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THE DEFINITIVE GUIDE TO THE REGION'S CONSTRUCTION PROFESSIONALS A huge demand for affordable housing in the GCC needs to be met by a construction industry ready to deploy standardisation and economies of scale to get building December 2015 Managing partner of LACASA Architects and Engineering Consultants Emad Jaber talks about the infamous relationship between contractors and consultants As Saudi Arabia implements its new PMO law, experts analyse how the new legislation will help one of the world’s largest construction markets overcome its delivery challenges A roundup of the latest technologies, products and machineries revealed by regional and international suppliers at The Big 5 2015 Small homes BIG losses?

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construction business news me December 2015 2 NEWS OHSAS 18001 certified ISO 9001, 14001 and 130+years of project experience LEED Platinum, LEED Gold and LEED Silver Capability End to End Integrated Solutions Pioneering Engineering Construction since 1881 www.drakescull.com 700+ Projects Delivered For over 130 years, Drake & Scull International PJSC has been shaping skylines and transforming the lifestyle of communities around the world. Drake & Scull is an industry leader, with a proven history of delivering more than 700 projects through its General Contracting, Engineering, Rail, Oil & Gas, Water and Wastewater Treatment and Infrastructure development business streamlines across the region.

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construction business news me December 2015 3 32 A huge demand for affordable housing in the GCC needs to be met by a construction industry ready to deploy standardisation and economies of scale to get building EDITOR’S NOTE NEWS EVENT ROUNDUP The Big 5 Leaders in Design MENA SUPPLIER NEWS IN PERSON Managing partner of Lacasa Architects and Engineering Consultants Emad Jaber talks about the infamous relationship between contractors and consultants ANALYSIS Craig Gibson shares the secret formula to calculate contractors’ overhead charges Winston and Strawn’s team including partner examine Dubai’s new PPP law set to boost private sector investments SUSTAINABILITY Shivram Mukherjee analyses this year’s COP21 and looks into how the UAE has prepared itself and its construction industry to adapt with the upcoming changes PROJECT REVIEW Construction Business News looks into the largest building retrofit project in the Middle East 6 8 16 22 24 28 38 40 42 44 cover story 32 16 contents

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construction business news me December 2015 4 S U B S C R I B E c o n t r i b u t o r s subscriptions@bncpublishing.net Managing Director Walid Zok walid@bncpublishing.net Director Rabih Najm rabih@bncpublishing.net Director Wissam Younane wissam@bncpublishing.net Group Publishing Director Diarmuid O'Malley dom@bncpublishing.net Business Development Director Rabih Naderi rabih.naderi@bncpublishing.net +966 50 328 9818 Group Editor Melanie Mingas melanie@bncpublishing.net Editor Lorraine Bangera lorraine@bncpublishing.net Art Director Aaron Sutton aaron@bncpublishing.net Sales Manager Mostafa Abdo mostafa@bncpublishing.net +966 56 6695 333 Group Sales Manager Joe Taphouse Joe@bncpublishing.net Sales Manager Vishvanath Shetty vish@bncpublishing.net +971 52 6745378 Marketing Executive Mark Anthony Monzon mark@bncpublishing.net PO Box 502511 Dubai, United Arab Emirates P +971 4 4200 506 | F +971 4 4200 196 For all commercial enquiries related to Construction Business News ME contact sales@bncpublishing.net T +971 55 339 5097 All rights reserved © 2015. Opinions expressed are solely those of the contributors. Construction Business News ME and all subsidiary publications in the MENA region are officially licensed exclusively to BNC Publishing in the MENA region by Construction Business News ME. No part of this magazine may be reproduced or transmitted in any form or by any means without written permission of the publisher. Images used in Construction Business News ME are credited when necessary. Attributed use of copyrighted images with permission. All images not credited courtesy Shutterstock. Printed by International Printing Press www.ippuae.com Stuart Matthews Marlow McGuinness Ltd ------- Joanne Bladd Nurol Construction takes us around its current project, Bab Al Qasr, in UAE’s capital FORUM As Saudi Arabia implements its new PMO law, experts analyse how the new legislation will help one of the world’s largest construction markets overcome its delivery challenges COMMENT Mustafa Pooya writes about how the Dubai real estate sector is presently witnessing a price-stabilising period Malcolm Dias discusses The recent deluge in Qatar and its water-logged capital Doha TECHNOLOGY Phil Bernstein writes about revolutionary changes coming up in the future where building won’t be built—it will be manufactured The Flux Innovation Lounge speaks with Construction Business News ME about how creative industries could play a major role in selling real estate Q&A Ashraf Al-Garf, CEO of Projacs, throws light on construction management in the region and the benefits of collaboration RSG International handed over Qasr Sabah project 90 days ahead of schedule. Chair of RSG Raj Sahni talks about what it takes to deliver on schedule EDITOR’S pick 46 48 52 56 58 60 62 64 66 28 42

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construction business news me December 2015 6 Affordable living A continued influx of expatriate workers and their families, in addition to the burgeoning youth population across the GCC, has driven the demand for affordable housing across the Middle East to 3.5million units, according to JLL. There are 820,000 middle income house- holds in the UAE alone. Add the numbers to the recent musings of Arab News, which stated “a good housing policy helps maintain political stability and social order while preventing problems related to homelessness, poverty and exclusion”, and there is a clear and pressing need for govern- ments to put some real force behind the afford- able housing agendas. There are a number of factors feeding into the trend; the foreign nationals moving here for work are no longer just expatriates, but often emigrants also, looking for a permanent home and economic stability. Our cities are growing at a phenomenal rate: according to a UN report by as much as 2.1% a year every year, as people move away from rural areas and towards the urban economic hubs the 20th century created. Compounding these issues, the GCC in par- ticular has an almost unparalleled issue in that far more than 50% of its population is under the age of 30; looking for somewhere to live, raise a family and launch a career, on some- times stagnant salaries. The need for affordable housing came into the limelight in early 2003 when governments observed a significant disparity between supply and demand for affordable housing. Gaining momentum after the financial cri- sis in 2008, today the GCC has systems in place, with the overall agenda of achieving a well-balanced society. Affordable housing without a doubt should be part of that story. Not only does affordable living solve a de- mand exceeding supply situation, but person- ally I think this goes along with the region’s agenda to make itself a sustainable space. By incorporating affordable housing not only will overall infrastructure improve but also the wellbeing of residents. All that being said there are several meas- ure that have not been in place. Even though flexible payment plans are being offered to middle-income potential homebuyers, chal- lenges still exist for the developers and con- tractors. A few of those challenges include the high cost of land in the region along with the high cost of construction, which hinders private developers from taking a more active role in building affordable units. Well-known developers including Emaar, Nakheel, NShama and Dubai Properties within the UAE have taken steps towards reversing this trend. Other challenges such as access to financial support or supportive regulations are necessary to streamline things into an orderly fashion so that potential homebuyers can feel incubated by the sys- tem. Affordable housing has been on the agenda for some time, with most governments tak- ing the time create a framework that suits everyone; even most tradeshows, including the region-wide Cityscape exhibitions and The Big 5, have addressed the issue of af- fordable housing in 2015. I also think affordable housing is a social issue as much as an economic need. While we must praise how the region has recognised the importance of affordable housing, Iook forward to seeing how it will affect our construction, real estate and also cultural and social landscape. What remains to be addressed is the affordability of the business model. Without government sup- port in the form of incentives, the future could become a very challenging time. editor’s note Lorraine Bangera Editor

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construction business news me December 2015 8 NEWS Global developer, Crystal Lagoons, is set to launch its first project in India with a 6.5 hectare lagoon in Pune situated in the West coast of India. The project will be located at the heart of Dream City project, which is currently under phase one of development. The one million square metre project will be home to 8,000 luxury residential units and 50,000 people when completed. A total of 100,000 cubic metres (310,600 gallons) of water will be required to fill the six hectare lagoon, which is estimated to be a $200m investment and one of the biggest lagoons in Asia once completed. Under a phased development over a decade-long period, the lagoon is scheduled to be operational upon completion of phase one of the project, which has a scheduled launch date of Q2 2016. Lagoons use up to 100 times fewer chemicals than traditional pool systems, and only 2% of the energy required by conventional filtering technologies. French company, Alstom, has started the production of trainsets for the upcoming Riyadh Metro in its Kato- wice plant in Poland. The contract was awarded to FAST consortium, which Alstom is a part of, two years ago by Arriyadh Development Author- ity (ADA). The contract included the design and construction of lines four, five and six of the network. The Ka- towice plant will be manufacturing all 69 of the Metropolis trainsets, with over 1,000 employees it is one of Al- stom’s largest train manufacturing sites in the world. In the short-term, a full-size mock-up of the Riyadh Metropolis trainset will be unveiled in Riyadh. The driverless train will be 100% motorized and composed of two cars per set and is 36 metres long. Alstom will provide Urbalis, its CBTC signal- ling solution, as well as the power supply and Alstom’s energy recovery system HESOP. All sub systems have been optimised together so as to re- duce energy consumption. Alstom begins train production for the Riyadh Metro Crystal Lagoons to build largest manmade lagoon in India Upcoming Crystal Lagoons project

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construction business news me December 2015 9 Industry experts talked about the adoption of the latest construction software to ensure efficient and swift delivery of projects worth almost $3tr at The Big 5 2015. According to recently launched report by Deloitte, GCC Powers of Construc- tion 2015, the region’s construction pipeline totals $2.8tr. These projects in- clude mixed-use mega developments, airports, seaports and other transport infrastructure projects. As the industry matures, architects, engineers, contractors and real es- tate companies have been increasing their demand for building information modelling (BIM) software to create 3D constructible models. These models not only enhance collaboration, but also increase visibility and efficiency across the design, build, and operate stages of projects. Paul Wallett, area business director at Tekla Middle East, said that the Middle East is seeing a nationwide transforma- tion in construction innovation, with projects for mega-events such as World Expo 2020 in Dubai and 2022 FIFA World Cup Qatar stretching design boundaries. “Advancing government BIM mandates further demonstrates the Middle East’s desire to be on a par with global inno- vators in the construction field.” GCC Hosts Record High $3tr in Construction Projects Majority of UAE residents prefer renting property Real estate prices could be preventing 76% of UAE residents form purchas- ing property in the UAE, according to a survey conducted by compareit4me group. This is despite apartment sale prices in Dubai going down by 3.6% and villa prices dropping by 3.7% from April 2014 to April 2015. The survey also noted that 54% of the residents opted for rentals because they were unsure of how long they would live in the region. That being said, a survey by US executive recruitment company, Stanton Chase, found that expatriates are now staying in the UAE twice as long as they used to five years ago. The average stay of senior professionals has in- creased to four and a half years. Jon Richards, CEO of compareit4me.com, said: “The number of people staying beyond two years is increasing, so it’s worth residents doing the sums to calculate if home ownership would be more beneficial for them.” According to Dubai Land Department, the number of those residents buy- ing property with mortgage has increased by 44%. Recent home financing solutions and competitive mortgage rates given by UAE banks have actively encouraged more residents to buy property. Richards said: “The long term outlook for the real estate market in Dubai looks favourable for investors, particularly in the run up to the Dubai Expo. However, there’s every chance we could see prices going up and down before that, so it’s important longer-term investments are considered.” Dubai Marina and Jumeirah Lakes Towers, Dubai Paul Wallett

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construction business news me December 2015 10 NEWS The Abu Dhabi Urban Planning Coun- cil (UPC) briefed 43 government enti- ties and developers on advancing a data collection project for development in Al Ain and Al Gharbia. The initiative aims to create a Capital Project Plans (CPP) for the Al Gharbia and Al Ain re- gions, and builds on the capital’s desire to fully integrate data. The briefing was in the same format as the CPP for the Abu Dhabi Metro- politan Area where UPC collected and spatially mapped all of the projects that require government funding for Abu Dhabi. Representatives from Al Ain and Al Gharbia’s government entities were in- vited to attend the meeting to explain all of the requirements for the project and anticipated timings. The project is due to be completed in Q1 2016. Abdulla Al Sahi, acting executive di- rector of the planning and infrastruc- ture sector at UPC, said: “The formal in- tegration of data regarding current and future projects will allow for enhanced decision making and the ability to bet- ter identify and prioritise key projects. This will ensure that the Abu Dhabi Emirate continues to move forward in meeting the needs of its communities with regards to community facility proj- ects, while also remaining on track in terms of its commercial, industrial and infrastructure-based projects.” Capital Projects Plan to be developed for Al Ain and Al Gharbia • Nakheel Mall and The Pointe on Palm Jumeirah • Deira Mall and Deira Islands Night Souk at the new Deira Is- lands coastal city • Al Khail Avenue and The Circle Mall at Jumeirah Village • Warsan Souk at Warsan Village • two major extensions to the existing Ibn Battuta Mall • a large expansion at Dragon Mart Projects at various stages of design and construction: UAE-based developer Nakheel high- lighted AED14.5bn worth of projects (in construction costs) at MAPIC, the annual international retail real estate show in Cannes, France. This year, the 21st annual gathering brought together more than 8,400 interna- tional participants, including over 2,400 retailers and 2,300 property developers for three days from 18 to 20 November. Nakheel has more than 15 million sq.ft of shop space across its 14 exist- ing and upcoming projects. Currently there is over 11 million sq.ft of retail space in the pipeline, with 10 projects anticipated for deliv- ery over the next three to four years. Nakheel highlights projects worth AED14.5bn at MAPIC 2015 Nakheel's Deira Islands Abdulla Al Sahi

