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MAY 2016 meconstructionnews.com
THE BUSINESS OF CONSTRUCTION
Welcome to the Family
creating an atmosphere of collaboration has made brookfield multiplex a force to be reckoned with
Contents
Issue 122 May 2016 08
18
20
30
36
44
06 ME Construction News.com
18 Saudi contractor risks
40 District Cooling
08 Emaar to pay 15% dividend
20 Brookfield Multiplex
42 Nothing to Waste
30 Nakheel Mall & The Pointe
44 Examining the PPP Landscape
36 Airport of the future
60 The business of relationships
OnlIne
The biggest stories from Big Project Middle East’s home on the web The bIg pIcTure
Mohamed Alabbar, chairman of Emaar, says he is ‘really scared’ of market conditions
14 $1.4bn Docklands scheme InTernaTIOnal news
London Mayor’s Office approves two Docklands residential projects
16 Commercial real estate report MarkeT repOrT
Knight Frank report finds that commercial real estate will be of interest to MENA investors
analysIs
Riaz Hussain analyses the impact of stalled infrastructure projects in the Kingdom cOMpany prOfIle
Big Project ME spends a day at the Brookfield Multiplex offices to find out what makes the contractor a force sITe vIsIT
Big Project ME tours Nakheel’s projects on the Palm Jumeirah prOjecT prOfIle
How ALEC will tackle the challenge of delivering the AMIA expansion
cOMMenT
Alan Millin asks whether district cooling technology is being used in the best manner susTaInabIlITy
Big Project ME speaks to Gyproc Middle East about how it’s helping contractors reduce site waste rOundTable
Experts debate whether PPP can be a viable funding option for UAE projects lasT wOrd
Martin Payne outlines the best approach to achieving client satisfaction on projects
May 2016 1
Introduction
Be the best you can be
T
his month’s cover story is a bit different to our usual interviews and profile pieces, in that we’ve actually decided to focus on an entire company – not just the CEO or the managing director, but actually talk to a broad spectrum of people from within the company. To be honest, it wasn’t the easiest of features to put together. When I first spoke to Marcus Truscott, managing director of Brookfield Multiplex, about doing an interview with him about the contractor’s work, he was very insistent on not deflecting the attention away from the extraordinary work that his staff have been doing over the last 18 years. As a result of that conversation, I went back to the drawing board to see how we could create a more rounded view of the company, and following extensive discussions, we were finally able to lock in a format that would showcase the company’s work in the best way. While it was a lot of work to do, I have to say that I’m delighted with how it’s come out. While I’m always happy to speak to senior level people in a company, it was something special to hear from the likes of Kylie Judd,
eDItorIAL eDItor gAVIN DAVIDS gavin.davids@cpimediagroup.com +971 4 375 5480 PUBLISHING DIrector RAZ ISLAM raz.islam@cpimediagroup.com +971 4 375 5471
oNLINe eDItor BEN FLANAgAN
eDItorIAL DIrector VIJAYA CHERIAN vijaya.cherian@cpimediagroup.com +971 4 375 5472
ADVertISING
ben.flanagan@cpimediagroup.com SUB eDItor AELRED DOYLE aelred.doyle@cpimediagroup.com
coMMercIAL DIrector JUDE SLANN jude.slann@cpimediagroup.com +971 4 375 5496 coMMercIAL DIrector MICHAEL STANSFIELD michael.stansfield@cpimediagroup.com +971 4 375 5497 SALeS MANAGer FAAJU ABDULFATAH faaju.abdulfatah@cpimediagroup.com +971 4 375 5495
4 May 2016
MArKetING MArKetING MANAGer LISA JUSTICE lisa.justice@cpimediagroup.com +971 4 375 5498 DeSIGN Art DIrector SIMON COBON cIrcULAtIoN & ProDUctIoN DIStrIBUtIoN MANAGer SUNIL KUMAR sunil.kumar@cpimediagroup.com +971 4 375 5476 ProDUctIoN MANAGer VIPIN V. VIJAY vipin.vijay@cpimediagroup.com +971 4 375 5713 WeB DeVeLoPMeNt MOHAMMAD AwAIS SADIq SIDDIqUI SHAHAN NASEEM
Kevin Coleman and Abbas Raja. These are the people who make successful companies run smoothly; they are the life-blood of any organisation. What came out most clearly from my conversations with them, and the other members of the Brookfield Multiplex team, was the sheer pride and pleasure they take in their work. The sense of camaraderie that permeates the company is truly special. It’s clear that this is a company that takes an interest in the well-being and future of its staff. Perhaps it’s a lesson we can all learn – not just construction companies, but businesses in general – if you want to perform and work better, invest in your staff and encourage them to be the best they can be. It’s certainly working for Brookfield Multiplex.
Gavin Davids editor gavin.davids@cpimediagroup.com @MecN_Gavin
PUBLISHeD By
Registered at IMPZ PO Box 13700 Dubai, UAE Tel: +971 4 440 9100 Fax: +971 4 447 2409 www.cpimediagroup.com FoUNDer DOMINIC DE SOUSA (1959-2015) PrINteD By PRINTwELL PRINTINg PRESS LLC © Copyright 2016 CPI. All rights reserved while the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be held responsible for any errors therein.
Online
Big Project Middle East’s home on the web MOST POPULAR
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EDITOR'S CHOICE
READERS' COMMENTS
Emaar’s $1bn Dubai tower to be taller than Burj Khalifa
New skyscraper to be centrepiece of Dubai Creek Harbour
2
PHOTO GALLERIES
Top 10 facts about Dubai’s $1bn ‘tallest tower’
Emaar’s The Tower will be “a notch” taller than the Burj Khalifa
3
Explaining Dubai’s
Al Fahid Island among 27 Abu Dhabi projects approved in Q4 The Abu Dhabi Urban Planning Council approved 27 major projects in the last quarter of 2015. See photo galleries at: meconstructionnews.com/photos
new PPP law
Scott Lambert of the Al
What needs to change in the construction industry following the damage caused by the UAE storms?
new law governing publicprivate partnerships
63% 0%
Green light for Vertical Industrial City, Dubai Steps
Dubai Municipality gets approval for several new megaprojects VIDEO
5
Masdar City in Abu Dhabi outlines 5-year expansion
Kareem Sadek, comment to story ‘UAE storms bring lessons for construction sector’
READER POLL
Tamimi law firm explains the
4
“The first lesson should be to actually construct buildings properly, before selling the idea of ‘premium’ or ‘luxury’, which has mostly turned out to be non-existent. I hope this issue does not get swept up under the rug as a oneoff incident, and is seriously taken into account when enforcing new building codes or monitoring how developers design their buildings”
Aerial view of Mall of Qatar construction works
Sustainable development to
When complete the centre will be Qatar’s largest mall, with over 500 stores.
include 2,000 apartments
See videos at: meconstructionnews.com/videos
A nationwide and sweeping overhaul of compulsory building regulations
A new set of voluntary guidelines on weatherproofing for contractors
33% 4% Limited action is needed as such weather is rare
Nothing – extreme weather is a problem everywhere
Log on for the latest from across the Middle East construction sector. Write to the editor at contact@meconstructionnews.com 6 May 2016
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The big picture
Emaar to pay 15% dividend after ‘severe’ cost cuts due to fears over the market Alabbar says he is ‘really scared of 2016’, but Q1 performance is promising Emaar shareholders have approved a 15% cash dividend in an annual general meeting in April 2016, at which the boss of the Dubai developer acknowledged he was “really scared” of market conditions this year. Mohamed Alabbar, Emaar’s chairman, said on the sidelines of the meeting that he was wary about 2016, but that the company’s Q1 performance looks promising. “We were really scared of 2016. Preparing for our cost budget, we basically went back to a cost budget base of two years ago, just to be cautious,” Alabbar was quoted as saying by Reuters. “Did we cut costs? Yes, of course, a severe cost cut.” Alabbar added that he was “pleasantly surprised” with Emaar’s performance in the first quarter of this year, with sales activity better than expected, Reuters reported. Emaar’s 18th Annual General Meeting saw shareholders approve a cash dividend of 15% of the share capital, equivalent to $292 million. “With all core sectors of the economy performing exceptionally well, and with the preparations for the Expo 2020 Dubai progressing in full swing, the coming years will witness healthy growth trends in Dubai,” Alabbar said in a statement. “We are setting new benchmarks this year, particularly with the opening of Dubai Opera, a multi-format events venue in Downtown Dubai. Emaar has also rolled out the magnificent tower 8 May 2016
$1.193bn Emaar net operating profit for 2015 that will form the vibrant heart of Dubai Creek Harbour, a one-of-akind master-planned community that will further energise the city by welcoming visitors from around the world,” he added. Emaar also said it is expanding its development portfolio in “high-growth international markets including Saudi Arabia, Egypt, India and Turkey, among others”. Emaar has assets valued at over $45 billion and a land bank New tower on the block Emaar has announced plans to build a tower taller than the Burj Khalifa.
of 196 million sqm in the UAE and international markets, Emaar said. The company recorded full-year 2015 net operating profit of $1.193 billion, 18% higher than in 2014. Revenue stood at $3.719 billion, 33% higher than the previous year. In the UAE, total sales in 2015 were over $2.79 billion while sales across various international markets in 2015 were valued at $1.37 billion. The developer has also
unveiled plans for a $1 billion tower in Dubai, which would be taller than the Burj Khalifa. Dubbed simply ‘The Tower’, it will be the centrepiece of Dubai Creek Harbour, Alabbar said. While the exact height was not disclosed, Alabbar said that it would be “a notch” taller than the Burj Khalifa, currently the tallest man-made structure in the world. Designed by Spanish-Swiss architect Santiago Calatrava, construction on The Tower is set to begin soon, with work completed in time for Expo 2020. The Dubai Creek Harbour development is twice the size of Downtown Dubai, the area around the Burj Khalifa, which Emaar also developed.
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The big picture
Qatar labour abuse claims: UK firms in spotlight following worker allegations Claims about unpaid salaries and intimidation to be investigated, firms say Mistreatment allegations Workers on sites operated by BK Gulf and Gulf Contracting Company allege they have been mistreated by labour supply firms hired by the contractors.
Workers on construction sites operated by BK Gulf and the Gulf Contracting Company (GCC) have raised “a raft” of allegations of mistreatment, according to a report by the Guardian. BK Gulf is co-owned by Balfour Beatty, while Interserve holds 49% of GCC. Balfour Beatty and Interserve are both UKbased firms listed on the LSE. Workers allege that they have been “exploited and mistreated” by labour-supply firms hired by the two companies. Issues raised include the alleged erratic or reduced payment of wages, confiscation of passports, workers entering employment with high levels of debt bondage, and pay levels below those agreed upon when individuals were recruited in their home countries, it was reported. Some workers, who spoke to the Guardian on condition of anonymity due to fears of losing their jobs, said that a culture of fear and intimidation existed, along with the threat of deportation and arrest if they “stepped out of line”. One, employed by a supply company but working on a GCC project, said that he had repeatedly asked his employer to let him 10 May 2016
leave Qatar after a salary cut of 20%, but was forced to stay. Labourers employed by supply companies, but working on a BK Gulf site on Qatar’s national museum project, said that they were earning a much lower salary than that promised to them by the recruitment firm in Nepal. Others claimed that their wages were cut if they missed work because of illness, and that they had to pay medical fees above a certain amount. However, the workers on the museum did praise BK Gulf for their safety management on the site, while two workers employed directly by GCC, building an office tower in Lusail City, said that they were happy with conditions in the labour camp. As positive as this is, the latest allegations show that serious concerns still remain.
