Big Project ME January 2014 by Big Project Middle East

JANUARY 2014

094

L I E H A T R E S ’ R A CC IL L ? G ST K C S A N R T A L P ON

e d i w et C C em G y a to b h t w s a re u o on d in biti f to am s t er onal p e x re g i e th l if o t s ucia k l ta is cr ALSO INSIDE E k M or t AKOYA TEES OFF c e w j t ro y ne BECHTEL’S DIPLOMAT P a g i B ailw KUWAIT IN HIBERNATION r CONTRACTOR CAUTIONS

DE M ON ST RA TI ON S

16-20 February 2014

DAMMAM

Dhahran International Exhibition Center, Dammam, Kingdom of Saudi Arabia Show timings: 9:30-12:00 and 16:00-22:00

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M MIDDLE EAST

CONTENTS

JANUARY 2014 07 THE BIG PICTURE INTERNATIONAL CONTRACTORS TAKE UAE TOP SPOT Report finds that balance of work has shifted away from real estate

12 IN PROFILE THE CONSTRUCTION DIPLOMAT Big Project ME talks to Bechtel’s David Welch about his plans for the giant

18 SITE VISIT AKOYA TEES OFF Big Project ME visits the site of the region’s most luxurious golf course

22 MAIN FEATURE STAYING ON TRACK Examining why a GCC-wide railway is vital for regional ambitions

26 INDUSTRY FOCUS A CALL FOR CAUTION Local contractors highlight their concerns in the aftermath of Expo 2020

30 COUNTRY FOCUS: KUWAIT HIBER-NATION – THE KUWAIT STORY Neha Bhatia analyses whats holding back Kuwait’s construction sector

34 SPECIAL FEATURE: SMART GLASS VISION 20/20 Big Project ME looks at how the glass industry is shaping up

38 SPECIAL FEATURE: TECHNOLOGY INTELLIGENCE: UNDER CONSTRUCTION How emerging technology can help the regional construction industry

42 COMMENT KUWAIT PPP – AN OVERVIEW OF RECENT DEVELOPMENTS DLA Piper analyses the impact of Kuwait’s PPP plans

44 TENDERS MIDDLE EAST’S TOP TENDERS Listing the Middle East’s biggest construction tenders of the month

47 HAPPENING THIS MONTH INTERMAT MIDDLE EAST Big Project ME previews Intermat Middle East ahead of the show

PAGE 18

48 CONSTRUCTIVE CRITICISM

Big Project ME visits the site of Akoya by Damac.

CHAMPIONS OF HOPE Is a local documentary the first sign of increased access to labour camps?

Money can buy the land. But ambition makes it a landmark.

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EDITOR’S COMMENT

M MIDDLE EAST

BIGPROJECTME.COM

Time for clear thinking

GROUP CHAIRMAN AND FOUNDER DOMINIC DE SOUSA GROUP CEO NADEEM HOOD GROUP C0O GINA O’HARA MANAGING DIRECTOR RICHARD JUDD EDITORIAL

Did you bring in the New Year ready with the resolve to keep your resolutions? While drafting this month’s editor’s letter I thought long and hard about what promises we should make as an industry. Eventually I distilled them into two worthy aspirations which I think we should aim for: transparency and engagement. The last half-decade made us conservative and wary as we clung onto the small volume of work and partners that were out there. However, as the market now opens up, and we embrace those opportunities that will arise, we should be confident in our ability to deliver effectively and to global standards of best practice. The only way this is going to be possible is by following those tenets I suggested above. The world’s media spotlight will soon move from the difficulties of Brazil and fix firmly on the way the Middle East construction industry conducts itself. We’ve already seen the problems that cutting corners that country has faced. Closer to home Saudi suffered last year when changes to labour controls brought construction to a standstill. In Qatar, poor practices by contractors there placed greater criticism and scrutiny on the FIFA World Cup preparation. This was followed at the close of the year by yet more bad news when we heard of a British company that found itself in trouble for ‘accounting irregularities’ from its Middle East operation. The global press will now be hunting for more stories that reflect badly on this industry. The pressure is therefore on and the onus is on us to prove that we deserve to build and host global events for the right reasons and not just because we can afford to do it.

GROUP EDITOR STEPHEN WHITE stephen.white@cpimediagroup.com +971 55 795 8740 DEPUTY EDITOR GAVIN DAVIDS gavin.davids@cpimediagroup.com +971 4 375 5480 REPORTER NEHA BHATIA neha.bhatia@cpidubai.com MARKETING & ADVERTISING PUBLISHING DIRECTOR RAZ ISLAM raz.islam@cpimediagroup.com +971 4 375 5483 COMMERCIAL DIRECTOR MICHAEL STANSFIELD michael.stansfield@cpimediagroup.com +971 4 375 5497 SALES DIRECTOR CARLO MENEZES carlo.menezes@cpimediagroup.com +971 4 375 5495 MARKETING MANAGER LISA JUSTICE lisa.justice@cpimediagroup.com +971 4 375 5498 MARKETING ASSISTANT BARBARA PANKASZ barbara.pankasz@cpimediagroup.com +971 4 375 5499 DESIGN ART DIRECTOR SIMON COBON JUNIOR GRAPHIC DESIGNER PERCIVAL MANALAYSAY CIRCULATION & PRODUCTION CIRCULATION AND DISTRIBUTION MANAGER ROCHELLE ALMEIDA rochelle.almeida@cpimediagroup.com +971 4 368 1670 DATABASE AND CIRCULATION MANAGER RAJEESH M rajeesh.nair@cpimediagroup.com +971 4 440 9147 PRODUCTION MANAGER JAMES P THARIAN james.tharian@cpimediagroup.com +971 4 440 9146 DIGITAL WWW.BIGPROJECTME.COM DIGITAL SERVICES MANAGER TRISTAN TROY MAAGMA WEB DEVELOPERS JOEL AZCUNA JANICE FULGENCIO online@cpidubai.com +971 4 440 9100 PUBLISHED BY

MIDDLE EAST

Stephen White Group Editor

JANUARY 2014

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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THE BIGGEST PICTURE

INTERNATIONAL CONTRACTORS TAKE TOP SPOT IN UAE CONTRACT WINS

CREDO GROUP REPORT ‘MIDDLE EAST CONSTRUCTION & ENGINEERING REVIEW 2013’ FINDS THAT BALANCE OF WORK WON BY FIRMS HAS SHIFTED AWAY FROM REAL ESTATE SECTOR OM AN K UW AIT

PO W

TE TA

CONTRACT WINS BY SECTOR

S GA

RI A

SA U

BY COUNTRY Given it accounts for over half of total contract wins in the group, it is perhaps unsurprising that all contractors have a material share of contract wins in the UAE. However, there is a marked difference between contractors in terms of their geographic diversity beyond this. Hyundai and L&T have been successful across all five countries (albeit on different scales). All the other firms have won over 90% of their contracts by value in one or two countries.

ED AR AB EMIR AT

CONTRACT WINS BY COUNTRY

TR ANSPORT

U N IT

WATER

TAR QA

INTERNATIONAL CONTRACTORS HAVE consistently won the most contracts by value in the UAE, a report by the Credo group has found. The results reflect the UAE’s position as the largest construction market in the region. In sector terms, the balance of work won by these firms has shifted from real estate (which remains the largest sector over the whole period) towards the oil & gas and industrial sectors. Contract wins in other sectors have been lumpy, the report said, skewed by individual megaprojects. Hyundai and Samsung have led the group in total contract wins across the period, but there have been some shifts in momentum. In particular, China Harbour has had success with several megaprojects and Leighton has had a number of recent successes across sectors, the report added. Credo said that their results were gathered after they considered the performance of the leading international contractors in the Middle East, over the last five years. “Our analysis has focused on the total value of published contract wins, adjusted for each contractor’s share in any joint venture or consortium,” the research group said in the report.

BY SECTOR Few, if any, firms have been truly generalist across sectors. In particular, the relatively smaller (in terms of contract wins) European firms have, mostly, only had success in real estate, figures show. The larger firms have been successful across more sectors, notably Infrastructure, oil & gas and Industrial, reflecting the general shift in sector performance across this group. The nature of new developments means that the physical assets these firms are building may not match the sector in which they are classified.

JANUARY 2014

MIDDLE EAST

DAVID WELCH OUTLINES HIS AGENDA FOR BECHTEL IN THE REGION TO BIG PROJECT MIDDLE EAST – PAGE 12 7

THE BIG PICTURE

BIGPROJECTME.COM

QATAR TO COMPLETE RAIL PROJECTS AHEAD OF SCHEDULE TO SAVE COSTS CEO says mutli-billion project will be completed ahead of schedule to escape escalating costs

SAUDI KING WARNS MINISTRIES ABOUT VIOLATING TENDERING PRACTICES Move comes in response to finance ministry letter that highlighted cases of malpractice KING ABDULLAH OF Saudi Arabia has warned ministries in the country to be fair and transparent when it comes project tendering and not to entertain or tolerate requests to break the rules. The strong move comes as a response to a letter from the finance ministry that highlighted cases of government departments requesting for permission to award contracts to preferred companies or to restrict tenders to select firms, the Arabic language daily, Sabq reported. The publication carried text of the finance ministry’s letter (No. 8155), drawing the monarch’s attention to such practices. “In response to the letter, the monarch has issued instructions, stressing that all ministries and public establishments must adhere to the rules, which require them to issue tenders for government projects to all qualified companies without exceptions,” the report said. The ministry said that it believes that this tendering process will allow the government to get suitable prices for its contracts. The Minister of Finance echoed the King and said that there must be no exception to any department. The finance ministry noted in its letter that requests by defaulting departments violated relevant regulations, which stipulated that government projects must be tendered publicly to give a fair chance to all qualified contractors.

510 KILOMETRES

LENGTH OF LONGRANGE RAIL PROJECT IN QATAR

Qatar is working on a plan to complete its multi-billion dollar rail project ahead of schedule as it looks to escape escalating costs from delays, the CEO of Qatar Rail Company (QRC), has said. Saad Al Muhanadi, told the Qatar Arabic language daily newspaper, Al Sharq that the project was ‘on schedule’ and that 21 of the planned 25 stations are under construction and progressing ‘very well’, in line with the company’s planned timetable. “QRC has devised a plan to prevent any delay in the execution of the project to avert any increase in costs,” he said. However, he conceded that work was yet to start on the

remaining four sites. Al Muhanadi added that besides the foreign firms which won the massive rail contracts, Qatari companies have also picked up a share of the projects, by partnering with the foreign firms. “The contract stipulates partnership between the foreign and Qatari contractors, with a range between 10% and 20%, from project to project,” he explained. “Most of the consortiums that qualified and won the first phase of this project include Qatari partners,” he said. Formed in 2011 to undertake the rail project, Qatar Rail Company has already agreed contracts worth $8.2 billion. The project is scheduled to be completed by the year 2019. The planned metro network will be 230km long, while the long range rail will stretch across 510km of the country. It will be part of the mammoth 2,177km GCC wide railway system, running from Kuwait to Oman.

TENDER FOR SUSTAINABLE CITY TO BE ISSUED IN FEB 2014 Diamond Developers to issue $82 million contract for construction within their $299 million Sustainably City project DIAMOND DEVELOPERS WILL issue an $82 million contract for construction within their $299 million Sustainably City project, situated in the Dubailand district of Dubai. “We will be issuing a tender for the construction of a school, a university and a planetarium by February,” said Faris Saeed, chairman. The company will also construct 500 villas in the development, which will be handled by its in-house construction arm, Jeet Contracting. “We are expecting to get the building permit soon from Dubai Municipality to start construction of the first phase of villas. We plan to handover the first phase by end-2014.” Saeed added that the master planning and project design has been developed by the in-

house team. Set for completion in 2015, Dubai Sustainable City is expected to feature a green belt with 20,000 trees and a 5,000 square footlong water canal with a tourist minaret. At least 20% of the construction area is planned to be built with eco-friendly materials. The project will also feature 182,000sqm of solar farms, which will provide for 50% of the cooling energy in the development. Saeed also added that all sewage water will be recycled, and homeowners will not be charged for services, community fees and maintenance fees for their villas. The community centre and retail wing are expected to generate enough income to cover their expenses.