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construction business news me December 2015 12 NEWS Dr Ali Hamed Al-Mulla talks about GCC and Korean partnership The Gulf Organization for Industrial Consulting (GOIC) and Korea Institute for Industrial Economics and Trade (KIET) organised a workshop on industrial diversification and job creation between the GCC and the Republic of Korea last month. In his session, Al Mulla emphasised how the GCC has provided Korea with opportunities in the construction sector including the building of expressways, seaports, and industrial plants. He said that about 39.8% of the foreign construction proj- ects Korean companies have won have been in the GCC. He added that the effectiveness of this economic partnership between the GCC and Korea relied heavily on volatile oil prices and the the GCC’s construction market, rather than on more stable bases for bilateral cooperation. “GCC-Korea economic relations need to be diversified to include other industrial sectors, and the collaboration between GCC and Korea should also include greater involvement of private sector MSEs and entrepreneurs.” The GCC supplied 71.2 % of Korea’s crude oil imports and 52.4 % of its natural gas imports in 2013. Following the sus- pension of free trade agreement (FTA) negotiations in 2009, the two are now considering re-establishing the deal. STR Global Construction Pipeline Re- port launched in October 2015 reveals an increase in hotels under construction in the Middle East and Africa region. The report stated that there are 781 hotels currently under contract in the re- gion. This represents a 29.1% increase in rooms compared with October 2014 and a 43.1% year-over-year increase in rooms under construction. The under contract data includes proj- ects under construction, in final plan- ning and planning stages. However, the data does not include the projects under the unconfirmed stage. In October 2015, the region reported 105,177 rooms in 407 hotels under con- struction for the month. Sister publication, Hotel News ME, will publish a full analysis and round- up of the regional pipeline in its January issue, detailing all the major openings planned for 2016. Hotels under construction in Middle East increases by 29.1% Ongoing construction in Downtown Dubai Chinese delegation attended a two-day fact-finding mission to study Estidama, the Abu Dhabi Urban Planning Council’s (UPC) sustainability programme. The delegation, represented the Guangzhou International Award for Urban Innovation, recognises innovation in im- proving social, economic and environmental sustainability in cities and regions. The delegation was given a detailed insight into the work- ings of the UPC’s Estidama Pearl Rating System (PRS), Abu Dhabi’s mandatory sustainability rating system, which guides development projects through design, construction and op- eration, along with a tour of Masdar City. “The fact that Estidama was shortlisted for such a prestigious award and is now the basis of a visit by the Guangzhou del- egation is further demonstration that it is being recognised beyond this region as a sustainability programme that features a unique combination of global and local best practice,” said Mohamed Al Khadar, executive director of urban develop- ment and Estidama sector at UPC. Chinese delegation studies UPC’s Estidama system

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construction business news me December 2015 14 NEWS China Trade Week 7 - 9 December 2015 ADNEC Under China’s “One Belt, One Road” initiative, a framework for organising multinational economic development and trade, China Trade Week (CTW) provides Chinese companies oppor- tunity to meet, discuss and develop trading and business relationships with the regional business community, in a number of key commercial sectors. It will feature Chinese businesses from sectors such as construction materials, PMV, automotive parts and accessories. HVACR Expo Saudi 11 - 13 January Jeddah Centre for Forums and Events The HVACR Expo Saudi will address products, training, and education solu- tions for the entire heating, ventilating and air-conditioning and refrigeration (HVACR) industry. With multi-billion dollar develop- ments and mega projects underway in the Kingdom there is proven de- mand for HVACR products, services, and technologies. The event is will be organised by the same team behind The Big 5 Saudi, dmg events, and the owners of the largest HVACR buyer database in the Kingdom of Saudi Arabia which will ensure a meeting platform with thousands of buyers searching for the latest products and services in HVACR. Architectural and design practice Perkins+Will Middle East, won two awards at the 2015 Arabian Property Awards. The firm was recognised for the ‘Best Residential High-Rise’ for Ellington Group’s DT1 in Dubai, and ‘Best Hotel Architecture’ for the Marriott-branded Diplomatic Quarter Hotel in Riyadh, Saudi Arabia The 20-storey DT1 tower, is an innovative residential project which is situated in Downtown Dubai, covers approximately 20,000sqm and rises to 72 metres. While the Best Hotel Architecture’ for the low-rise design was awarded to the 5-star Marriott-branded Diplomatic Quarter Hotel in Riyadh, Saudi Arabia. Owned by Saudi-based Dur Hospitality, the meandering three-storey structure, covers over 40,000 square metres and was inspired by the beauty of the coun- try’s wadis and oases. The event took place at the JW Marriott Marquis in Dubai, on 12 November 2015. Perkins+Will recognised at Arabian Property Awards Save the date REC will power a new solar installation for Red- tag Group as one of the first projects to be com- pleted as part of a new UAE initiative, Shams Dubai, to promote renewable energy. The European solar panel manufacturer is not only providing the photovoltaic (PV) pan- els but the full EPC expertise. The rooftop installation extends over 7,000m2 and will be located in fashion retailer, Redtag’s, logistics and warehouse centre. It will be one of the first installations under Dubai’s new renewable metering scheme for re- newable energies. Luc Graré, SVP EMEA at REC, said: “It is a very straight forward scheme and we are con- fident that the new programme will give solar another push in the region. We expect new installations in particular from the commercial rooftop segment.” The solar panels (2,161 in total) are expected to generate 904,000kWh of electricity, reducing the CO2 footprint by 550 metric tonnes per year. REC to install solar panels in Redtag’s Dubai- based centre Diplomatic quarter at the hotel in Riyadh Luc Graré, SVP EMEA at REC

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construction business news me December 2015 15 Volvo Construction Equipment EMEA and FAMCO organised a customer event at Hilton Ras Al Khaimah on 26 Novem- ber 2015, to conduct a regional launch of Volvo L120Gz wheel loaders and EC750D excavators. The event, similar but a smaller ver- sion of the machinery show held in Sweden (Volvo Days), showcased new- ly launched machinery along with its existing Volvo articulated hauler and road machinery. The Volvo L120Gz wheel loader in- cludes a fully automated power shift that ensures optimal operation by ad- justing the machine gear, load-sensing hydraulics which supply power to the hydraulic functions only when needed, and an eco pedal that ensures reduced fuel consumption by applying mechani- cal push-back force. The Volvo EC750D excavator in- cludes an ECO mode which saves fuel, an electro hydraulic system that uses intelligent technology to control on- demand flow and reduce losses in the hydraulic circuit. The D16 Engine in this machinery delivers 11% increased horsepower for high productivity and increased fuel efficiency. During the event, selected members from the Volvo team along with a num- ber of interested buyers from around the region were given a chance see a machinery show. This was an opportu- nity for them to witness the machinery in action. After a short presentation and the ma- chinery show, the potential buyers had the opportunity to try out the machin- ery themselves. Bahrain-based Steven Edward Hanahoe, workshop manager of NASS Asphalt, was impressed by the show and the machinery showcased. He said: “Some of the machinery displayed at the show were very impressive.” Fadi S. Nimri, service and operations Driving force manager of UAE-based Transmak, said that he enjoyed the show and really got a feel of all the machinery, which is a very important criteria for purchas- ing. He was particularly fascinated with the Volvo articulated haulers which he deemed to be quite remarkable. Frank O’Conner, managing director of FAMCO operations in the UAE, said “the event had a great turnout, and showcased how important customer satisfaction is to Volvo CE.” Volvo Construction Equipment showcases new ranges of innovative construction machinery at machinery show in Ras Al Khaimah Testing of Volvo CE Machinery Demonstration of new ranges Presentation of new ranges

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construction business news me December 2015 16 Jafza to double construction sector growth in four years The building and construction sector in Jebel Ali Free Zone (Jafza), expects to double its growth over the coming four years, following results which demonstrate a 74% growth since 2010. Revealing the sector’s value has increased from AED10.7 billion in 2009 to AED18.6 billion over the same period, future growth will largely be driven by the continued focus of GCC countries on building economic infrastructure and stimu- lus generated by Dubai 2020-related infrastructure projects. HE Sultan Ahmed Bin Sulayem, chairperson of DP World and Ports, Customs and Free Zone Corporation, said: “Jafza’s evolution as a global business hub hinges around its com- mitment to excellence in terms of products, services and overall busi- ness ecosystem, which is fully in sync with the vision of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, to position the Emirate as the world’s top business centre and the most favoured investment destination.” Jafza is currently home to over 800 world’s steel, building material and other construction sector-related com- panies such as ArcelorMittal, Tianjin Pipes, Tata Steel, Conares, China Na- tional Building Group, Danube, Saint- Gobain Gyproc, Petrogas Piping, Van Oord, Hitachi Construction Machinery, Hyundai Engineering and Construc- tion Company among others. Most of these companies have set-up their re- gional headquarters in Jafza to serve the entire region most efficiently. Fino will expand operations to Sau- di Arabia in Q1, 2016, on the back of growing demand in the infra- structure and hospitality sectors, managing partner Talal Saeed told Construction Business News ME, during the exhibition. He explained: “Due to the reli- gious pilgrimage, Hajj, Saudi Arabia has great potential in the hospital- ity sector as millions of pilgrims pour in every year. Due to which there are a large number of ho- tels in the pipeline, as well as proj- ects like Riyadh Metro and new real estate developments.” Fino is headquartered in the UAE with a second office in Qatar. Saeed observes the GCC as a whole is a lu- crative market but comes with its fair share of challenges. In Saudi Arabia, he said that one of the major chal- lenges is acquiring visas (especially for labour), while Qatar has the limi- tation of bringing skilled workforce from only certain nationalities. He observes that UAE has compara- tively fewer limitations, however, dealing with the tough competition in the market can pose challenges. Saudi Arabia’s market demands interior finishing Event Roundup - Big 5

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construction business news me December 2015 17 BIG 5 NEWS Over the last few years, steel in the UAE market has witnessed a stable an- nual growth of 5 to 15%. At The Big 5 show, CEO of Conares Bharat Bhatia says that as the number of projects in- crease, traders in the UAE are keen to buy from local manufacturers in order to save inventory cost and avoid risk of price fluctuations. “There are positive expectations on steel demand, which will grow substan- tially from 2016 onwards. This will have an additional growth of 10% on a yearly basis from 2017. From the steel industry standpoint, local manufacturers will be in a strong position to cater to each of the upcoming projects,” he said. Keeping this in mind, steel manufac- turer Conares is planning to expand within the domestic market as well as explore export opportunities. MEA managing director Franz Freiherr von Redwitz, revealed MAN Trucks has just signed its first contract with a partner in Iran since economic sanctions were eased, following years of restricted trading. Commenting on the deal, which will see a fleet of vehicles delivered in Q1, 2016, Redwitz said: “We are in the process of rebuilding [business] in Iran, as European brands have not done business there for some time. “We have a lot of new contracts and I have just this morning finalised a contract which has now been signed off between the German High Court and Iranian Embassy, and is on its way to Iran for official registration.” Breaking the news at The Big 5, Redwitz also detailed MAN’s new Ecoline concept, which was unveiled at the show. Ecoline is designed to tackle the use of counterfeit parts in the brand’s vehicles, and also place focus on aftersales, during current market difficulties. “Counterfeit parts are a threat to the quality of our products and we have two ways to work against that. Firstly, to keep the loyalty of the customer so they only come to our workshop and by selling vehicles with repair maintenance contracts, under a fixed cost per annum. “But now, also we have the Ecoline range of parts, which are a wide range of refurbished products which we can sell up to 30% cheaper than new parts,” he added. After spending two years overcoming import restrictions on used parts in numerous markets, Ecoline is now available in all 14 of MAN’s MEA markets and received a positive response, according to Redwitz, during The Big 5 debut. “One thing we are pushing big time is the after sales business and keeping the vehicles on the road. Where liquidity is tough or prices are bad, we can compensate with initiatives to keep the vehicles on the road,” he added. Celebrating 100 years of the brand, MAN also previewed its EURO 5 TGX 6x4 tractor head; with a gross vehicle weight of 33 tons and gross combination weight of 180 tons, it boasts up to 540 horse power, and is adapted for the local market. Delivery of this head will commence in late 2016. MAN announces new Iran contract and debuts new vehicle and concept Conares CEO predicts the steel industry to grow by 2020 MAN managing director Franz Freiherr von Redwitz Bharat Bhatia, Conares CEO

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construction business news me December 2015 18 BIG 5 N Event Roundup - Big 5 Juno Enterprises, a multi-product dis- tribution company, showcased the lat- est addition to its product line, Arbor Lighting Towers. The compact design, includes a vertical mast tower that of- fers complete flexibility with fixture ground access and 360 degree mast or light rotation. “The product is distinct in the mar- ket because of various features such as the telescopic mast can extend up to 8 metres while it has a certified wind stability of up to 110km/h,” said Rohan Kapur, business development manager at Juno Enterprises. The product underwent almost two years for R&D and finding a manufac- turer. The product has currently been in the market for 18 months, while the company is relatively new in the mar- ket, with under two years’ experience. Kapur is currently looking for deal- ers in the market in the UAE, fol- lowed with sub-dealers in Qatar, Oman and Kuwait. French manufacturer Atlantic, com- mercially launched its new solar water heater, a high-end forced circulation solar solution with indoor tank and outdoor solar panel. Utilising strengthened polyure- thane insulation and low consumption pump integrated, Solerio Optimum al- lows users to save 70% energy and is A class with the new European Energy Efficiency Regulation (ErP). With tank capacities from 150 to 400L and equipped with steatite backup heating element and new el- liptic solar exchanger, the product is described as a “user friendly water heater which is the optimal renewable energy solution for water heaters in the Middle East.” Atlantic dedicates an average of 4% of its turnover to R&D, focusing on the production of more efficient renewable energies solutions. As a result, 2015 was also marked with Atlantic’s upgrade of its heat pump water heater and the worldwide launch of its new ONDEO range of small capacity compact square water heater from 10 to 30L. Speaking at the Sustainability Work- shop, CEO of DC Pro Engineering George Berbari encouraged the GCC’s heating, ventilation and air conditioning (HVAC) industry to adopt new energy- efficient technologies. He said: “The air-cooled systems con- tinue to dominate 70% of the HVAC mar- ket without offering any significant power saving features.” He raised concerns about power sav- ing and refrigerant safety issues in VRF as well as in the design of fresh air sys- tems. He recommended the upgrading of existing district cooling systems from partial to 100% usage of the thermal stor- age and treated sewage effluent (TSE). Berbari also stressed that district cooling has to embrace renewable energy such as solar PV (onsite or remote) and deep geothermal energy, and move into full tri-generation using bio fuels synchro- nised with renewables. This, according to Berbari, would save 75% primary en- ergy as compared with the current elec- tric district cooling. Juno showcases 8m long flexible lighting tower Atlantic launches solar water heater DC Pro CEO urges HVAC market to shift to sustainable George Berbari Juno’s Arbor Lighting Tower Nathan Waugh, event director for Middle East Concrete and PMV Live, revealed that the dollar value of the free CPD-certified education programmes at Big 5, 2015 amounts to $250,000 for the GCC construction industry. Visitors to both shows had access to 75 free CPD-certified workshops led by industry experts from their respective fields. Did you know?