When contacted by Big Project ME, Balfour Beatty said BK Gulf is undertaking a review of the labour supply companies it uses. “BK Gulf WLL, in which Balfour Beatty has a 49% share, provides conditions for its workforce which go over and above local regulations and laws,” the Balfour Beatty statement said. “Where workload exceeds our directly employed workforce capacity or where specialist skills are required, BK Gulf utilises a selection of labour supply companies. “BK Gulf requires all of its labour supply companies and subcontractors to meet a selection criteria and code of conduct which includes requirements around operative working conditions. The company actively monitors its supply chain to ensure these standards
and criteria are being met. “BK Gulf takes the claims made by the Guardian very seriously and as a result is currently undertaking a review with the labour supply companies it works with to ensure our standards are being met.” Interserve said in a statement to Big Project ME that it is investigating the issue. “We are fully committed to supporting and protecting the health, safety and welfare of our employees and those working as part of our supply chain. We take these allegations extremely seriously and will investigate them thoroughly. If corrective measures are required, we will ensure they are implemented immediately,” it said. Although repeated attempts to contact BK Gulf and GCC directly have been made, no response has been forthcoming at the time of going to print.
“BK Gulf requires all of its labour supply companies and subcontractors to meet a selection criteria and code of conduct which includes requirements around operative working conditions”
The big picture
27 projects approved in Q4 2015 by Abu Dhabi Urban Planning Council Reem Mall among projects to get planning approval from the UPC The Abu Dhabi Urban Planning Council has approved 27 major projects, including the vast Reem Mall, it said in an announcement. The planning approvals were issued in the last quarter of 2015, bringing the total number of projects and master plans given the green light last year to 101. Those projects have a gross floor area (GFA) of 13.58 million sqm – 26% more than that of the projects approved in 2014. Of the 27 approved in the last quarter of 2015, 21 were in the Abu Dhabi metropolitan area, two in Al Ain and four in Al Gharbia.
The Reem Mall development is set to span 185,000sqm and feature 450 retail units, including 85 restaurants and cafés, the world’s largest indoor snow-play park and a multi-screen cinema. “The creation of a highquality mall in Abu Dhabi City will provide muchneeded retail, leisure and entertainment amenities for residents of Abu Dhabi City and visitors to the area,” said Mohamed Al Khadar, executive director, Urban Development and Estidama Sector, UPC. “Al Reem Island is a central component of Plan Capital 2030
21
Number of projects in the Abu Dhabi Metropolitan Area
and it gives us great pleasure to give approval to such an important project – we look forward to watching the mall become a focus for residents of and visitors to the island.” Another approval was for Najmat Towers, a twoCentral component Al Reem Island is a central component of Plan Capital 2030.
12 May 2016
tower residential complex, one comprising 244 units over 40 storeys and the other comprising 330 units over 41 storeys. The units will be made up of one-, two- and threebedroom apartments, duplex apartments and townhouses. A third project on Al Reem Island is Shams Meera, two identical residential towers comprising 408 units. The development, which is targeting a 2 Pearl Estidama sustainability rating, will span 67,000sqm of GFA. The Al Fahid Island master plan was also given approval. Located between Yas Island and Saadiyat Island, the island development is split into five phases, of which phase one has received detailed planning approval. The largest master plan approved by the UPC in the last quarter of 2015 was the Al Khrair Emirati housing project in the Al Khrair area in the eastern side of Al Ain City. With a GFA of 3.3 million sqm, the residential community will comprise 3,017 single-family villa plots. “The increase in the amount of GFA approved in 2015 versus 2014 reflects the longterm demand for quality real estate development across Abu Dhabi,” said Al Khadar. The UPC is responsible for approving large-scale projects and master plans, as well as managing the emirate’s mandatory Estidama PRS for sustainable design, construction and operation.
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The big picture
1. Abu DhAbi’s EAglE hills stArts construction of
$1.46bn
bElgrADE towEr Abu Dhabi-based developer Eagle Hills has begun building a 160m riverside
3
Value of two major Docklands schemes approved by the London Mayor’s Office
tower in Belgrade, according to a Reuters report. The tower will form the centrepiece of an estimated $3 billion residential, office and tourism complex being built in the Serbian capital. The Belgrade Waterfront complex on the Sava River marks the first foray into the Central and Eastern European region by real estate executive Mohamed Alabbar, who is also chairman of Dubai’s Emaar Properties. While work on the actual building commenced on April 15, the clearing of two million sqm of former industrial land began last September in order to make way for the hotels, office buildings and apartments for 14,000 people, it was reported. The project has the backing of Serbian Prime Minister Aleksandar Vucic, who visited the site with Alabbar on April 15 to formally launch construction, Reuters reported.
14 May 2016
2. ovErhEAD crAnE collApsE in chinA prompts stAtE invEstigAtion Authorities in southern China have said that 18 people were killed, with a further 18 hospitalised, following
the collapse of an overhead crane at a construction site during a massive windstorm. According to reports, the 80-tonne crane fell directly onto a two-storey temporary building in the city of Dongguan. State media said that 139
people were in the building at the time of the accident, with 88 managing to escape on their own. An investigation has been opened into the accident and $3 million has been made available by the companies concerned for recovery and clean-up.
The big picture
$30bn
Amount of funding China Construction Bank will provide for infrastructure projects in Singapore 1 4
2
600kg
Total weight of ancient Roman coins uncovered by Spanish construction workers
3. uAE’s grEEn vAllEy lAunchEs projEcts worth $169m in morocco, bosniA UAE-based developer Green Valley International Real Estate has launched projects worth a combined $168.8 million in Morocco and Bosnia. Close on the heels of completing projects in the Emirates and Turkey, the company has announced the City of Green Valley Marrakesh project, worth
$136.1 million. The 410,000sqm project comprises 350 villas around 11km from the city centre. It offers facilities such as a swimming pool, health centre, spa, sports complex, shopping centre, restaurants and mosques. Green Valley has also launched the $32.7 million Green Valley City project in Sarajevo, at Vogosca on one of the highest peaks in the city. The 73,000sqm project
is Green Valley’s first foray into Bosnia, and consists of 106 independent villas and 224 apartments. The launch of the two projects is part of Green Valley’s plans to offer GCC nationals the opportunity to invest in properties outside the region. Green Valley’s previous projects include the Bursa Boulevard, Sapanca Villas and Yelwa Villas developments in Turkey.
4. russiA kEEn on construction of rAilwAy link bEtwEEn AzErbAijAn AnD irAn Russia is interested in the construction of the RashtAstara railway, the foreign minister of Azerbaijan has said, following a trilateral meeting between Azerbaijan, Russia and Iran. Elmar Mammadyarov said that talks during the Azerbaijan president’s visit to Iran had focused on creating a railway link between the two countries. Following those discussions, Russia had expressed an interest in the project, he told reporters during a press conference in April. Speaking about the construction of the Rasht-Astara railway line, Mammadyarov said: “Russia too is interested in it and has proposed that the meeting should take place in Moscow.” The minister added that the main purpose of the meeting was a discussion of the North-South Corridor. “This corridor with Russia had existed in the 19th century. Since the conflict with Armenia began, this corridor has not been in use. We think the use of this corridor is important for all the three countries.”
May 2016 15
Market report
commercial real estate report
Knight Frank’s 2016 Attitudes Survey finds that commercial real estate is expected to be of interest to MENA investors
total aNNual iNvestmeNt iN commercial real estate (us$BN) 2009–2015 Comparing private and institutional investment* into commercial real estate leGeND Private investment
2009
Institutional investment
$ 54 bn $ 162 bn
2010 $ 87 bn
2011
$ 275 bn
$ 111 bn $ 361 bn
2012
Findings from Knight Frank’s 2016 Attitudes Survey conducted in conjunction with ultra-wealth intelligence consultancy Wealth-X reveal that commercial real estate is expected to become an established component of the investment portfolios of ultra-high net worth individuals (UHNWIs) from the MENA region over the next decade.
“Despite the recent decline in oil prices and the slowdown in global trade and commercial volumes, UHNWIs are committed to the growth of businesses and the industrial, logistics and transport sectors over the next decade,” says Dana Salbak, head of MENA Research at Knight Frank. While 82% of UHNWIs from the MENA region have invested in residential property over the past decade, only 53% are expected to allocate funds to the asset class over the next decade. Responses from MENA reveal a growth in allocation to offices, from 41% between 2005 and 2015 to 53% between 2015 and 2025. Warehousing and logistics also emerge as key elements in UHNWI real-estate portfolios over the next decade, with 32% revealing they will invest in the sector. “While residential property was historically seen as a secure form of investment, the volatility of the asset class has made the commercial sector more appealing as its value extends beyond the ability to produce income,” says Salbak. Total cross-border investment from Middle Eastern capital into commercial properties focused on the major global gateway cities of London, Paris, New York and Sydney. “The availability of diverse investment products (e.g. REITs) have made property more accessible to a wider range of investors, while the high level of market transparency and diverse expertise enables private investors to overcome their knowledge gaps.”
16 May 2016
$ 128 bn
2013
$ 354 bn
$ 157 bn $ 438 bn
2014 $ 187 bn $ 514 bn
2015 $ 178 bn $ 539 bn
*Commercial real estate investment from institutional investors, real estate investment trusts, equity funds, listed funds, others and unknown
Source: RCA, data preliminary as at 11 Jan 2016
commercial property sectors most popular with meNa uhNwi iNvestors (% of respondents) Over the past 10 years
Over the next 10 years
Residential
82%
53%
Offices
41%
53%
Retail
15%
21%
Hotels
47%
38%
Warehousing/Logistics
15%
32% source: Knight frank
Analysis
ContraCtor risks as saudi publiC expenditure stalls Riaz Hussain QC, a barrister at Atkin Chambers, analyses how Saudi Arabian contractors will be impacted by a postponement of infrastructure projects, and what legal recourses they may have The Saudi economic downturn continues, as oil prices continue to fall. To illustrate the extent of the downturn, it has been reported that the transport and infrastructure budget for 2016 has been reduced by 60% from 2015, from $16.8 billion to $6.4 billion.
It is reported that through a circular issued by the Saudi Minister for Municipal and Rural Affairs, the Government has decided to “stop” or postpone all new projects save for those relating to Haj and Umrah infrastructure works, and also any additions or extensions to existing projects. Although the exact workings of the circular and the halting of new projects remain to be seen, there is concern among contracting bodies as to how best to cope with existing projects in times of straitened spending. Such concern is well founded. A large portion of the Saudi projects market is related to public works, with the government acting as the employer. These public works contracts will likely feel the strain of reduced public expenditure. There are some universal problems that 18 May 2016
arise in times of economic downturn in construction projects, such as irregular or delayed payments, employers’ reluctance to accept change orders and their seizing on any perceived claims against contractors. There are also specific vulnerabilities arising under the Saudi contractual regime. Public works contracts in Saudi Arabia are governed by the Implementing Regulations for the Government Tenders and Procurement Law 2006 (“Procurement Law 2006”). The law expressly forbids contractors from suspending works in the event of nonpayment. This removes perhaps the biggest weapon in other jurisdictions for a contractor to avert non-payment by the employer. A contractor’s avenue for relief in the case of nonpayment is to seek redress or compensation from a committee to be set up under the 2006 Law to consider contractor grievances and claims (Articles 54 and 78 of the 2006 Law). Under Article 52 of the 2006 Law, a contractor is entitled to an extension of the time for completion if the funds
Analysis
tightening budgets The tightening of public works budgets may mean more privatisation and private-public partnerships in the Kingdom.
