen there is good. We’re looking at average absorptions of between 50 to 150 units per month, so the appetite is high.

“But what we’ve seen is that the demand for townhouses is higher than it is for apartments.

Smaller villas are okay as well, but it’s mainly townhouses, especially for families looking for affordability. Townhouses are more efficient to build and that also means higher returns for the developer. When it comes to villas, we’ve seen that there’s mainly a demand for smaller unit types.

So it’s not necessarily the big four-bedroom or five-bedroom type villas, but more the smaller unit sizes. That also has to do with some of the cooling measures introduced by the Dubai government.”

What De Jong is referring to is the introduction of the mortgage cap; first-time buyers have to pay a down payment of 25% on a property. However, if the property is worth more than $1.36 million, then investors need to pay a down payment of 35%.

“The moment you have this barrier, where if you go beyond the $1.36 million figure, then you’re going to be catering to the wealthy – the richer people, so to speak. That’s the difference, and that’s what we’ve seen, that

SEPTEMBER 2015

MIDDLE EAST

R

ight from the start of 2015, the buzzwords in the Dubai real estate market have been ‘positivity’, ‘resurgence’ and ‘growth’. The message from developers to investors was clear: Dubai is back and ready to build again.

This sense of optimism is only natural; developers are keen to get their projects started off again, and with the effects of the crisis fading into the background, the time is right to go back to the investor well.

However, when the data is examined a little more closely, things are not as clear-cut as they seem. A report by Jones Lang LaSalle for the first quarter of 2015 found continued subdued activity in Dubai’s real estate market. While residential rent remained relatively flat, sale price actually saw a slight decline across both apartments and villas.

Meanwhile, the retail market continued to be constrained by the slowdown in spending, which restricted overall growth levels. The report added that the delivery of more grade-A office space has limited rental growth in the office sector as well.

What this means for the real estate market is manifold. While there are clear indications of recovery, the double-digit growth between 2012 and 2013 has evolved into a more stable market that is showing signs of maturity, says Ian Albert, regional director of Colliers International.

“In contrast to the highly speculative market of 2008, today the majority of transactions are for completed properties, purchased by investors and, increasingly, by end users.”

This changing marketplace is reflected in the changing nature of investment for

57

Real estate RepoRt Dubai Market

MEconstructionnEws.coM

Financial constraints A sizeable demographic of Dubai’s population is only able to afford one-bedroom and studio apartments in certain locations.

58

MIDDLE EAST

townhouses are in higher demand,” he asserts.

This viewpoint is backed by Albert, who says Colliers has seen diminishing returns at the top end of the market.

“Since the introduction of the mortgage cap and the increase in transfer fees, we have seen residential sales prices of villas in Dubai feel the most pressure, with prices remaining stable in Q2 and Q3 of 2014, rising marginally by 4% in Q4 2014 and declining by 5% in Q1 2015. This can be attributed to the overall increase in cost of buying a villa.”

In light of these facts, perhaps it’s no surprise then to see that greater attention is now being paid to the affordable housing market in Dubai.

The JLL report’s overview of the city’s residential market found that the next driving force in the market is set to be end users or middle-income earners, rather than speculative buyers.

Therefore, the first quarter of 2015 saw developer and government initiatives launched to target the affordable housing sector. On the development side, Nshama launched two phases of its Town Square project – Zahra and Hayat. Meanwhile, Ian Albert says that developers like Damac and MAG have begun addressing the issue of affordable or midmarket properties in the Dubai market.

“This, however, will not have a significant impact on the current demand/supply gap that we are seeing in the market,” he warns. “In order to make any real headway in addressing the current housing gap that Dubai is facing, we would need to see another mid-market residential development of comparable size to Discovery Gardens [approximately 25,000 units].”

“Another theme that our research is

SEPTEMBER 2015

highlighting is the lack of mid-market property,” Albert says. “Colliers International recently conducted a study looking at affordability levels within the housing market. The findings indicate that over 50% of Dubai households earn between AED 9,000-15,000 per month.”

“Following internationally accepted standards of what a household can afford to spend every month on accommodation, this limits rental or mortgage repayments to AED 32,500-54,000 per annum.

This sizeable demographic is currently limited by not only location but also the type of product that is available to them, with often only studio or one-bedroom apartments offered in this price range.”

INTERNaTIONaL aFFaIRS

An intriguing subplot to the story of Dubai’s residential market is the impact of Iran’s nuclear deal with the USA. While a conclusion still remains some distance away, the early signs remain positive, which means a long dormant investment

“another theme that our research is highlighting is the lack oF midmarket property”

avenue could soon be open to developers.

“Let us assume that the deal is approved and Barack Obama will get his wish, alleviating the situation with Iran. That means that the real impact will only happen in 2016. That’s when you’ll get European and Western companies who can freely trade with Iran.

“For Dubai, it’s a positive thing that the sanctions are alleviated. That’s because Dubai has a history of trading with Iran, even during the sanctions. And also, Iranian banks have been very active in Dubai, it’s a hub for them. When you look at the companies looking to do business in Iran, then it’s most likely to be coordinated out of Dubai.”

Should that happen, it would mean more employees coming into Dubai to cover the Iranian market. As it’s the second largest market in the region after Egypt, its potential is tremendous, and Iran’s large, well-educated population could mean considerable investment flowing into the Gulf city.

Foreign investment has always played a key role in Dubai’s real estate performance, and the current signs seem to be reflecting buyer concerns.