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construction business news me December 2015 19 NEWS Receiving 40% more nominations than in 2014, The GAIA Awards, took place during day three of The Big 5, with Ba- salt Rock Composite FZE taking the top prize to walk away with a $50,000 mar- keting package. In the judging process, two selections rounds were held for submissions based on the potential to impact people, plan- et, and profit. Following which winners from six categories were chosen, includ- ing coatings adhesives and sealants; gen- eral construction; HVAC; marble stone and ceramics; windows, doors and clad- ding; and innovations. Speaking after the ceremony Nathan Waugh, event director for Middle East Concrete said: “To have an exhibitor from Middle East Concrete win the 2015 GAIA Awards is a tremendous endorse- ment of the show and the caliber of the companies and products at the event, and I would like to congratulate Basalt Rock Composite on their success.” The 2015 winners are: • Coatings adhesives and sealants: Derbipure, by Derbipure • General construction: Green Perspec- tives for Ecotile • HVAC: Knauf Insulation for Fibre Glass Insulation • Marble stone and ceramics: Making Ground for EVAGLOW • Windows, doors and cladding: Glazetech for AL. Roll Pergola • Innovations: Basalt Rock Composite, for its Basalt composite rebar Emrah Duman, Ford Trucks’ international markets director said: “The Middle East is a priority region in Ford Trucks’ growth plans. Following the UAE and Saudi Arabia, where we launched our new facilities last year, we plan to expand our sales and service network into Oman, Qatar, Bahrain and Iraq markets. We be- lieve our product line-up is well ahead of the competition, offering solutions to different market needs, such as hot climate package specially developed for GCC region and complete truck solutions for all Middle East markets. Additionally, our expanded network will provide customers with a strong service support and spare parts availability in the near future. We are confident that our world-class products and growing network will lead to stronger presence of Ford Trucks in the region.” The GAIA Awards Ford Trucks unveils 2016 range Ford Trucks showcases 2016 range at Big 5 Fila Surface Care Solutions promoted its new rust stain remover and silicon resi- due remover during Big 5. “There is a high demand for our prod- ucts in the region as the quality of finish- es has become essential to developers. We have been listening to their feedback -since our first participation in the Big 5 in 2006, and in answer to their demand we have developed two new products that are fast, effective and very easy to apply,” said Francesco Pettenon, Fila ME. “FILANO RUST is a ready to use rust stain remover applicable even on deli- cate surfaces. FILAZERO SIL is extremely effective at removing residue of silicone, glue, adhesive tape, wax and old labels from any surface,” he added. Fila launches adapt rust stain remover Francesco Pettenon

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construction business news me December 2015 22 Event review O rganized by International Busi- ness Council, Leaders in Design MENA saw members of the design community gather to discuss the latest design trends across commercial, resi- dential, retail and hospitality locations. Delegates included architects, inte- rior designers and developers, as well as organisations such as the American Institute of Architects (AIA Middle East), Association of Professional Inte- rior Designers (APID), The Middle East Council of Shopping Centres (MECSC), RIBA Gulf, and Emirates Green Build- ing Council. “Leaders in Design MENA is turning out to be a brand that the Middle East and North African architecture and design community wants to be associ- Leading Design The fifth edition of Leaders in Design MENA took place last month and was attended by 200 industry leaders including architects, interior designers, developers and Construction Business News ME ated with and take active part in. It is one platform where future projects are discussed and business strategies for the biggest firms are decided,” stated Elena Jassim, CEO of International Business Council. “We are thankful for all the sup- port we received and look forward to bringing more in depth and insightful business opportunities to the region, for instance our upcoming Lead- ers in Architecture MENA and global architecture awards that will take place in April 2016 in Dubai, gathering the global architecture and design commu- nity and highlighting the crucial role the region plays in setting worldwide trends as well as promoting global cooperation,” she added. • Storytelling in Retail Interior Design • Office Space Evolution • Hot or Not: Latest Trends in Residential Design • Cultural Diversity in Design • Trends in Healthcare Design • The Hotel of the Future • Rashid Doleh, co-founder and managing partner of mSquared • Andrew Linwood, head of design of Areen Hospitality • Francis Gallagher, principal and MD of HKS • Elvira Muñoz, director of AECOM • Saeed Alabbar, chairperson, Emirates Green Building Council. Leaders in Design MENA 2015 covered: Speaker highlights Fit out Panel at Leaders in Design MENA 2015 Roger Marien speaks at Leaders in Design MENA 2015

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construction business news me December 2015 23 BROUGHT TO YOU BY THE ORGANISERS OF 11 - 13 JANUARY 2016 JEDDAH CENTRE FOR FORUMS & EVENTS GET YOUR FREE TICKET AT WWW.HVACREXPOSAUDI.COM ARE YOU IN THE HVACR INDUSTRY? Confirmed Exhibitors Platinum Sponsor Official European Partner Association Knowledge Partner Under the Patronage of Mr. Adnan Mandourah, Secretary General, Jeddah Chamber of Commerce and Industry (JCCI) NETWORK WITH INDUSTRY EXPERTS SOURCE 100+ HVACR RELATED PRODUCTS GET CERTIFIED FOR WORKSHOPS ATTENDED AT THE EVENT FREE THE EXHIBITION & WORKSHOPS ARE ALL FREE TO ATTEND

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construction business news me December 2015 24 Pelican Products opens its first distribution cen- tre in the Middle East on 11 November 2015. The new logistics centre based in Dubai also includes an office for the local team. Piero Marigo, EMEA MD of Pelican Products, said that with the new distribution centre, the company can now store inventory in the region to optimise customer service, improve delivery times and make smaller shipments economical- ly viable. “With our newly expanded sales and customer service team in place, our company is well positioned to help accelerate our custom- ers’ business.” In addition, Pelican has chosen Danzas (DHL) as their third party logistics partner. “Danzas AEI Emirates LCC is known in this region of the world for its expertise in transpor- tation, customs and entry/export documentation which of course will be of great service to our existing and new customers,” said Alex Spaans, director of supply chain and operations EMEA at Pelican Products. T he GCC plans to build $115bn worth of rail proj- ects and should pronounce its focus on functional stations to enhance take up of passenger services. Frans van de Laak, general manager at Hunter Douglas Middle East, said that while the GCC countries are constructing a large number of rail projects, in order for them to succeed in growing strong user numbers they need to create uncluttered, well-lit stations where travel- lers feel comfortable. He said: “Ceilings play an important part in enhancing the traveller experience, as they can absorb sound, lead travellers toward trains, and make travellers feel safe by providing human-sized pro- portions and ample lighting.” In both the Dubai Metro’s Union Station, one of the busiest stations in the system, and the Delft Railway Station, Hunter Douglas installed ceil- ings with tapered baffles of extruded aluminium. These ceilings have the strength to half reverberation time of tra- ditional train stations, while absorbing the noise of trains and travellers. An important factor in making sure travellers in an underground station feel safe is light, which is why in be- tween the baffles, artificial lighting has been installed. At 110 gloss units, the baffles have an exceptional gloss level for reflecting light. Spe- cial weather-resistant coat- ings can also reflect daylight. Regional metro projects in- clude the Dubai Metro expan- sion, construction in Doha, Qatar, and Riyadh, Saudi Arabia, and plans for metros in Jeddah, Medina, and Dam- mam in the Kingdom. N ational Aluminium Prod- ucts Company SAOG (NAPCO) has revealed tre- mendous growth in domes- tic and international markets. Its revenue for the first nine months of 2015 is $48.05m , which is a 37% increase from the revenue generated same time last year. The company’s net profit, $1.5m, has also increased by 20% during the same period of the previous year. Robert Holtkamp, CEO of NAPCO, said: “The GCC is bullish in its economic growth because of contin- ued infrastructure devel- opment that has created opportunities for key play- ers such as NAPCO. We re- main optimistic about our growth in the near future because of our high-quality products, better customer service, and quicker deliv- ery periods.” Hunter Douglas works on bettering rail projects NAPCO’s revenue reveals tremendous growth Pelican Products announce expansion in the Middle East SUPPLIERS News Dubai Metro station

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construction business news me December 2015 26 Bentley Systems announced the general access of its new Sewer- GEMS, SewerCAD, StormCAD, and CivilStorm V8i products for the analysis and design of wastewater and storm-water systems. The softwares will be available as stand-alone applications to run on CAD and GIS platforms. In addition, the V8i (SELECTseries 5) sewer and stormwater products can now be used from within the V8i (SE- LECTseries 4) versions of OpenRoads-based products – combining 3D design and hydraulic analysis capabilities in the same platform. Chris Haines, senior civil engineer of drainage and utilities at Parsons, said: “The integration of Bentley’s OpenRoads civil design functionality with the advanced capabilities of Bentley’s storm and sewer analysis products will be a huge benefit to productivity and quality for our highway drainage design workflows.” Gregg Herrin, Bentley Systems director of product management, hydraulics and hydrology, said, “With these new releases, the automated hydraulic design functionality of our sewer and storm products can be effortlessly combined with the 3D physical design and terrain model- ing capabilities of Bentley’s other civil products. From an information mobility standpoint, this has a direct and substantial positive impact on roadway, site, and municipal work where hydraulic engineering is just one part of a much larger project.” T aj Concrete has opened a training facility in Dubai on 10 November 2015, with classrooms and workshops to train hun- dreds of students how to use decorative concrete in construction. Acoording to Matthew Burns, general manager of Taj Concrete, there is a huge scope for a decorative con- crete market, as a significant increase in demand has left the industry short of supply. He explained: “In less than six months I’ve had over 12,000 visits to my website. I’m also getting calls from contractors be- cause there are not enough people in the industry who understand how to use it. “Our training facility com- bines lectures with hands-on training using a four week intensive programme.” He said that many of the current crop of young peo- ple that he trains are being sent by companies in Afri- ca, but that the potential is also there for people in the Middle East to tap into this thriving industry at a time when regional demand is higher than it’s ever been. Building on this momento, Burns was among a team of experts leading a free work- shop at this year’s Middle East Concrete exhibition at Dubai World Trade Centre from 23-26 November 2015. D orma Gulf launched its new product Mundus, on 9 November 2015, for easy installation with multi- dimensional adjustment. The new design works with any of the standard toughened-glass assem- blies, and room structures enabling easy installation and adjustment irrespective of the application and situ- ation. Earlier this year, Mundus was awarded the German Design Council’s Interior In- novation Award –2015. Noushath Ahamed, prod- uct marketing manager at DORMA Gulf, said: “The key feature of Mundus that tops the list is the fittings which come with an inte- grated multi-dimensional adjustability, allowing for a choice of pivot points be- tween 52 and 73mm and a perfect alignment of the glass panels. The possible glass thicknesses ranges from 8 to 22mm; the glass type used can be single pane toughened glass or laminated safety glass.” New construction school for decorative concrete Dorma launches Mundus products in GCC Bentley opens applications for water systems SUPPLIERS News For more news about suppliers and the industry, visit www.cbnme.com

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construction business news me December 2015 28 Construction frenemies Contractor-turned-consultant, managing partner of Lacasa Architects and Engineering Consultants Emad Jaber talks about the infamous relationship between contractor and consultant and how his experience in contracting has helped bridge the gap. Lorraine Bangera writes IN PERSON

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construction business news me December 2015 29 E mad Jaber, managing part- ner of Lacasa, has been in the Gulf for more than 31 years. After working for almost two decades in the industry, Jaber realised that he wanted to implement his own vision rather than that of others, and de- cided to start his own consultancy. In 2006, Jaber and co-founder Nabil Al Khaja started their own firm, Lacasa, with the connections, experi- ence and the technical know-how re- quired to bring what they saw lacking in the market. Before launching his own business, Jaber used to be the director of manage- ment in one of the biggest consultan- cies in Dubai, he was in that position for nine years from 1997 to 2006. The experience he had gathered in the field for those nine years was like a stepping stone. He was able to meet the right clients, establish relationships and get to know how the business works from the inside. He observes that the key while start- ing your own business is recognising what is missing in the market. “You learn from every experience and need to take the right calculated risks.” During the opening of his business on 1 June 2006, Jaber was not alone. He started with 22 employees, which turned into 250 employees by mid-Au- gust 2008. He admits the expansion was rapid. “We had a chance to capitalise on the boom in the market in Dubai at the time and the good reputation we had personally made.” He explains that though the company did not have a portfolio, it managed to get contracts based on personal commit- ments made from relationships in the in- dustry. “In 2008, we were handling proj- ects that were worth AED45bn which really gives an idea of the confidence and trust the clients had in us.” A turn of events During the financial crisis in 2008, Laca- sa had only one office located in Dubai and it was unfortunately one of the busi- nesses that was drastically affected. Most of the company had to be restructured, and employees had to be laid-off. From a total of 250 employees, the headcount dropped to 70. “The fact that we had only one of- fice in the region,” Jaber observes, “was a crucial reason we had to layoff em- ployees.” Jaber and his team started to consider expanding the brand across the region, so that in case of another slowdown they could move employees to other offices. After 2009, the compa- ny opened offices in the wider Middle East including countries such as Syria, Qatar, Libya, Saudi Arabia, and Sudan, along with another office within the The truth behind project delays Several factors that cause project delays according to Emad Jaber: • Sometimes contractors get greedy about securing contracts because they are unsure of the future. By doing this they take on jobs that are beyond their capabilities in terms of manpower, equipment and resources. • Some clients push for a short construction period. The consultant and contractor both know that this would be impossible. But because the contractor is desperate to get the job, they agree. • The lack of proper planning is another key reason there are project delays in the market. By not having a technical team contractors are losing out. A good technical team is not a waste of money, but an investment. Mall of the World Sales Center, UAE

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construction business news me December 2015 30 IN PERSON UAE in Abu Dhabi. “It was tough to survive during the slowdown especial- ly in the UAE, there wasn’t much work from 2009 to 2012. During that time we survived with the work we did in all our other locations.” Jaber says: “Since then, we are do- ing very well. We have also expanded by number of employees. We are cur- rently 275 people altogether. Our big- gest office is definitely Dubai and Qa- tar is not too far behind with around 60 employees.” Currently Dubai is back on track, with 70% of Lacasa’s work from Dubai, 25% from Qatar, and 5% from both Saudi Arabia and Sudan. With 60,000 sq.ft of office area, the compa- ny is considering expansion in terms of space and personnel. Jaber predicts that considering the project commitments Lacasa has in hand at the moment, it should have around 300 employees by mid next year. He reflects back to how the company used to be before the crisis, and con- siders that in a way the company has restarted after 2009. Contractor versus consultant Jaber entered the construction industry as a contractor and worked in the disci- pline for five years before he made the shift to consultancy in 1989. “This was a very crucial decision,” says Jaber. “I didn’t see myself becom- ing as a successful contractor, and if I did not shift roles back then I don’t think I would have achieved as much success as I have now.” Contracting, Jaber explains, is the im- plementation of a design done by the consultant on the side, with focus on lo- gistics, procurement and chasing people and material. Also when Jaber worked in contract- ing, he considered the market was not as professional as it is now. “The contracting industry was premature, and no one was really impressed with technical know-how. You had to be an engineer, a foreman, a purchaser, all combined in one.” He was intrigued with consultancy as instead of working on one project for a year and a half, you could supervise three or four projects in the same pe- Abu Hamour Shopping Village, Qatar Dubai Wharf Culture Village Mall, UAE Empire State building in New York was constructed in one year and 45 days riod. Finally since he did make the shift, Jaber has not looked back once and considers it to be one of the best deci- sions he has made. He does admit, however, that having previous experience in construction has had a specifically positive influence on him. In fact he even encourages young engineers to take up contracting early in their career to help them be better consultants later on. He says: “Yes it might be tough, but it gives you an insight into the sequence of work which you might never under- stand if you settle right into consultancy. It is important to understand the mate- rials, the labour, and all that goes into being a contractor.” He believes that once the contractor experience box has been ticked, it is fairly easy to be a consultant, especially because you understand what the con- tractor can and cannot do. “It gives you