allocated annually for a project are insufficient for completion of the works by the specified time. This, however, does not cover a situation where the price is sufficient to allow timely completion but has simply not been paid. One avenue for relief may be Article 51, which allows an extension of time and the waiver of delay penalties if the delay is due to matters outside the contractor’s control. Given the vulnerability of public works contractors in Saudi Arabia to non-payment or deferred payment from the employer, it is prudent for such risk to be factored into the decision to bid for projects and the pricing of such bids. Equally, contractors relying on loans and project financing should seek extra flexibility in repayments, to allow for the risk of nonpayment from their employers. Press reports have indicated that major project financing will become increasingly harder to achieve as public expenditure budgets shrink. In terms of termination of existing contracts in times of economic downturn, there are equally concerning aspects of the 2006 Law. Under English law, a powerful disincentive to a termination for convenience by the employer is a liability to pay the contractor’s loss consequent on termination (including any loss of profit). Under Saudi law, however, consequential damages (such as loss of profit) are irrecoverable in light of Islamic jurisprudence. An employer thus has relatively little to lose from an unlawful termination of the contractor’s employment. There is no real option for contractors to avoid the use of Saudi law in public works contracts, as the Saudi standard form contract requires its
“There is no denying that certainly, from a general international contracting perspective, traditional protections afforded to contractors in, say, the FIDIC standard forms and generally in many Western jurisdictions are not present under Saudi law” application. Again, industry reports state that in the long term the tightening of public works budgets may mean more privatisation and public-private partnerships emerging. One option contractual parties may
wish to consider is a mutual suspension or extension of projects on agreed terms, but these should be carefully detailed to allow for different eventualities. For private contracts, Article 38 of the Saudi New Arbitration Law expressly allows the parties to choose the substantive law of their contract and requires arbitrators to apply that law. However the substantive law must be applied without violating Shariah law or the public policy of the Kingdom. This caveat has made many users of the new law nervous, because it is difficult to predict with certainty what would constitute such a violation. That uncertainty is compounded by the fact that the question of such a violation will be decided by a Saudi court in the absence of any doctrine of judicial precedent. Likewise, although the New Arbitration Law allows contractual parties to choose a seat for the arbitration outside of Saudi Arabia, commentators note that Saudi courts have been suspicious of awards issued in non-Islamic jurisdictions because of concerns that the awards may not be compliant with Shariah principles. There is no denying that from a general international contracting perspective, traditional protections afforded to contractors in, say, FIDIC standard forms – and generally in many Western jurisdictions – are certainly not present under Saudi law. This makes it inevitable that in times of economic downturn contractors find themselves with substantially less protection against nonpayment, deferral and termination of projects. These risks should be contemplated gravely by contractors considering bids in the Kingdom and contractors already involved in projects. May 2016 19
Company profile
“We look for someone Who Wants to build a career, someone Who has long term ambitions and Wants to take the opportunities that We can give people. We tend to attract people Who are proud of the brand and Want to be successful, and Work very hard to be successful” Gavin Davids spends the day at Brookfield Multiplex’s Dubai offices to find out what makes this first-tier contractor a force 20 May 2016
Company profile
the brookfield multiplex way From left to right: Kevin Coleman, Abbas Raja, Marcus Truscott, Alan Humphrey and Geoff Pontefract.
May 2016 21
Company profile
i
n ordinary circumstances, covering the operations and performance of a business tends to be fairly prosaic. You study profit and loss margins, revenue generated and other key performance indicators, but you’re essentially looking at the big picture – the how and why doesn’t really matter, what you’re really bothered about it is the end result. However, when it comes to covering a construction business, the big picture doesn’t really tell the whole story, especially when it’s a contractor you’re looking at. Given the nature of the industry, a contractor’s yearly performance graph is but one indicator of success. Of course the bottom line matters,
mentor system Senior staff at Brookfield Multiplex often provide guidance and advice to new staff members.
22 May 2016
but success is also measured in intangibles like client satisfaction, project delivery and employee performance. This makes sense when one considers the size and scale of some of the projects being built by these companies. Leaving aside the complex engineering required to make sure the finished product works, the successful completion of a largescale project hinges on a lead contractor being able to make sure that a cast of thousands all operate in synchronicity. For this to happen, there needs to be complete trust and confidence between a lead contracting firm’s management and staff. If there’s a break in the chain, a project worth millions, if not billions of dollars can come grinding to a halt, leading to severe repercussions for all involved. Therefore, it’s no surprise to hear that a first-tier contractor like Brookfield Multiplex puts employee performance and satisfaction near the top of the list when it comes to its
“We’re always looking for solutions that improve safety and efficiency. One thing that we try to instil in everyone’s mind is that you’ve got to spend a little bit of money up front, so as to save money further down the line”
operations across the globe. With operations in Australia, Europe, India, Canada and the Middle East, the contractor is one of the best known and bestregarded in the international construction industry. Established in 1997, the Middle Eastern operations of Brookfield Multiplex consist of more than 3,600 employees spread across Qatar (Doha) and the UAE (Abu Dhabi and Dubai). With $6.6 billion worth of work to date, the company has built itself a reputation as a contractor that can deliver high-quality, complex and fast-tracked projects on schedule and within budget. Over the last 18 years, the contractor has gone from a reasonably small operation to one that offers clients a complete suite of options across the board. In 2007 and 2008 respectively, the company expanded its offerings to the Middle East market through the introduction of its Brookfield Multiplex Services and Plant + Equipment divisions. The divisions either work together or independently to meet the needs
Company profile
KEEPING EVERYONE SAFE As a safety manager for Brookfield Multiplex and a member of its Middle East Safety Committee, Kevin Coleman has been intimately involved in developing the contractor’s highly-regarded health and safety standards and regulations. He tells Big Project that the contractor’s approach to health and safety comes from the very top of the organisation, which shows the seriousness with which it is viewed. “My role within the company is effectively that I’m someone people rely on for information to ensure that we follow Brookfield Multiplex standards. I advise site managers and employees on the standards, regulations from the company and also the local authority regulations,” he says. “The most important thing is that the approach to health and safety comes from the top, from the Board of Directors. It’s not just a paper exercise. We do this because it’s a serious subject, and I’m glad to say that we do take it seriously. We have to.” To ensure that staff are fully up to speed, Coleman and his team run monthly training campaigns that
teach employees the right way to do things, whether it’s working at height or handing hazardous substances. “Each month, we do a different training topic and that brings us up to a calendar that we’ve got for the full year, which we follow on all the sites. It’s not just on my projects, but across the board.” Given the diversity of the workforce, one of the biggest challenges facing Coleman is the language barrier, but he and his team have introduced an initiative that helps get their messages across. “This is going back several years, but one of the initiatives that we brought on board was that no matter what training we do, we translate that into as many nationalities and languages that we have. The training may be English, but it’s translated into the various languages, and that benefits us because it allows us to get the message across for health and safety. It also allows us to obtain feedback in the workers’ languages. It shows them that they’ve got somebody who can understand them, and that they can talk to someone as well.”
of each stage of the property cycle, allowing clients to get the most from their investment. Keeping all this in mind, Big Project ME visited Brookfield Multiplex’s offices on Dubai’s Sheikh Zayed Road to gain a better understanding of what makes this company tick. Speaking to a range of staff members, from Marcus Truscott, the managing director of Brookfield Multiplex Middle East, through to younger employees who have come up through the contractor’s graduate programmes, it rapidly becomes obvious that there is a large amount of pride within the company when it comes to the way it conducts its business. “In terms of the culture within the business, whilst we employ people from diverse backgrounds and nationalities, with different interests, there’s something that we look for in every person that we employ, and that is the desire to succeed. “You don’t define success in just one area, it’s in a lot of different areas. We employ
people that want to work for us and we look for someone who wants to build a career, someone with long term ambitions. We tend to attract people who are proud of the brand and want to be successful, and work very hard to be successful,” Truscott emphasises. The key to this is creating a culture of inclusion and collaboration, where employees feel like they’re contributing to the growth of the business, he says, pointing out that this is something that senior management strive to ingrain in the workforce. It quickly becomes apparent that this commitment to the company isn’t just something that’s preached, with senior management leading the way when it comes to putting it into practice. The average length of service amongst senior management is more than 10 years, which explains why they’ve been able to grow the way they have, and why they have such a strong reputation in the market. “There’s one thing we do
added value to clients Alan Humphrey says that Brookfield Multiplex’s culture allows it to exceed clients’ expectations.
May 2016 23
Company profile
guarantee 100%, every time, and that’s the effort that we put into our projects with a determined focus on successful delivery,” says Marcus Truscott. “I think people within the company see that and they want to be a part of that. It’s something that motivates people. And I think our clients and the industry see that as well, which is great.” Alan Humphrey, commercial director for the Middle East, agrees wholeheartedly, telling Big Project ME that the culture of the company has allowed it to provide added value to clients. “It’s definitely a culture [within the business]. We’re very open in discussion with all our staff and we’ve very open lines of communication. All our staff have direct access to our directors. So if anyone has any thoughts or ideas on how we can perform better, our doors and phone lines are always open.” “We do listen to our staff and we’re a very close-knit team here, even though we’ve grown to the size that we are. We still maintain that. We work hard together, leading from the front Marcus Truscott says that senior management at Brookfield Multiplex always make themselves accessible to staff members.
24 May 2016
but we also socialise together. It makes senior management a lot more approachable to the staff and it pulls everyone together as a team. There is a hierarchy, but we value our people, so we ensure that there’s open communication across the business,” Humphrey asserts. This open approach with staff also seems to pay off in other ways. Geoff Pontefract, technical director at Brookfield Multiplex, has clocked up close to 25 years with the company and has had a first-hand view of the benefits of being willing to listen to employees. As technical director for Brookfield Multiplex Constructions and also a director of the Plant + Equipment division, he’s often required to think outside the box and come up with solutions that others may not necessarily think of. With a team of eight engineers working under him, Pontefract is required to look at every single project Brookfield Multiplex tenders for and put together methodologies and programmes for each of them.
THE IMPORTANCE OF A MENTOR Having been with the company for close to 14 years, Abbas Raja has seen the company grow from just 300 or 400 staff to the GCC-wide behemoth that it is today. Initially joining as a site engineer, he has risen through the ranks to become a project manager for some of the company’s highest-profile and most challenging projects. In that time, he’s gained an appreciation and understanding for what it takes to be a part of the Brookfield Multiplex team, especially as a project manager. “A project manager deals with everything, from bottom to the top. He deals with site engineers on project sites, and he deals with contractors, subcontractors, deadlines. He also deals with clients and end users. They represent the company and they’re the core of the company. Every step that they take should bring value to the company, so they have to do well and make sure that the job is done on time, within budget, so that the clients and end users are happy,” he asserts. He’s keen to pass these values on to the next
generation of Brookfield Multiplex staff. “I started as an engineer and it’s been a big growth, starting from engineer through to the top level. There is very good career growth within the company, so it’s clear that they understand the value of staff. The staff is our core strength, and it’s also clear that they understand that the company is looking for people who want to come in and who want to put up their values within the company, so that both can grow. “They’ll work with existing old staff, and we have chats with them so that if they have any issues or problems, they can feel free to contact their line managers, construction managers or project managers. We continuously encourage [new staff members] so that they know that ‘this is what I have to do’. This shows them that if they put in the hard work, they will do well. This is the career progression they can have with Brookfield Multiplex, and this is the kind of confidence that we give new staff,” he explains.