MIDDLE EAST

BIG PROJECT MIDDLE EAST SHOOTS A COUPLE OF HOLES AT THE AKOYA BY DAMAC PROJECT – PAGE 18

JANUARY 2014

THE BIG PICTURE

SAUDI CONSTRUCTION ON ROAD TO RECOVERY SAYS COUNCIL OF CHAMBERS

UAE CONSTRUCTION MANUFACTURERS GIVEN 2014 DEADLINE FOR REGULATION

Saudi contractors wary of employing undocumented workers due to penalties

Unified building code to be applicable on products not covered under ESMA regulations

FOLLOWING THE GOVERNMENT crackdown on undocumented labourers in the country, the Saudi construction sector is reportedly recovering following a slump in productivity. Construction workers are being given temporary jobs that last the duration of on-site construction activity. While the private sector prefers taking loans to indulge in construction, high labour costs act as decisive factors in the final decision. Saudi individuals choose expat workers from Egypt and South-Asian countries. After the crackdown by the authorities, Saudis are apprehensive about employing undocumented workers for fear of penalty. Many contracting establishments, a major source for expat labour in the Kingdom that were functioning in violation of rules and regulations, have also closed down. Statistics by the Saudi Council of Chambers show there were 200,000 registered contracting companies before the crackdown, and the number has nearly halved since the campaign began. Riyadh, Jeddah and Dammam’s labour markets are reportedly largely dominated by undocumented expat workers.

MANUFACTURERS OF CONSTRUCTION materials across the UAE have been given the deadline of 2014 to regulate their products under the Emirates Authority for Standardisation and Metrology (ESMA)’s mandatory registration. The unified building code will be applicable on products not covered under ESMA’s regulations, a senior official is reported to have said. An initiative by ESMA and the Gulf Standardisation Organisation (GSO), the unified code is expected to come into effect by next year and cover multiple construction materials, such as paints, glass, flooring and ceramics and so on. “We will monitor not just room air-conditioners and central-air conditioners, but the refrigerants (chemicals used as coolants in air-conditioners) too,” said Abdulla Abdelqadir Al Maeeni, director of ESMA conformity affairs depart-

JOB PROSPECTS FOR ENGINEERS TO INCREASE IN DUBAI Dubai hosting Expo 2020 will create job opportunities for engineers

200,000 CONTRACTORS THE NUMBER OF CONTRACTORS IN KSA HAS HALVED SINCE THE CAMPAIGN BEGAN

ment. “We are also reviewing the situation in existing buildings, which use central air-conditioners and big air-conditioning units as well as duct types. “Air-conditioning accounts for at least 50% of electricity consumption in the UAE,” he added. While manufacturers of more than 800 construction materials have already obtained optional standards from ESMA, these are not mandatory and will have to be certified by the conformity department of ESMA by 2014. Some construction materials and sanitary products for water pipelines, like PVC pipes, will have to undergo third-party laboratory tests for conformity with international standards. “Our inspectors will visit local factories to inspect production lines, to ensure that these materials are produced, according to global standards,” Al Maeeni added.

Engineer Essa Al Maidoor, chairman of the Society of Engineers - UAE said Dubai hosting the Expo 2020 would create numerous job opportunities for engineers in the country and region. At a roundtable conference held prior to the Arabian Tunnelling Conference & Exhibition, Al Maidoor, who is also the director-general of the Department of Health Authority said the number of engineers in the country had increased from 26,000 in 2011 to 31,000 in 2013. “It’s too early to accurately predict how many engineers will be needed in the city to prepare for the Expo,” Al Maidoor said. However, he was quick to add that there was a definite chance that openings would increase on the back of more work. “There will definitely be an increased demand for them since projects will be undertaken to develop infrastructure,” he said.

JANUARY 2014

MIDDLE EAST

STAYING ON TRACK: BIG PROJECT ME FINDS OUT WHY THE GCC RAILWAY IS VITAL FOR THE FUTURE – PAGE 22 9

THE BIG PICTURE

BIGPROJECTME.COM

TAKING FLIGHT

KSA

THE EXPANSION OF KING ABDULAZIZ INTERNATIONAL AIRPORT (JEDDAH INTERNATIONAL AIRPORT) IS THE LARGEST PROJECT UNDER WAY IN THE AVIATION SECTOR

n The expansion project will cost

$7.2 billion

n The capacity will be increased from 17 million to 30 million passengers annually n Jazan, Abha, Al Qasim Airports

Earlier this year, the International Air Transport Association said that the Gulf countries are investing more than $313 billion into airport development to help manage a surge in passenger traffic, which is being driven by six of the region’s major airlines. The UAE is leading this investment drive, with more than $23 billion spent on developing its airport infrastructure, including $15.79 billion in Dubai alone. The following is a breakdown of the various projects across the GCC:

$10.7 billion

UAE

COST OF MAJOR UAE AVIATION PROJECTS:

n Dubai Int Airport Concourse 4 and Terminal 4 expansion

$7.8 billion

KUWAIT

n Abu Dhabi International Airport expansion

n $3.3 billion

$6.8 billion

Kuwait International Airport (KIA) terminal will open in September 2016 n Initial terminal capacity will be 13 million passengers annually, with plans to increase this to 25 million and 50 million through further development n Expansion of Kuwait airport valued at

n Al Maktoum International Airport

$3.3 billion

n Dubai International Concourse

$3.0 billion

n Abu Dhabi International Airport has also

launched a mega project, the purpose of which is to increase the capacity of the airport from 11 million passengers to 30 million passengers annually. The cost of the project will amount to

$6.8 billion

n Construction was scheduled to begin in Q2 2012, with completion due in Q1 2017

n The largest contract awarded in the UAE

$6.0 billion

was the joint venture led by Turkey’s TAV to build the Midfield Terminal building at Abu Dhabi International airport worth

n Aviation 9% of total budget for 2013

$2.8 billion

OMAN

OMAN IS CARRYING OUT PLANS FOR THE CONSTRUCTION OF SIX NEW AIRPORTS AND THE EXPANSION OF THE EXISTING AIRPORTS AT MUSCAT AND SALALAH

n The plans include a new international airport at Duqm

BAHRAIN

n Expansion of Bahrain International Airport

$4.8 billion

n Aviation 16% of total

MIDDLE EAST

budget for 2013 n Average ﬂights Bahrain International Airport handles a week: 580

JANUARY 2014

which is due to be operational by 2014

n Development of Muscat International Airport is worth

$1.8 billion

n The Salalah Airport project requiring an investment of

$765 million

n Muscat International Airport new terminal project value

$1.8 billion

n Aviation 6% of total budget for 2013 n Percentage year-on-year increase of passengers handled at Muscat International Airport: 12.7%

QATAR

n New Doha

International Airport

$15.5 billion

n Aviation 13% of total budget for 2013

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IN PROFILE DAVID WELCH

MIDDLE EAST

“WE WORK INSIDE OF OTHER SOCIETIES, I COVER EUROPE, NORTH AFRICA AND THE MIDDLE EAST, AND THEY’RE ALL VERY DIFFERENT CULTURES AND SOCIETIES, AMONGST THEMSELVES EVEN. SO I THINK THAT WE CAN BECOME A MORE SUCCESSFUL COMPANY, THE MORE WE CAN UNDERSTAND THAT AND BECOME A PART OF IT”

JANUARY 2014

BIGPROJECTME.COM

IN PROFILE DAVID WELCH

THE CONSTRUCTION DIPLOM AT Bechtel’s David Welch sits down with Big Project ME’s Gavin Davids to explain why his international diplomacy experience will benefit his firm as it steps up operations in the Middle East and Africa legacy in the Middle East and North Africa. “I joined the American diplomatic service as quite a young man. I was fortunate enough to have a very good career and was involved in a number of serious foreign policy issues for the United States. But I also thought that it would be good to explore the possibility of a second career,” he relates to Big Project ME during an interview at Bechtel’s offices in Dubai Marina. “I wanted to do it in something that would test me individually and personally. You could say that I wouldn’t be comfortable if I couldn’t stretch myself. I was attracted to Bechtel as a possibility because I’d seen some of their work over the years, when I was working in Saudi Arabia and Egypt, and I thought, ‘here’s a company that is building things, that is helping people.” “At the end of the day, when the project is finished, everyone has a result and ideally everything is done in an efficient and safe manner. I was involved in exciting things when I was in government, but the truth is that a lot of projects didn’t get completed and things weren’t done so efficiently, and sometimes there were questions as to whether they helped or hurt people. So it was a complete shift in focus in my career, and I liked the ethical values of Bechtel too. It’s an organisation that runs itself to a very high discipline and standards. It doesn’t cut corners when it comes to honesty, that’s very important to me as a person,” he reiterates.

So what can a former career diplomat bring to one of the largest construction companies in the world? After all, as Welch would be the first to admit, he’s not the best person to go to when it comes to talking shop and making construction related decisions. However, that isn’t what he’s been brought in to do. As he puts it, his job is to utilise his vast knowledge of regional languages and customs (he’s fluent in Spanish and Arabic) to ensure that Bechtel is able to provide the best service possible to its clients in the region. “I think that having been involved in government at the highest level, there are some experiences that are valuable, but we shouldn’t exaggerate that. Instead, what I think is that our business is a global business. That means global engagement and local performance,” says Welch, outlining his philosophy. “We work inside of other societies, I cover Europe, North Africa and the Middle East, and they’re all very different cultures and societies, amongst themselves even. So I think that we can become a more successful company, the more we can understand that and become a part of it. That’s a skill and an insight that I’m trying to bring to this job.” “Now, I have an advantage because Bechtel has been in the Middle East, and in Saudi Arabia, for nearly 70 years – 50 years in the UAE – so it’s not like we don’t have some sort of knowledge

JANUARY 2014

MIDDLE EAST

hen you’ve helped shape the USA’s foreign policy in the Middle East, you might think you’ve done enough to mark your life as one of some consequence. If you then throw in the fact that you’re a former US Ambassador to Egypt, you may be entitled to think you’ve done enough to be remembered by the world. And when you’re a former Assistant Secretary of State for Near Eastern Affairs who has helped bring together two formerly implacable foes and put them on a path to full diplomatic and commercial engagement, then you might even claim to have helped alter history. But if you do think all of those things, then you’re not David Welch. The former Assistant Secretary of State for Near Eastern Affairs is a man who doesn’t believe in looking backwards. Despite all his achievements over 30 years as a career diplomat, Welch has embarked upon a career that he hopes will be equally rewarding, if not more so. Since late 2008, Welch has been the President of Bechtel’s Europe, Africa and Middle East regions and is tasked with managing strategy and business development at Bechtel’s Civil business unit in London. He sat down with Big Project ME to discuss his philosophy for Bechtel’s operations in the Middle East and how he intends to use his decades of regional experience to help Bechtel enhance its

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IN PROFILE DAVID WELCH

IMPROVED SERVICE Bechtel has set up a regional office in the UAE for its mining and metals business, as it seeks to improve service to clients in the GCC. The GCC mining and metals sector has been identified as one of the main pillars of industrial diversification in the region and this trend is reflected in the scale of awards made during the last 12 months, which reached around $6 billion. Two other factors that have driven growth of the sector are urbanization and industrialization of the GCC economies. “We recognise the growing importance of the Gulf region as a strategic hub for our business. The opening of a regional office for our mining and metals business is a reflection of our ongoing commitment to this region,” said David Welch, president of Europe, Africa and Middle East at Bechtel. “Our mining and metals business has a rich history here. Bechtel has been present in the region for around 70 years. We are optimistic about the business opportunities in the region and we believe the outlook is strong. In addition, the region has excellent connections to European and North African markets. The regional office puts us closer to our customers,” he added. The new regional office will draw upon Bechtel’s global experience and expertise in Mining & Metals and will offer services from master planning studies through to engineering execution. Bechtel has completed several hundred major mining and metals projects and more than 1,000 studies across six continents around the world. Some of their projects have included 26 aluminium smelters, 42 major copper projects and 36 major coal projects. The company is currently constructing one of the world’s largest greenfield aluminium smelter projects – Ras Al Khair – for the Ma’aden Alcoa joint venture in Saudi Arabia.