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construction business news me December 2015 31 technical knowledge in guiding contrac- tors better.” He jokes about taking the contractor’s side on occasion when clients may be unreasonable. He says that he under- stands the kind of pressure they are under. “Most of the time the contractor thinks I am his friend as I back him up in times of need. This has helped me and our business a lot.” He presses that the consul- tant and contractor must have an excellent relationship. “A lot of people assume that the contractors and consultants are ene- mies, where the consultant pushes the contractor to do more for less money while the contractor cheats to save more money.” He admits there are many cases The Palace Residence, Jordan where that is true. But Jaber believes in not working like that, he preaches the concept of “one team” and believes every player is a representative of the client and they must work together as one unit. “There is no line that defines the work of the contractor and the work of the consultant. If I have a detail that is wrong on the drawing, a good contrac- tor will spot that out and rectify it. The same goes for us, if there is a specific detail that is hard for the contractor to execute, then as the consultant should simplify it.” According to Jaber, consultants taking the client’s side is not justified. “Just be- cause we are hired by the client, doesn’t mean we have to only back up the cli- ent. As a consultant, we must be im- partial while working on a project. The project comes first, not the client. So if the contractor is right, we should sup- port them. Likewise, if the client is right, we must support them.” He explains that consultants are pres- ent to give each party its right and en- sure efficient delivery of the project. “The contractor has the right to be paid on time and consultants must facilitate his work by getting all the approvals. While the client has the right to get the building as he wants in terms of design and quality, and in the right time.” By having a good relationship with the contractor, not only is the consultant making his own work easier but is also helping the client. Jaber notes that in the industry it is quite common to hear com- plaints from contractors talking about how consultants are not co-operating. “We don’t have that kind of reputa- tion, in fact most of the time clients get in touch with us to convince contrac- tors to take on a project,” he says. This is only because Jaber and his team has consciously maintained good relation- ships with contractors in the industry. Not only has this helped Lacasa as a firm, but it has also helped several of his clients to manage the smooth flowing of a business. In a business like construc- tion, it is important to work together rather than arguing and working against each other. Jaber tries his best to set an example of just that and hopes that the industry will follow.

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construction business news me December 2015 32 COVER STORY A huge demand for affordable housing in the GCC needs to be met by a construction industry ready to deploy standardisation and economies of scale to get building. Stuart Matthews The House Factory

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construction business news me December 2015 33 T here’s one clear consensus about affordable housing: something must be done. After that, opinions di- verge on how best to meet the very clear need for af- fordable homes that ex- ists in the GCC and the wider Middle East. The scale of the challenge is signif- icant. While definitions of just what an affordable home is and who it is for vary from one calculation to the next, market sizing estimates show there is major demand waiting to be met by supply. Numbers run by property consultant JLL suggest the size of the market in the UAE is some 820,000 households, in Saudi Arabia with its much larger population this estimate rises to 3.3 million house- holds. Head outside of the GCC to Egypt and the figure rises again to a staggering 12 million households. By no means are all these households currently homeless, but they do fall into a middle-income bracket for each country and in each of those brackets there are severe and rising shortages of homes available to rent or buy. The issue is not new. Since the regionally contagious development boom of the mid-2000s the issue of affordable housing for middle-in- come households has been widely discussed and debated, but rarely dealt with. Depending on where you are, it affects both expatriate families that have made their home in the Gulf and nationals of those same states, to differing degrees. In the UAE it is ex- pats who feel the crunch, there is a balance of demand in Saudi Arabia and in Egypt the vast majority of the market is native to the country. While it appears that to all intents and pur- poses the scale of the problem has outpaced proposed solutions over the last decade, regional authorities have made some moves to address concerns about where these millions of people will be able to live. But progress has been slow. “We feel there is a genuine need for more activity in this space and perhaps if enough people say that then we might get something done,” says Craig Plumb, head of research – MENA for JLL. Plumb says that there is no simple Residential Area in Cairo “We need to be thinking more about prefabrication to help lower costs through standardisation, which will also assist the attractiveness of this kind of development.” - Christopher Seymour, head of markets and development - Middle East, at Arcadis.

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construction business news me December 2015 34 single answer as to why affordable housing continues to be slow to de- velop. Instead several factors influ- ence the situation with the cost of land and developer strategy being foremost among them. “Once a developer gets a piece of land they can largely do what they like with it,” says Plumb. “If they can make more money out of building luxury, rather than affordable, then clearly that is what they’re going to do. There’s no incentive for the de- velopers to do social housing. “The other key piece is the cost of land, which in a free market is driven by activity and obviously there has been a lot of speculation. Therefore people will pay more for land than perhaps it’s worth; certainly more than you could make stack up for an affordable housing project. Experi- ences overseas have shown that is the case everywhere there is a free market, so in order to create enough of the product the government must take a role, in some way, to subsidise the cost of land.” The bigger picture Around the wider region authorities have handled the same issue in dif- ferent ways. Morocco and Turkey have both put land into developer’s hands free of any upfront charges, instead taking payment as a portion of completed units, which are then made available for social housing. In Saudi Arabia authorities have in- troduced a tax to tackle the issue of empty land being left undevel- oped, while traded by speculators, a practice which Plumb says distorts the market. Part of the problem is with profit- ability: affordable housing projects rarely offer developers the same gen- erous margins as luxury property. Plumb continues: “The margins are fine, but the development industry has been used to very high margins on residential products in the Middle East. Times are changing [the market] is over built in many places and the demand is simply not there, so they will have to change their model and accept a lower return and perhaps make more of a mass-produced product.” A mass-produced product could suit the growing mass demand. In Abu Dhabi JLL’s research has pointed to an average of 1.9 households oc- cupying every housing unit, whether apartment or villa. This sharing is driven by affordability, with many households having insufficient in- come to feasibly afford a place of their own. It’s something the Abu Dhabi Urban Planning Council (UPC) is seeking to address through policy and regulation, having rec- ognised that the working profes- sionals who need the affordable housing are the engine room of the emirate’s economy. “Generally, the types of individu- als who require affordable units are teachers, nurses, pharmacists, gen- eral office workers and other profes- sions that every city requires,” says Mohamed Al Khadar, executive direc- tor of Urban Development and Esti- dama Sector at the UPC. A key chal- lenge in addressing the issue is the expectation of developers and the stigma sometimes associated with af- fordable housing. “In order for Abu Dhabi to remain competitive and attract and retain the best workers in the world, they need to ensure that they can afford to live here,” says Al Khadar. “The de- velopment of affordable housing can offer just that.” Al Khadar points to international examples, such as Singapore, where much housing is affordable and pub- lic, developed in conjunction with the government, to keep homes available at rents people can afford. He says that research indicates most governments define that the maxi- mum individuals and families should spend on housing is around 30% of their income, a figure raised to 35% for Abu Dhabi. “When we put together the Mid- dle Income Rental Housing (MIRH) Policy in 2010 for Abu Dhabi Emir- ate, most of the developers acknowl- edged that there was a need for af- fordable housing and advised us on COVER STORY “If they can make more money out of building luxury, rather than affordable, then clearly that is what they’re going to do.” –Craig Plumb “The UPC is working closely with the developers to introduce a new affordable housing approach in 2016, which will stipulate that 20% of any residential development project above 75,000m2 be allocated for ‘middle income’ housing.” –Mohamed Al Khadar

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construction business news me December 2015 35 the development of a sound policy,” he says. “Obviously, there is a time lag between the policy coming into force and the completion of build- ings on the ground, but we have al- ready started to see a number of af- fordable housing projects that have gone through the UPC’s Urban De- velopment Review process and are under development. As the majority of developers see this as a lucrative market, they are now looking to add further affordable housing units into the product mix of their future devel- opment pipelines.” Al Khader believes that doing so can make for profitable business, as part of an overall portfolio, if devel- opers are prepared to be more cre- ative and open minded about how they structure projects. “Just because a developer doesn’t make a 20% immediate return, it No. Project Name Project Status Country Client Est. Value in US$ Mn 1 500,000 Housing Units in Different Areas of Saudi Arabia Construction Saudi Arabia Ministry of Housing, Saudi Arabia 68000 2 Ain Al Fayda in Al Ain - 2000 Villas Construction United Arab Emirates Al Qudra Real Estate 1000 3 Emirati City in Ras Al Khaimah Design United Arab Emirates Sheikh Zayed Housing Programme, Fujairah 1000 4 Housing Development in Liwa Design Oman Ministry of Housing, Oman 800 5 Mohammed Bin Zayed City in Fujairah Tender for Con- struction United Arab Emirates Ministry of Public Works and Housing, Fujairah 600 6 Naseej Affordable Housing Construction Bahrain Ministry of Housing, Bahrain,Naseej BSC 550 7 East Hidd Housing Project Construction Bahrain Ministry of Housing, Bahrain 500 8 Development of East Sitra Construction Bahrain Ministry of Housing, Bahrain 500 9 588 Villas in Marabe Al Dhafra at Zayed City Tender for Con- struction United Arab Emirates Abu Dhabi General Services PJSC (Musanada) 500 10 Housing Complex In Oman Planned Oman Supreme Council for Plan- ning (SCP) 500 Affordable Housing Projects – GCC doesn’t mean it can’t be profitable in the long run,” he says. “The UPC is working closely with the developers to introduce a new affordable hous- ing approach in 2016, which will stipulate that 20% of any residential development project above 75,000m2 be allocated for ‘middle income’ housing.” The joint approach One path the region may follow to develop the housing it needs could be that of public private partner- ships (PPP). PPPs usually consist of some sort of government funding for projects created and managed by the private sector. The prospect of PPPs may be an enticing one, especially for the UAE, where Abu Dhabi has a growing track record of PPP proj- ects and Dubai has just introduced a new law creating the framework for a wide variety of PPP deals to be struc- tured. These could readily include af- fordable housing developments. Earlier this year, Dubai Municipal- ity revealed plans to introduce man- datory affordable housing quotas for all new residential developments. Other government-backed incentives that would likely be met with indus- try approval could include easing and shortening government approval processes, relaxing planning regu- lations - particularly those around parking requirements - low-cost fi- nancing, and concessionary packages that reduce production-related costs. Regardless of what might make prog- ress quicker or help create ideal envi- ronments, project activity around the region indicates that some affordable housing is on the way. “GCC governments are being pres- sured to take action to address the hous-

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construction business news me December 2015 36 ing shortages,” says Mibu John, syndi- cated research director for Ventures Onsite, a project tracking firm. “Bahrain has introduced public private partner- ship housing developments, while Saudi Arabia has launched an initiative to cre- ate more affordable homes for nation- als. The Omani government is embark- ing on a large-scale construction plan to provide affordable, modern residential areas for nationals in the country.” In Bahrain, affordable housing has become a priority for the government, reflected in the number of new resi- dential projects signed so far in 2015 that are focused towards the supply of social and affordable housing. Ac- cording to figures from Ventures Onsite about 2,548 affordable housing units are scheduled for completion in 2015, while a further 1,443 units are planned for completion by 2016, with a further 5,241 due in 2017. “The government inked a $1bn proj- ect with property developer Diyar, to purchase social housing units, af- fordable housing units, and the sup- porting infrastructure,” says John. “The project is intended to address the acute shortage of low-cost homes in Bahrain, which currently stands at 50,000 units.” Elsewhere in the GCC the Public Au- thority of Housing Welfare (PAHW) in Kuwait has committed to the imple- mentation of a roadmap, which stipu- lates distribution of 12,000 housing units per year over 10 years, starting from March 2015. A decade of imple- mentation may prove a long wait, but offers a steady trickle of work for the contracting community. In Oman a five year development plan that concludes this year sought to implement hous- ing projects with a budget of $1.16bn, some 8% of total planned spending. The country’s ruler Sultan Qaboos ordered a grant of $520m for a housing assis- tance programme that includes housing loan projects, addressing one of the key challenges facing many middle income households: access to finance. But for contractors with the right skill set the scale of the projects on offer in Saudi Arabia dwarfs all others. The country’s housing ministry is building some half a million housing units in lo- cations across the country with an ear- marked budget of some $66bn being injected into affordable homes. “[Affordable housing] can be a huge- ly profitable pursuit as the demand is quite high across the GCC, due to a rap- id increase in population,” says John. “The creation of an affordable housing sector in the GCC represents the matur- ing of the region’s construction market and is creating business opportunities for construction companies.” A residential compound of villas in Dubai COVER STORY