Company profile
“There’s a lot of tenders going out, and obviously there’s a lot of work to make sure that when we’re tendering for projects, and when we’re actually working out how we’re going to build them, that we actually do it correctly. The worst thing is to win a project and then realise that you haven’t actually got it worked out properly before you win it,” he explains. “We’re always looking for solutions that improve safety and efficiency. One thing that we try to instil in everyone’s mind is that you’ve got to spend a little bit of money up front, so as to save money further down the line. That’s been demonstrated by a number of the new systems that we’ve implemented.” Additionally, for the last eight years Pontefract’s role within the
company has been more globallooking, with a remit to develop new systems that can be used on projects across the world, not just in the Middle East. “I’ve been the technical director for Europe, the Middle East, Asia and North America and the beauty of my role is that I can actually see what people are doing in Canada, what they’re doing in New York, in London. I see what they’re doing in India, and I see what they’re doing here. We’re able to take the best of each region, and then come up with detailed designs,” he says, pointing out that Brookfield Multiplex’s team often comes up with more innovative designs. “I think that’s where we’re different. We push the boundaries in terms of ideas and philosophies. As an international
“Every step that they take brings value to the company, so they have to do well and make sure that the job is done on time, within budget and cost, so that the client and end users are happy”
contractor, to be cost competitive, you’ve got to be innovative. I’ve had a bit of a free rein – not to do what I like, but I can come up with an idea, run it past my technical team and then we’ll run it past the board. If we get the tick in the box – which we generally do – then we go develop and implement it on site.” Marcus Truscott reinforces this view, explaining that supporting innovation and new ideas, and developing staff is something senior management focus on. While he’s loath to put a label on it, he emphasises that it’s certainly a key priority for the business. “It’s not necessarily that we approach Learning and Development in a very structured way, it’s more that we encourage our managers
diverse workforce Brookfield Multiplex tailors the training and development of its staff, keeping in mind the diversity of its workforce.
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Company profile
to spend time with our junior people or the new staff. “It’s about educating the labour, educating staff – constantly having the right people in the right positions. At the end of the day, this isn’t anything new, but the most important thing for a contractor is your staff and having staff that are innovative in their way of thinking, that are forward thinking, is very important. We’ve been able to attract those kinds of people over the years, and it’s something we look out for,” Truscott says. “Really, what makes Brookfield Multiplex special in the region is the close-knit culture that we have,” Alan Humphrey adds. “Everyone is involved in social events and it gives people exposure
the right people, in the right positions Having staff that are innovative in their way of thinking is very important for the future of the company, says Marcus Truscott.
26 May 2016
to management, which makes the pathways of communication much easier.” The future for Brookfield Multiplex in the Middle East thus looks quite rosy. Given the aptitude and commitment that the company’s staff displays, all three senior management figures have no doubts about how things are progressing for the company. “We’re busy in the market, mainly for repeat clients,” says Geoff Pontefract. “There are a number of projects out there where we’re looking at and discussing [projects with them]. For me, 2016 is going to be a fantastic year for us.” While Humphrey does accept that the market for tenders is currently slowing down, he remains hopeful that by the end of the year, the market will see
“I think it’ll get really interesting towards the end of the year, where we’ll see if people can replenish those order books. That’s for both main contractors and subcontractors”
more tenders come out. But he agrees that repeat business will be crucial for the contractor. “We’ve got good clients with healthy pipelines and projects coming up in the near future. That relationship with clients is something that we think will continue to allow us to maintain our order book going forwards over the next 12 months. We think that the residential, hospitality and retail markets will continue [to progress], but not in any great volume over the next year. “I think most contractors’ order books are fairly full at the moment, which has really come about because of a good couple of years. I think it’ll get really interesting towards the end of the year, where we’ll see if people can replenish those
Company profile
THE RISING STAR Kylie Judd is an assistant project manager with Brookfield Multiplex Middle East, as well as one of the company’s rising young stars. Having begun working for Brookfield Multiplex straight out of university, she has seen her career undergo rapid progression over just five years. “I started in Perth, with the graduate programme there. It’s a three-year programme and you rotate through different disciplines, such as design, site-based work, programming and all the different aspects of the business. It’s a really amazing programme for someone straight out of university, it builds them up and gives them all the skills they’ll need to succeed in the industry,” she says. In 2015, Judd received the global John Roberts AO Development Scholarship, designed to support and foster Brookfield Multiplex’s young construction professionals in their ongoing development. The scholarship is awarded to one recipient a year, and a number of senior management staff have been previous winners, a clear indication of the importance of the award. “The person [who wins the scholarship] gets to travel to the different regions in which the
company operates and it acts as a learning curve or stepping stone for everyone within the business. I’ve been to the UK, Canada and Australia, as well as investigating the business here in the Middle East, but you also get to develop yourself personally and go on executive education courses. “I went to the Booth School of Business at the University of Chicago and to Columbia Business School, which was an amazing opportunity for someone in my job role and being so young in the business,” Judd relates. “Knowing that the company will support you in gaining that international exposure and representing the business, learning as much as you can and then coming home and telling everyone what you’ve learnt is a real opportunity for both sides to learn more.” Further building on her success, the company encourages her to speak to other young people in the business and explain how they can map out their career progressions, she says. “It’s about saying, look, this is what you can do if you work hard, and if you’d like to do this, the company will definitely support you and your career aspirations.
order books. That’s for both main contractors and subcontractors. If we don’t see those order books replenished, then that’s the time we’ll start seeing construction prices falling.” Humphrey adds that the company will be looking at new sectors in the coming years, with a particular focus on the affordable housing segment of the residential market, as he sees opportunity there. “I think the typical residential housing market will continue, but not in the volumes we’ve seen before. But affordable housing is the market that we’re starting to see a lot of potential volume coming through.” Truscott adds that the contractor is continuing to keep an eye out for blue-chip projects in the GCC, with Oman and Saudi Arabia likely to be of particular interest, along with a continued focus on the UAE and Qatar. For example, the company has priced projects in KSA and Oman. There is a desire to expand into those countries, but Truscott asserts that it’s about
finding the right opportunity that will benefit Brookfield Multiplex and its clients and partners. “Ultimately, however, we’re very excited about our future in the Middle East. We feel like we’ve got a fantastic business. We’re well positioned in the market and we’ve got a good reputation due to what we’ve been able to achieve and deliver over the last 18 years. We want to continue to build on that reputation and our current workbook. Given the aura of positivity that surrounds his staff, it wouldn’t be a surprise to see Truscott’s ambitions coming to fruition. With the contractor’s current workbook looking healthy for 2016 and 2017, there’s clearly plenty to be optimistic about despite the uncertain market conditions that are clouding the GCC construction outlook. One thing that you can be sure about is that no matter what challenges lie ahead, the Brookfield Multiplex family will be standing shoulderto-shoulder to meet it.
ready for business Despite a slight slowdown in the market, Brookfield Multiplex maintains a healthy workbook for 2016.
May 2016 27
Site visit
Big Project ME tours Nakheel’s retail and hospitality projects on the Palm Jumeirah
Nakheel ta 30 May 2016
Site visit
kes PoiNte May 2016 31
Site visit
i
n April this year, Nakheel announced its first quarter net profits – a total of $400.24 million, and an 8% increase compared to last year. According to the Dubai-based developer, the gains were led again by its delivery portfolio and the steady accumulation of new rental assets. What was especially interesting about these figures was that retail and hospitality were major drivers in the improved performance. This is a clear reflection of a shift in focus for the developer, which has long been focused on the delivery of high-end residential projects, most situated on Palm Jumeirah. However, with the company returning to an even keel, there has been a renewed interest in retail projects. This is evident with Dragon Mart 2 opening in the first quarter of 2016, while the 27,870sqm expansion of the Ibn Battuta Mall is on track. Although these are significant developments, the developer’s crowning glory remains the Palm Jumeirah. Following years of development by outside investors, with numerous hotels and resorts being built, Nakheel has begun taking the next steps forward in its masterplan for the man-made island. Fuelling this move into the future are two projects that Nakheel hopes will revitalise and reenergise the Palm, giving residents and visitors fresh options for shopping, dining and entertainment on the island. Built on a total area of 92,903sqm, Nakheel Mall is the 32 May 2016
first of the two, and will feature a tower housing a 289-room St. Regis five-star hotel, 504 apartments and a 220m high viewing deck. Designed around architectural representations of water in tribute to its location at the heart of Palm Jumeirah, the mall will include a variety of indoor and outdoor features that mimic nature, the developer says. With five floors of retail space, dining and entertainment, it is being built to rival the best Dubai has to offer. The second project being built is The Pointe, a waterfront destination that will provide visitors and residents with “relaxed entertainment” at the tip of the central trunk of Palm Jumeriah, just across the bay from Atlantis the Palm. A combination of retail outlets, everything in one place Nakheel Mall will host F&B outlets, a cinema and different retail outlets.
ProJect details developer: Nakheel total area of Nakheel Mall: 92,903sqm total area of the Pointe: 36,000sqm Main contractor (Nakheel Mall): Joint venture (UNEC and ACTCO) Main contractor (the Pointe): GTCC consultant (Nakheel Mall): RSP Project value (the Pointe): $218 million Project value (Nakheel Mall): $326.7 million
restaurants, cafés and outdoor entertainment along a quayside promenade, the 136,000sqm development is intended to tap into the increasingly popular trend for outdoor retail in Dubai. With construction on both projects well underway, Big Project ME was invited to tour both construction sites to get an idea of how work is progressing on these vital projects. “Nakheel Mall, it has food and beverage outlets, it has different concepts and shopping outlets. You have a cinema, and there’s different retail concepts as well,” says Khaled Salem Al Jaberi, director of Projects (ERA) and Project Construction for Nakheel. “The mall is totally different to The Pointe. That is a luxury place where people can come and relax. In most of the areas at The Pointe, it’s F&B. However, both of them complement the other. I feel that people in the area can come to relax at the end of the day, after work, or they can enjoy a break during working hours [at The Pointe]. It’s different at Nakheel Mall. In this project, you can have all of what you’re looking for: retail experience, shopping, entertainment for the kids and even medical facilities and so on.” Al Jaberi also points out that the surrounding area has seen an upturn in interest from investors, highlighting just how positively the projects have been received by the owners and tenants around the sites. Nakheel Mall in particular has a lot of its neighbours excited, he asserts. “I think that this project is something everyone is looking forward to, especially people who are living on the Palm. The people who are in these zones, these projects will serve them very well. It will become another landmark on the Palm for Dubai. The location itself helps everyone, and you can see that
Site visit
Man in charge Khaled Salem Al Jaberi is tasked with overseeing the construction and delivery of both Nakheel Mall and The Pointe.
the monorail has a stop there, so it’s very convenient for everyone – people who live in this area, people who are having vacations on the hotel side [of the island]. “It really will be a destination for everybody, and it will definitely have a part to play in adding value to Palm Jumeirah.” Building the mall and tower comes with particular challenges. Given its proximity to a number of residential units and its position on the main thoroughfare, several logistical challenges arise while construction is ongoing. With nearly 4,000 workers already on-site, the logistics around moving materials, workers and equipment in and out of the site are quite complicated, Al Jaberi readily acknowledges. With this number set to rise once finishing works begins, getting it right is a priority for him and his team. “This project [Nakheel Mall] is totally different from others. It really has logistical issues. For example, we have almost 4,000 people working on the project and it’s increasing day by day.