“THE BIGGEST CHALLENGE ON THE RIYADH METRO IS THAT IT’S A CITY OF FIVE MILLION PEOPLE WITH IMMENSELY COMPLEX TRAFFIC, AND WE’RE GOING TO DO TWO LINES OF METRO THROUGH THE DENSEST PART OF THE CITY”

respected that over the years. We have people at the very top of Bechtel who have been going in and out of the Kingdom for decades,” Welch says, as he outlines the many challenges of working in a city like Riyadh. “The biggest challenge on the Riyadh Metro is that it’s a city of five million people with immensely complex traffic, and we’re going to do two lines of metro through the densest part of the city.” “That’s what we’ve been hired to do. It’s going to be both exciting and challenging. I’m sure they thought very carefully about which companies they wanted to choose, particularly for those two lines, which are the biggest parts of the project. Everybody at Bechtel, from Riley Bechtel down, is riveted on this project and we’re determined to begin it well and give the people of Saudi Arabia the metro system they deserve.” One area that has worried a number of contractors in the Kingdom has been the lack of construction materials available to them due to the supply/demand imbalance throughout the country. One major cause of the shortage in supply is due to the conflict in Syria, which has hampered the delivery of materials to Saudi Arabia over land. Coupled with the lack of labour now available to them due to the Nitaqat ruling, there have been serious concerns raised about their ability to complete their projects. However, Welch says that Bechtel already came to the project knowing that this would likely to be an issue and has prepared accordingly. “We’ve already worked around that problem in other projects and our logistical pipeline doesn’t really run through Syria either. I know it would be an issue for local contractors because the Turkish truck trade is really important to this area, but I don’t foresee it being a problem for us. I’m not belittling the challenge posed by a $23 billion investment and what it’ll mean to the cement and steel market, but if you look at the consortia, these are fairly big, substantial companies with a lot of experience. They’ll be organising themselves to meet these challenges,” he asserts. “I feel very good about our consortia,” Welch adds. “We’re lean – with four companies – and all have complementary skills. Almabani has worked with the Municipality of Riyadh for a long time – they’re a competent civil contractor, Siemens is a world class, state of the art, rolling stock provider and CCC is one of the most substantial construction companies, not just regionally, but globally as well.”

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base in the region, in fact, it’s quite sophisticated in some cases.” “The second point I’d say is that when you’re involved in big decisions, what you don’t know is at least as important as what you do know. The biggest risk is when you don’t know you don’t know something. I know a lot about thinking through decisions and managing risk,” he says. “That’s interesting in the corporate world, because the standard can be, in some instances, more clear. You’re running a business and the focus is on the bottom line, but then in projects, there are schedules, performances, budgets and people. And then there are the intangibles. The intangibles are the society and the environment you’re operating in.” With Bechtel being a privately held firm, there isn’t a publicly traded balance sheet to draw on, nor can it rely on the US government to bail them out of its mistakes, so therefore, the quality of decision making has to be absolutely spot on, Welch points out. Given the scope and scale of its projects in the Middle East region, this is probably for the best. Having been appointed, as part of a consortium with Siemens, CCC and Almabani, to the $10 billion project to build Lines 1 and 2 of the metro system, the pressure is on for Bechtel. “A Saudi friend of mine told me the other day that he’d been to an event where the deputy governor of Riyadh was present, and he told me that all the Saudis in the room said that it was really important that this metro system gets done, because this city needs world class public transportation. But to do it is difficult, so (they need to be) aware that we’re going to be affecting their lives for several years now! (But) It’s great that their leadership is immediately, from the top down, signalling their support and interest in this project, and that they’re looking to educate their public that it’s not going to be an easy thing to do,” he reiterates. “We like working in Saudi Arabia, our experience there has been very good. We’ve done some good things with them and they’ve

IN PROFILE DAVID WELCH

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While he does concede that the project could have an impact on the pricing of the materials, he remains assured that Bechtel has kept a handle on things, so as to ensure that it doesn’t get too out of hand. “It’s happened in the past, where if the market heats up, you can have unexpected inflation spikes. Those risks need to be managed.” “We pay very close attention to the procurement side, it’s really just because we do so much, that we have to be really close to it,” he explains to Big Project ME. “If you’re buying stuff for an airport, then you visit the factories in China or in India. You see what the manufacturers actually do, because they’re producing something that might be machined, that’s purpose built, replacing it would

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BIGPROJECTME.COM

“WHEN YOU’RE INVOLVED IN BIG DECISIONS, WHAT YOU DON’T KNOW IS AT LEAST AS IMPORTANT AS WHAT YOU DO KNOW. THE BIGGEST RISK IS WHEN YOU DON’T KNOW YOU DON’T KNOW SOMETHING”

be very hard and you have to absolutely sure about the quality,” Welch asserts. Although Saudi Arabia and the rest of the GCC remain the major focus for Bechtel and David Welch, he tells Big Project ME that his ambitions for the construction giant extend much further than that. Having had projects in Libya and Egypt prior to the Arab Springs in those countries, he says that Bechtel is now looking at assessing the risks involved with returning to them and finishing the job. “To be honest, we’re risk averse when it comes to security. We’ve had a lot of difficulty in some places and we’re very conscious about the security of our employees and those who work on our projects,” Welch says. “We have an electricity project in Sirte, Libya – we’re the construction managers for it, but we have to manage that from afar because of security concerns. We’re not happy with that, to be honest with you. My colleagues, the construction and engineering guys, they’re hands on people and they like to be right there on site. There’s a lot of dissatisfaction when we have to manage from afar. It’s possible to do, but it’s not the way we’d like to do it.” “In Tunisia, we didn’t have any ongoing work, but we were looking at a couple of opportunities, but we decided not to. So yes, that’s been put on the back burner. In Egypt, we still have ongoing work, and the recent disturbances were a bit of a shock and the American and British governments were advising some citizens not to travel there, as well as some Gulf governments too, so we have a lot of employees who are very cautious of those travel warnings, but we think that we can operate in Egypt effectively,” he says. “In Algeria, we’ve had a number of projects there in the past, but we haven’t got any current businesses and we’re not pursuing it right now. Morocco would be fine, but our track record there is not very deep, but we’ll definitely be taking a closer look at Morocco. “We’ve also opened a country office in Mozambique and we’ve just finished a LNG plant in Angola. We’re involved with a country masterplan and institutional project management for the government of Gabon, which is a very interesting project. We’re also involved in a feed contract with Anadarko in Mozambique. So we’ve opened the country office there.” “Sub-Saharan Africa is a growing area of interest for us, we’re devoting a lot more resources there and it’ll be a lot easier to service that market from here in Dubai,” he says, as he brings the interview to a close. n

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717-1

Hall 1

ON SITE AKOYA BY DAMAC MASTER DEVELOPMENT

Akoya by Damac

Project Type

Mixed Use Development (Residential, Sport, Retail)

Project Developer

Damac Properties

Contractors

Trojan General Contracting, Ghantoot Contracting and Ascon Contracting

Golf Course Design

Gil Hanse Golf Course Design

MIDDLE EAST

Project Name

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BIGPROJECTME.COM

ON SITE AKOYA BY DAMAC MASTER DEVELOPMENT

AKOYA TEES OFF

Big Project ME visits Akoya by Damac, the Trump backed luxury golf and housing estate that is set to prove that Dubai’s largest private property developer is ready to move over to master development. Gavin Davids reports

n May of this year, Damac Properties, the largest private property developer in the Middle East, announced plans to develop an 18-hole Championship Golf Course, right at the heart of its 3.91 million square metre master planned development, Akoya by Damac. Since then, work on the project has progressed at pace, with the property developer keen to keep to its five year construction plan despite the mammoth size of the project. In fact, so confident is the developer, it recently acquired an additional 1.27 million square metres of land for the project, bringing its total area to 3.91 million square metres. Included across the Akoya project will be a variety of residential, retail, leisure and educational facilities, says Niall Mcloughlin, the senior vice president of marketing and communications at Damac, who took Big Project ME for a tour of the site. Of course, at the heart of the project will be the Trump International Golf Club, Dubai – an 18 hole PGA Championship Golf Course which is being developed in collaboration with Damac. The 7,205 yard, par 71 course will be developed by renowned golf course architect, Gil Hanse. Having previously designed the course for the 2016 Olympics in Brazil and spearheaded the redesign of the famed ‘Blue Monster’ at Trump National Doral, Miami, Hanse was the perfect choice for the Dubai course says Mcloughlin. “Trump International Golf Course had a relationship with Gil Hanse and we very quickly came to an agreement that they would do the golf course in Dubai. It’s their first golf course in Asia, which is a very important market for them

and their global strategy. Trump is a very well known brand that’s associated with luxury, they were aligned with what we wanted to do and deliver. We categorically said that we wanted the best golf course in the region. It has to be,” he tells Big Project ME at the Akoya site. “That was associated with the other product portfolios of Damac, which was Fendi, which was Paramount. It was the perfect mix to deliver a lifestyle community. It was the extension of a relationship that was already working. We had partnerships with Fendi, with Versace and with Paramount. These were relationships that were working, that we liked and that understood the value proposition that branded residential brings to the market, so they were happy to work with us on the extension of the relationship.” While it’s a given that the bulk of the land area will be taken up by the golf course, Mcloughlin adds that Damac has quite a few interesting plans in place for the remaining space. “Out of the 3.91 million square metres, there

“THE SCHEDULE ISN’T 24 HOURS, BUT IT’S A COMPREHENSIVE SCHEDULE OF SIX DAYS A WEEK. IT’LL RAMP UP AND DOWN AS TIME MANAGEMENT DICTATES”

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MASTER PLANNED COURSE The Trump International Golf Club course will be designed by the renowned Gil Hanse.

ON SITE AKOYA BY DAMAC MASTER DEVELOPMENT

BIGPROJECTME.COM

GIL HANSE TO DESIGN COURSE World-renowned golf course architect Gil Hanse has been confirmed as the designer for the golf course at Trump International Golf Club, Dubai, set in the heart of the ‘AKOYA by DAMAC’ master development. Hanse is one of the most respected names in the industry and has not only been commissioned to design the course for the 2016 Olympics in Rio De Janeiro in Brazil but was also hired last year by Donald J. Trump for the renovation of the famed, ‘Blue Monster’ at Trump National Doral, Miami which is currently home to the World Golf Championships - Cadillac Championship, an official PGA TOUR event. The 7,205-yard, par 71, 18-hole Championship course is the focal point of ‘AKOYA by DAMAC’, a 3.91 million square metre master plan development on Umm Sequim Road, just 10 minutes from Sheikh Zayed Road. “We have always aspired to design courses around the globe and Dubai is one of the most sought after golfing destinations in the world,” said Hanse. “We are looking forward to bringing forth our expertise to develop a strategic, fun and interesting course, which will fit into its surroundings, while being accessible for all.” Hanse has been charged with delivering the finest course in the Middle East, with the goal of hosting a professional tour event. In addition to the course Hanse will also oversee the development of the academy, double-ended driving range, chipping area and putting greens, which will all reflect the same challenges and tests on the course itself. “Gil is easily one of the most sought after golf course designers in the world today and we have enjoyed working with him and his team on ‘The Blue Monster’ at Trump National Doral,” said Mr. Donald J. Trump, Chairman & President of The Trump Organization. “We are confident that Gil will bring his unique perspective and expertise to what will soon become the greatest golf course in the region.”

will be approximately 1.67 million square metres built. So it’s not going to be a very densely built project. That’s one of the components of the Akoya Park, which is a 418,000 square metre green park. Dubai is known for residential living on golf courses, but we don’t think that there’s anything that will compare to our residents opening their back doors and having a 418,000 square metre garden,” he enthuses. A number of main construction contracts have been awarded for the project, with 677 luxury villas awarded to contractors, while 480

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“THE MAIN CONTRACTORS ARE ON BOARD FOR MORE THAN 50% OF THE VILLAS, AND FOR 30% OF THE APARTMENTS, THE MAIN CONTRACTORS (HAVE BEEN APPOINTED)”

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apartment units have also had contractors appointed. “Trojan General Contracting is on board for 446 villas in various clusters and Ghantoot Contracting is on board for 231 villas,” says Mcloughlin. “Ascon is on board for six of the low rise buildings, which are ground plus seven. So the main contractors are on board for more than 50% of the villas, and for 30% of the apartments, the main contractors (have been appointed).” Prior to this, work orders were placed with Al Naboodah Contracting Company for the bulk earthworks required for the project. In addition, a 132KV substation has been built with ETA, while the Desert Group were appointed to oversee the construction, completion and maintenance of the golf driving range. More than 100 pieces of heavy machinery were used to shape the land, Mcloughlin says. “We’re in talks with schools and retail centres to get them on board,” he adds. “The catchment

