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Planet Gulf: construction heaven?

The number of construction projects in the Gulf continues to grow, and so is the competition to secure the best consultants and engineers.

Currently there are 92bn worth of construction projects on site in the six Gulf Cooperation Council (GCC) countries –Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).

A further 462bn of projects are planned for the region, so it is no surprise that Middle East clients are scouting the world for consultants and contractors.

The driver for construction in these oil and gas rich states is to build and grow their economies outside the energy sector. They want to provide a cushion against future oil price falls and a long term dwindling of oil reserves.

Power stations, desalination plants, roads, railways, office blocks and housing are all vital if emerging new industries are to be supported and swelling populations accomodated.

Since peak oil prices exceeding $100 a barrel in 2007, budgets for infrastructure projects have never been higher.

UK consultants have long been prominent in the Gulf construction market and the number of UK companies setting up business in the region increases every year. Contractors have also recognised the opportunities. Laing O’Rourke, Interserve, Balfour Beatty and Kier all featured in a recent ranking of the region’s top 50 contractors published by NCE sister magazine MEED, winning 1.6bn of work between them in 2007.

By far the busiest market is the United Arab Emirates, where Dubai and Abu Dhabi, have a staggering 61bn of projects currently under construction.Consultants in the two territories are also busy working on the planning and design of another 237bn of projects.

These include the Arabian Canal, an incredible 75km extension of Dubai’s creek, the 20bn Yas Island real estate development in Abu Dhabi within which the emirate’s Formula 1 Grand Prix circuit is under construction and the GCC railway, a network that would ultimately link the region from Saudi Arabia to Yemen.

Abu Dhabi and Dubai are also the busiest markets for UK companies – some of whom have operated in the country for more than 50 years.

But in some cases the clients are asking a little too much in terms of commitment and resource.

“We have had two or three approaches from developers who want to enter into framework contracts, which are new in the region. We are actively thinking about it but you have to enter into these things very carefully and not put all your eggs in one basket.

“If you are not careful you will find yourself overcommitted,” says a director of one of the biggest UK consultants in the UAE.

“Some of the developers work in over 30 countries and by committing to provide all design services, you could find yourself having to work in markets where you have no resources. For an anglicised firm like ours working in francophone Africa for example would not suit the company,” he says.




Framework contracts are a natural step for clients who are struggling to secure design and construction resources. Less and less schemes are being competitively bid. “Increasingly, projects are being won through direct negotiation, which is obviously good for margins,” says the consultant.

Rather than being solely responsible for all design services, consultants spoken to by NCE say they would prefer to see frameworks similar to those used by major UK public sector clients such as water companies and Network Rail. These clients have several firms on their frameworks and share the workload between them. The idea is to maintain a healthy level of competition while guaranteeing a supply of work.

They would also like the margins to remain in double figures rather than being shrunk to the 0% to 5% common in the UK.

Another reason Gulf clients are turning to frameworks is that pricing jobs is becoming increasingly difficult. Construction inflation in the region is running well above standard inflation rate of over 8% in the UAE. Cement prices have shot up by 50% in 2007 while steel prices have shot up 70%. As a result. clients want to tie in consultants and contractors at fixed rates so they can secure a level of cost certainty.

Booming market conditions bring increasing competition for the best staff. Staff turnover, more commonly described as churn, is higher than ever.

“The issue of churn is increasingly important. Four years ago it was at 4% here and now it is at 10%. Some of the newer entrants have got aggressive growth plans and are working hard at poaching staff,” says another senior UK consultant.

Retaining in-demand engineers and project managers means offering increasingly attractive packages including private medical insurance, air fares, better training and career development opportunities.

For engineers in the region the benefits of working on fast-track large scale projects remain but the scope of work is shifting. Superlative projects such as the construction of the tallest buildings in the shortest times, are becoming less important as clients are becoming more sophisticated.

“The fuller Dubai gets, the more it has to incorporate a degree of normality,” says OMA Architects head of the Middle East business Renier de Graf.

Tall buildings are not particularly economic as the increased height demands larger cores and smaller lettable floor plates.

An increasing number of those Gulf developers that were initially set up by governments are preparing to list on regional stock exchanges and become truly public companies. As a result commercial success is increasingly important to them.

But what is most critical to the UAE is basic infrastructure such as wastewater treatment systems, roads and power networks.

In late 2007 Dubai Municipality admitted that its main wastewater treatment works was operating at 480m3 per day when it was only designed to take 280m3.

As a result, effluent was not allowed to settle for long enough and when used for irrigating the manmade greenery, the odour became unbearable.

In addition congested roads mean that 16km journeys can take 90 minutes and with no alternative mode of transport building wider and alternative routes is critical.

These issues threaten to undermine the emirate’s ambitions of stimulating economic and tourism growth.

In other markets such as Saudi Arabia and Kuwait, the number of planned projects exceeds those in the UAE but less political support and slower decision making has prevented construction from really taking off.

Clients there are mainly government bodies that in many cases lack technical and project management expertise. In the case of Kuwait, budgets are often delayed due to extensive debate in parliament.