“Given that a significant proportion of investors in the UAE real estate market are foreign, regional events and currency fluctuations have a significant impact on the market. During 2012 and 2013, cash buyers from neighbouring countries in the MENA region helped fuel the double-digit growth which took place in Dubai as they looked for a safe haven to invest their money,” explains Albert.

“Conversely, tax on foreign property held by Indians – who are the largest group of foreign buyers in Dubai – has applied pressure to property transaction volumes. At the same time, Dubai’s dollar-pegged dirham is making its property more expensive for investors from the Indian subcontinent, the UK, Russia and the euro zone.

In the past six months, the British pound lost about 8% against the dollar, the euro declined 15% and the Russian ruble slumped 42%.”

There is a clear need for new investment avenues. With the market showing signs of stabilising and reaching a level of maturity in recent months, Albert believes a two-tier market could result.

“Our valuers are seeing more upgrades and retrofits in older, more established developments.

This is creating a two-tier market where we are seeing a significant divergence in price between properties in the same building/street. Prime areas in Dubai are also holding their value, especially in areas such as Dubai Marina and JLT which benefit from improved infrastructure and amenities for residents,” he concludes.

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Project VillAMAr CoMPlex ProjeCt - BAhrAin FinAnCiAl hArBour Budget $650,000,000 Project Number MPP1666-B reGIoN Manama, Bahrain clIeNt Name gulf Finance

Villamar residential complex comprising three high-rise buildings, villas and a series of landscaped terraces dropping towards the sea, including one-four-bedroom apartments, and leisure and retail facilities.

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Project Number WPR080-Q reGIoN doha, Qatar clIeNt Real estate Services group (Qatar) PhoNe (+974) 4458 3388 WebsIte www.rsgqatar.com descrIPtIoN Construction of Marina Mix 11, a 5-star hotel and residential building comprising 2 basement levels, a ground floor, 2 podium levels, 36 additional floors and a services floor.

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Fit-Out Picks uP Pace Big Project Me sPeaks to alan Mccready, Managing director of isg Middle east, to get a sense of how the fit-out contracting Market is evolving in 2015

What are your thoughts on the fit-out market in the uae in 2015?

Clearly, the growth rate for the fit-out market in the UAE was maintained and even accelerated in 2015. This is driven by particular activity in the corporate office sector in Abu Dhabi and the hospitality sector in Dubai.

At ISG, our projects also reflect this trend, as we have recently completed the National Insurance Company (Daman) HQ full building fit-out in ADNEC and also the new offices for the Abu Dhabi Tourism and Culture Authority in Nation Towers. In Dubai, we have handed over the initial phases of the Kempinski Mall of the Emirates hotel refurbishment and are currently working on some very high specification F&B venues and other public areas.

What are the major design trends in the current gcc fit-out market?

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We have noticed over the past 12 months an increased focus on collaboration spaces within office designs. We have recently completed a fit-out for a Mubadala company facility where the interdepartmental collaboration was vital to the functionality of the office. This was achieved through spaces that could be of dual usage, and act as both social and meeting space where shared ideas are encouraged.

Hubs are also another shared facility that can be designed into an office layout to support work spaces. These can be particularly efficient for companies who have a mix of permanent and non-permanent office-based staff.

The use of centralised spaces for filing, storage or printing encourage social interaction

SEPTEMBER 2015

and have the added benefit of getting people to move more frequently within the office.

The last trend which has evolved over the past couple of years has been the reduced usage of closed office space â&#x20AC;&#x201C; or where there are closed offices, the use of more glass partitioning as opposed to gypsum walls. This allows more light to penetrate the office, which has a strong correlation to improving the well-being of staff working in an office environment.

What Will be the major groWth sectors in the fit-out market in 2016?

We think that hospitality and leisure will remain a key growth market, particularly for Dubai, and there are already a number of hotels that are being considered for refurbishment, and of course new ones being built to cater to the growing regional and international tourist numbers.

In the past year, we have demonstrated how a five-star refurbishment project can be implemented efficiently and effectively within a live 24/7 environment, and the market has taken notice.

Also, ISG is increasingly involved in engineering-led projects within large corporate fit-out projects. We have always had a sizable technical team of engineers, which we have grown considerably over the last 24 months, as well as the successful growth seen by Commtech, our testing and commissioning sister company. Our ability to manage this business-critical work for our clients has enabled us to ensure a wider sector diversity and to have a real differentiating

advantage as new project opportunities present themselves in the run-up to Expo 2020.

With the importance of sustainability and green building, hoW can fit-out contractors help clients achieve these aims?

ISG has successfully completed a number of projects across the UAE with the directive to obtain sustainability accreditation through LEED, Estidama and BREEAM. We are currently working in Masdar City, on a project that has to achieve an Estidama Pearl 2 rating. This can be accomplished through a number of processes, including ensuring all timber used is FSC-certified, all paints are low VOC-emitting. The lights used are LED, which are more energy-efficient.

Another project which we have recently completed in Dubai achieved a LEED Gold rating. We used PIR sensors to only light up areas in use. This can have a real impact on the energy consumption of an office.

We advise our clients to spend time in the design stage to make decisions that will improve the efficiency of the office environment they are planning to create, and we provide solutions which can have dramatic impacts on the sustainability aspect of our projects.

Finally, we always find that the relationship between stakeholders when considering design and construction is about the integrated design process and project delivery methods, which are the foundation of all sustainable design, construction and operations efforts.

3/3 Daybreak…

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And thatʻs just as well. Because this jobʻs gonna get tough.

The bridge is fixed. The job, done.

And the city is safe once more.

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