ON SITE AKOYA BY DAMAC MASTER DEVELOPMENT

GOLF COURSE SPECIFICATIONS n 18 holes n 7,205 yards n Par 71

PROJECT SPECIFICATIONS n Total area: 3.91 million square metres

n Total built area: 1.97 million square metres

n Akoya Park area: 418,000 square metres

area here is tremendous. We have Sports City, Motor City and Arabian Ranches all within driving distance. So the spa, the clubhouse and the retail centre will be very popular, we think.” Given its size, it’s only natural that the construction schedule for the project comes under scrutiny, but Damac remains adamant that it will meet its scheduled completion dates. The first stage of the villas will be completed in the first quarter of 2015, while the actual golf course is scheduled to be finished by the end of 2014. “Because we’ve broken up the contractors, they’ll work in parallel with each other,” says Mcloughlin. “We’re looking at a five year roll out for the whole development.” “The end of 2017 (is when full completion will be achieved) and we anticipate things like the retail centre. It’s 8,825 square metres of retail and we’re in final negotiations with anchor tenants, and we’ll be signing HOTs within the next few days. It will have top end retail and luxury

“ITS TRUMP’S FIRST GOLF COURSE IN ASIA, WHICH IS A VERY IMPORTANT MARKET FOR THEM AND THEIR GLOBAL STRATEGY. TRUMP IS A VERY WELL KNOWN BRAND THAT’S ASSOCIATED WITH LUXURY, THEY WERE ALIGNED WITH WHAT WE WANTED TO DO AND DELIVER”

outlets and a 2,322.5 square metre grocery supporting the residence.” In order to keep up to date, Mcloughlin says that the thousands of workers on site will have to stick to a regimented work schedule that will see them continue the impressive pace they’ve set in 2013. “The schedule isn’t 24 hours, but it’s a comprehensive schedule of six days a week. It’ll ramp up and down as time management dictates.” “Building something like this is much easier than building a 84 storey tower, for example. That’s because of shorter build terms and you don’t have the complexity in a villa. A villa can be built in 14 months; it isn’t any more difficult than anything we’ve been doing successfully for the last 10 years. The challenge here, which we believe we’ve overcome, is bringing a mix to the development, which adds value to it,” he asserts. “The infrastructure is another challenge. Everything within the development, we’ll be doing, supported by the Dubai Government of course, in relation to the water supply and the electricity supply, which is being fed to the power station. The infrastructure internally is being developed by Damac, and that’s a major challenge, bringing the infrastructure along with the development. Projects such as this, as long as they’re planned correctly, to build them isn’t super challenging.” With a team of 279 people already employed in Damac’s technical and development department, the Akoya project is set provide the base for the developers plans to move away from being a property developer to a master developer. As Mcloughlin puts it, there is a huge opportunity awaiting Damac and it only needs the developer to reach out and seize it. He’s crystal clear that this is exactly what it intends to do. “Historically, in the UAE, Damac has always been a plot developer, where we buy a plot from a master developer and we build a tower. We’ve always been looking to become a master developer because we believe that we have very strong capabilities. Internally, we have over 1,000 employees, so we have very strong capabilities, from project management to MEP to interior design and so forth.” “We looked at our portfolio; we looked at what the market was missing and what would complement the offering within the lifestyle space within the market, and we believe that if there’s a Trump golf course in Dubai, it’ll have a lot of appeal to the golfing community, golf tourists will come to Dubai, and also the value of golf courses add to residential components.” n

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COMPREHENSIVE SCHEDULE The number of workers onsite will adjust according to the time management of the projects.

RAILWAY CONSTRUCTION

BIGPROJECTME.COM

STAYING ON TRACK

Big Project ME speaks to those involved in the construction of the region’s biggest railway projects to find out what sort of challenges they expect to face, and how they’re ready to overcome them. Gavin Davids reports

MIDDLE EAST

he long anticipated railway construction boom in the GCC finally kicked off last year with billions of dollars of major rail project contracts awarded across the region. Forming a sizeable chunk of the $108 billion contracts awarded in 2013, rail seems set to be the region’s most ambitious and exciting project sector for a good while. It is estimated that there are $194 billion worth of rail projects currently underway or in the pipeline. The first three quarters of 2013 saw more than $30 billion worth of rail construction contracts awarded across the GCC, a staggering jump from the $3.9 billion awarded during the same period in 2012. The reason for this massive

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jump was the awarding of the $22 billion construction contracts for the Riyadh Metro in June of this year. Furthermore, when it comes to overland rail, the UAE’s Etihad Rail has been one of the most prominent projects in the region, with the first phase of the project well underway. In fact, the next 12 months will see a surge in railway project activity, with Oman looking to set up its own national railway, while Mecca, Medina and Dammam are all looking to develop metro and light rail networks. Meanwhile, the Metro Jeddah Company has already announced that the Jeddah Metro will most likely be awarded in the first half of 2015.

This railway activity isn’t limited only to the GCC, with Iraq keen to build up its railway network while working on plans to develop an elevated metro in Baghdad. In addition, there are numerous opportunities in Northern Africa for rail projects, with a high speed railway been Tangiers and Casablanca most prominent amongst them. As a result of all this rail activity, Big Project ME sat down with a number of railway construction experts to find out just what these projects will mean for the future of the region, both economically and socially. Given that all the GCC projects will tie up to create a region wide railway network, the need

RAILWAY CONSTRUCTION

HIGH SPEED RAIL WORKS Saudi Arabia is spending $25 billion to develop its railway networks across the country.

VALUE OF RAILWAY CONSTRUCTION PROJECTS IN THE GCC: n $25 billion Worth of rail projects underway in KSA

n $25 billion Total amount to be invested in Qatari rail projects

n $14 billion Construction of the GCC railway in Oman

n $12.9 billion Value of Oman National Railway Project

n $11 billion Total worth of Etihad Rail project in UAE

n $10 billion Value of National rail network construction in Oman

n $6.6 billion Value of East West Railway network in Kuwait

to get all facets of its construction spot on is vital, says Trevor Butcher, Partner – Head of Finance and Projects, at DLA Piper Middle East. “The 2,177km GCC rail network is set to link all six Gulf states for the first time in history, providing a welcome alternative to air, sea and road for both goods and passengers,” he says.

“This will be a fantastic achievement for the GCC and the wider Middle East as a whole. The complexity of the project should not be underestimated however, with ambitious time frames and numerous developmental and operational challenges remaining to be overcome, such as resolving the aims and

priorities as between passenger and freight services and settling the immigration and customs logistics at the many borders that will be crossed.” “It is imperative that the GCC countries work together to resolve the outstanding challenges if they are to realise the improved efficiencies in transportation and logistics that the scheme offers, as well as furthering the vision of a more closely integrated GCC community,” Butcher points out. Dr Nadhem Bin Taher, the executive director of the National Transport Authority, adds that this cooperation between GCC countries has already begun, with plans for a GCC Railway Authority already in motion, so as to regulate inter operability issues and the connections between each country. “This has been discussed in the GCC council and will very soon be raised with the GCC supreme council, I don’t have an exact date but this is the plan,” he tells Big Project ME. “Connecting the whole GCC line and the UAE network, there’s a part that’s around 580km, which is part of our national network. Our national network is around 1,200km, so we’re connecting all these issues together. Saudi Arabia is working on (their railway) right now, Qatar is working, Oman is working and we are working,” Dr Nadhem explains. “Now we are studying the connection and interoperability issues, immigration issues, trips issues, taxes, and customs, all these issues are studied right now to see how we can go further from this perspective.” “In order to have a feasible railway industry, you need to take care of all these issues. If you go to Europe, you can take the Euro rail, there are all these issues like customs and immigration, they’ve solved it.” “So all these will be studied by different departments and the responsible authorities, like the Ministry of Interior, the Ministry of Immigration, the Customs Authority and the National Transport Authority. We’ll work with our colleagues in the GCC to enable the GCC railway to be a good tool for transportation (in the region),” he adds.

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“NOW WE ARE STUDYING THE CONNECTION AND INTEROPERABILITY ISSUES, IMMIGRATION ISSUES, TRIPS ISSUES, TAXES, AND CUSTOMS, ALL THESE ISSUES ARE STUDIED RIGHT NOW TO SEE HOW WE CAN GO FURTHER FROM THIS PERSPECTIVE”

RAILWAY CONSTRUCTION

Butcher emphasises that for the GCC Railway to work, there will need to be close collaboration and consultation to ensure an alignment of objectives, standards and time frames between the various long range and urban rail projects. Two men who are intimately involved in the development of these railway systems and their accompanying infrastructure are Joerg Scheifler, CEO of Siemens Infrastructure and Cities, Middle East and Julian Hill, regional managing director, Rail for Atkins. Scheifler says that one of the biggest issues the region’s rail projects is going to face is meeting their own targeted deadline, which is due to the rate at which work is being completed across the region. “Basically, from my own perspective, I don’t think they’ll all make it together, by 2018. We are already at 2014. The Saudis are well ahead, the tracks exist already, so I’ll say that they can make it. The UAE is next. Phase one of the network is under construction, so I think they’ll make it too. But others like Oman, Kuwait and Bahrain, or the link to Qatar, I think those will take longer than 2018. But this is understandable. Building a rail network is very complex, and especially in countries where there is no rail history.” While Julian Hill is slightly more optimistic about the time line for the projects, he stresses that it’s vital for the right level of dialogue and planning to take place now, so as to avoid issues later on. “From a historical perspective, for a cross border railway, I think the level of coordination

MIDDLE EAST

“AS A SECTOR, WE’RE NOT JUST BURYING OUR HEADS IN THE SAND – THERE’S A HUGE AMOUNT OF PLANNING AND COORDINATION TAKING PLACE IN ORDER TO HELP MITIGATE THE RISK, BUT IT’S REALLY IMPORTANT THAT WE DEAL WITH IT AS AN INDUSTRY”

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BIGPROJECTME.COM

and shared vision for the railway, is at a pretty good level. We’re encouraged by the fact that there is a working group to drive things forward and to resolve potential issues at the earliest stage,” he explains to Big Project ME. “The Kingdom of Saudi Arabia has led the track standardisation (gauge width and axle load), to ensure freight trains can technically move seamlessly between countries. Common clearance envelopes and train control systems will be adopted. Diesel trains have also been adopted with space provisions in the

MITIGATE RISK Contractors and consultants are planning ahead to reduce the margins of error on these projects.

infrastructure for potential electrification in the future,” Hill says. Of course there are other problems that contractors, consultants and developers will face when it comes to the actual construction of the railways. One major issue is the availability of skilled labour and materials to work on these complex projects. Given the delicate situation in the Kingdom, thanks to the Nitaqat ruling, and the demand in Qatar and Dubai, ahead of the FIFA World Cup 2022 and Expo 2020 respectively, sourcing

RAILWAY CONSTRUCTION

COME TOGETHER The GCC countries have to work together to create unified standards and codes.