But both countries are committed to accelerating their investment plans.

Saudi Arabia is attempting to improve business processes for foreign companies, meaning that the potential for the UK construction industry, particularly consultants, should become more attractive in the coming years.

Bernadette Redfern is features editor of MEED magazine.

MAJOR PROJECTS

Engineering pick and mix

GCC Railway. Rail link from Kuwait, through Saudi Arabia and along the Arabian Peninsula into the United Arab Emirates and Oman. The 1,500km project will cost Ł1.25bn. There are plans to extend it from Oman into Yemen potentially adding another 2000km.

Economic Cities, Saudi Arabia. The government is promoting the Ł40bn development of six new cities. Each will focus on promoting industrial growth in metals and minerals, petrochemicals, automotive and software development. Improving education through investment in new universities and training facilities will be another main aim in these cities.

Madinat Al-Hareer, Kuwait. This Ł43bn, 250km2, city development on the Subiya peninsula will include construction of a tower more than 1km tall and the Ł1bn Subiya causeway linking the city with the mainland.

Landbridge railway, Saudi Arabia. This 950km railway will link Riyadh in the centre of the kingdom with Jeddah on the west coast. local consultant Saud Consult and Parsons Brinkerhoff International are carrying out a route alignment study. Construction will be carried out on a 50 year build operate transfer basis and is expected to cost at least Ł2.5bn.

Emirates roads masterplan, Dubai. Dubai Road Transport Authority plans to build approximately 500km of roads, 95 new interchanges and nine new ring-roads by 2020. Estimated investment is Ł6bn.

Business Bay, Dubai. This Ł2.25bn project to develop a business district along Dubai Creek has been masterplanned by Halcrow and following extension of the creek in 2007, road, power and telecoms infrastructure work is now underway.

Lusail, Qatar. Covering 35km2 the Lusail residential development will accommodate up to 200,000 people in 10 districts. Halcrow, Hyder and Danish firm Cowi are all consulting on the Ł3.15bn scheme.

Bahrain - Qatar Causeway. Linking the two countries will cost Ł1bn to 2bn causeway. Following several years of funding delays the project now looks set to be awarded to a joint venture of Vinci, Hochtief and local firm CCC.

Yas Island , Abu Dhabi. Spread over 2,500ha , Yas Island is one third the size of the island of Abu Dhabi, and has a beach front shoreline of approximately 32km. The development will comprise beaches, leisure and shopping facilities, hotels, residences, golf courses, and motor racing facilities including the grand prix race track for Abu Dhabi 2009.

Dubai World Central Airport. New airport with six runways, three passenger terminals and 16 cargo terminals. It will eventually supercede Dubai’s existing airport, which will be redeveloped for housing.

Top 15 UK consultancies working in the Middle East

This year’s list of the top fifteen consultancy firms active in the Middle East* holds few surprises, as the usual suspects look to increase their market share.

Contrary to ongoing fears that the bubble could burst for Middle East infrastructure investment, the top 15 consultants in the region have raked in a massive combined turnover of 517M. This is a whopping 59% increase on last year (NCE 8 March 2007).

Atkins remains the company with the highest turnover in the region with 93M, up on 45.4M last year. Halcrow is second with Mott MacDonald and Hyder still kicking around in the top five, taking third and fourth positions respectively, but Parsons Brinckerhof which ranked fifth last year been pushed down to seventh position. Arup has snuck in at fifth place with a turnover of 45M. This is up from 15M last year.

1 Atkins

Turnover

93M

Staff
2308 (Expatriate staff, 2184)

Principal offices
Dubai, Abu Dhabi, Sharjah, Manama (Bahrain), Doha, Safat,(Kuwait), Muscat Oman

Projects include
Bahrain World Trade Center; DIFC Dubai Metro; Trump Hotel & Tower, Dubai

2 Halcrow

Turnover

89M

Staff
1600

Principal offices
Dubai, Abu Dhabi, Sharjah, Manama (Bahrain), Doha, Muscat Oman

Projects include
Yas Island primary infrastucture, Abu Dhabi; Lusail primary infrastructure, Qatar

3 Mott Macdonald

Turnover

76M

Staff
1310 (Expatriate staff, NA)

Principal offices
Dubai, Abu Dhabi, Oman, Doha, Saudi Arabia, Bahrain

Projects include
Hassyan Power & Desalination Complex ‘P’ Station, Dubai; Abu Dhabi surface transport master plan

4 Hyder Consulting

Turnover

55M

Staff
1200 (Expatriate staff, 1000)

Principal offices
Dubai, Al Ain, Abu Dhabi, Doha, Bahrain

Projects include
Dubai Festival City; Dubai Marina; Jumeirah Beach Residence; Raffles Dubai; Industrial City Abu Dhabi; Lusail Development (Design)

5 Arup

Turnover

45M

Staff
75 (Expatriate staff, 75)

Principal offices
Dubai, Abu Dhabi, Doha

Projects include
Al Raha Beach (Abu Dhabi); Abu Dhabi Airport; Doha Education City.

