Jan 21 | 2021
Call for Shake-up of MENA Project Delivery
By Carly Fields
Project delivery in the Gulf Cooperation Council region would benefit greatly from collaboration, and stakeholders need to think innovatively to make it work, according to specialists operating in the region.
Speaking at a seminar hosted by Middle East business intelligence consultant MEED, industry specialists spoke about how project delivery could be refashioned in the GCC region, specifically through collaborative forms of contracting.
Sean McQue, operations director at Dubai-based ALEC Engineering & Contracting, saw collaboration as a mindset. “It’s not necessarily the words written down in a contract,” he said. Key things such as being clear on responsibilities and risk apportionment and making sure that the right behaviors are incentivized can go a long way. “Trust doesn’t exist because you write it somewhere; it’s developed over time. You learn to trust people because of the way in which you interact with them and the way that they behave – and that comes from all sides.”
Raymond Hector, director – commercial contracts, procurement at Abu Dhabi real estate specialist Aldar Properties, said that collaboration works well for large complex infrastructure projects. He added that while there might not be formal agreements on collaboration in place in the GCC, that does not mean that collaboration is not taking place.
“You may not see collaboration in a formal sense because when you’re establishing good working relationships, there doesn’t necessarily need to be a formal contract naming something as an alliance for it to work.” For collaboration to work there must be trust and aligned goals and objectives, Hector said. “Alliances allow us to continue to be sustainable, allow us to continue to be innovative, and allow us to deliver quality products to the market.”
GCC Maturity Challenges
Faisal Butt, project delivery director at The Red Sea Development Co., said his company procured about US$4 billion in contracts in 2020 and plans to continue contracting at that scale in 2021. For him, the challenge in the GCC has been the maturity of the market, which has made it difficult to deliver aspirational projects within project deadlines. “To deliver with the aspirations of the design we’re trying to deliver and the quality we’re trying to deliver, you need to think outside the box of how to structure your models, how you put your contract together, and how you collaborate with the market,” he said. Modularization and speed of delivery are both important elements.
McQue noted that early contractor engagement has been “missing for a long time” in the region. “We’ve always felt as contractors that we do have a lot of value to add in that respect as we do end up being major stakeholders in these projects when they kick off.”
Paul Abbosh, managing director, GCC (excluding UAE and Saudi Arabia) at Atkins, a member of the SNC-Lavalin Group, echoed the importance of early collaboration. He stressed the importance of a good, robust and well-coordinated design stage, which can solve a lot of a contractors’ problems.
“It’s vitally important that designers have early access to all of the parties that have an influence on that particular design,” he said. “By working earlier with the client to understand goals and mapping your procurement process and the sequence of your fulfilment, you optimize getting as much of the key information that you need for the design as early as possible.”
Abbosh referred to a study he was involved in which examined why major projects fail. The key finding was that the majority of projects fail because they simply have not been set up properly.
Digital tools can help to facilitate collaboration and allow a project to succeed where it might otherwise have failed, he added. However, ALEC – an early adopter of collaboration platforms – has faced challenges getting employers to buy into them. “We invest in them and then push them onto projects, providing them free of charge to employers – then we see uptake,” McQue said. “If used correctly they can be very, very powerful.”
He added that all stakeholders need to get in front of this. “The new digital tools that are coming along are no longer these point solutions. More and more of these things are integrating so well with one another that the opportunities are endless.”
While ALEC initially focused on the return on investment on digital tools, that strategy has evolved. “The more we’ve looked at it, it’s a no brainer. We don’t need to think about it anymore. When a new technology tool comes along that plugs into what we do, we get it and start using it,” McQue said.
At the ‘Sharp End’
Regarding the pandemic, McQue noted that contractors are at the “sharp end” of the downturn. There have been fewer tenders and there have been spin-off problems including defaults on payments. Big players have disappeared from the market, which has had a cascade effect on the supply chain. “It has been pretty desperate,” he said.
ALEC has also witnessed some developers using the pandemic as an opportunity to take advantage of contractors. “On some of the tenders that are coming up, we’re starting to see some quite difficult terms and conditions being pushed out,” he said. “For example, even worse payment terms than before – in terms of timing – which makes things pretty challenging when contractors and the supply chain are already struggling for cash.”
Meanwhile, Abbosh said that the current delivery models in the GCC are failing – evidenced by builders becoming more risk averse. This is creating an opportunity to improve the whole supply chain, whether that is through the client, contractor, consultant or all the way down to the subcontractors, material and equipment.
Abbosh also flagged up a reluctance to own up to problems in the GCC project chain, which causes greater problems down the line in the project. “One of the problems we encounter at the moment is that you’re not encouraged to identify a problem. So, generally, people sit on it, and it eventually comes out. And when it does come out, it’s much more difficult to deal with.”
He suggested that the industry strive to foster a level of trust and openness which allows people to put their hand up and admit to a problem, and then work together with everyone else to resolve it as quickly and as early as possible. “To do that you need to make sure that everybody is incentivized. This is all about trust and encouraging people and motivating them to work outside of the narrow sort of contractual silos that they sit in,” Abbosh said.
Ultimately, it is about creating the right culture, he said. “The more you do that, the more confidence is built into the system, and the further you can go. Ultimately you can get to the type of all-singing all-dancing system that you get in, say, Australia and Western Europe,” Abbosh said. However, he acknowledged that the region is a “long way off that” today.
Carly Fields has reported on the shipping industry for more than 20 years, covering bunkers and broking and much in between.
Image credit: The Red Sea Development Co.