VALUE OF KSA RAIL PROJECTS: n $7 billion - Saudi Landbridge Railway

n $5.6 billion - Jeddah Monorail

n $5.3 billion - Phase one of Mecca Mass Rail Transit project (MMRT)

“IT IS IMPERATIVE THAT THE GCC COUNTRIES WORK TOGETHER TO RESOLVE THE OUTSTANDING CHALLENGES IF THEY ARE TO REALISE THE IMPROVED EFFICIENCIES IN TRANSPORTATION AND LOGISTICS THAT THE SCHEME OFFERS, AS WELL AS FURTHERING THE VISION OF A MORE CLOSELY INTEGRATED GCC COMMUNITY”

available. We recruit from within, but that’s not enough. We also have to approach (people) externally. We have professional recruiting agents (on the case).” “But I would say that, at the end, the key will be remuneration. You have to offer proper packages to attract the best people. It’s not too complex a task, but one that needs to be taken very seriously.” Hill points out that the fact that the market is talking about these issues is in itself a positive indication that the situation will be addressed sooner, rather than later. “As a sector, we’re not just burying our heads in the sand – there’s a huge amount of planning and coordination taking place in order to help mitigate the risk, but it’s really important that we deal with it as an industry,” he says. “We also need to look beyond rail at all the other major infrastructure activity taking place in the region to see the bigger picture.” n

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skilled labour and materials is going to be vital for the success of these projects, say the experts. “That’s really an issue,” says Scheifler, “I’m always saying that we’re now living in the decade of rail in the Middle East. We have projects popping up everywhere. We’re talking about the main line projects, but in addition, we have many metro and tram projects coming up. In Saudi we have numerous metro projects, in Qatar we’re in the midst of the tender process. In Abu Dhabi, there are plans for a metro and light rail system as well. All of that falls under the umbrella of rail, and all of that needs expertise. So at the moment, there are a lot of opportunities out there,” he asserts. “I think this is the most important topic, if you want to do your project successfully. What we’ve done is set up a recruitment programme, which on one hand looks into the whole organisation, as we have projects globally. So we first look internally, where we have expertise

LOCAL CONTRACTORS

BIGPROJECTME.COM

A CALL FOR CAUTION

Big Project ME looks at the concerns local contractors in Dubai share in the wake of the Expo 2020 announcement

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n the wake of the World Expo 2020 being awarded to Dubai, expectations amongst the local construction industry have risen in anticipation of new tenders and project announcements. While it’s likely that the major players in the construction market will dominate the flagship projects, there remains tremendous opportunities for local contractors, especially those in the ‘medium to large’ bracket, experts say. In a report published online in November 2013, Ventures Onsite said that it “strongly believes that Dubai will be prepared to see further economic development, enhanced infrastructure and a host of new employment opportunities, along with an even stronger global reputation and new architectural landmarks.” “This will offer a huge lot of opportunities to all industries in the country, as well as in the region,” the report added. Dr Imad Al Jamal, Contracts and Development consultant expert, mediator and arbitrator at the UAE Contractors’ Association, agrees with this assessment. He tells Big Project ME that it’s likely that there is going to be a surge in investment over the next two years that will benefit the local contractors market. “With the upcoming Expo 2020, of course the contracting market is ready and serious (about taking advantage of the opportunities available). They’re serious about getting into the business available, but it’s not going to be soon. It’ll be at least a year or two before we see the start of business for 2020, it’ll be in 2014 or 2015,.” However, he remains optimistic about the market overall, given what he calls the ‘upward trajectory’ that he’s noticed and the lessons that contractors and investors have learnt from their struggles in 2008 and 2009. “It’s a little bit more conservative in terms of attitudes, on the part of investors, especially in

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the private sector. The government is going ahead with all its projects, but the private sector is a little bit more conservative, bearing in mind what has happened,” he says. “But nevertheless, prospects are pretty good, although the rents are pulling things a little bit backward as they have increased. The price of property has increased as well, so that hasn’t helped. Hopefully the government will (step in). I think they’ve issued some decrees on rents and caps and things like that,” he adds. The call for government intervention is one that is echoed by Milind Deshmukh, managing director at SAM Contracting. The head of a local contractor that has operated in Dubai since 2006, Deshmukh has seen both the extreme highs and lows that have swept Dubai’s construction market. “There is no government regulation for prequalifying contractors. You can start a contracting company tomorrow and take on a $130 million job just because your price is good. In this market, the government hasn’t put any

“IT’S A LITTLE BIT MORE CONSERVATIVE IN TERMS OF ATTITUDES, ON THE PART OF INVESTORS, ESPECIALLY IN THE PRIVATE SECTOR. THE GOVERNMENT IS GOING AHEAD WITH ALL ITS PROJECTS, BUT THE PRIVATE SECTOR IS A LITTLE BIT MORE CONSERVATIVE”

standards as to who should do what. It’s a very serious problem.” However, as Dr Al Jamal points out, there has been significant improvement in the way local contractors are now conducting their business, a consequence of the problems they faced in the aftermath of the bubble collapsing. “I think the best thing they’ve learned from the lesson (of 2008) is to be very fair and balanced in their pricing, in their cost controls and planning. It’s no more (so easy), especially with the medium and big sized companies,” he says. “We’re talking about the medium to big sized companies. Competition has become more reasonable now, with appreciation of prices, inflation, economic factors, both internally and regionally. So we’re seeing better deals being executed, more awareness of the legal and contractual obligations of the contracts that they enter. And of course, the cost control of their operations internally, within the company or other contractors or suppliers.” However, he warns that the resurgence of the construction market in Dubai will only attract more interest from the rest of the world, being one of the healthiest construction markets globally. This is something that Deshmukh is well aware of, pointing out that: “The competition is growing, because of the regional situation. There are more expats coming and setting up business here. This is driving the prices down and the bottom line is completely eroded, making the market unstable.” Despite this, Dr Al Jamal says that he’s convinced that lessons have been learnt: “Things are moving in the right direction, but we just have to be a little bit patient. 2020 is not going to be an easy task, there are a lot of things (to do) and billions of dollars are going to be invested, both locally and internationally. So let’s wait and see,” he says optimistically. n

LOCAL CONTRACTORS

JANUARY 2014

MIDDLE EAST

LESSON LEARNED Contractors have learnt to be ‘fair and balanced’ in their pricing, cost control and planning.

www.cat.com / www.caterpillar.com © 2013 Wolverine World Wide. All Rights Reserved, CAT, CATERPILLAR, BUILT FOR IT, thier respective logos,“Caterpillar Yellow, ” the “Power Edge” trade dress as well as corporate and product identity used herein, are trademarks of Caterpillar and may not be used without permission.

MARKET REVIEW KUWAIT

BIGPROJECTME.COM

UNTAPPED POTENTIAL The Kuwaiti private sector is an untapped resource for construction firms.

HIBER-NATION – THE KUWAIT STORY 30

MIDDLE EAST

Big Project ME provides a SWOT analysis of Kuwait’s business practices - and what it means for the construction sector.

JANUARY 2014

MARKET REVIEW KUWAIT

OUTPUT, TRADE AND EXPORTS

Kuwait: Top 50 exports of goods, 2011

Singapore: Top 50 exports of goods, 2011

n 68% Oil

n 26% Oil

n 28% Other

n 2% Food

petroleum products

n 3% Other chemical n 0.3% Metals n 0.2% Manufactured goods

n 1% Crude materials n 13% Chemical products

n 11% Manufactured goods

n 0.7% Others

n 46% Machinery and

Source: IMF Data

n 1% Others

transport equipment

largely inclusive of administrative opinions. A well-placed source from the country’s market, who requested anonymity for risk of commercial repercussions, went so far as to call this inclusive approach - accounting for and attending to every opinion from the governmental sector - the reason behind an eventual slowdown in the Kuwaiti construction market. Generally, it is the country’s spending policies that have earned considerable flak over the years. Geopolitical conduct has, in the past, weighed down the economy of the country. Consequently, the economic attitude of Kuwaiti planners wavered towards welfare-systems and an overfed public sector - resulting in an untapped private sector. Member of the ruling family and one of the government policies’ most influential critics, Sheikh Salem Abdulaziz Al-Sabah, resigned in February 2012 from his position as governor of the Central Bank of Kuwait following his expressed disappointment over increased public expenditure of “unprecedented levels.”

Al-Sabah returned to the government in late-2013 as the new deputy prime minister and finance minister of the country, with his staunch beliefs intact. “These imbalances are partially or wholly linked to the exchanged relationship with the size and nature of the role played by the government in economic activity,” said Al-Sabah, as per stateowned news agency KUNA, “which has resulted in the oversized growth of its administrative sector and the complication of procedures - thus hindering sustainable growth.” Copious efforts have been invested in addressing the housing shortage in the country. “We have enough finances to solve this problem,” said parliament speaker Marzouq al-Ghanim at a National Assembly session as per a Reuters report from October 2013. While al-Ghanim labelled the issue the ‘top priority’ of that session, Wouterson is of the view that the shortage is only a part of the bigger picture. “The perceived housing shortage is limited to government-funded housing with local Kuwaitis having to wait for extended periods of time on the housing list,” he says. “This forms part of the national welfare programme whereby men can apply for government housing after marriage and receive loans which are paid off over a lengthy period of time. Based on the number of empty apartments in Kuwait, there generally doesn’t appear to be a shortage of housing,” says Wouterson. Kuwait’s labour market structure in itself could hold the key to this problem. The country’s unemployment rate within nationals was a meagre 3% in 2012, as per the IMF report. High salaries, lucrative perks and short working hours make public sector jobs the more attractive option for nationals – a preference that further defeats the already-slacking private sector. The 100,000 applicants reportedly wait-listed for government housing will only further eat into Kuwait’s finances, and an encouraging transition from government-reliant practices to self-sufficient ones - such as private ownership of business and land, could save the Kuwaiti government’s efforts to meet the housing shortage.

“IMBALANCES ARE PARTIALLY OR WHOLLY LINKED TO THE…SIZE AND NATURE OF THE ROLE PLAYED BY THE GOVERNMENT IN ECONOMIC ACTIVITY”

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MIDDLE EAST

he new year will be a busy one for construction in the GCC; UAE continues to race ahead of its peers in creating renowned developments and intelligently strengthening its economy on the world stage after having bagged the Expo 2020. Countries like Saudi Arabia and Oman are gaining attention for large investments in their respective infrastructure most prominently those in rail. As Qatar copes with the ticking countdown to the FIFA World Cup 2022 and criticism regarding its labour laws, Bahrain will have to deal with a sluggish economy and a relatively plodding construction market. Amidst these GCC countries scurrying to meet deadlines – of global events or economic targets – lies Kuwait. Thought to be in a state of inertia at one point, the country’s construction sector has, of late resurfaced on the GCC’s map. A recent news report published by Arab Times stated the country is to spend $75 billion on energy, power and housing projects by 2016. Progress in the energy sector is already underway, with proposals expected for the Clean Fuels Project (CFP), a development worth $17 billion that is expected to revamp the country’s Mina Abdullah and Mina Al-Ahmadi refineries. So it’s understandable why Kuwaiti construction market is not taken lightly. Most operators within the country recognise the vast potential of the Kuwaiti infrastructure sector - an asset often under-utilised by its own government. “Development in Kuwait appears to be curtailed by numerous changes to the government, which have occurred at least every year for the past few years,” says Paul Wouterson, regional director for Faithful+Gould’s Kuwait offices. “Accusations of corruption at all levels throughout the government directly impact on the level of trust within the leadership group and also result in decision making being limited, which in turn impacts on the number of projects being let yearly,” he adds. Wouterson is not alone in his scepticism regarding the Kuwaiti government. A report published by consulting services firm Deloitte stated corruption as one of the country’s biggest weaknesses hindering its growth. “Corruption and political instability both threaten the investment environment. This has already resulted in projects being cancelled or postponed. Poor growth rates and uncertainty about major projects dissuade private investment, further reducing potential infrastructure projects.” Studies by Big Project ME have revealed that the Kuwaiti government framework remains

MARKET REVIEW KUWAIT

BIGPROJECTME.COM

RESTRICTED MARKET Foreign contractors find Kuwait’s government restrictions difficult to deal with.

MIDDLE EAST

A quick glance at Kuwait’s economic revenue breakdown reveals the country’s dangerous reliance on its public sector and overlooking of its private industries. True to its form as a Gulf state, most of Kuwait’s national revenues depend heavily on the trade of oil – the impacts of this overreliance are many. Oil accounted for 68% of Kuwait’s top 50 exports for the year 2011. The oil and gas sector, on the whole, contributed 86% of the total exports and 85% of government revenues in the year, as per an IMF report. In the past decade of high oil prices, Kuwait’s construction sector has rapidly grown in size and volume - growth of the manufacturing and trade sectors was comparatively far slower. ‘Kuwait has a weak business environment compared with other GCC countries’, continued the Deloitte report, which further states the country’s lengthy tendering process and favouritism as a major dampener for the private sector - from within and abroad. “Faithful+Gould is currently undertaking a project for the Ministry of Public Works (MPW) which encompasses a review and improvement programme on the way the MPW manages their projects,” informs Wouterson. “The ultimate aim is to upgrade the MPW’s processes and procedures and install a Project Control System which utilises the latest software available in the marketplace, along with training in the usage of the new system for a number of MPW staff. “As with all change management programmes, this exercise has proven to be both interesting and difficult, in that this is not the same as a construction project in which the client can view progress as the project progresses – progress and

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“GENERALLY, WE HAVE FOUND WORKING IN KUWAIT VERY STRENUOUS, PARTICULARLY GIVEN THE RESTRICTIONS IMPOSED BY THE GOVERNMENT ON OBTAINING VISAS AND/ OR RESIDENCY FOR FOREIGNERS”

INFRASTRUCTURE CREATION Large scale contracts have been awarded to local contractors as Kuwait steps up its infrastructure development.