“The planning for the project was done with the contractor, the consultant and the logistics suppliers. That was key to not affecting things with the operations here. We have set different times for deliveries, like in the night when traffic is much less”
On top of that, the materials have to be considered – the number of trailers, the tonnes of steel that are coming in, the concrete, everything like that. “Logistics is becoming a challenge for us. We are trying not to close any roads, but at certain times we will reduce traffic from two lanes to one lane,” he says. Planning is definitely key for the construction team, with builders UNEC and ACTCO working as a joint venture to create a workable schedule for the building of the mall and tower, to ensure minimal disruption to daily life on the island. “The planning for the project was done with the contractor, the consultant and the logistics suppliers. That was key to not affecting things with the operations here. We have set different times for deliveries, like in the night, when traffic is much less. Sometimes when we’re pouring concrete, it’s not on all the days [to ensure minimal disruption].” However, as construction on the mall continues to progress, things
will continue to be increasingly complicated, as Al Jaberi explains. “We used to have a ramp down [to the site] so that the trucks can go and do all their off-loading. Now, since we’re reaching the last point, it’s starting to get very tight for us. We’re trying to use all kinds of resources, long pipes for concrete and so on, for the concrete pouring. Now we’re finishing the ramps for the trucks to enter inside the structure, so that they can deliver all the materials from the basements and so on.” Another challenge that limits the work on both Nakheel Mall and The Pointe is the monorail, which limits the time during which the team can work, as well as the space available to cranes. “During operation, we cannot work so close to the monorail. It’s only after 10pm at night up to 6am in the morning that we can work close to the monorail. On top of that, there is a certain amount of metres that we have to stay away from it. So we can’t move our cranes [in that space], we cannot put them in certain areas. May 2016 33
Site visit
As such, we have to use normal cranes, manual cranes and so on to do the jobs,” he points out. Meanwhile, construction on the tower alongside the mall involves a separate contractor to the JV. The 52-storey tower is being handled by Trojan General Contracting, though the basement areas are under the JV, which is close to completing the works, Al Jaberi says. Once this is finished, they will hand over to Trojan to finish the tower. For The Pointe, construction work poses a few different challenges, with groundwork especially difficult given the proximity to the water. Built by GTCC, a subsidiary of Drake & Scull, the contractor was faced to come up with different resolutions compared to the team on Nakheel Mall. In order to cope with the groundwater, GTCC had to try a number of different solutions to try and stop the groundwater leaking through. It was certainly a complicated procedure, Al Jaberi recollects. “We brought in pre-cast walls and we tried to use that there, and thus it was faster there. You’ll notice that the promenade is almost there in terms of the shape. You’ll also notice that we’ve started
cHoosiNG tHe riGHt coNtractors “UNEC has done a lot of projects for us. One of the projects they’ve done with us was Dragon Mart. They are working with us as a partner, to be frank,” says Khaled Salem Al Jaberi, about the joint venture for Nakheel Mall. “ACTCO is used to working with us on a lot of projects related to power stations. They’ve built Jumeirah Park and are doing well there. So this is another project with them.” Because the project is so large, the two contractors decided to form a JV, given the resources and manpower needed. In addition, finishing Nakheel Mall will require financial expertise and experience, which both parties bring to the deal. “UNEC have good experience in retail, as they’ve done shopping malls before. They are also doing a couple of other projects with us – towers and hotels. So I think they’re handling it well so far.”
putting in the fountains – there’s a lot of fountains on the promenade. Materials have started to arrive, such as the basic infrastructure like fire-fighting and all those services, for the areas we’ve already completed. It was a challenge, but again, we had proper planning and coordination between what services will move, and so far we’re almost out from those activities.” Given the large numbers involved, coordination is vital to the project team’s success. Al Jaberi explains that all stakeholders were careful to encourage a culture of communication and cooperation. “It’s not only the contractors and the consultants; on top of that you have the authorities. You have to wait for them to get approvals. If you don’t get approvals fast, contractors can claim for delays and for extension of time. So we’re trying not to allow getting those approvals to delay us. “If we feel that the contractors or consultants have any issues, then we intervene, as we have a good relationship with Trakhees, with the RTA, with DEWA. For example, with DEWA, we are pushing them to get everything approved as soon as possible. On top of that, we are also coordinating with the contractors [to make
sure things run smoothly]. “On The Pointe, GTCC also cooperated with us. Even though we did some enhancements on the project to make it more in line with market expectations, GTCC and Drake & Scull have been working well with us to meet the target we’re looking for.” The entire precinct is scheduled for completion in 2016. The most important concern, Al Jaberi says, is the prompt delivery of materials, with certain products having a long lead time. To ensure that things don’t get out of hand, Al Jaberi says that the Nakheel project team often steps in to assist in the timely delivery of necessary items. To that end, they hold regular meetings with the various teams to find out where things stand. “Every Monday, we have a coordination meeting where we review the pending materials, the electrical, mechanical and finishing items, things like that. We go into detail: where it is pending, why it’s delayed, why it’s taking time [to be completed]. If it’s an issue on our side, we ask what we need to do to get it approved quickly. The contractor should have time to order materials, because we don’t want delays. “We even go and visit the
Waterfront destination The Pointe will have a range of food and beverage outlets and cafés, while also allowing residents and visitors to walk along a sweeping promenade.
34 AMay 2016
Site visit
Hse aNd sUstaiNaBilitY tarGets In order to maintain the health and safety of the workers on the projects, Nakheel works in tandem with the consultants on the project to ensure that standards and requirements are being met, Al Jaberi says. “We have a team from the consultants who have weekly meetings regarding these issues. We also have a Nakheel team that visits here and does what it required. They have the full power to do whatever is needed, if something is not being done right. “From our side, we have weekly meetings that review the health and safety of workers, how things are going and what training is
being done [to ensure HSE targets are being met]. We are taking care of that.” Sustainability is another concern for Nakheel, with Al Jaberi pointing out that green building is crucial to the final handover of the project. “Green building is one of the elements without which we cannot hand over the project. We have a consultant who is following us on meeting the green requirements, and we’re doing a lot of things to save power. For example, the material that we use, we’re looking at solar power for lighting, there’s recycling of waste materials. There’s no doubt about it, we have to meet these targets.”
factories, like the aluminium factory, for example. We go and see them before we approve it to make sure that they can handle this the project.” He adds that Nakheel takes this so seriously that it doesn’t just rely on the contractor’s approval for a supplier. Instead it looks at factors like how many jobs the supplier has in the pipeline and what he is currently working on, and from there makes a judgement call on whether the deadline can be met. “On top of that, we may intervene to make sure that coordination is going on between the subcontractors themselves – are they talking to each other, do they know what the other is doing? Also, we work closely with the consultants and we look at the commercial aspects. If sometimes the things that are specified in
the projects aren’t valid, then we’ll go back to our design team and we’ll check with them.” While this could be seen as alarming to a project team, Al Jaberi insists that this approach is because Nakheel is determined to have its projects receive the best attention possible, with construction schedules met and budgets adhered to. “All this coordination, this is our role to play. The important thing is to make sure that the contractor is getting his money on time, and that there are no delays from our accounts team, from our consultant approvals and from our management. Our role is to make things move fast and to push everybody in one direction, to achieve the completion date with the high quality that we need on these projects,” he concludes.
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Project profile
Airport of the future
Big Project ME catches up with Sean McQue, project director at ALEC, to find out how the contractor will tackle the challenge of expanding Al Maktoum International Airport 36 May 2016
Project profile
May 2016 37
Project profile
e
arlier this year, Al Jaber LEGT Engineering (ALEC) was appointed by Dubai Aviation Engineering Projects (DAEP) to expand the Al Maktoum International Airport (AKA Dubai World Central, DWC) passenger terminal building to more than double its existing size. ALEC will increase the built-up area of the passenger terminal from the existing 66,107sqm to 145,926sqm. Work on the project is scheduled to be completed by June 2017. This marks the first phase of an expansion project that will eventually see the airport handle up to 26.5 million passengers per year by 2025. Ultimately, the airport will have the capacity for more than 220 million travellers on an annual basis, says HH Sheikh
Ahmed Bin Saeed Al Maktoum, president of Dubai Civil Aviation Authority, chairman and chief executive of Emirates Airlines and Group, and chairman of Dubai Aviation City Corporation. “We are poised to significantly boost Dubai’s economy by creating a world-class facility capable of handling the growing number of passengers visiting and transiting our city. Al Maktoum International is being designed to become an airport of the future. We are building a range of amenities and facilities that will increase capacity and significantly enrich the airport experience, making it an attractive proposition for airlines as well as passengers,” Sheikh Ahmed says. As part of the proposed expansion work for the passenger terminal, the arrival building, which houses the public hall for arrivals, the baggage claim area and related services, as well as the baggage handling system, will feature a new immigration hall with 55 control counters, and visa and passenger utilities. Furthermore, the departure building will see the expansion
expansion plans Once the expansion of the airport is complete, it will be able to handle more than 220 million passengers on an annual basis.
of the public hall, commercial areas and offices, as well as the check-in hall, which will house 74 check-in counters. The expansion will also include 12 new boarding lounges and the extension of the emigration transfer and security area, with a new baggage screening zone for arrivals, while the current space will see the addition of three new carousels. The expansion will take place in two phases over six to eight years, with the entire development covering an area of 56 sq km. All in all, the project is shaping up to be a challenging one for ALEC, the main contractor. Big Project ME caught up with Sean McQue, project director for ALEC, for a brief chat about how the Dubai-based firm is going to tackle the challenges of this high-profile project. Firstly, what is ALEC’s scope of work on the project? Sean McQue: ALEC has been
engaged to extend the footprint of the existing facility as well as to reconfigure and modify
QUICK FACTS Five parallel Code F runways of 4.5km in length, spaced wide apart in order to provide for simultaneous operation Two terminal facilities on either side of the airport site, west and east, providing capacity for over 50 million passengers a year in total. Four concourses featuring an innovative triple-plus 2.8km-long layout, encompassing three nodes, each the size of seven football pitches. Concourses, each with 100 wide-body aircraft contact stands and 65 million capacity, totalling over 220 million passengers per year capacity for the entire airport, with over 400 wide-body contact stands. Innovative concourse functional design aiming to raise passenger experience to new levels never before experienced at any airport. A six-track train system connecting the airport’s two terminals with its four concourses. A massive 8 sq km cargo facility area on the south side of the airport, supported by the quick cargo transfer facilities.
38 May 2016
Project profile
such an environment? SM: The safety of the project
staff and operatives, as well as all airport personnel and passengers, has always been at the top of our agenda. This will be achieved through strict controls and guidelines and close management and supervision, and it is an effort that will involve all the entities involved in this project. We look forward to continuing the impeccable record that we have enjoyed over the years of working with DAEP and DAR in the Dubai Airport environment.
Striking a balance The key to successfully delivering the project is striking a balance between delivering the project to tight deadlines and accommodating the airport’s commitment to high levels of performance.