6 WSP

Turnover

34.6M

Staff
523 (Expatriate staff, 521)

Principal offices
Dubai, Abu Dhabi, Sharjah, Saudi Arabia, Oman

Projects include
Ajman Corniche Residential; Al Raha Beach Development, Abu Dhabi; City of Arabia; Dubai Sports City; Dubai World Trade Centre Development

7 Parsons Brinckerhoff

Turnover

29M

Staff
500 (Expatriate staff, 450)

Principal offices
Dubai, Abu Dhabi, Sharjah, Saudi Arabia, Oman

Projects include
Palm Jumeirah infrastructure first stage; Teweelah B Power Station; Kuwait First Ring Road first stage, Abu Dhabi 400kV cable network

8 Mouchel Parkman

Turnover

28M

Staff
424 (Expatriate staff, 424)

Principal offices
Dubai, Abu Dhabi, Sharjah, Saudi Arabia, Oman

Projects include
Palm Jumeirah infrastructure first stage; Teweelah B Power Station

9 MWH Global

Turnover

23.5M

10 Mace

Turnover

20M

Staff
420 (Expatriate staff, 300)

Principal offices
Dubai, Abu Dhabi, Bahrain

Projects include
Dubai World Trade Centre; Burj Dubai South Ridge; Lagoon Club

11 Pell Frischmann

Turnover

16M

Staff
220 (Expatriate staff, 220)

Principal offices
Dubai, Abu Dhabi

Projects include
A’Samaliah Island, Al Zeina; Mussafah (new worker city)

12 Scott Wilson

Turnover

10M

Staff
120 (Expatriate staff, NA)

Principal offices
Dubai, Abu Dhabi, Bahrain

Projects include
Island developments, Bahrain; National Assembly Building

13 Waterman Group

Turnover

9.5M

Staff
150 (Expatriate staff, 150)

Principal offices
Dubai, Abu Dhabi

Projects include
Dubai Festival City, Al Muneera; Al Raha Beach, Abu Dhabi

14 Buro Happold

Turnover

8.5M

Staff
136 (Expatriate staff, 50)

Principal offices
Dubai, Abu Dhabi, Kuwait

Projects include
Al Faisal University, Riyadh; Buildings by Daman, Dubai

15 Royal Haskoning

Turnover

6.25M

Staff
95 (Expatriate staff, 60)

Principal offices
Dubai, Bahrain

Projects include
Dubai Maritime City; The World

• Companies ranking in the top 30 of NCE’s Consultants File and working in the Middle East were contacted for this article.

CASE STUDY

Empire Tower, Abu Dhabi

Value: 130M
Consultant: Ramboll Whitbybird
Client: Empire Holdings

Despite the complex curving architecture of Empire Tower, structural consultants Ramboll Whitbybird was able to design a relatively economic 58 storey concrete structure. The need to keep the size of structural members to a minimum while maximizing lettable area meant that high strength concrete-encased steel sections were used for selected elements.

All columns within the tower are inclined, resulting in high axial forces on the horizontal plane of the building. These are mitigated by the use of beams tied back to the structural core. The tower rises from a six storey podium with a single basement. These levels accommodate car parking, retail, leisure and other facilities for future residents.

CASE STUDY

North Corniche, Saudi Arabia

Completion date: Unknown
Value: Unknown
Consultant: Scott Wilson
Client: Muncipality of Jeddah

Scott Wilson is creating the master plan for 12km of seafront along the North Corniche in Jeddah, Saudi Arabia. The vision is to create a lively, safe and accessible destination for people of all ages.

The aim is to address and increase the amount of publicly accessible open space, improving and integrating the surrounding areas along the coastal waterfront.

Proposals include the re-design of the existing coastal edge, with new beaches and headlands linked by a continuous promenade.

CASE STUDY

Al Raha, Abu Dhabi

Completion date: 2009
Client: Aldar/Laing O’Rourke
Consultant: Waterman International

Waterman International is working on Al Raha Beach, one of the longest developments in the world, stretching over 11km along the Abu Dhabi coast. Al Raha beach is mostly on reclaimed land and natural islands, one of which is Jas Island where the motor racing Grand Prix will be held in 2009.The development is split into 11 precincts and Waterman International is working on Al Muneera, part of the Khor al Raha precinct. Al Muneera is a residential and commercial development straddling an island and the mainland.

CASE STUDY

Khalifa Port & Industrial zone

Completion date: 2010
Programme manager: Bechtel
Client: Abu Dhabi Ports Company

The Khalifa Port and Industrial Zone is a multi billion dollar development in Taweelah, midway between the cities of Abu Dhabi and Dubai.

Bechtel is currently managing design and construction.The port is an island located 4.8km off shore from Al Taweelah and access to the mainland will be along two causeways. The causeways are broken up at intervals and replaced by bridges to allow water to flow along the coast.

Around 8.5km of breakwaters have been constructed as part of the project, 6.4km of which were primarily built to protect nearby coral reefs.

The port is being built to accommodate massive post-Panamax ships and has been designed to be as flexible as possible for future adaptation.

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