success can only be measured over a period of time and against set criteria. “Generally, we have found working in Kuwait very strenuous, particularly given the restrictions imposed by the government on obtaining visas and/or residency for foreigners. “Without a civil ID, one can’t open a bank account, which in turn makes it difficult to manage personal finances properly. This along with other issues, such as not being able to get drivers licences for foreigners makes life in-country that little more unpleasant,” Wouterson says. Faithful+Gould is not the only international firm ruing the lack of opportunity in an otherwise promising market. At least two sources from internationally-renowned manufacturing corporations have told Big Project ME about their missed chances in the Kuwaiti construction sector due to tedious price wars and extremely bureaucratic practices. The Kuwaiti construction sector, however, is more than just active. Both petroleumdevelopment projects undertaken by the country currently appear to be on track. Intelligence agency MEED has reported almost $116 billion will be invested in the country’s projects, currently or in the future. Leading local construction companies – such as Al Ghanim and Mushrif Trading & Contracting Co – were awarded large mega-projects by the government, focusing on power generation and infrastructure creation (road-building). It’s clear that Kuwait will grow. The country’s large pool of surplus budgets and oil reserves provide a cushion for its private sector to experiment, grow and compete with its fellow GCC-members and in the international arena. n

AREAS OF OPERATION: UAE

OMAN

QATAR

MONTENEGRO

www.alec.ae

SPECIAL FEATURE SMART GLASS

BIGPROJECTME.COM

VISION 20/20

As technology advances pave their way into construction segments, Big Project ME looks at how the glass industry stands to impact from the Expo 2020 win and the scope for smart glass in UAE. Neha Bhatia reports

MIDDLE EAST

013 was a year of ‘more’ – more exhibitors at The Big 5, more visitors at Cityscape Global, more mega-projects undertaken and one more feather in UAE’s cap – the Expo 2020 winning bid. More is also the theme of the glass industry in UAE. Loic Pageot, area manager for Saint-Gobain Glass Exprover – Middle East, says, “in terms of basic glass, production in UAE and Saudi Arabia exceed the demand for the materials. “There is an estimated gap of almost 100 kilotons per year between the supply and demand for glass in the GCC and Levant countries. Most overproduction in this region alone is due to the optimism of pre-2008; the investments made at the time perhaps kept the market in balance back then. Capacities have been growing due to economy of scale and increased productivity too,” he adds. One would expect, then, that the glass industry would be a fairly happy. Given the number of developments expected across residential, commercial and infrastructural sectors in UAE alone, the glass sector in the UAE and MENA region will be a busy one in the upcoming years.

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“2013 has been better than 2012, but not as good as was expected,” says Ammar Alul, general manager of Schueco Middle East. “Some companies continue to struggle but some haven’t even peaked yet.” “The Middle East market is picking up though, and landmark events such as the Expo 2020 in UAE, FIFA World Cup 2022 in Qatar and infrastructural investment in Saudi Arabia are sending out a feel-good message.” “It’s hard to predict what will follow after the Expo and World Cup, but the immediate foreseeable midterm future - the next five-to-six year period – looks very bright.” Kiomars Dabbagh, managing director of SCHOTT Middle East agrees with Alul’s estimation of the regional market in the run-up to the events. “There’s two sides to the situation – demand and supply. I certainly anticipate an increase of costs due to material demand and capacity requirements. “Specifically though, I don’t see a difference in SCHOTT’s local costs due to the surge, since we aren’t actively involved with local manufacturing.

“Our year-on-year increase in costs will mostly be a general reflector of global patterns.” Maintaining that the UAE market will continue its current growth patterns, Alul insists that the major challenges in doing business in the country persist even today. “Delays, delays, delays and more delays – the biggest risk remains the delays in projects. These could be delays in payment or general project push-backs itself. The companies involved in the development may be financially strong, but holdups like these usually destroy our forecasts and make budgeting very challenging.” “Other risks involved are those usually present in any market, such as price wars, specification-changes, project cancellations and so on, but project and payment setbacks are a tad more recurrent in this region,” he adds. Pageot is, however, concerned about the cost of production for the glass sector in the UAE. “Glass production requires a lot of energy, be it from electricity or gas. Costs for the same haven’t reduced in the last year or so, and it is possible they will be or are already increasing. “The raw materials required to produce glass

SPECIAL FEATURE SMART GLASS

that will allow them to accommodate for the green quotient in their products. “Having been involved in the construction industry for two decades now, I can say the the word ‘sustainable’ has been around for as long, and essentially is referred to the so-called ‘green’ side of things alone, and not so much to the affordable side. “Since it pertains to the environmental aspect of things, every manufacturer, regardless of their fields, certainly strives for some components of environmental friendliness in their products. This is not always a cost-conscious approach, but on the contrary, it leads to increase in costs.” “Nevertheless, architects, designers, specifiers and sometimes, even environmentally-con-

“IT’S HARD TO PREDICT WHAT WILL FOLLOW AFTER THE EXPO AND WORLD CUP, BUT THE IMMEDIATE FORESEEABLE MIDTERM FUTURE – THE NEXT FIVE-TOSIX YEAR PERIOD – LOOKS VERY BRIGHT”

scious owners – if not regulatory mechanisms as well – require sustainable components be used in production processes within the construction industry,” he says. Alul agrees with Dabbagh’s view on sustainability in the region. “Sustainability is a huge thing in the market today, and is sometimes abused, sometimes misunderstood. “A huge percentage of global energy waste comes from buildings or pollution through inefficient insulation, so where we can play a role as an industry and as regulators of this industry lies there. “It is essential to use insulated windows, doors and facades instead of the less-expensive NI (not-insulated) alternatives. They are cheaper since they are thinner and heat up more, which adds to costs and energy wastage. This eventually leads to more environmental damage, which contradicts one major aspect of sustainability,” explains Alul. “The idea of sustainability is to add value to the glass itself,” says Pageot, “in a way that it consumes limited energy – individually and after application too. Glass that does not heat up

JANUARY 2014

MIDDLE EAST

too are expensive. We therefore try to focus on increasing the productivity and recyclability of the materials so there is minimal wastage, bearing in mind the overall value chain of the project as well. “Generally, though, competition often prohibits pricing from reaching the required levels. Since we also have to remember the aspect of sustainability, it becomes essential to reduce consumptions of energy and money while maintaining and bettering the manufacturing of high-value products,” Pageot explains. As the demand for sustainability increases across the region – Dubai’s new Green Building Code will be implemented in January 2014 – the glass industry is busy working on new methods

SPECIAL FEATURE SMART GLASS

A CASE OF OVERCAPACITY Loic Pageot explains the phenomenon of oversupply and demand for glass in the region. “Broadly speaking, there is definitely a case of overcapacity. In the GCC, the demand for basic glass stands at around 500,000 ktons/year production is almost 900,000 ktons/year. The full demand, including the Levant countries (such as Syria and Egypt), still falls short of the total supply by 100,000 ktons/year. You have to bear in mind the time before 2008 in the region, the fast-pacedness of which could have probably maintained an equilibrium at the time. Companies also import from China due to the price gap in the materials. UAE also exports to parts of Asia, Australia and parts of South America. Overcapacities are exported but companies also

easily will automatically reduce air-conditioning costs,” he points out. All three, seasoned members of the glass industry, are confident about the market’s ability to offer sustainable value to a given development. “From the glass perspective there’s a lot you can do, since it is one of the main interfaces between the building and the environment. There’s obviously issues such as solar heat and up until recently, SCHOTT was involved in the production of photovoltaic integrated facades and opaque facades – that’s one way of controlling environmental issues,” says Dabbagh. “The recycling content being used can also be made non-damaging and non-poisonous. Those are areas that can be addressed. As manufacturers, we look to control issues such as how the glass itself can be used and reused, and its application to add to sustainability,” he adds. Ammar Alul is willing to give the regional market time to come around to the concept of reasonable sustainability. “Sustainability includes other connotations and implications as well, such as the recyclability of a product. The industry here is upcoming and not at a stage yet where competitive pricing allows for 100% green production. We will have to pay more right now as it is a long-term approach, which will require social responsibility and ignoring the bottom-line. “Because it (the cost of being sustainable) adds up on the value chain with end-users paying more rent and the developer paying more expenses, it requires every party to be socially responsible and pay more to save later,” he explains. With the use of IT across construction sectors being recognised as a value addition to developments, both Alul and Dabbagh are optimistic about its scope in the glass market. “Most technical advancements in the glass industry are inherent to the actual product itself – the manufacturing process involved, the coatings that append the existing technologies – to reduce reflectivity, repair thermal gains and losses and so on,” says Dabbagh. “There have been breakthroughs in processing capabilities too, but besides these, I can’t say I’m aware of any other technologies that have added to the glass industry in the last few years.

BIGPROJECTME.COM

SUSTAINABLE VALUE Ammar Alul, Kiomars Dabbagah and Loic Pageot say that they’re confident that the market can offer sustainable value to developments.

“Glass is a very non-organic, solid material; one of the strongest involved in construction business – even stronger than concrete. Its sensitivity to touch and heat allows it to be incorporated with technologies available today. “It is certainly possible to allow glass to facilitate in information-creation. I’d say it isn’t too far into the future either,” says Dabbagh. Alul echoes the confidence in IT for glass. “Information technology is a kind of infrastructure I’m afraid many companies don’t – unfortunately – take full advantage of. “By the definition of ‘intelligent’ and ‘smart’, I believe the industry already has these products, such as windows that automatically detect smoke, allow for fire-safety (such as opening up in event of fire smoke to let air out),” says Alul. “This feature comes handy in schools at the kindergarten level so the children can’t run out or get lost. It also saves expenses of security. Many such practical applications, such as fingerprints and biometrics can be incorporated in the frame for windows and doors,” he explains. Pageot excitedly lists down the vast array of glass products that Saint-Gobain sends into the regional market. “Today, we can use the many sensitivities of glass – such as to acoustics, touch, heat and so on – to create soundproof, bullet-proof, UVresistant and sunlight-reducing glass,” Pageot tells Big Project ME. “There are vast functionalities of glass the industry can tap into. Today, glass can be created to restrict electromagnetic waves in security centres and hospitals. Acoustic glass is another creation today – it can not only control the sounds audible inside a room, but also transmit audio. We have a kind of glass which is resistant to bomb-blasts too!” Alul conclusively echoes the supportive sentiment for smart glass. “There is nothing in the world right now that doesn’t need IT – it is no longer a luxury, but the ground we walk on.” Clearly, the glass industry is morphing into more than just a product manufacturing one. Value-based services are constantly being added to basic glass products, and there are no limits on the glass industry’s innovativeness. As Alul said, “who knows, we may even have mind-reading glass in the future!” n

import materials they either don’t have, or are specifically loyal to from their

MIDDLE EAST

home-country.”

JANUARY 2014

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CO-LOCATED EVENTS

ORGANISED BY

SPECIAL FEATURE TECHNOLOGY

BIGPROJECTME.COM

INTELLIGENCE: UNDER CONSTRUCTION Big Project ME spoke to representatives of market leaders from the IT sector to learn how emerging technologies can help the construction industry in the region to create not only smart, but intelligent buildings in the future

MIDDLE EAST

“It starts at the very basic step of sourcing raw material, and continues all the way to the end product, which is essentially the buildings we function in and the standard of life they provide us with. It allows a builder to differentiate himself in the market as a provider of smart buildings as against his competitors who might not - as can, say for instance, an owner of parking spaces or crowd management, who can market his solutions and control of flow as completely unique vis-a-vis his competitors.” RABIH DABOUSSI, MANAGING DIRECTOR AND GENERAL MANAGER OF CISCO SYSTEMS INTERNATIONAL - UAE

JANUARY 2014

“It is about solving the complicated problem of creating futureoriented physical infrastructure. The physical layer is the most challenging aspect of any type or size of network as it has to not only support the programs on that platform in the present, but also support applications that will be implemented in the future - and may not have even been invented yet! As IT companies, we have to anticipate at least the next three generations of the active equipment and curate the physical connectivity layer so its infrastructure can support the company for the next 20-odd years, if desired.” CIARAN FORDE, EVP, ENTERPRISE SALES, COMMSCOPE - MIDDLE EAST AFRICA

SCOPE Ciaran: “There is a huge amount of demand for connectivity today - the trend of BYOD (Bring Your Own Device) such as smartphones, tablets and so on means users are not content with limited connectivity just in their homes or offices. People want the same level of connectivity in a coffeeshop, their home, offices and malls alike; this requires high capacity cell and wireless networks, and places a strain on wireless networks that were designed purely for voice transfers to now accommodate data - such as Facebook posts and emails - as well. Users are becoming hungry and unforgiving - if a certain hotel does not offer quality WiFi services, chances are the builder will suffer long-term losses of customers and business. A simple statement by a consumer saying ‘I want the same level of connectivity everywhere’ has a massive impact on the way networks are - and ought to be - laid out.”

