Consultants in Dubai are being paid as much as 18 months late, firms in the region said this week.
"The agreed payment terms with most clients is 45 days but the usual payment period is six to nine months," said a board director of one of the UK’s top consultants.
Several of the emirate's largest clients including developer Nakheel and other emirate government owned clients, were identified by consultants as making late payments.
Nakheel has more than £64bn of real estate and construction projects in the Middle East, including the 1km tall tower in Dubai (News last week). The firm denied the allegations and claimed it does meet the terms of its agreements and only delays payment if an issue regarding the invoice was raised by its managers.
"Nakheel normally provides a 60-day payment period, which is subject to certifi cation and claim. Nakheel adheres to the payment terms unless there is an issue raised prior by our cost consultants and project management," said a Nakheel spokesman.
Many consultants contacted by NCE agreed that the region has a culture of late payments and said it could act as a barrier to entry for smaller firms. The Association for Consultancy & Engineering (ACE) said it was concerned about the issue. "The ACE is very much aware of the issue of payment delays," said ACE chief executive Nelson Ogunshakin.
"We are about to visit Dubai for our second annual risk management conference out there and this issue will be high on our agenda." "The terms of payment in this part of the world can be looser than we are used to in the UK. The fear is that because the client pool is relatively small, if a firm does take a client to task then you can run the risk of harming your prospects of future work. It is absolutely essential that firms working in the region build better relationships and forge strong links with clients."
Ogunshakin urged consultants to take time to ensure the scope of work is fully defined and that change management processes are agreed with the client to ensure payments are made promptly when alterations occur.
The ACE said when disputes over payments do arise alternative dispute resolution methods should be implemented. "The normal dispute resolution processes do not appear to apply in this part of the world, therefore alternative dispute resolution (ADR) is highly recommended. Again, that means working closely with the client and using professional people on the ground to manage those relationships."
Consultants working in neighbouring Abu Dhabi said that late payment is not an issue there. "We work for several major clients and generally are paid 45 to 60 days after the invoices are filed, depending on the client," said a project manager for another UK based international consultancy.