ThE PASSEngEr TErMInAL BUILdIng In nUMBErS Area
145,926sqm
no. of floors
Ground + mezzanine
dEPArTUrE ArEA Check-in counters
90 Economy + 10 Business Class
OOg check-in
2
Self-service check-in kiosks
7 Economy + 4 Business Class
dEP passport control counters
20
E-gates
6
dEP security screening
10+1 Staff
Boarding lounges
24 (16 open + 8 closed)
ArrIVAL ArEA Arr passport control counters
40
E-gates
15
Arr hand baggage screening
9
Baggage delivery carousels
7
Customs control screening
6
TrAnSFEr ArEA Transfer counters
8
Transfer screening
12
sections of the existing building. The completed product will serve to increase the capacity of the Al Maktoum International Airport significantly in line with the overall master development plan for the area. We will be in coordination with two other specialist contractors and will jointly complete the project under the supervision of DAEP and DAR Al Handasah. What are some of the challenges of conducting construction work in a fully operational airport? SM: The key here is to strike
a balance between delivering the project in line with aggressive deadlines while still accommodating the airport’s commitment to their high level of customer satisfaction and smooth running of each stakeholder’s requirements. This will be achieved through close, collaborative coordination, which is already well underway. how do you manage and maintain hSE standards in
What have you learned from previous jobs, such as the dubai International Airport expansion works? how can this be applied to the current project? SM: ALEC attributes our
outstanding reputation in the market for safety, quality and ability to deliver large complex projects under difficult circumstances largely to our experience over the last eight years of participating in a number of projects at Dubai Airport. To be successful in delivering projects in this environment, contractors need to be proactive, flexible, customer-centric and fully committed to the highest levels of quality in all aspects of their work [and this is what we’ll be aiming to achieve]. What is the key to achieving your scheduled targets on the project – achieving construction completion and handover on time? SM: The key ingredient here
is communication. Regular discussions and workshops with all the affected stakeholders will lead the entire team to the optimal transitional scenarios that will keep the airport running smoothly and allow the challenging task of the construction works to continue. May 2016 39
Comment
Alan Millin
District cooling: the ultimate solution, or the ultimate rip-off? Dubai-based facilities scientist Alan Millin breaks down the issues surrounding district cooling and questions whether the technology is being operated and managed in the best possible manner In a region where air conditioning is an essential component of facilities, the source of chilled water can often make a significant difference to facility energy consumption. District cooling plants that are well operated should be more energyefficient than stand-alone systems in each facility – and there is the first problem. District cooling plants must be operated and maintained to the very highest of standards if design efficiency targets are to be met. When a district cooling plant is less than optimally managed, 40 May 2016
it is likely to be the end user that pays, via contractual tariffs. How many district cooling providers base their charge-out rates on the cost of 25 years of peak operational efficiency? We can therefore expect a contingency to be factored in. If this is the case, end users are penalised from the outset. It gets worse. End users are often subject to a capacity charge, based on an assessment of the peak cooling demand of their individual unit. But just how is this calculated? It would be comforting
to believe that computerised energy simulation assessments are carried out for each unit, but that would of course be time-consuming and expensive. A more common way of assessing peak demand is the use of check figures. For several decades, organisations such as the American Society of Heating, Refrigerating and Air-conditioning Engineers (ASHRAE) have published cooling load check figures. Using these figures, we can take the floor area of a unit and apply a
published cooling load factor to obtain an estimate of the peak cooling load for our unit. Some of the published figures are actually decades old. Given the move towards green and sustainable buildings, particularly over the last 20 years or so, it would be reasonable to infer that the application of older, published cooling load factors would return higher than actual cooling loads. Today’s buildings should be far more efficient than older facilities. ASHRAE’s District Cooling Guide, published in 2013 and
moral obligation District cooling providers have a moral obligation to work with clients to ensure that a realistic capacity charge is applied.
“The district cooling industry has tried to position itself as a utility. To achieve that goal, it has to be fair and transparent in all areas”
part-funded by a major Dubaibased district cooling provider, provides a table of cooling load factors, by building type, in square feet of floor area per ton of refrigeration (ft²/ton). The worst case, or highest cooling load factor, for a high-rise apartment is given as 350ft²/ton, with the other residential building types listed having a higher cooling load factor. If we assume that this worst case holds true in Dubai, an apartment with an area of 861.11 ft² would have a peak cooling load of 2.46 tons. Amazingly, the same district cooling provider
that part-funded ASHRAE’s district cooling guide has assessed just such an apartment as having a peak cooling demand of 4.28 tons, which equates to 201.2ft²/ ton, which is much closer to published figures for offices and shopping malls. For the district cooling end user, capacity over-assessments like this translate directly to inflated capacity charges. If we then factor in contingency for district cooling plant operational efficiencies that are worse than design targets, we can see that the end user is again penalised.
Comment
I would argue that district cooling providers have, at the very least, a moral obligation to work with clients to ensure that a realistic capacity charge is applied. Unfortunately, this does not yet take place as an industry norm. For the apartment used in the above example, the district cooling provider simply stated that it was unable to change the capacity charge assessment, as it was given the peak load by the master developer. The end user was forced to accept the capacity assessment or face disconnection by the district cooling provider. Convenient, isn’t it? An apartment that, on the face of it, has been grossly overassessed, and the district cooling provider will not look into it. If the capacity charge was too low, would they have adopted the same hands-off attitude? The conclusions we can draw from this case suggest that either master developers are building hopelessly inefficient apartment buildings, or that the district cooling provider is happily ripping off its clients. Neither of these conclusions should fill any of us with cheer. While we can generate and support arguments for building energy certificates, perhaps it is time to consider building and unit cooling load certificates. Such certificates would expose developers who build inefficient facilities, and also constrain the excess charges of district cooling providers. The district cooling industry has tried to position itself as a utility. To achieve that goal, it has to be fair and transparent in all areas of business. Public reporting of plant energy efficiencies, water consumption and operational achievements should be the norm. It is evident from this case that the industry still has a very long way to go to reach maturity. May 2016 41
Sustainability
Major contributor It is estimated that the construction industry in the UAE contributes 65% of all non-residential waste in the UAE.
NothiNg to Waste
Big Project ME speaks to Gyproc Middle East about an exciting new recycling and sustainability scheme being launched by the plasterboard systems specialist
42 May 2016
As the UAE continues to beat the drum for sustainability, the country’s construction industry is facing up to the considerable challenge posed by the waste that it generates. With the pressure on to build the real estate and infrastructure needed to meet the UAE’s aspirations, the construction industry is one of the worst offenders when it comes to generating waste.
It is estimated that by 2017, the UAE alone will produce as much as 8.5 million tonnes of waste every year. Experts have unequivocally said that the infrastructure needed to handle this volume of waste is simply
not present, especially as the landfill capacity in the country is close to being maxed out. Worryingly for the construction industry, it is estimated that it produces a massive 65% or so of all nonresidential waste in the UAE. With construction and demolition sites standing out as the biggest offenders, government authorities have now begun targeting the industry through new legislation and increasing waste disposal costs for contractors and building developers. Given the situation, it’s imperative that the industry itself begins to find solutions to its
Sustainability
REcycling WAstE Contractors wishing to participate in the new recycling scheme must first set up the necessary arrangements with Gyproc, to ensure they have a system in place to enable plasterboard waste and offcuts to be segregated and managed independently of other site waste. The contractor can then liaise with Gyproc and its own waste management company to collect and deliver the waste plasterboard to a special facility at Gyproc’s Abu Dhabi plant. Once at the plant, the waste will be weighed and monitored, with data fed back to the contractor and Tadweer. The reclaimed board will then be processed and recycled into the new board manufacturing process, at a predetermined rate, so as to ensure that all new board produced meets performance and appearance standards.
construction waste problem. This is where plasterboard systems specialist Gyproc Middle East comes in. The company has announced a recycling service for customers that will see site waste plasterboard reprocessed and recycled into new plasterboard. Targeted at contractors in the UAE, this initiative will help save on expensive landfill costs and increase sustainability ratings for projects, says Peter Robinson of Gyproc Middle East. “We have been working closely with the industry and Tadweer, the Abu Dhabi Centre for Waste Management, to reduce the amount of plasterboard waste
produced and dumped. This involves a three-pronged attack. Firstly, reducing the amount of offcuts through improved system design and product engineering, and through training and support on-site; secondly, promoting reuse of offcuts where possible; and finally, recycling any waste and offcut plasterboard that is created into new high quality boards.” Robinson adds that the local initiative began as part of a drive by parent company Saint-Gobain Gyproc to offer recycling services in 15 countries, as part of the company’s global sustainability strategy. “Through our collaborative partnership with Tadweer, we are now the only approved plasterboard recycler in the UAE.” Although the company has been recycling its own manufacturing waste since 2013, the new service will go a step further, with delivery of clean site waste and offcut plasterboard to Gyproc’s plant. This follows successful trials at two sites which began in 2014, Robinson says. While there are obvious benefits to contractors, there are also others that may not
be so immediately apparent. Not only will such schemes improve site safety and practices, segregating plasterboard waste on-site helps to create new working systems – tidier sites, with fewer slips, trips and falls, and an improved appreciation of environmental issues both at site management and installer level. Furthermore, Robinson says that Gyproc will monitor and weigh all the waste they receive, creating data that will be sent back to the contractor to feed into green building calculations. “This will help identify and address areas of the site, or specific operations that produce high levels of waste. This should enable overall waste volumes to be reduced, saving further costs on the project,” he explains. “As well as cost reductions for the project, there are also big benefits for Gyproc,” Robinson adds. “We are able to process the reclaimed plasterboard and feed it back into the manufacturing cycle. This not only has direct cost implications, but helps to improve the sustainability credentials of the products and reduce future demand on raw materials.”
Contractor savings This initiative will help contractors save on expensive landfill costs and increase the sustainability ratings for their projects.
May 2016 43
Roundtable
Examining thE PPP LandscaPE
Anoop Menon sits down with three regional experts to examine whether PPP can be a viable method of funding projects in the UAE
44 May 2016
Stakeholders in the region’s infrastructure industry widely welcomed Dubai’s introduction of a new Public Private Partnership (PPP) law last year. With governments slashing budgets to deal with the low oil price, the region’s infrastructure sector was surely headed for a funding crunch, and PPP was seen as an alternative to traditional procurement.
However, Dubai’s PPP market in the non-power and water sectors hasn’t taken off as expected. Big Project ME hosted a round table of experts
from finance and insurance to understand the reasons behind the poor market response and figure out the missing elements needed to kick-start the market. Here are some excerpts from an engrossing discussion. Can you give us your view on the PPP market in Dubai and the wider region? Ebere Ihetu: Due to the drop
in oil prices, PPP is once again under the spotlight as a procurement route for infrastructure projects. Dubai
Roundtable
introduced its PPP legislation last year, while Qatar and Oman are talking about introducing PPP legislation later on in the year. Kuwait’s PPP law has been sort of revised and they have a strong pipeline of PPP projects. I think everybody wants to know where the opportunities lie, what can be done to help the market from a bidder’s perspective and what makes projects work. Andrew Ward: Before talking about the market, it’s important we agree on our terminology. There is no widely accepted
PArtICIPAntS Ebere Ihetu Managing director and founder, ENA Consulting Andrew Ward Director, Affric Infrastructure Advisory Vasan Seshadri Vice president of Construction and Infrastructure Practice, Marsh
definition of PPP and people use the term indiscriminately. However, PPP generally shares the following characteristics: • Private sector delivers assets and services on behalf of the public sector • Risk within the contract is allocated to the party best suited to manage such risk • Long-term (15 year+) concession contracts • Payments to the private sector linked to performance Asset-based PPPs require the private sector to design, build
Positive outlook The outlook for PPPs within the region is positive, but dependent on each specific market and geography.
and operate the asset as well as source long-term third-party finance to fund the transaction. In return, the public sector guarantees to make long-term payments to the private sector partner (subject to performance). This is a key benefit to the public sector, as it allows governments to develop projects and then pay for the capital expenditure and maintenance of the asset over the project lifetime (up to 25 years), as opposed to funding the project costs from their annual capital expenditure budget or existing reserves. The impact of low oil pricing has impacted many GCC countries’ budgets and reserves, and as such many of these countries are seeing a form of PPP as one method to finance their infrastructure programmes. Within that context, the outlook for PPPs within the region is more positive, however still mixed, and very much depends on each specific market and geography. The region has a strong track record of delivering energy projects (a form of PPP). The IWPP model has been very successful and Phase II of DEWA Mohammed bin Rashid Solar Park is a BOT project, which is a form of PPP. Looking at Phase II specifically, it is easy to see why the model works so well. The allocation of risk was clear – the technology risk of solar is low, investors and debt providers were able to understand the forecast power demand analysis and DEWA is a BBB-rated off taker. As a result, competition was fierce and an extremely competitive deal was struck. But looking beyond power and water sectors or the energy sector, like education and healthcare? Ward: The PPP opportunities
May 2016 45
Roundtable
revenue projections for the project do not materialise.
the issue with institutional debt Institutional investors are not prepared to accept the level of risk associated with construction, says Andrew Ward.