SPECIAL FEATURE TECHNOLOGY

LEVEL OF INVOLVEMENT

OBSTACLES

Rabih: “I believe the starting point should be walking backwards from the desired overall experience of that given building, mall or hotel under construction. If they need the services available at the structure to be exclusive, it requires IT companies to be involved earlier than the planning and design stage. The network companies have in their work settings is a key factor that affects large-scale projects. Along the way, this can aid their decisions regarding the products they source, where they source them from and the overall of the vision of the type of buildings they want to build. For instance, one could construct a hotel where every room is equipped with a mirror that speaks to the occupant - ‘here’s your email, here are the pictures of your friends, here’s the news from the city you live in, here’s the weather in this city and I know you have a meeting with XYZ at such time for which you might want to leave 10 minutes early because its raining or because there’s a traffic

Rabih: “Innovation will overcome the initial response - which was flat due to the lack of knowledge about what technology can do for the construction industry. But as we see smart cities being developed - like Sando in Korea - the approach will hopefully change. Leaders from the construction industry need to be more open to the applications of technology and enhance not just the products they offer, but their methods of execution as well.”

Ciaran: “We have to be involved before the design stage. A lot of our businesses are tied to construction cycle where people don’t always plan what they need to get it built, and infrastructure is not always the first thing on everybody’s mind. So it becomes our job to remind them that design is more than just choosing the right technology or bandwidth - you could easily over-engineer and damage the costs of the project, or under-engineer and sacrifice quality leading to a situation where users complain about poor connectivity issues. We aim for design optimisation through our services to help customers and consultants design correctly by choosing the right techiques and charting out an infrastructure plan.”

Ciaran: “There is the practical issue of ‘who owns the network in a building’ - is it just the service provider, or is it also the owner of the building who decides the level and quality of coverage that service users experience? The builder’s interest in footfall-revenues could lead him to demanding better coverage from the service provider. Hopefully, governments will understand the stress this demand places on service providers alone and might voluntarily involve developers in the process.”

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MIDDLE EAST

jam on this highway, or when you take a taxi tell him to avoid this highway and go that path!’ Building smart governments and smart cities requires a joint effort from all industries, of which construction is a huge part.”

SPECIAL FEATURE TECHNOLOGY

BIGPROJECTME.COM

BREAKING BARRIERS Experts have called on the construction industry to be the first to adopt smart building technology.

EXISTING APPLICATION Rabih: “Our office building here (Dubai Media City) for starters! It is probably not the most advanced anymore because its construction was completed around four years ago. We wanted it to be a bit ‘smarter’ than most others, which is why we implemented technology like smart lighting - the lights start turning on as I walk into my office, for instance. Another feature we’ve added is our IP phones, which run on a technique called Power Over Ethernet (POE) as against electricity, which means they go to sleep - like any computer/tablet - at a given time, and ‘wake up’ the next morning when the working day resumes. my office lights come on, but one thing most people don’t know is that even my IP phone that sits on the desk goes to sleep when I go to sleep. The construction industry has to break the barriers like this. If they don’t, somebody else will come in and make them do it.”

“A SIMPLE STATEMENT BY A CONSUMER SAYING ‘I WANT THE SAME LEVEL OF CONNECTIVITY EVERYWHERE’ HAS A MASSIVE IMPACT ON THE WAY NETWORKS ARE LAID OUT.”

COMMON CLOUD

Rabih: “Networks aren’t set up overnight. Prioritisation is an important part of this planning process. These days, buildings have to incorporate smart doors, smart lighting, smart camera and monitoring devices; in the future, we could even have smart faucets - they might alert you if there’s a leak! It’s an evolution, and there’s cost to everything. However, people invest in and pay for technology to get value, and there’s a lot of value in technology today and many ways of realising it too. Technology has become a lot cheaper in recent years; TV sets, mobile phones and laptops have gotten cheaper over the years and the same could apply to network infrastructure and access point systems in the future.”

Rabih: “The cultural shift has to be driven from the top. From a technical perspective, there are no barriers and we’ve already seen what we can do with technology. The ability to unify the platform and build a common mechanism to collaborate construction communication is all there. It’s like doing YouTube or Facebook for your company internally. To allow them to share pictures, share information - but it’s all about work here. As IoE becomes more of a reality today, our chances and ability to harness and leverage more value from it increases. We calculated the commercial and business value opportunity of IoE between now and 2022 to be $14.4 trillion - that’s equivalent to an annual GDP of USA!”

MIDDLE EAST

COSTS

JANUARY 2014

TIE IN WITH PM Rabih: “At the conceptualisation and initial discussion phases, technology should be brought up as an integral, important ingredient. Technologists should be enabled communication with the builders on an ongoing basis. Mechanical engineers, electricians, architects, constructors, site managers need to be relieved of their xylos and allowed interaction, which obviously needs the introduction of technology. It isn’t just about the end product, but also enhancing the flow of processes. Enforce technology to allow the electrical engineer to speak to the site manager and socially interact with them, over either a mobile device or internal social website that allows them to share doubts and clarify concerns. That is what the younger generation of workforce does - they don’t work within themselves, they work together as teams on projects. The future is about this - companies that adopt technologies to implement these models will be very successful and companies that don’t will have to change their ways or face challenges.” n

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DLA PIPER

Kuwait PPP - overview and recent developments George Oti, Legal Director, and Trevor Butcher, Partner, DLA Piper Middle East, analyse the impact of Kuwait’s proposed plans to encourage Private Public Partnerships

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PPP DEVELOPMENT Kuwait s is pushing forward with plans to encourage Private Public Partnerships.

JANUARY 2014

ver the past five years, Kuwait’s economy has experienced one of the fastest growth rates in the GCC. Kuwait has the second lowest unemployment rate in the MENA region and in 2008, the country ranked the highest in the Middle East on the UN’s Human Development Index. Since 2008 the government has also sought to invest in vital legislative reform and development projects to transform the role of the government from an operator to a regulator. One of the most significant reform initiatives is the Kuwait Vision 2035, which aims to transform Kuwait into a vital regional financial and trade hub by 2035. The Vision comprises six development plans, the first of which, the 2010-2014 development plan, was approved by the National

Assembly in 2010. This vision aims at stimulating GDP growth and encouraging the role of the private sector in the economy. Under this plan projects are to be implemented by the private sector, either through traditional tendering processes in Kuwait (Central Tendering Committee) or Public Private Partnerships (PPPs). In addition, the national vision will increase investment to raise oil and natural gas production, and diversify the economy away from oil through the promotion of key non-oil related sectors. In the initial stages there was a strong emphasis on the development of the PPP programme in the power, transportation, health and telecommunications sectors. Given Kuwait's financial strength and reserve levels, budget and balance sheet considerations have

COMMENT DLA PIPER

“BUT RATHER IT IS RECOGNISED IN SOME GOVERNMENT CIRCLES THAT THE PPP MODEL COULD HELP ENSURE A MORE TRANSPARENT, EFFICIENT AND EFFECTIVE DELIVERY OF IMPORTANT NATIONAL INFRASTRUCTURE”

had failed to follow proper legal procedures in offering the tender to establish the shareholding company to build the power plant. The Government vigorously defended the process and, following the dissolution of the National Assembly shortly thereafter, has proceeded with the project. Although financial close has not yet occurred, it is said to be imminent. While the current National Assembly and the Council of Ministers appear to subscribe to the philosophy of increasing private sector par-

HOUSING SHORTAGE Kuwait, one of the world's richest countries per capita and a major oil producer in the region is facing a shortage of government-funded housing, with reports suggesting the locals may have to wait for almost two decades on the housing list. "The housing issue is the top priority in this session," parliament speaker Marzouq alGhanim said.

ticipation in the Kuwaiti economy, nonetheless in January of this year four large privatization projects were put on hold after the Ministry of Communications ordered a review of the projects while it considers bringing them back under government ownership. The schemes include the PPPs to develop the Kuwait rail and metro projects, and the part-privatization the Public Post Office and communications network. The PTB has stopped work on the four schemes while the Communications Ministry reviews whether they should be procured as PPPs or developed through direct government procurement. Other projects have been cancelled but some schemes in the waste and housing sectors appear to be progressing. For example, in March, the Public Authority for Housing Welfare (PAHW) announced that it is looking to appoint advisers on the development of two public-private partnership projects to develop thousands of new houses at an expected cost of several billion dollars. However, there seems to be a lack of clarity as to why the process is not being done under the auspices of the PTB or if the PAHW process will be run according to the PPP guidebook that was written by the PTB to establish international best practice for the procurement of new projects developed in co-operation with the private sector. The Kuwaiti PPP market is perhaps the most promising in the MENA region, but needs greater clarity as to whether there is a meaningful place for PPP schemes in the Kuwaiti economic model. The overriding sense is that the key players in the market would prefer to see a more rigorous selection process with less deals coming to market, provided the deals are ultimately delivered. n

"We have enough finances to solve this problem," he added, and pointed out that the country needed a watertight plan and timetable to correct the shortage.

George Oti is legal director, and Trevor Butcher, Partner at DLA Piper Middle East. Both have extensive experience operating in the GCC region and its businesses.

JANUARY 2014

MIDDLE EAST

played no part in the pursuit of the PPP model. But rather it is recognised in some government circles that the PPP model could help ensure a more transparent, efficient and effective delivery of important national infrastructure. Whilst important preparatory steps have been taken, few PPP projects have progressed beyond the preparatory stage and the future of the PPP market in Kuwait currently hangs in the balance. The Government of Kuwait has established a clear regulatory framework for implementing PPP projects. The laws and regulations seek to establish high levels of transparency and certainty throughout the process. The main PPP law is Law 7 of 2008, on the Regulation of the Operation of Build, Operate and Transfer and similar Systems (BOT Law), which is a general law that covers all PPPs undertaken on state owned land. However, there have been a number of other PPP laws passed that cover power production, public warehousing, labour cities and other projects, as well as Law No. 37 of 2010 regarding the Regulation of Privatization Programs and Operations. A common trait in these laws is the requirement for the incorporation of a public shareholding company (KSCP) in certain specified circumstances to carry out the various Private Public Partnership projects. Kuwait has pressing infrastructure needs that span from power to housing and, critically, the financial firepower to ensure such projects are completed, thanks to sustained high global oil prices. It is therefore perhaps not surprising that Kuwait has some 324 infrastructure projects included in its 2012-13 development plan. However, significant doubt remains as to how many of these projects will progress past the tender stage to implementation. At the heart of the problem is the conflict between the Council of Ministers and the National Assembly that has stalled a number of crucial infrastructure projects. A prime example of this dissonance is the country’s first independent water and power project (IWPP) at Al-Zour North. In June 2012, the National Assembly voted to scrap the process for the development of the Al-Zour North IWPP, purportedly due to concerns regarding the tender procedure, with the then Speaker of the National Assembly spearheading the opposition to the project. The Speaker raised objections to the Al Zour IWPP on the basis that the Government (through the PTB and the Council of Ministers)

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including a five-star hotel, restaurants, villas and apartments; and a 27-storey building featuring offices, retail and other commercial uses

STATUS New Tender

PROJECT NAME: SOLAR POWER PLANT PROJECT - PHASE 2

BUDGET $190,000,000 REGION Dubai CLIENT Dubai Electricity & Water Authority (DEWA)

PROJECT NAME: FUJAIRAH REFINERY PROJECT

BUDGET $3,500,000,000 REGION Northern Emirates CLIENT International Petroleum Investment

REGION Saudi Arabia CLIENT Saudi Electricity Company - Central Region (Saudi Arabia) DESCRIPTION Construction of an Independent Power Project (IPP) with capacity of 600 MW

Company - IPIC (Abu Dhabi)

STATUS New Tender DESCRIPTION Engineering, Procurement and Construction (EPC) contract to build a grass-roots refinery in Fujairah with capacity of 200,000 barrels a day (b/d)

STATUS New Tender

BUDGET $600,000,000

STATUS New Tender

PROJECT NAME: POWER TRANSMISSION LINES INSTALLATION

BUDGET $105,000,000 REGION Kuwait

PROJECT NAME: MIXED-USE TOWERS PROJECT - LUSAIL DISTRICT

BUDGET $275,000,000 REGION Qatar

PROJECT NAME: DHUBA 1 IPP

DESCRIPTION Engineering, procurement and construction (EPC) contract to build a solar power plant with capacity of 100 MW as part of Shaikh Mohammed Bin Rashid Al Maktoum Solar Park Phase 2