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construction business news me December 2015 37 “The creation of an affordable housing sector in the GCC represents the maturing of the region’s construction market and is creating business opportunities for construction companies.” –Mibu John Laying foundations Being ready to take advantage of these opportunities will be the main challenge facing contractors and con- sultants alike. While the market is potentially huge, addressing it effec- tively and profitably will mean tack- ling the industry’s continued addic- tion to low-cost and labour intensive onsite fabrication. That said, from a contractor’s perspective, affordable housing projects offer solid contracts that are little different to other work they might bid for. “It’s marginally different,” says Chris Seymour, regional director of markets and development in the Middle East for Arcadis. “The fact is there is usually higher volume there, so from a contracting or consultancy point of view it’s not significantly more or less attractive. While you may lose value in the materials or so forth, you gain in the scale of the development. Contractors would be very willing to build it and consul- tants would be very willing to design and manage it. “However, in order to make sure there is some profit margin in the development of affordable homes, is the need to simplify and standardise construction. We need to be thinking more about prefabrication to help lower costs through standardisation, which will also assist the attractive- ness of this kind of development.” The regional industry has tradition- ally been slow to embrace the ben- efits of prefabrication, or the factory- scale production of everything from walls and windows, to bathrooms and kitchens. While facilities ex- ist and some companies have made the investment in the infrastructure required to make at least part of a house factory, the market has not al- ways proven big enough to warrant the level of investment required for some prefabrication operations. In- dustry observers say large interna- tional firms have toyed with entry to the market, but have found it hard to drum up the level of interest they required. Seymour believes that the industry needs to develop a more cohesive approach to prefabrication and system building. “It’s not terribly sophisticated here,” he says. “There are definitely options for it, but it needs to be expanded a great deal. There also needs to be a will to regulate and help the industry find better ways to achieve what’s re- quired. I would say there is now an emerging recognition in this region that it is necessary.” Seymour believes the key to de- veloping the prefabricated capacity of the industry lies around demand, suggesting there are lessons to be learned from the US and Europe, where system building and prefabri- cation is well developed. “What has to happen is there has to be a commitment and consistent demand to make the investment in the plants worthwhile,” he says. “For instance, it’s quite easy to obtain pre- fabricated bathroom pods, as many hotels use them. That’s because bath- rooms are generally the same, so its not difficult to set up a plant to build pods, but taking it a step fur- ther is harder because there hasn't been the volume of middle income housing developed. There has been no consistency in demand for certain configurations of housing. Create that demand and the industry will follow and fill the gap in the market.” There are some examples starting to lead the way. Contractors Beaver Gulf Group and UNEC have both won contracts this year to work on parts of Dubai-based Nshama’s Town Square project. Aimed squarely at the affordable market, Town Square is set to include 3,000 townhouses and 18,000 apartments, once the 10-year project is complete. The developer has clearly incorporated cost reduc- tion techniques, standardising unit sizes and deploying careful design to optimise internal usage. In addition, Nshama is acting to curtail specula- tive trading by limiting sales to just one unit per end user. In doing so it is setting out its brand as a clearly end-user focussed option, targeting the large middle income bracket. While Town Square is just getting started it does demonstrate that de- velopers and contractors can find a business model that allows them to tap into the huge and growing market for affordable homes. The professional skills exist to make it happen too. “There certainly is a knowledge base built up in the international consultants on how to create high- volume housing at economical rates,” says Seymour. “It is not an unattract- ive sector at all. I think the consul- tants and probably a lot of the con- tracting industry have got quite a bit to offer in this sector.” All that remains is for the immense pressure being created by demand to build momentum in the construction supply chain. Once a tipping point is reached, the contractors who can standardise and move quickly to take advantages of the economies of scale offered by dense developments will be the ones best placed to benefit from a transition into a house factory.

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construction business news me December 2015 38 ANALYSIS Craig Gibson shares the secret formula to calculate contractors’ overhead charges The magic numbers I t starts off with such good in- tentions: a new partnership, the honeymoon period, various bonds and guarantees as to per- formance. However, the older we get the more we see linger on longer than the parties wanted. We are gathered here today, to con- sider an omnipresent issue across the various interlocutory marriages present on a construction project. The complexities of construction proj- ects are widely accepted. However, there is a propensity for the industry to accept a building contractor on a delayed project is probably entitled to some damages, without understanding the mechanisms under which that en- titlement should be assessed. This article will focus on loss suffered and expense incurred by a building contractor’s head office resources, due to a project being delayed. When a contractor tenders for a new project, it will submit a tender sum based on that project taking ‘n’ days to complete, this price will include for both site and head office overheads and profit. Should the project take longer to complete, the contractor is entitled to seek damages from the client. Note three salient considerations of this article: (i) project overheads are different from head office overheads; we are fo- cussing on the head office overheads of the contractor; incurred by the contractor; this cost should not include mark-up for profit. The Three Gates The first gate for a contractor to pass is es- tablishing the period of delay for which it is entitled to redress. A delay analyst can opine on compensable delay, allowing for concurrent delay and so on. The second gate involves demonstrat- ing that it is reasonable to believe the contractor would have secured work else- where if the delay on the project had not occurred (for example, if the contractor was going bankrupt, it may be unlikely that it would have secured further work). The third gate to pass regards demon- strating that the overhead and profit al- lowance in the contract was reasonable (whilst simultaneously deducting the prof- it in order to only claim damages). Notably, many large building contrac- tors would be content with 3% compa- ny-wide profit from the array of high- value work they carry out. However, most building contracts in the UAE will include a diluted head office and project office overhead and profit mark-up of 10-15%. Owing to resource availability, potential lack of understanding, or strat- egy, most contractors will understand- ably claim for the full percentage mark- up, at least in the first instance. In turn, an astute client would contest the prob- able disparity between what the contract says and what the auditable head office accounts prove as a way to ‘block’ this Craig Gibson, MRICS MCIArb MScL LLM Pg. Dip. Law BSc (Hons) – Omnium International. He is dual-qualified in law and quantity survey- ing. A Chartered Surveyor with experience of ICC and DIFC arbitrations and a passion for simplifying conflict. Craig Gibson (ii) we are not discussing liquidated damages of the client; in the UAE this is usually a prescribed daily figure (AED ‘x’) in the contract, so the calculation is simply the number of days delay multi- plied by AED ‘x’ (subject to Article 390 (2) of the UAE Civil Code); (iii) aside from (ii) above, this article considers damages, that being the cost

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construction business news me December 2015 39 third gate and quash this head of claim. If the parties accept the principal that the contractor is entitled to damages, the discussion moves on to calculating the entitlement. Loss of Opportunity or Actual Cost The contractor can calculate this entitle- ment based on loss of opportunity, or by demonstrating actual cost incurred. Loss of opportunity claims rely on the success of the contractor demonstrating it would have profited by moving its resources [from the delayed project] onto another project, but for the delay for which it was not responsible. So, the contractor was held back from making ‘AED y’ else- where, thus it is reasonably entitled to that ‘AED y’ from the client. The actual cost approach requires the contractor to demonstrate the actual loss suffered by its head office as a result of the delay. That is not easy. Resultantly, contractors tend to prefer the lost opportunity approach as it is simply calculated using a formula. Such a calculation is less time consuming and usually produces a higher figure than ac- tual cost. There are three formulas commonly used to calculate the head office overhead: (i) Hudson formula (ii) Emden formula (iii) Eichleay formula Hudson formula The Hudson formula relies on the per- centage agreed in the project contract as the factor for considering entitlement. However, in reality this percentage may bear no resemblance to the contractor’s actual head office overhead cost. This is a primary criticism of the Hudson formu- la, but also a major reason why this for- mula is often a contractor’s first choice. To be more accurate, this formula should be factored to account for the likelihood of the contractor securing work elsewhere in a timeous manner, in- efficiencies and the like. Insofar as this factor is not based on auditable calcula- tions, it is still subjective. Therefore to do so would defeat the purpose of using a simple formula. In the UAE, this formula is generally used as a ready reckoner or starting point when looking to settle a claim. Emden formula In light of the Hudson formula attract- ing criticism for being too simplistic, Emden’s Building Contracts and Prac- tice published an alternative; the Em- den formula. This formula divides the total over- head cost of the contractor’s organisa- tion by the total turnover. This results in a percentage based on the contractor’s actual head office overhead, instead of one contained in an isolated contract. This is advantageous. The Emden formula received judicial support in England and Wales. It was widely used until a loss of opportunity approach fell out of judicial fashion, in favour of trying ones best to demonstrate actual loss. This downfall was largely at- tributable to the [non-construction] case of Tate & Lyle vs Greater London Coun- cil (1983). Following this lull, loss of opportunity claims have resurged as a result of the difficulty in demonstrating actual loss; judges are growing more un- derstanding of this difficulty. I state the stance in the England and Wales jurisdiction as background, but one must remember concepts formed in such Common Law jurisdictions should be treated with caution in the UAE. In the UAE, Emden’s formula is not as commonly used except in arbitral pro- ceedings, mainly because contractors are reluctant to disclose auditable head office overheads. Ironically, this is the greatest advantage of Emden’s formula. Eichleay formula Depending on the strength of the cir- cumstances, a contractor may recognise it cannot prove loss of opportunity and therefore an actual cost approach is re- quired. The Eichleay formula may be useful in this case. The Eichleay formula compares the value of work carried out in the con- tract period with the value of work car- ried out by the contractor as a whole for the contract period. The contractor can then be apportioned a share of head office overheads using the same ratio to provide a lump sum. The allocable amount of head office overheads to the given project is divided by the contract period, which can then be multiplied by the number of days delay to provide a total sum claimed. Is the End Formulaic? Industry professionals will advise on a case by case basis, but using formulas to calculate damages due to a contractor is a widely accepted industry norm. The circumstances of the project and the dispute resolution forum will inform whether using a simple formula like Hudson’s is appropriate to demonstrate loss of opportunity, or whether Eichleay’s formula is more prudent to demonstrate actual loss. A contractor will need adequate re- cords to pass the three gates considered earlier, so remember the mantra: “re- cords, records, records!” Keep detailed records in order, and these interlocutory marriages of construction projects will be simpler to conclude in the event they do last longer than planned.

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construction business news me December 2015 40 ANALYSIS Winston and Strawn’s Dubai-based team including partner Stephen Jurgenson, associate Kilian de Cintré and counsel Katharine Sonneborn examine Dubai’s new public-private partnerships (PPP) law set to boost private sector investments Time to partner up D ubai published a new public-private partner- ships law in September 2015, to draw more private investment into infrastructure projects. The PPP law came into force on 19 November 2015 is expected to generate significant project activity and to attract substan- tial interest from foreign investors. The law is deliberately designed with broad application, stating that it will apply to PPP projects, “regardless of their type, form or nature of activ- ity”, originated by Dubai government agencies subject to the general budget of the government. It may also apply to off-budget bodies with the approv- al of the Supreme Fiscal Committee. Power and water projects are, how- ever, excluded from the scope of the PPP Law and will remain governed by existing legislation. The publication of the PPP law underpins strong political support for public-private partnerships in Dubai, which is key to any success- ful PPP policy. The law simply aims to encourage the participation of the private sector in the development of projects. Sitting behind this stated aim is a de- sire to enable the Dubai government Impact on bidding processes The PPP Law has a transparent bid- ding process led by the relevant gov- ernment agency. Submitted offers will be evaluated by the Partnership Committee, an internal committee formed by the government agency for each project, with the project be- ing awarded to “the most feasible of- fer technically and financially among the submitted offers”. It also allows bidding developers to form a con- sortium, and provides that if this is done the offer should be made in the name of the consortium - unless specified otherwise in the invitation to bid. The PPP Law also sets out clear consequences for not following the rules of the process – any offer re- ceived from sponsors not meeting the conditions contained in the invi- tation to bid will be rejected and if only one offer is submitted, or only one offer remains after other offers have been disqualified, the bidding process may be cancelled by the Partnership Committee. It should be noted, however, that government agencies do not need to follow a competitive tender pro- cess and unsolicited PPP proposals are possible. Stephen Jurgenson to take advantage of private sector ex- pertise, to ease the financial burden and financial risks of capital intensive projects on the government’s budget and to offer (and evidence) the best value for money to the community. This new policy is a very welcome ini- tiative – a strong relationship between the Dubai government and the private sector will be key to address the in- frastructure needs of the Emirate over the medium and-long term.

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construction business news me December 2015 41 Structural considerations The Law allows for a wide range of po- tential PPP structures. It provides that BOOT, DBO, lease and concession agreements may be used together with any other structures approved by the Supreme Fiscal Committee. The relationship between the project company and the government agency responsible for the PPP project will be governed by a partnership contract. Key features of the partnership contracts are described in the PPP Law including the scope of works, ownership of assets and intellectual property rights, responsibili- ties for obtaining necessary approvals, offtake or service prices, rules on su- pervision of the project company by the government agency, environmental requirements, termination rights of the government agency and penalties im- posed on the project company, transfer and decommissioning of the project. Private sector investors will also note that, while the Law does not yet im- pose restrictions on finance sources, it does expressly state that the obliga- tions under the financing arrangements will be borne by the project company alone. The absence of restrictions on fi- nance sources is a positive feature and should allow international sponsors to combine multiple sources of finance such as commercial lenders and export credit agencies. Finally, the PPP Law provides that partnership contracts with government agencies can be entered into with a term of up to 30 years (and, in some exceptional cases, longer) from the date of signing the partnership con- tract. This is in line with practice for PPP projects elsewhere and should certainly allow for the private sector to raise long term finance and realize a return on its investment. In conclusion, the PPP Law is a posi- tive development that will certainly at- tract the attention of international inves- tors with the many opportunities that Expo 2020 will bring to the Emirate. It is a detailed and clear legislation that of- fers the legal framework necessary for a successful PPP policy and is a step for- ward towards addressing the infrastruc- ture needs of Dubai in the future. Kilian de Cintré Katharine Sonneborn • Projects with a total cost of up to $54m to be incurred by the government agency through the partnership contract must be approved by that agency’s director general. • Projects with a total cost of between $54m and $136m to be incurred by the government agency through the partnership contract must be approved by the Department of Finance. • Projects with a total cost in excess of $136m to be incurred by the government agency through the partnership contract must be approved by the Supreme Fiscal Committee. • The project company must be licensed to operate in Dubai and contemplates that in most cases the project company must be a special purpose vehicle. • The new Law does not specify whether the project company must be incorporated as a local entity under the requirements of the UAE commercial companies law or whether it can be established as a free zone entity. Should it be permissible to establish the project company as a free zone entity, foreign investors should note that a key limitation of a free zone entity is that it is generally permitted to conduct business solely within its relevant free zone, therefore limiting this structure to PPP projects strictly contained in that free zone. • The PPP Law does not relax requirements requiring local ownership of businesses es- tablished as limited liability companies (LLC), therefore it should be assumed that project companies incorporated as an LLC will have to comply with the so called 51/49 rule which prevents foreign investors from owning more than 49% of UAE companies - although it is possible for the constitutional documents of the LLC to contain certain provisions in order to protect the interests of a foreign minority shareholder. • The PPP Law also provides that the government agency may hold an interest in the project company, which would impact the status of the project company under Dubai law, but does not specify the proportion nor the conditions of such participation. • Union Oasis Project The Roads and Transport Authority (RTA) was at the forefront of the PPP Law. The RTA’s Union Oasis Project, a five towers project above Union Square Metro Station, will be one of the first projects to use the new law, with a tender deadline of April 2016 announced. • Al Maktoum International Airport The Law may also be used for the expansion of the Al Maktoum International Airport, which with a $32 bn development budget, is anticipated, at the time of completion, to become the largest airport in the world. • Metro Route 2020 Dubai’s Expo 2020 will also offer numerous opportunities for the private sector, such as the 14.5km Metro Route 2020 from the existing Nakheel Harbour and Tower station to the Expo 2020 site. Requirements for government approvals and licensing? Project impact