What has been Marsh’s insurance on PPP projects in the region? Vasan Seshadri: From a purely
for the region in these markets are much less clear. In welldeveloped PPP markets – say the UK, Australia or Canada – government still provides the majority of healthcare and education services. The respective public sector bodies (along with their treasury departments) therefore engage the private sector to deliver the assets or services on their behalf. The population mix with the different GCC countries will impact the delivery of both healthcare and education services. In countries with high expatriate populations, these services are predominantly delivered via the private sector. With government having oversight and enforcing standards, however, in countries where there is a high proportion of local residents, then government-sponsored PPPs are an option to deliver public sector assets. Therefore, in countries with high expatriate populations there may be the occasional project that will come to market;
46 May 2016
however, countries such as Saudi Arabia have the potential of a strong pipeline of PPP projects. Ihetu: Kuwait in the past has tried to do traditional PPP schemes in the healthcare sector where the contractor or developer’s role was to build, finance, maintain and make the facility available. The health authority’s responsibility is then the provision of clinical services and providing medical staff. I haven’t seen something similar in the GCC but there is potential. And transport? Ward: We would expect to
see more movement in the transportation market (toll roads, metro, airports, railway, etc), where government is still largely considered the primary service provider. However, the size of this market will largely depend on which party is required to take demand risk (the risk the asset will be used) and what guarantees can be put in place to provide funders with comfort debt will be repaid, in the event
“Energy market PPPs have done very well in the region, but as soon as you move outside that market, the same momentum isn’t there due to the absence of a public sector take-off entity which will bear the demand risk”
insurance perspective, be it during the construction stage or subsequent operation stage, PPP projects aren’t treated differently. Whether the project goes down the PPP route or the traditional procurement model, insurance products are always insurance products predicated on physical loss or damage-related events. The only nuance we see between PPP and non-PPP projects is involvement of private lending. The moment private finance comes in, they will have certain minimum requirements and standards because they have insurable interest in the investment. In the traditional model, governments had their own way of approaching risk management and mitigation. Private sector has a different approach and attitude towards risk management insurance. What exactly is being insured? Seshadri: What we are looking
at is the asset getting built and operated to generate revenues. We provide construction risk insurance during the construction phase to protect against damage to the works being carried out. Once the asset gets built and starts commercial operations, we provide operational insurance, property damage insurance. At either side of the spectrum, we are looking at physical loss or damage to the asset. Is the complex structuring of PPPs a factor in insurance? Seshadri: Since there are multiple
parties of various backgrounds involved in a PPP structure, the interest of each and every party
Roundtable
needs to be noted in the insurance. Should something go wrong, it’s not just the government which is going to suffer a loss. The investors and the operators who have a stake in the project are also going to be affected. The other aspect is the nature of insurance itself. If it is a governmentdelivered infrastructure project, they wouldn’t be too much interested in delays from physical loss and damage. But if you have investors coming in, their interest will again revolve around revenue the asset generates. The sooner it starts generating revenue, the better it is for them. They will be very much interested in ensuring that any physical loss or damage or even delays are insured. They tend to buy another class of insurance
called delay-in-start-up (DSU) insurance for the construction stage. The moment it becomes operational, they also look to procure business interruption insurance. These two classes of insurance are not taken up in the traditional procurement approach. Ihetu: I would like to add that from a lender’s perspective, they have particular insurance requirements which are used for commercial loss mitigation. The loan agreement deals with insurance during the construction and operational phase of the project. Ultimately the lenders’ objectives are the protection of assets and future revenues. How do lenders view PPPs? Ihetu: From a lender’s perspective,
one of the key risks is demand
risk or market risk. For projects to be financed quicker, you need availability-type projects where the government takes care of the demand risk. It could be a hospital, school, pipeline or even street lighting. The idea is that the private sector will come in to design, build and finance, and maintain the asset. The private sector developers get paid on a yearly basis through availability based payments, as long as key KPIs are met. This is seen in the power and water sector in the region, where the big operators are confident they will get paid as long as they continue to produce power and water. But we haven’t see this successful approach being rolled out across other infrastructure sectors in a significant way in this region.
What are the options outside the traditional debt markets? Ihetu: There is not a lot of
institutional funding in the GCC. There has been talk about bond financing, but construction risks and bonds don’t fit well. Ward: That’s the key issue for institutional debt (i.e. the capital markets). Generally, the institutional investors are not prepared to accept the level of risk associated with construction, preferring to provide long-term finance to operational assets. It’s also a very time-consuming process. Export credit agencies (ECA) offer another alternative funding source with competitive margins and tenors. ECAs are active in the GCC market, as the governmental nature of PPP fits well with their credit parameters.
investor interest If investors come into a project, their interest will revolve around the revenue the asset generates. The sooner it starts generating revenue, the better it is for them.
May 2016 47
Roundtable
Andrew, have you had an opportunity to study Dubai’s new PPP law? Ward: We looked at the law closely
when it was issued late last year. It is not an extensive document and it is more of a framework, but it covers the majority of the key principles. It’s a good foundation stone, but I think it’s unlikely the law in itself will dramatically change the PPP market in Dubai. However, it does provide a solid legal structure upon which the future delivery of PPPs will be based, and this is crucial for foreign investors, who will want to understand the key principles upon which contracts will be agreed prior to entering into the process. What else do these investors look for? Ward: They are generally
extremely selective about the projects they tender for. For the larger projects, the bid process alone can tie up internal resources for two years, and bid costs can easily reach $3 million to $5 million. The private sector understands this process and the investment they are required to make, but prior to committing to the process they need assurances that: • The project is economically viable • There is full public sector commitment and an understanding of the longterm costs involved • The evaluation process will be transparent, with the bid stage conducted as quickly and cost efficiently as possible Going back to the Mohammed bin Rashid Solar Park, these structural requirements were all in place and competition for the project was fierce. However, around the wider region we have all seen examples of projects
48 May 2016
insurance products for assets Seshadri says that as long as the asset is getting built and there is a risk of loss or damage impacting investors, there is always an insurance product for it.
“In the traditional model, governments had their own way of approaching risk management and mitigation. The private sector has a different approach and attitude towards risk management insurance”
that were pulled during the bid phase, with bidders left to absorb their own costs – such practices leave investment committees questioning their approach when new projects come to market. What are some examples of non-government actors employing the PPP approach? Ward: We recently developed
a structure to raise $68.06 million of institutional equity for Jebel Ali School (JAS) using PPP principles. The school was seeking to relocate and expand, but due to its not-for-profit status and constitution was unable to raise finance itself. However, what JAS could demonstrate was a long-term ability to deliver highquality education to its pupils and generate recurring revenues. The final structure saw Emirates REIT funding the purchase of the land and construction, with JAS committing to make longterm lease payments back to the REIT. Construction is being undertaken by ALEC.
Crucially, the strength of the school’s track record provided the REIT with comfort it could continue to generate sufficient revenue into the long term to make the annual payments. The structure isn’t a classic PPP, but it does retains the key principle of third-party financing and risk allocation. Two entities have come together, put together structured cash flows and used those flows to raise the project finance. Emirates REIT are comfortable with the risk that Jebel Ali School can continue to deliver good education and attract pupils; Jebel Ali School are confident they can generate appropriate profits to pay Emirates REIT; and both parties are confident ALEC can deliver. Seshadri: The presence or absence of government involvement wouldn’t make any difference to insurance procurement. As long as the asset is getting built and there is a risk of loss or damage impacting the investors, there is always an insurance product for it.
Event review
Builders day out
Region’s top contractors come together at the Emirates Golf Club for the Big Project ME Golf Day – Contractors Cup 2016
The Emirates Golf Club once again hosted the Big Project ME – Contractors Cup, on April 6, 2016.
Now established as one of the most popular golf days in the UAE construction industry, this year’s event had more than 70 participants from across the regional contracting industry, allowing teams the opportunity to network together in a relaxed and fun-filled environment. Targeted at senior executives, this year’s event included a number of new attendees, including guests from BK Gulf, China State Construction Engineering Corporation and Arco General Contracting, among many others. “This is the golfing date on the Dubai golfing calendar. It’s not to be missed, good golf course, well organised,
generous sponsors and an excellent networking opportunity at the 19th hole,” said Robert Harvey of BK Gulf. “Quite possibly the best corporate golf day I have had! Really enjoyed the course, company and craic. Looking forward to the next one!” added Brendan Carbery of Khansaheb. Michael Stansfield, commercial director of CPI Construction Division, told Big Project ME that the event was a huge success and he thanked both participants and sponsors for joining the CPI Construction team in making it such a memorable day out. “A special thank you is also due to our partners – CCS, Truelux Group, Electric Mirror, Gyproc Saint-Gobain, Intertek, Izuzu D-Max and Stretch Ceilings,” he added.
Thanks to all our sponsors
50 May 2016
CONGRATULATIONS The 2016 winners of the Big Project ME Contractors Cup were: 1st Place Gary Williams AESG Cx Michael Boyle AESG Cx Jason Redgers Menard David Lamb DDM 2nd Place Brendan Carbery Khansaheb Civil Engineering Duncan Quick Khansaheb Civil Engineering Andy Raj Stretch ME Ltd Mark Thornton Stretch ME Ltd 3rd Place Andrew Harvey Arabtec Engineering Services Shabir Yakub Karma Consultants Anmar Jameel URUKGROUP Namir Daod Al Maham Al Sareeaa Building Contracting Nearest the Pin Jerome Auchere DCCI longest drive James Poole Al Futtaim
May 2016 51
Show preview insight from around the world The conference will feature more than 120 worldrenowned speakers from across the globe.
Building HealtHcare
The event will feature high-level strategic discussions for ministers, CEOs and senior healthcare professionals in the Middle East
Building Healthcare Exhibition & Conferences, organised by Informa Life Sciences Exhibitions, will take place 30 May - June 1 2016, at the Dubai International Convention and Exhibition Centre.
The exhibition will bring together more than 6,000 leading investors, healthcare CEOs, government representatives, IT decision-makers, architects and more. It will provide an industry platform for the industry’s movers and shakers to discuss the future of healthcare and source the most cutting-edge technologies, products and services available to ensure the efficient management and appropriate development of the region’s healthcare systems, both inside and outside the hospital setting. Bearing in mind the consistent growth in healthcare demand in the GCC, there are currently a number of forthcoming investments within the realm of healthcare provision, with 52 May 2016
22 hospital projects well under way in the region. In line with Dubai’s vision of becoming a leading medical tourism hub by 2020, Building Healthcare will create the optimum business environment for the industry to engage with key experts and decision-makers. The exhibition will expand over 7,703sqm, catering to more than 6,200 attendees and 151 exhibitors from 70 countries. The conference will feature more than 120 world-renowned speakers delivering the most recent developments and updates in the industry. Some of the key exhibitors and industry leaders partaking at this year’s event are Al Mazroui Medical & Chemical Supplies, GE, Maquet Getinge Group, Human Scale, Olympus and ProVita. The show brings together planners of public and private healthcare estates, attracting a wide spectrum of healthcare
“The conference will feature more than 120 worldrenowned speakers delivering the most recent developments and updates in the industry” construction and management professionals, including consultants, contractors and developers, as well as healthcare professionals such as medical directors, department heads and facility managers.
The Building Healthcare Conferences will take on a new format for the 2016 edition, having been revised to enable free movement between the conference streams without an overlap in timing. The conferences will feature three days of educational and thought leadership sessions, comprising keynote presentations and panel discussions. The conference will also cover key issues in the industry such as digital health, architecture, design, construction, longterm care facilities, medical equipment planning, healthcare management and lab management; and special sessions this year cover 3D printing and mega project investments. This year’s conference also includes the new highlevel Keynotes Session, with the established Architects Congress now accredited by AIA Middle East.