CLIENT Ministry of Electricity & Water (Kuwait) DESCRIPTION Engineering, Procurement and Construction (EPC) contract for supply and installation of 172 kilometres of 300kV power transmission lines

CLIENT Real Estate Services Group (Qatar) STATUS Current Project DESCRIPTION Construction of two mixeduse towers comprising a 35-storey building,

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BAHRAIN JW MARRIOTT HOTEL CONSTRUCTION PROJECT BAHRAIN BAY WATERFRONT DEVELOPMENT PROJECT NUMBER MPP2597-B TERRITORY Bahrain CLIENT Remza Investment Company CITY Manama COUNTRY Bahrain PHONE (+973) 1782 2122 EMAIL info@remza.com DESCRIPTION Construction of 50-storey JW Marriott Hotel on top of a five-stor podium, with three floors of underground parking STATUS New Tender DESIGN CONSULTANT Yousif Dawood Al Sayegh Consultants (Bahrain) INTERIOR DESIGN CONSULTANT Creative Resource Associates (CRA) - Dubai TENDER CATEGORIES Hotels, Prestige Buildings, Tender Products, High-rise Towers, Hotel Construction

PROJECT NUMBER MPP2849-IQ TERRITORY Iraq CLIENT China National Offshore Oil Company (CNOOC) CITY Beijing 100010 COUNTRY China PHONE (+86-10) 8452 1010 FAX (+86-10) 6460 2600 EMAIL cnooc@cnooc.com.cn WEBSITE www.cnooc.com.cn DESCRIPTION Engineering, Procurement and Construction (EPC) contract to build new oil and gas pipelines at an oil field STATUS New Tender TENDER CATEGORIES Gas Processing & Distribution, Oilfields & Refineries TENDER PRODUCTS Crude Transportation, Storage & Distribution, Gas Transportation, Pipes, Tubes & Fittings (Metal)

QATAR KATARA TOWERS PROJECT LUSAIL MARINA DISTRICT

PROJECT NUMBER WPR059-Q TERRITORY Qatar CLIENT Katara Hospitality (Qatar) CITY Doha COUNTRY Qatar PHONE (+974) 4423 7777 FAX (+974) 4427 0707 EMAIL info@katarahospitality. com WEBSITE www.katarahospitality. com DESCRIPTION Construction of Katara Towers comprising a luxurious five-star hotel and a luxury hotel, including branded

apartments, consisting a total of (614) rooms PERIOD 2017 STATUS New Tender

AL WAKRA SECURITY COMPLEX CONSTRUCTION PROJECT

PROJECT NUMBER 74/20102011-Q TERRITORY Qatar CLIENT Ministry of Interior (Qatar) CITY Doha COUNTRY Qatar PHONE (+974) 433 0000/ 484 9444 FAX (+974) 444 9228 EMAIL info@moi.gov.qa

IRAQ PIPELINES CONSTRUCTION PROJECT - MISSAN OIL FIELD

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DESCRIPTION Construction of Al Wakra Security Complex for a ministry PERIOD 2014 STATUS Current Project MAIN CONTRACTOR Al Madar Contracting & Trading Co. (Qatar) ALUMINIUM PRODUCTS SUPPLIER Al-Sakher Aluminium, Glass & Kitchen WLL (Qatar) TENDER CATEGORIES Construction & Contracting TENDER PRODUCTS Civil Works, Construction & Addition Works

MIXED-USE TOWER PROJECT DOHA CONVENTION CENTRE DEVELOPMENT PROJECT NUMBER BP 04-Q TERRITORY Qatar CLIENT Lusail Real Estate Development Company (Qatar) CITY Doha COUNTRY Qatar PHONE (+974) 4497 7770 FAX (+974) 4497 7775 EMAIL info@lusail.com WEBSITE www.lusail.com DESCRIPTION Construction of a 550-metre-high, 112-storey mixeduse tower comprising a hotel, offices and apartments POST DATE November 4, 2012 PERIOD 2015 STATUS Current Project MAIN CONTRACTOR Six Construct Ltd. (Qatar) MAIN CONTRACTOR(2) Midmac Contracting Company (Qatar) TENDER CATEGORIES Hotels, Prestige Buildings TENDER PRODUCTS High-rise Towers, Hotel Construction

SPECIALIST CONSULTANT WSP Environment & Energy Middle East (Dubai) PROJECT MANAGER Mace International Ltd. (Dubai) MASTER PLAN CONSULTANT HOK International (Dubai) FOUNDATIONS, ENABLING & PILING CONTRACTOR Middle East Foundations Group L.L.C (Dubai) TENDER CATEGORIES Hotels, Leisure & Entertainment, Prestige Buildings, Tender Products, High-rise Towers, Hotel Construction, Public Buildings, Retail Developments

UAE AL JALILA OIL FIELD DEVELOPMENT PROJECT OFFSHORE PLATFORM B PROJECT NUMBER MPP2857-U TERRITORY Dubai CLIENT Dubai Petroleum Establishment (DPE) CITY Dubai COUNTRY United Arab Emirates PHONE (+971-4) 343 2222 FAX (+971-4) 301 2200 EMAIL tony.galustian@ dubaipetroleum.ae WEBSITE www.dubaipetroleum.ae DESCRIPTION Engineering, Procurement and Construction (EPC) contract for the development of an offshore platform in an oil field along with offshore pipelines and associated facilities STATUS New Tender TENDER CATEGORIES Oilfields TENDER PRODUCTS Oilfields Exploration & Development

DUBAI WORLD TRADE CENTRE COMPLEX REDEVELOPMENT PROJECT - PHASE 1 PROJECT NUMBER MPP1411-U TERRITORY Dubai CLIENT Dubai World Trade Centre L.L.C CITY Dubai COUNTRY United Arab Emirates PHONE (+971-4) 332 1000 FAX (+971-4) 331 8299 / 331 2713 EMAIL info@dwtc.com WEBSITE www.dwtc.com DESCRIPTION Redevelopment of the existing Dubai World Trade Centre (DWTC) complex involving construction of a convention centre, office and residential towers, hotels and hotel apartments, and shopping facilities - Phase 1 STATUS Current Project MAIN CONSULTANT Atkins & Partners Overseas (Dubai) MAIN ARCHITECT Hopkins Architects (Dubai) DESIGN CONSULTANT WSP Middle East (Dubai)

THE ADDRESS RESIDENCE FOUNTAIN VIEWS TOWER PROJECT - DOWNTOWN DUBAI PROJECT NUMBER MPP2808-U TERRITORY Dubai CLIENT Emaar Properties PJSC (Dubai) CITY Dubai COUNTRY United Arab Emirates PHONE (+971-4) 367 3333 FAX (+971-4) 367 3000 EMAIL customercare@emaar.ae WEBSITE www.emaar.com DESCRIPTION Construction of 60-storey, 220-metre-tall luxury residential tower comprising (280) apartments STATUS Current Project FOUNDATIONS, ENABLING & PILING CONTRACTOR Brookfield Multiplex Constructions Middle East L.L.C (Dubai) TENDER CATEGORIES Prestige Buildings, Tender Products, High-rise Towers, Residential Buildings

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DIARY INTERMAT MIDDLE EAST

HAPPENING THIS MONTH...

REVIVAL OF FORTUNES Intermat organisers will be hoping interest in the 2014 edition of the show will rise on the back of Expo 2020.

INTERMAT MIDDLE EAST

ORGANISERS WILL BE HOPING IT’S A CASE OF THIRD TIME LUCKY WHEN INTERMAT RETURNS ON 14-16 JANUARY AT ADNEC Dubai-based construction community. Ultimately Intermat Middle East succeeded in proving what many people have argued for half a decade: that largely the UAE is too small a market to sustain a dedicated machinery show. Perhaps, the biggest shame of the previous show was that it was a lot better than the footfall suggested. It was a pretty solid representation of the machinery industry. It also boasted a decent array of new equipment and offered one of the few opportunities to compare region-ready machines side-by-side. It was also backed up by a substantial if thinly attended conference that made the most of local governmental support to put together a programme that would rival many other more established events. Plus it was free. However, this will be the first major construction equipment show after the announcement of Expo 2020. Come 14 January you could see a burst of late arrivals in terms of exhibitors and contractors. n

MIDDLE EAST ELECTRICITY 2014 DUBAI, UAE 11TH – 13TH FEBRUARY, 2014 Middle East Electricity is the largest meeting for energy industry professionals from over 100 countries. The 2013 edition was the most successful in the show’s 38-year history.

CONSTRUCTION MACHINERY SHOW 2014 DAMMAN, SAUDI ARABIA 16TH – 20TH FEBRUARY, 2014 The region’s biggest dedicated construction machinery show, returns, this time in Damman, Saudi Arabia, following its successful run in Jeddah last year.

AIRPORT SHOW DUBAI, UAE 11TH – 13TH MAY, 2014 As one of the world’s largest airport-focused exhibitions, Airport Show provides an ideal B2B platform for companies to present airport and aviation-related products and services.

JANUARY 2014

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NOW INTO ITS third edition, Intermat Middle East is an event that hasn’t yet caught fire despite the extreme heat experienced in 2012. The move from October to January should at least help with the weather which at times made visiting the outside exhibition area unbearable last time around. Intermat in Europe has so firmly established itself as the third largest global event since its inauguration in 1988, that it now confidently bears the burden of rotating with Bauma and Conexpo in the US. Before Bauma was flying dealers and equipment customers from the Middle East, it was Intermat that was pulling visitors from Jordan to Jeddah. Like its older German and US cousins, it started as a local show but found its place as an international meeting place. Those that visited the show in 2012 complained that the show wasn’t big enough; that it lacked the true Intermat experience; and that Abu Dhabi was too remote for a largely

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GAVIN DAVIDS

Champions of Hope Gavin Davids says that the locally filmed documentary ‘Champ of the Camp’ should be the first stepping stone towards allowing greater access and insight into the conditions of labour camps in the UAE

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LAST MONTH DUBAI hosted its 10th International Film Festival, which showcased a variety of films from all across the world. Being an avid movie buff, I made sure to catch as many movies as my schedule could permit. However, one movie I desperately wanted to see, but was unfortunately able to catch was the locally filmed documentary, ‘Champ of the Camp’. Set in the UAE, the film follows the contestants of an annual singing competition and charts their journey to the finals. What sets this film apart is that the aspiring singers are all construction workers from more than 70 different labour camps spread across the Emirates. Ranging from grizzled veterans to fresh faced youngsters, the contestants allow viewers a glimpse into the different and lonely struggles they face on a daily basis, which is in stark contrast to the excitement generated by the contest. Astonishingly, Champ of the Camp is the first documentary that has been allowed access to the labour camps, which is perhaps no surprise, given the positivity of its central theme. While there are certainly major issues that we should address when it comes to the

JANUARY 2014

livelihood of these workers, contests such as the ones depicted in Champ of the Camp, (which is in its seventh year, incidentally) show us that there is a lot being done under the radar to help make their mundane lives just a little bit easier and pleasurable. I think a quote from Bollywood actor, Javed Jaffery, who was interviewed by Gulf News, sums up the impact of this film: “What I liked about this film is that Mahmoud hasn’t taken away the dignity of the labourer. You don’t pity him. Instead, you get to respect the pain, the dignity with which they get

on with their lives and the determination they have to give their families back home a better life. It’s a film about hope.” What this documentary should be is a stepping stone to allowing greater independent access and insight into the conditions these men live in. With Dubai winning the Expo 2020, the international spotlight will be on us to prove that we provide a safe and welcoming environment to all workers, no matter what sort of work they do. We’ve already seen how Qatar has attracted massive negative attention thanks to its antiquated and secretive labour laws. Perhaps the time has come for Dubai to show that it has nothing to hide and that all those who come to its shores are afforded the greatest opportunities to shine, much like the stars of Champ of the Camp. n

“WHAT I LIKED ABOUT THIS FILM IS THAT MAHMOUD HASN’T TAKEN AWAY THE DIGNITY OF THE LABOURER. YOU DON’T PITY HIM. INSTEAD, YOU GET TO RESPECT THE PAIN, THE DIGNITY WITH WHICH THEY GET ON WITH THEIR LIVES AND THE DETERMINATION THEY HAVE TO GIVE THEIR FAMILIES BACK HOME A BETTER LIFE. IT’S A FILM ABOUT HOPE.”