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construction business news me December 2015 42 In 1992, politics and sustainability joined hands for the first time at the Rio Earth Summit in Brazil. This year at the 2015 Paris Climate Conference, COP21, leaders from around the world will attempt to create a legally binding agreement on climate protection in order to prevent global temperatures rising more than 2OC. Senior Consultant at First Climate, Shivram Mukherjee, looks into how the UAE has prepared itself and its construction industry to adapt UAE, construction and the COP21 Sustainability F ollowing the directions of its leaders, the UAE has formally submitted its Intended Na- tionally-Determined Contribu- tion (INDC) to the United Na- tions Framework Convention on Climate Change (UNFCCC). The INDC is an international agreement where countries have agreed to publicly outline what post-2020 climate actions they intend to take to combat global warming. UAE’s INDC reflects the nation’s economic diversification strategy and its commitment to sustainable devel- opment, harnessing innovation and green growth to ensure prosperity and environmental protection. Global gov- ernments have agreed to submit INDC plans, detailing the actions they intend to take to limit greenhouse emissions and to adapt to the impacts of climate change. In UAE’s Vision 2021, one of its major aims includes the target of 24% electricity to be generated from clean energy. According to the Ministry of Energy the last record of the same was 0.2% in 2014. During COP21 held in Paris from 30 November to 8 December, leaders from 193 countries are expected to finalise a new global climate change agreement which will set a framework for interna- tional efforts to combat climate change. The new agreement evaluates the ac- cumulation of negotiations since 2011 and formulates a global agenda that will help reinforce and build on international actions to fight climate change. The UAE’s actions are already under- way with a directive plan to address cli- mate change and transform the nation’s energy mix. Though the UAE is a major oil producer, it has readily incorporated clean energy and sustainability on the national agenda. Clean energy in par- ticular has been widely adopted in Abu Dhabi and Dubai, with a special focus on solar. Clean energy projects such as the national grid through Shams 1, a first-of-its-kind concentrated solar plant in Abu Dhabi, and the construction of the 1GW Mohammed bin Rashid Solar Park in Dubai has been revolutionary in the region. The UAE is also introducing energy- efficiency standards, funding the creation of world-class research centres, and is advancing critical innovations such as Carbon Capture Usage and Storage. In early November 2015, Dubai Electricity and Water Authority (DEWA) along with International Re- newable Energy Agency (IRENA) held a joint workshop to discuss the possibil- ity of residential and distributed solar in the region. Masdar, Abu Dhabi's renewable energy company, is contributing to the UAE's clean energy leadership by estab- lishing an integrated 'new-energy' indus- try in Abu Dhabi for knowledge export around the world. It is the region's larg- est supplier of clean energy, and takes an integrated approach to sustainability by combining academia, research and development, investment and technol- ogy deployment, to spur innovation and investment in clean energy. IRENA, headquartered within Masdar City, is also a reflection of the UAE's commit- ment to addressing the world's most pressing energy and climate challenges. What’s in it for the construc- tion sector? The construction industry and built environment is accountable for a major part of emitted carbon, especially in the Middle East. With the UAE already con- sidered as a global construction hub, it has taken giant strides in the imple- mentation of sustainable and energy efficient construction. In the last five years, the UAE has incorporated many new sustainable projects including Sustainable City, DEWA’s headquarters, a number of green globe certified hotels, and the retrofit of a number of government buildings particularly under the Emir- ates Green Building Council’s initia- tive. In addition, Dubai Municipality has announced green building codes to guide all new construction projects happening in the residential, commer- cial and industrial sectors. As World Expo 2020, FIFA World Cup 2022, and endless events drive more people into the UAE, sustain- able construction becomes more and more necessary. In Abu Dhabi alone there is a rising need for new residences. The emirate’s average annual population growth of 7.7% has created a significant demand for housing that is currently outstrip- ping supply. With mega-projects underway, such as the upcoming Burj2020 Dis- trict, Abu Dhabi’s Midfield Terminal Building and Meydan One, as well as increased spending on social infrastructure, the UAE saw new and planned projects valued at an esti-

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construction business news me December 2015 43 Shivram Mukherjee, senior consultant at First Climate Irena HQ at Masdar City > mated total of $315bn last year. Dubai and Abu Dhabi are defi- nitely leading the way for sustainable development here in the Middle East, with the municipalities having provided minimum standards that all develop- ers must adhere to. The emirates are reportedly driving higher regional standards in the outdoor construction and design sector. For example, UAE regulations stipulate that 25% of a project’s development area must be set aside for environmentally-responsible landscaping. Expected Outcomes: COP21 With the second commitment period slated to end in 2020, ideally known as KP2), the onus is on the Annex 1 as well as non-Annex 1 countries to come up with dedicated CO2 reduction plans. Governments are in no mood to repeat the failures of Copenhagen. What’s changed is that the big players have a better idea of each other’s position, reducing the extent of last-minute brink- manship that has characterised previous UN climate summits. The Paris summit is likely to spur an agreement on a more inclusive international climate policy framework that captures current levels of ambition, and encourages further ef- fort in future. Not all aspects of the deal will be legally binding, but it will cover a much greater percentage of global emissions than Kyoto ever did. Major Challenges for UAE The UAE construction industry, which has witnessed unprecedented growth in the past few years, is facing increas- ing challenges such as getting foreign workers into the country as well as the rising cost of raw materials, including cement and steel. In the past few years, the UAE's efforts to diversify away from oil have fuelled a massive growth in buildings and investment in the country, with the construction sector emerging as an important economic driver. It is deemed a very likely proposition that there would be nationwide GHG reduction targets and such an action would definitely call for stringent norms from both Annex1 and non-Annex1 countries post COP 21. The UAE being a pioneer in the construction sector, it would effectively need to switch from usage of conventional energy resources to non-conventional energy resources. With the UAE having rapidly emerged in recent years as a leading investor in clean energy technologies, the key chal- lenge here would be to embrace newer trends in sustainable construction which would have a two pronged impact on its growing economy. It would help in promoting a sustainable future by reduc- ing the conventional energy usage and it would also help in complying with the GHG reduction targets. Indeed, the less a country depends on finite resources such as natural gas and oil, the stronger and more stable the economy will re- main in the face of energy cost increases or reduced supplies. From a construction point of view it may be prudent to note that some construction materials have low impact on CO2 emissions that result from raw material acquisition, manufacture, trans- portation, installation, maintenance and recycling, but provide a moderate reduc- tion in terms of operational energy, and vice versa. Others positively impact the embod- ied energy and environmental perfor- mance and can optimise cooling and heating energy performance. Replacing or at least reducing the use of some construction material such as concrete, reinforcing steels, formwork, and gyp- sum board have a direct impact on CO2 emissions. Some materials and construc- tion systems can decrease the amount of CO2 emissions by around 6.9%. Although from the contractor’s perspective, the main challenge would be as obvious as a rise in the cost of raw materials, which would eventually add to a rise in the overall budget. The picture definitely looks greener on the other side, with various energy efficien- cy improvement initiatives, including the usage of low GHG intensive construc- tion raw materials being used. The strin- gent Green Building norms would add a cutting edge in the UAE’s staggering growth in its construction industry.

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construction business news me December 2015 44 PROJECT REVIEW T he Economic Zones World signed an MoU with Dubai Electricity and Water Authority’s (DEWA) Etihad ESCO to retrofit existing buildings in Jebel Ali Free Zone (Jafza) in a strategic move to it the most energy efficient area. The project will retrofit 157 buildings in phase one, totalling an investment of AED64m and producing energy savings of AED22m per year, which will equate to a 31% reduction on current energy cost of the buildings. The project aims to significantly reduce Jafza’s carbon footprints and make its operations more sustainable and efficient. This will include replacing old air conditioners with split units, old light fixtures with LEDs and old water fixtures with new efficient water units. According to H.E. Sultan Ahmed Bin Sulayem, chairper- son of DP World and Ports, Customs and Free Zone Corpo- ration, utility cost is the second largest expense for Jafza. The power and water consumption level has crossed 75 million KWh and 750 million IG per year respectively. He says: “After a rigorous tendering and selection process we selected Etihad ESCO for their viable Energy Conservation Measures (ECMs) to achieve an average consumption saving of 28% of power and 36% of water, while reducing the carbon footprint by 75,000 tonnes dur- ing the six year project.” Project restructure Construction Business News ME looks into the first building retrofit project in the Middle East DEWA, Etihad ESCO, Enova, National Bonds Corporation and Jafza at the press conference The project is set to be the largest energy retrofit project in the entire Middle East. It will be funded by Etihad ESCO through Shari’a compliant financing from National Bonds Corporation. The repayment (including financing cost) will be met from the guaranteed savings over the six years project period. Stephane Le Gentil, CEO of Etihad Energy Services, adds that the (guaranteed) savings over the next six years will include the savings of 158 GWh (28%) in electricity consumption and 1.2 billion IG (36%) in water consumption, which together amounts to net 30% sav- ings worth AED132m. He says that the project will start immediately and the construction work will last one year. During the construction phase, Enova will be responsi- ble for implementing the Energy Conservation Measures. Then, for six years, Enova will operate and maintain the new equipment, monitor the energy consumption of the buildings, and then guarantee that the energy savings are achieved. Sulayem says that the average savings in power and water consumption is 30%. “It makes the Free Zone the first organisation in the UAE to comply with the provisions of national energy conservation strategy far ahead of time." • Installation of timer controlled devices and photocells in parking areas, corridors and other parts of the buildings as well as replace- ment of old lighting fixtures with LED in Jafza buildings • Water saving devices have also been installed in office buildings resulting in 23% water savings • All sewage water and water drained from air conditioning units is recycled and used for irrigation • Refrigerants are also recycled and reused to minimise the free zone's carbon footprint • Jafza also extended its green strategies to its logistics developments and warehouses Other initiatives done by Jafza

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construction business news me December 2015 46 PROJECT REVIEW P laced in the last stretch of Abu Dhabi’s Corniche road, Bab Al Qasr which translates to Palace Door, is ideally situated between the capital’s key attractions Etihad Towers and Emirates Palace. The bronze-tinted glass twin-tower project adds value to Abu Dhabi’s skyline with a stunning view of the sea front on one side and the city on the other. When asked what makes this project so unique. Mehmet Kara, business development manager at Nurol Construction replies admitting that every construction project is unique considering the requirements of the stakeholders and time, environment and cost constraints. “However, what makes Bab Al Qasr unique is how the Emirati and Moroccan archi- tecture is blended in every part of its design. “It demonstrates the high quality of Nurol’s works in hotel and serviced apartments in the district of landmark proj- ects including Etihad Towers, Emirates Palace, Presidential Palace, etc.” The project was undertaken by new developer Emirates Moroccan Trading Company (EMROC). The main construc- tion contract was awarded to local company Nurol Construc- tion back in 2010 after which the construction work started by the end of the same year. The MEP subcontracting project was awarded to Turkish engineering firm Arma EleKtropanc. Kara said that there is an average manpower of the project is about 1,000 across all trades. The project is expected to be completed by the end of this month and fully operational by the first quarter of 2016. The hotel will be operated by Millenium and Copthorne Hotels. Considering the construction, design and operational cost, the overall cost of the project exceeds AED1bn. The red palace door As hotels in the region get on high gear to prepare for millions tourists flooding in for Dubai Expo 2020 and FIFA World Cup 2022, the hospital- ity sector according to STR Global, shows there are 781 hotels totalling 195,705 rooms, currently under contract in the MEA region. This month, Construction Business News ME visits the upcoming Bab Al Qasr Bab Al Qasr Hotel

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construction business news me December 2015 47 Ceiling at Bab Al Qasr Nurol construction team Office space within the hotel Ballroom in final stage A completed room of Bab Al Qasr Kara says that one of the major challenges was the delay in design and approvals especially on finalisation of finishing materials (provisional items) on this project, which is common in many construction projects in the UAE. “Another challenge was the construction difficulties in the very confined and environmentally sensitive location of the project. However delays were lessened through implement- ing proper communication, stakeholder management, team building, and crashing the work activities. Work space limita- tion was mitigated through proper logistical planning of activi- ties and using high technology machineries and equipment in the construction site. “

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construction business news me December 2015 48 As Saudi Arabia implements its new PMO law, representatives from the advisory board met in Dubai to explain how the new legislation will help one of the world’s largest construction markets overcome its delivery challenges by Melanie Mingas A s a global best practice framework, the Proj- ect Management Office (PMO) is an integral, albeit often overlooked element of project management. While there are tangible benefits, the concept itself can at times be quite abstract. With a near two decade history globally, in its current form, the PMO is a combination of consulting, men- toring and managing deliverables, while establishing a culture of compli- ance, cooperation, efficiency and sustainable working. Around 18 months ago, follow- ing several years of discussion, Saudi Arabia made a commitment to imple- ment a new PMO law, which could be applied to all its infrastructure projects with a view to maximising efficiency and minimising overruns in project costs and timelines. But the kingdom couldn’t achieve this alone and so turned to key private sector stakeholders who formed a working group which advised on draft- ing the law. Three representatives from that group (see box) met in Dubai last month to explain the PMO; its implica- tion on private sector construction com- panies; and the potential domino effect it could initiate around the region. The PMO Puzzle Advisory panel members »» David Clifton, regional development director, Faithful + Gould »» Nader Reslan, industry sales director, ME transportation and local infrastructure, Bentley Systems »» Amer Khan, country manager Saudi Arabia, CH2MHill Forum