Tenders
Top tenders Al QAnA Mixed-Use Project Budget $235,000,000 Project number WPR911-U territory Abu Dhabi, United Arab Emirates client Department of Municipal Affairs – Abu Dhabi Municipality Address Salam Street Phone (+971-2) 678 8888 Fax (+971-2) 677 4919 Website www.adm.gov.ae description Construction of a mixed-use leisure project which will provide recreation facilities, high-end shopping and fine dining Period 2018 status Current Project tender categories Construction & Contracting, Leisure & Entertainment, Marine Eng. Works & Seaports tender Products Commercial Buildings, Marina Development, Mixed-use Developments, Retail Developments
desalination and power project with capacity of 150,000 cubic metres a day and a 457MW combinedcycle gas turbine power plant status Current Project tender categories Power & Alternative Energy, Water Works tender Products Power Generation Plants, Water Desalination Plants
cAiro MonorAil Project Budget $1,500,000,000 Project number MPR1477-E territory Cairo, Egypt client New Urban Communities Authority (Egypt) Phone (+20-93) 228 6870/1 description Construction of a monorail stretching 52 kilometres, including 17 stations
Period 2018 status Current Project tender categories Public Transportation Projects tender Products Railways
tender Products Hospital Construction
king ABdUllA MedicAl city Project – dUrrAt Al BAhrAin
Budget $200,000,000 Project number MPP2818-U territory Abu Dhabi, United Arab Emirates client Abu Dhabi Company for Onshore Oil Operations (ADCO) Phone (+971-2) 604 0000 Fax (+971-2) 666 5523 Website www.adco.ae description Engineering, Procurement and Construction (EPC) contract to build a gas processing plant with capacity of about 250 million cubic feet a day (cf/d) Period 2018 status New Tender tender categories Gas Processing & Distribution tender Products Gas Exploration & Production, Gas Processing
Budget $270,000,000 Project number WPR876-B territory Manama, Bahrain client Arabian Gulf University (Bahrain) Phone (+973) 1723 9744 Fax (+973) 1723 9552 email alaasa@agu.edu.bh Website www.agu.edu.bh description Construction of a Medical City comprising a 300-bed hospital, staff housing and a mini shopping mall Period 2019 status New Tender tender categories Construction & Contracting, Medical & Healthcare
Al-dABBiyA gAs Processing PlAnt Project
Ain sokhnA integrAted desAlinAtion & PoWer Project Budget $500,000,000 Project number MPR1495-E territory Suez, Egypt client Suez Canal Economic Zone (Egypt) Phone (+20-62) 359 0004/7 Fax (+20-62) 359 0003 email info@sczone.gov.eg Website www.sczone.gov.eg description Engineering, Procurement and Construction (EPC) contract to build an integrated
INTEGRATED ESTIMATING, PROJECT CONTROL AND ERP SOLUTION FOR CONTRACTORS www.ccsgulf.com | Tel: +971 4 346 6456 | info@ccsgulf.com
54 May 2016
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Tenders
Middle East tenders UAE eni stAr toWer Project – BUsiness BAy Project number WPR450-U territory Dubai, United Arab Emirates client Emirates National Investment (ENI) – Dubai Address Podium 1 & 3, Office Tower, Churchill Towers, Business Bay (Burj Khalifa Area) Postal/Zip code 474 Phone (+971-4) 452 4444 Fax (+971-2) 452 4555 email contact@eni.ae Website www.eni.ae description Construction of a residential building comprising a lower ground floor, a basement, ground floor, 2 parking levels and 24 floors offering 5 retail units, 299 residential units and 506 parking spaces status New Tender Main consultant Lacasa Architects & Engineering Consultants (Dubai) MeP consultant Lacasa Architects & Engineering Consultants (Dubai) Foundations, enabling & Piling contractor Edrafor Emirates (Dubai) tender categories Leisure & Entertainment, Prestige Buildings tender Products Residential Buildings, Retail Developments
BUrjeel hosPitAl Project – MAdinAt ZAyed Budget $60,000,000 Project number BPR684-U territory Abu Dhabi,
United Arab Emirates client VPS Healthcare Group (Abu Dhabi) Postal/Zip code 33566 Phone (+971-2) 222 2366 / 508 5555 email info@vpshealth.com Website www.vpshealth.com description Construction of a hospital Period 2017 status Current Project Main consultant Society Technology House Consultant (Abu Dhabi) design consultant Society Technology House Consultant (Abu Dhabi) Main contractor Commodore Contracting Company LLC (Abu Dhabi) tender categories Construction & Contracting, Medical & Healthcare tender Products Hospital Construction
Kuwait hAWAlly 4-stAr hotel Project Project number WPR898-K territory Kuwait client Tamouh National General Trading & Contracting (Kuwait) description Construction of 32-storey, 4-star hotel in Hawally status New Tender Main consultant SSH International Consultant (Kuwait) design consultant SSH International Consultant (Kuwait) tender categories Hotels, Prestige Buildings tender Products High-rise Towers, Hotel Construction
Project number 10/2015/2016-K/9 territory Kuwait client National Guard (Kuwait) Address Khaldiya Postal/Zip code 17010 Phone (+965) 2481 1633 Fax (+965) 2481 2831 description Development of marina project at National Guard Officers Club status New Tender Main consultant Gulf Consult design consultant Gulf Consult tender categories Construction & Contracting, Marine Engineering Works & Seaports tender Products Marina Development
Saudi Arabia crAcking FUrnAce Project
MArinA Project Budget $65,000,000
Budget $100,000,000 Project number MPR1493-SA territory Jubail Industrial
INTEGRATED ESTIMATING, PROJECT CONTROL AND ERP SOLUTION FOR CONTRACTORS www.ccsgulf.com | Tel: +971 4 346 6456 | info@ccsgulf.com
56 May 2016
HOW DOES RAIL INCREASE PROPERTY VALUE? #LetsTalkAbout…Rail
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Tenders
City 31961, Saudi Arabia client Saudi Kayan Petrochemical Company (Saudi Arabia) Postal/Zip code 10302 Phone (+966-3) 359 3000 Fax (+966-3) 359 3111 Website www.saudikayan.com description Engineering, Procurement and Construction (EPC) contract to build a new cracking furnace to increase ethylene production capacity by 93,000 tonnes a year (t/y) and ethylene oxide by 61,000 t/y Period 2017 status Current Project Main contractor CTCI Corporation (Saudi Arabia) tender categories Industrial & Special Projects tender Products Chemical Plants
ArAr doMestic AirPort exPAnsion Project Budget $100,000,000 Project number 0-104-0-SA territory Jeddah 21165, Saudi Arabia client General Authority of Civil Aviation – GACA (Saudi Arabia) Address Bin Malek Street, Old Airport Area Postal/Zip code 887 Phone (+966-12) 640 5000 Ext: 2337 / 3368 Fax (+966-12) 640 1477 / 3876 email gaca-info@gaca.gov.sa Website www.gaca.gov.sa description Expansion and renovation of a domestic airport with capacity to accommodate 140,000 passengers per year Period 2017 status Current Project Main consultant Adham Group (Saudi Arabia) Main consultant (2)
Scott Wilson (Dubai) Main consultant (3) Mohamed Turki Mott MacDonald Engineering Consultancy (Saudi Arabia) Main consultant (4) URS Corporation (Saudi Arabia) Main contractor Al Joudah Construction (Saudi Arabia) MeP contractor Al Joudah Construction (Saudi Arabia) tender categories Airport, Construction & Contracting tender Products Airports Development & Management
description Construction of a smart office tower comprising seven floors Period 2018 status Current Project design consultant Lines & Visions International Engineering Consultant (Oman) Main contractor Durat Al Sahil Services & Trade LLC (Oman) tender categories Construction & Contracting tender Products Commercial Buildings
Oman
hilton gArden inn hotel & UrBAn PArk Project
itoWer Project Budget $22,000,000 Project number WPR929-O territory Oman client Gulf Muscat United LLC (Oman) city Muscat 112 Postal/Zip code 3183 Phone (+968) 2469 2677 / 2469 1193 email info@gulfmuscatunited.com Website www.gmuco.com
Budget $40,000,000 Project number WPR900-O territory Oman client Muscat National Development and Investment Company SAOC (Oman) description Construction of 4-star Hilton Garden Inn Hotel comprising 7 floors, consisting of 232 rooms, including an urban park Period 2019
status New Tender tender categories Agriculture & Irrigation, Hotels tender Products Gardens/Parks Development & Maintenance, Hotel Construction
Bahrain light rAil netWork Project Project number MPP2353-B territory Manama, Bahrain client Ministry of Transportation & Communications (Bahrain) Postal/Zip code 10325 Phone (+973) 1732 1105/ 1732 1055/ 1753 4534 Fax (+973) 1753 0243 description Construction of a light rail network comprising 22 kilometres of elevated double track, with 19 stations and an initial capacity to handle 8,000 passengers Period 2022 status New Tender tender categories Public Transportation Projects tender Products Railways
INTEGRATED ESTIMATING, PROJECT CONTROL AND ERP SOLUTION FOR CONTRACTORS www.ccsgulf.com | Tel: +971 4 346 6456 | info@ccsgulf.com
58 May 2016
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Last word
The business of relationships Martin Payne, commercial director at Arcadis Middle East, explains why the best approach to client satisfaction is incorporating client suggestions into the work After a brief stint in the Middle East from 1996 to 1998 as a young quantity surveyor, I returned to the Middle East in early 2006 as a commercial manager, and now as a commercial director for Arcadis. A lot has changed between 1998 and 2006, and continues to change – the pace of development has accelerated (oil prices notwithstanding). I have always been fortunate enough to work with some of the most astute Emiratis, Saudis and Qataris, who were both clients and colleagues.
Through all this time, one observation has continued to frustrate me: that people here understand the cost of everything but the value of nothing. I disagree and suggest we listen more closely and observe more carefully. For someone fresh off the plane, then or now, junior or senior, there is a temptation to bring
60 May 2016
“Not every client is an architect, engineer or some other construction professional, and they may not be skilled in communicating a vision in the way we are used to. But make no mistake, there is a vision and it has weight and value”
preconceived notions about what ‘good looks like’ with us. You have heard this before, I am sure, but what have you done about it? Try this. As a consultant, if you deliver something that is in truth inappropriate to the context or culture, whether it be a service, piece of work or professional advice, you will be thanked politely and then silence. Do it again, and you may be lucky to hear a thank you, but the silence will be longer. Do it yet again, and all you will hear is silence. Often we mistake this for negotiation, and the price of work is reduced or the work is re-done, but more often than not, this is a disappointment. What ‘good looks like’ can be a matter of perception. Not every client is an architect, engineer or some other construction professional, and they may not be skilled in communicating a vision
in the way we are used to. But make no mistake, there is a vision and it has weight and value. Through trial and error, I have seen other consultants often stumble in frustration repeatedly, in an attempt to realise this vision, and if they are lucky, they get to hear the final word! This is the ‘tell me what I want’ approach to client satisfaction. Thank you means no, and only yes means yes! Confusing isn’t it? What should you do? Be patient and listen. There is good humour in this part of the world, and clients do see the irony. Someone wiser than me once said, “There are no business relationships in this part of the world, it is all personal.” It is obvious really, when you think about it, but do we really listen to our clients as confidantes to gain their trust and vision? Or do we presume
too much without asking, and then disappoint? A dialogue may commence based on previous good work elsewhere, but to clients, it is about the intimate and immediate understanding of what something means to them here and now. Listening is about trust, understanding and asking the right questions. This does not have to be rocket science. Ask, do not presume. Much of the Middle East is a developing economy. In broad terms, the canvas has background and the foreground continues to be added and funded through the returns from oil and gas, and the development of schools, hospitals, housing, hotels, roads, ports, utilities, etc. To be part of this, we must be here. To stay here, we must deliver. That has to be a promise, and to promise, we must do as we say. This is our invitation to listen.
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