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construction business news me December 2015 49 The PMO is designed to be condu- cive to Saudi Arabia’s unique challeng- es – centrally controlled governance, a challenging and complex terrain and a seriously ambitious project pipeline, in the face of declining oil revenues, a growing population of young nation- als and ever growing requirements for social and civil infrastructure. Development of the PMO Saudi Arabia is the biggest projects market in the region and has been so by a long way for a long time. But it has project delivery challenges, especially relating to mega-projects, many of which can be addressed though a PMO. CH2MHill country manager for Sau- di Arabia, Amer Khan, explains: “That was the genesis of this idea and with the delivery method that has been es- tablished over the last 15 to 20 years, across the globe. This will be an ef- fective implementation method for the country, particularly due to its size and complex- ity. It also recognises an opportunity for cen- tralised monitoring and control, which is conducive to the kingdom’s style of government.” In 2014, a study by PwC concluded 95% of projects in the Middle East are delivered late and often over budget and this, along with achievable Amer Khan HE Mohammed Al Jassa The private sector work- ing group which assisted in drafting the PMO law was led by His Excellency Dr. Mohammed Al Jassa, who is credited as acting on the concerns and advice raised by the private sector. In a circular issued by the government it is out- lined that the PMO aims to “contribute to raising the adequacy and quality of im- plementation of public sector projects, through the appli- cation of international best practices in the areas of PM and programme objectives.” This work will be super- vised by the Board of Direc- tors, chaired by the Minister of Economy and Planning. HE Dr Mohammed Al Jassa is now advisor to the Royal Court. efficiencies in cost, planning and waste, has in part inspired the PMO law. Continuity of best practice and stan- dards has also played a part, as Nader Reslan, industry sales director for ME transportation and local infrastructure at Bentley Systems, explains. He says: “Most of the projects come with very advanced processes but once the project is delivered they go for the next phase or project and have to start all over again. There is a lack of skills in the local industry as well as a grow- ing need for those skills to be captured and for people to learn from the previ- ous challenges.” It is the intersection where this lack of continuation meets the scale of proj- ects, at which problems begin to occur. Referencing Riyadh Metro – a proj- ect he describes as “putting veins in a city once it has been built” – David Clifton, regional development direc- tor, Faithful + Gould, notes the lack of continuation also exists between municipalities, rather than simply be- tween project stakeholders. “Saudi Arabia is very centrally planned, however each central depart- ment has its own agenda and the fact is, that sometimes can be viewed as opaque. In countries like the UK and US, these models are established and understood and they actually help de- liver. It might delay things for a while but overall it provides transparency.” He adds: “What you will see with PMO is set parameters you can move within but no flexibility beyond that, so municipalities have to stick to a broadly similar set of frameworks, but we still need to see that brought to fruition. It’s a very differ- ent world for example between Jeddah Metro, Damam Metro, and Ri- yadh Metro, which is essentially like build- ing two thirds of the London Underground from scratch in a city that already exists.” The potential impact PMO is not a new idea, but it can be revolutionary. In essence it is a mechanism for feasibility and viability; it is a check and balance process to avoid neces- sary projects becoming runaway ideas, and it is a stringent tool in keeping the functional functioning. Khan says: “PMO can help the deci- sion makers of the country to assess and prioritise projects in an effective way. In terms of the oil price, I think this is where PMO can actually help the country because it will force itself to look at the programmes and find more efficient ways to achieve functional objectives while using technology to make things smarter.” Echoing his point, Clifton explains: “We are living in a new world and while there is money coming in, ev- erything is fine, but at other times you have to think of the functionality of the asset, rather than going purely on aesthetics. It may not be Zaha Hadid territory but the functionality can still be there.” 50 government related entities who will have to implement the PMO

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construction business news me December 2015 50 David Clifton As Khan says: “Being bigger isn’t better, being smarter is better. More emphasis on the economic impact of a project and creating smarter solutions through technology, procurement or collaboration, is better.” In some corners there are concerns PMO could trickle down to the private sector balance sheet as procurement procedures change; if projects are suddenly reigned in, re-structured, or cancelled all together, the effects could be wide-reaching. But the outlook is far more positive. Advising that larger projects are currently under review, Khan predicts things will become clearer at the end of Q4 and beginning of 2016, in light of revised budgets and it’s a point Clifton and Reslan echo. Clifton says: “It takes time to measure the impact and the breakeven oil price conversation we will have is that Saudi is going to look at [new] ways of raising funding for these projects. But when you talk about liquidity you will find liquidity wants transparency and governance and money will flow with these new measures in place. If the same systems are in place here as in the UK, for example, it will generate more business and talent.” Khan echoes: “The terms and condi- tions are discussed in so many confer- ences, including how government procurement needs to be updated. The key terms are always transparency, fairness; that is absolutely key to our industry to allow the Saudi government to attract the best talent and providers, in order to achieve what it wants to.” Technically speaking In tightening up processes and proce- dures, technology will have a key role to play, specifically BIM which is set to enjoy new found applications under new working processes, both during and after construction. As Reslan says, construction is five to ten years maximum, but the asset lifecycle could be up to 70 years; which is part of why BIM must become standard. Its implementa- tion elsewhere has brought about stronger project returns, through ef- ficiency and effective planning. Speaking as a civil engineer, he says: “Working smarter means phas- ing projects and at the end of each phase assessing the success of the previous phase. To be frank, we haven’t always been as smart for example as the aviation industry. For some reason construction projects happen in a much more flexible way and then to increase the pressure on the project schedules and cost of these, reduces efficiency further. “These observations are why gov- ernments in other countries are so advanced. The standards they work to, to create and handle information over the course of a project, are what we need to adopt. This isn’t a case of im- posing, there is an objective here. If it is properly done everybody will see the benefits. Digital infrastructure isn’t just a 3D model, it’s everything behind that.” The issue is, who takes the lead; should this be pioneered by the consul- tants or sponsored by the government? “We are wondering if having an ex- ecutive or steering committee can assist in that and while that is happening we are seeing that although construction is about building an asset, while we are doing that there is a lot of information and data created and we need to think of the best way for that to be con- trolled,” he responds. Legacy While the disparity between project stakeholders and departments to date, not to mention the very nature of New construction of a tower building in Riyadh, Saudi Arabia Forum

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construction business news me December 2015 51 the region’s “bigger and better” mindset, has been rooted in legacy, the take away from a PMO implementation is about creating a different type of legacy. While PMO has existed in Doha, Dubai and Kuwait, it is expected the entire GCC could benefit from what Saudi Arabia is about to embark upon. The GCC-wide rail project is certain to become the first pan-region project for which PMO could be implemented, should other states choose to adopt it at the same level. Khan says: “We know countries tend Riyadh to learn from each other in this region and being GCC there is opportunity for collaboration anyway, as they do with trade, security and other aspects of governance. So there is no reason why similar initiatives won’t be rolled out elsewhere.” Reslan adds: “The best thing about this PMO initiative is that once it is properly established we will have all the system to support it in areas like Kuwait, Dubai and Doha. I don’t see it being observed at a federal level right now but it is being recognised at the highest level and once it is being implemented it won’t just be related to a specific project or asset, like the metro. My observation is that’s fine but it’s better implemented across the industry, and not just applied to specific projects. “It’s the more intelligent way of handling building information manage- ment and when that happens it makes it much easier when we all sit together and we all have very similar and acces- sible rules,” he adds. As it improves the sustainability of projects, PMO could also boost nationalisation efforts in the kingdom, as Saudi Arabia’s young engineers find opportunity to be involved in new areas of a project lifecycle. And the working group of private sector advisors, on the back of recent success, will use their new relation- ship with the government to keep other industry issues at the forefront of government thinking, including labour conditions, health and safety, worker welfare and sustainability. Although oil revenues have nose- dived and GDP will take another hit at the end of this year, Saudi Arabia isn’t, in context, in financial trouble and the PMO law is not a knee jerk reaction to such. However, it does need to work more efficiently, not just for the sake of its own future finances but in order to attract investment moving forwards. The effects of that on the private sec- tor are yet to be felt. The bank of Saudi Arabia is under new management now, but it is far from closed and as long as the pipeline remains as buoyant as it has been, it is likely to be business as usual. Clifton concludes: “Rationalising projects doesn’t necessarily mean cuts, it just means phasing things differently so we aren’t looking to do everything by tomorrow morning, but we are looking to create efficiencies and adjusting the balance sheets. That rationalisation is about the economy moving forwards. “In general I think this will be an in- credibly positive step forward and there are many other steps to take in order to facilitate this but it’s a step in the right direction. Now it is time to do the work and there is a lot to be implemented and many challenges to overcome.” 13 regional municipalities were involved in the PMO

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construction business news me December 2015 52 construction business news me December 2015 52 COMMENT innovative and progressive policies. Minister of Economy Sultan Bin Saeed Al Mansouri declared recently that the UAE government plans to increase the contribution of the non-oil sector to 80% of the nation's gross domestic product (GDP) from the present figure of 70% in the next 10 to 15 years. Interestingly, buyers from countries like China and India increasingly see Dubai as the best choice. Compared with some major Chinese cities like Beijing or Shanghai, the rental returns from Dubai are better. In fact, Chinese investments in Dubai are said to be setting new records. Dubai Land Department statistics reveal that Chinese investments in the emirate's real estate sector reached AED1.28bn last year, which constitutes more than 300% rise compared to 2013. Regard- ing India, Sultan Butti Bin Mejren, general director of Dubai Land Depart- ment has been quoted as saying that in the past four years, Indians have invested more than $14.4bn in Dubai properties. Dubai would be hosting World Expo 2020 and it marks as a security for its economic growth that will bring profitable dividends in both the long and short runs, particularly lucrative rental yield that ranges from four to 7% per annum. The oncoming mega event is chang- ing the face of the region and creat- ing new hotspots. Bayut revealed that Dubai Marina retained its top posi- tion for another month in September this year exhibiting an 8% increase in interest compared to August. Jumei- rah Lakes Towers (JLT) came second with 5% more search hits in the same month. Dubailand overtook Downtown Dubai for the third spot gaining two positions to become the third-most popular locality for renting apartments in the emirate, according to the report. We foresee a rise for the affordable market segment due to projects being undertaken by the government. Mustafa Pooya is the chief commer- cial officer at Dubai-based real estate company, Select Group. He has over 14 years of experience in real estate devel- opment and investment management with particular emphasis on the United Arab Emirates and North America. Property shift A growing number of wealthy individuals prefer to buy their second luxury home in Dubai and the reasons are obvious: Dubai is a prestigious business hub for global investors, a safe haven in the region, and above all, is presently witnessing a price- stabilising period that offers an unrivalled opportunity. Mustafa Pooya writes yields and timely project completion. Rental values grew on average by 1% across Dubai during Q1 2015 and 5% over the same period last year as per the Dubai real estate market overview by ADIB. The UK-based consultancy Knight Frank noted in March 2015 that $1m could buy 145 square metres of prime property in Dubai compared to 96 square metres in Mumbai. Such advantages make Dubai the obvi- ous choice. The UAE property portal Bayut.com indicated that the emirate’s residential market offered average an- nual rental returns of over 7.2% of the property value, which is even higher than London’s. Recession or drop in oil prices does not deter the UAE because of its I t is known that the real estate market in Dubai grew at a dy- namic pace in 2013. What is being witnessed now is the stabilising period, which is attracting global buyers and investors. The Dubai gov- ernment has not imposed any tax on property rental income, which means that investors can make free and clear profit on rents. Similarly, with zero percent capital gain taxation and no property tax, the profit margin is much higher, making Dubai real estate a far more rewarding venture compared to other countries. According to a recent Research and Markets study, the UAE is home to the second highest number of millionaires in the Middle East with 72,100, which means every 125th person in the coun- try is one. As per Reidin.com data, Dubai saw the launch of 14 projects in the first five months of 2015 compared to 37 launches announced during the same period last year. A total of 4,800 units were launched from January to May 2015 compared to 11,288 units in the same period last year. Such statistics indicate a favourable background for the luxury real estate sector, including investor interest from the neighbour- ing countries. The major attractions luring more in- vestors, in my opinion, are high rental

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construction business news me December 2015 56 NEWS COMMENT in Jeddah, Saudi Arabia’s largest commercial city and large parts of Makkah province and the Hejaz region. Coincidently, the flood in Jed- dah happened 25 November in 2009, precisely six years prior to the date. They have been described by civil de- fence officials in the Kingdom as the worst in 27 years. According to Saudi Arabian officials, some 122 people are reported to have been killed, and more than 350 were missing. Business losses were estimated at $270million and over 300 individuals and 30 firms were probed as a consequence. Sev- eral officials were given jail terms as a result of the investigations. This move now by the Qatari Government has sent shockwaves through the construction community in this energy-rich country and has set new precedents in project oversight and enforcement. It also puts the spotlight on liability of contractors, vendors and suppliers. It also raises a lot of questions. What is the extent of the probe? How long will the probe last? Will the travel ban run for the duration if the investigations? Was the quality of work sub-standard? Was there compromise on quality? What was the role of the certification and oversight bodies? What is the degree of liability by contractors, construc- tion and associated companies? How about fines and compensation? These are unanswered questions and time only will tell the outcome of the inquiry. Some of the biggest construction companies and their local Qatari partners were involved in this infrastructural work which spanned decades. In the context of the Qatar situation, the construction community locally, regionally and internationally is out on a limb and waiting nervously and with bated breath as investigators continue their work. It also casts a pall over the con- struction industry as Qatar is set to complete more than $200billion of infrastructure projects, including a $35billion metro system, a $7billion port and new motorways, before the World Cup, which will take place in November and December 2022. Rain, rain go away! The recent deluge in Qatar and its water-logged capital Doha, has opened the floodgates to controversy and contentious construction. By Malcolm Dias governmental or private, will be held accountable”. This fiat reportedly comes from the Prime Minister’s office, from one of the highest echelons of the Qatari Government. It is now reported that Qatar has announced a travel ban and prohibited contractors from leaving the country as it carries out a probe into how heavy rains damaged vital infrastructure. Qatar, which is set to host the 2022 FIFA World Cup, said without elaborating, that five companies were under investigation. It is reported that ‘owners of companies, contractors and consulting engineers’ would be banned from traveling abroad until the end of the probe. These developments in Qatar are eerily reminiscent of what happened B etween noon of Tuesday, 24 November and mid-day of Wednesday, 25 Novem- ber this year, Qatar and its capital Doha, received more than an average year’s worth of rain (80 mm according to the Qatar Meteorological Agency) in a matter of hours causing wide-spread disrup- tion of normal life and transportation. Many of the capital's streets were flooded, and schools and stores had to close. Several top hotels and malls were also affected. The huge downpour caused serious damage to several roads, buildings and infrastructure and revealed exten- sive flaws and leaks at Doha’s brand new $17 billion Hamad International Airport, (commissioned only in April 2014 and home to Qatar Airways) and prompting the country’s Prime Minister to order a far-reaching inquiry. Stunned by the extent of devastation, Prime Minister Sheikh Abdullah Bin Nasser Bin Khalifa Al Thani, who also holds the Interior Ministry portfolio, ordered that all government bodies and private companies involved in the construction of buildings where flaws had been exposed by the rain, would be referred to an investigation and then to the public prosecution for shoddy and sub-standard work, the state-run Qatar News Agency (QNA) reported. The report quoted “parties responsible for dereliction or negligence, whether

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construction business news me December 2015 58 Technology Earlier this year Chinese pre-fab con- struction firm Broad Sustainable Building (BSB) company constructed Mini Sky City at a pace of three stories per day; the tower includes 800 apartments, 19 atriums, and office space for 4,000. The project made headlines around the world but BSB isn’t the only one with this type of ambitious plan for the future of construction. The industry is entering the age of the mass-manufac- tured building. Prefabrication is growing up, reaching a new level of maturity that is now going to change the industry and bathrooms “plopped” into place to hospitals and entire floors built in days rather than weeks. Given that the technique has been part of building for decades, the obvious question is: Why is prefab gaining such traction? Like most things with architec- ture and construction, it’s complicated. Why Now? Revolutionary changes don’t come along very often in the building industry, and when they do, usually a confluence of stuff pushes those changes forward. Pre- Future of construction define new categories of building. Check the trailer-park stereotype at the door. While the construction of BSB’s tower is staggering in its speed, the concept isn’t completely new. For the past decade, there has been a lot of talk about the inefficiencies of the building industry and the need to turn to manufacturing techniques. It has happened in pockets, but now that surge is really taking off and going beyond the typical stuff: metal, curtain wall panels, and cabinetry. There’s a huge rush to prefabrication—from whole Imagine a 57-story tower built in just 19 days and construction projects which rely on robots more than people. Your next building won’t be built—it will be manufactured. Phil Bernstein writes

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construction business news me December 2015 59 Of course, the ER floor plan isn’t iden- tical to the in-patient-care floors. But oft- repeated spaces and areas—and modern hospitals have lots—can be built this way, and many are today. So prefabrica- tion won’t just save time in construction; it will also make the entire process more efficient and less reliant on increasingly scarce resources such as architects, engi- neers, and skilled craftspeople. And it won’t be just prefab forever. Once prefab is even more mainstream, another disruption will come right on its heels: mass customisation. When a com- puter is driving the making of a building part, it doesn’t care if you change that part for each customer. That means the same computer-controlled building as- sembler will make what you want for no additional cost. It’s not perfect, but it’s inevitable. Although prefab is gaining traction, it’s not all rosy. Last year, Brooklyn’s Pacific Park (formerly named Atlantic Yards)—at the time touted to become the world’s tallest modular-constructed building— came to an unfortunate, grinding halt. Challenges in the design and fabrication project have all sides pointing fingers and arming for lawsuits. Prefab is a disruption, so it’s going to have fits and starts. It’s not always pret- ty—new business relationships will need to develop; contracts will evolve (never to look the same again); the nature of work will shift. How construction work- ers show up on a job (and where) will change. Increasingly, they might clock in at the factory and not at the building site. Although all of this was a unique idea 10 years ago, almost every major design school is now teaching the fundamentals of prefab. A new generation is coming into the field equipped to do this, and the wheels of manufacturing buildings will soon be turning. Those folks will catch the wave of prefabrication fully, and workers swinging hammers will give way to assemblers in the era of manufac- tured buildings. Phil Bernstein is a VP for strategic industry relations at Autodesk. Formerly a principal with Pelli Clarke Pelli Archi- tects, he teaches Professional Practice at Yale where he received both his B.A. and his M.Arch. fewer workers and increased cost to skilled trades, the demand for prefab has never been higher—or more criti- cal. Right now, buildings are still mostly built; in short order, they are going to be assembled. What Will It Look Like? To get one stereotype out of the way, prefab does not equal “generic”. Major institutional buildings are not going to be like your local big-box stores. Design will be as important—if not more so—in the age of mass customi- sation and increasingly sophisticated consumer demand. Take a hospital, for example, one of the more popular uses for prefab. Cur- rent designs combine both design and optimum care: wide hallways, rooms designed for natural light and effective use of space for equipment, appropriate finishes—all preassembled off-site and then snapped into place with structure and mechanical systems in one fell swoop. Once the design is finalised and the assembly facility is ready to go, the floors can be replicated as necessary. fabricated architecture, sometimes also called assembled architecture, looks to be one of those transformations. In the past decade, a few pivotal events shaped the transformation of “manufacturing buildings” from hyperbole (or desperate banality) to reality. First, there’s the increasing use of digi- tal models paired with ever-cooler fab- rication methodologies. New “making” techniques such as additive manufactur- ing and 3D printing, more robotics both on and off the job sites, CNC-controlled technologies, and even laser scanning for field verification are major influenc- ers. Collaborative project-delivery models such as integrated project delivery— which put information sharing at a pre- mium—are moving toward more integra- tion, too. Early signs suggest that robots might be as important to construction, eventually, as people. And then there are economic and cultural factors that are pushing the shift to prefab. During and after the recession, construction capacity was destroyed due to job loss as millions of construc- tion workers were out of work. In 2010, the number of people working in U.S. architectural firms plummeted. In turn, clients used the crunch to drive prices down further, taking advantage of the marketplace in crisis. Construction was buying at rock bottom, and architects were working at below-breakeven cost just to keep the lights on. Many in the construction industry retired or departed. Five years after the recession, as design and construction vitality returns, the capacity to support it no longer exists in its previous form. At the same time, baby boomers are retiring left and right, as evidenced by the dwindling numbers of skilled craftspeople and experienced site super- intendents. The family-owned drywall company handed down through the generations now has 21st century kids in medical school instead. Many trade skills are disappearing, and those workers are harder and harder to come by now, meaning builders are looking for alterna- tive methods to handwork and manual methods of assembly. So with the combination of technol- ogy breakthroughs, economic shifts, “with the combination of technology breakthroughs, economic shifts, fewer workers and increased cost to skilled trades, the demand for prefab has never been higher” Phil Bernstein

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construction business news me December 2015 60 I n October 2015, interactive technology group Engage Works and strategic brand design company StartJG joined forces to launch Dubai’s first hi- tech innovation lounge. The first Flux Innovation Lounge, debuted in March 2014 in London, aimed to be a space for ideas and explor- ing emerging technologies through hands-on experience. The lounge is a creative space designed to inspire leading creative minds – brands and agencies alike – through an evolved est developments in hi-tech can affect all businesses as well as our working lives, today and in the future. Steve Blyth, founder and CEO of Engage Works, says that the Flux In- novation Lounge received a phenom- enal response in London and brands are increasingly recognising the power of technology as an enabler to better connect and engage with their em- ployees and customers. “From robots to augmented reality, Flux Innovation Lounge showcases the most innovative solutions the industry can offer.” Creative spaces showcase of the world’s best emerg- ing interactive technology. The Middle Eastern Flux Innova- tion Lounge is located Arenco Tower in Dubai Media City. The lounge draws multiple technologies from virtual reality to advanced robotics under one roof. Visitors can experience how inter- active technology can enhance com- munication experiences for today’s biggest brands. It is built to drive insights and knowledge, to stimulate invention and to expose how the lat- The Flux Innovation Lounge speaks with Construction Business News ME about how creative industries could play a major role in selling real estate The Flux Innovation Lounge in DMC Technology

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construction business news me December 2015 61 Dubai a priority market in the field of innovative consumer interaction. Flux Innovation Lounge will help to showcase the potential for technol- ogy and demonstrate how brands can produce disruptive experiences, further cementing Dubai’s reputation for attracting shoppers and business- es from around the globe.” Apart from virtual reality, the lounge also promotes hi-tech soft- wares that can contain and present a magnanimous amount of data. Client director at Engage Works Richard Ward says that provided the content exist with the developer it could take only two to three weeks to integrate in the software. In London the market has respond- ed particularly well especially in the real estate sector. Ward says: “British Land has been particularly impressed by this technology which is why we receive a lot of projects from them.” The Flux Innovation Lounge plans to update its software every quarter and expand to various other metro- politan cities, with Hong Kong its next target. in terms of opportunities for the bet- ter communication and marketing of real estate and development. From a commercial point of view technology is an enabler of different ways to market projects. The lounge itself is set up to bring the latest technologies that are set up across the world into one market place so that people can come in and look at technologies that are available. Curtis says that this makes sure customers can use these tech- nologies for their own purposes. After London, the team picked Dubai because is it a very active marketplace that attracts some of the world’s best architects. He observes: “There is a lot of investment into real estate development. However, that being said there is quite a traditional way of selling going on here. “The growing appetite for engag- ing brand experiences makes Dubai a natural home for Flux Innovation Lounge. Being heralded as the sec- ond most important global inter- national shopping destination for the fourth consecutive year, makes CEO of StartJG Mike Curtis says that the technologies provided could be used by real estate developers during sales. “Through virtual reality, a potential customer can get a feel of the space in ways that go beyond static images.” He explains: “As virtual reality be- comes more widely available around the world, your target customer moves from national to regional or even international. All that needs to be done is put on the headset, and they can very accurately view what the future development or apartment looks like. “There is still a big commitment towards model-making and visuali- sation which are basically static im- ages. While we all know that video content is more compelling than static images.” Curtis explains that this helps customers to customise what people want in their apartment, make deci- sions about environment designs and furniture. According to Curtis these advance- ments are just the tip of the iceberg

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construction business news me December 2015 62 Q&A In recent times, there have been a lot of mergers and acquisitions (M&A) in the construction industry. How do such deals affect management and how has this worked out for Projacs? M&A is all about increasing value of the new created entity when compared to the value of each company sepa- rately. That being said, practicing it is a whole other ball game. Does this bring better management? Well first, we have to make sure the M&A process was done properly, which means ensuring an appropriate due diligence exercise was executed, an engagement of the buyer and seller management and employees was ac- counted for during the process. In Projacs’ particular case, we expe- rienced many synergies, compatibilities and complementarities in our merger process. A project manager (from Pro- jacs) joining forces with an international engineering firm (Egis) added value to both operations. In addition, Egis is internationally known as the leading engineers in infrastructures, roads and rail sectors that we – Projacs - were not covering. Thus the new merger opened new spectrums for us. What is knowledge management and how does it work in the GCC? In a business context, knowledge is what employees know about their customers, each other, products, processes, mistakes, and successes, whether that knowledge is tacit or explicit. Knowledge management is a systematic effort that enables informa- tion and knowledge to grow, flow, and create value. Organisations implement presentations, the 2015 APQC MENA Knowledge Management Conference provided attendees an understanding of what knowledge management is, why KM is good business, how to build a business case for KM and how KM sup- ports an organisation’s core processes. This conference invited some of the foremost experts in KM that represent leading global organisations, such as Microsoft and NASA, to participate as keynote speakers and panelists. What are some of the serious prob- lems in the regional construction market that need to be addressed? With expected projects over $100bn in 2016, the construction industry in the GCC is a major contributor the econo- my of those countries. The construction sector envisaged a huge development over the past few years, however we are still working on reducing the gap between our best practices here and what we see in the West. The em- powerment of new techniques in the industry is something that we lack here (such as BIM) and we are, with other colleagues and governmental agencies, working on this. Human resources is also a very important element in the West which ensures the continuous success of an organisation, theGCC lacks focus in this area. Training and career development are very important in the region to prepare the experienced and capable personnel to face the mega projects we build in here. In addition, other minor variances such as approvals and lifecycle of projects could positively affect the con- struction industry in our region. Merge Talk KM programmes to institutionalise and promote knowledge-sharing practices. There is a growing realisation by leading organisations in the region of the real value knowledge manage- ment provides. Could you tell us about Projacs Acad- emy and the KM Conference organ- ised in November 2015? In 1984 Projacs introduced the Projacs Academy to further cultivate the construction industry’s awareness of Project Management. This year Projacs Academy partnered up with APQC, a knowledge manage- ment (KM) company, to bring the foremost KM Conference in the US to Dubai. This is the first time the confer- ence is held outside of the US. The conference took place on 18-19 No- vember 2015 at the Ritz-Carlton DIFC. Through workshops and keynote Ashraf Al-Garf was named CEO of Projacs in August this year, before which the project management company was 51% acquired by international engineering firm, Egis. After a merger and a new leadership role, Al-Garf throws light on construction management in the region and the benefits of collaborating Ashraf Al-Garf

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construction business news me December 2015 64 Q&A Qasr Sabah was delivered 90 days ahead of schedule, this is quite un- common in the region. What have you done differently? This project was almost completely sold out when it was first launched in Feb- ruary 2014. During launch, the payment plan comprised of 20% reservation de- posit and 80% at handover. In the Holy Month of Ramadan 2014, it was the only project in the UAE that pioneered a post-handover payment plan for its investors encompassing 60% imburse- ment in three years after handover. We also decided to fund the whole project internally, which we intend to follow in future projects as well. When we were planning Qasr Sabah I knew I wanted to finish it in 18 months. With a dedicated team and a drive to succeed, we ended being the only developers in Dubai who have completed a project before time. What motivated you, as a developer? During the groundbreaking of the Qasr Sabah, I announced that we will be delivering the entire project in 18 months. A lot of media questioned me about how would this be possible. It was 550,000 sqft of built up area, which apparently needed at least two and a half to three years to finish. People often promise in Dubai and don’t deliver, which is why I took this as a challenge. My team and I worked day in and out. I would be at the site at 2am in the morning to make sure to draft a different plan, something that would deliver a project on time and something that would give home- buyers a secure investment. One of the best decisions to be made is working with the best contractors in the market. What does it take for developer to be successful? People should not talk, they should build. I think being a developer is one of the toughest businesses. To be able to deliver efficiently, I think, it has to be a one man show. You cannot have a development with over 20 partners. Secondly, I think it is very important not to be greedy. Even though we have taken up many projects, we need to make sure to finish one before start- ing another. Time to build construction is going on alright. We also always paid the contractor ahead of time to make sure we don’t have any problems. I am glad to say that all of it paid off. The last few years have witnessed a tough real estate market, what has the slowdown taught you as a developer? Actually we decided to buy plots during the crash and slowdown. We purchased some good plots at good rates. One of the biggest complaints in the market that everyone talked about was that projects were never delivered on time. Another thing that bothered me was that most developers took 80- 90% investments from people, but did not even begin construction. I decided Earlier this year, RSG International announced the handover of AED450m Qasr Sabah, 90 days ahead of schedule. The project, located in International Media Production Zone (IMPZ), comprises of three buildings with 402 apartments and four retail shops in total. Chair of RSG Raj Sahni, Abu Sabah, speaks with Construction Business News ME about what it takes to deliver on schedule Qasr Sabah Raj Sahni

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construction business news me December 2015 66 D ubai Electricity and Water Authority (DEWA) along with the Interna- tional Renewable Energy Authority (IRENA) hosted a joint workshop on accelerating residential solar in the UAE at Raffles Dubai on 8 November. “In line with this initiative, DEWA has trained more than 120 individu- als both consultants and contractors. There are over 26 companies that have registered, which is a good start,” says Saeed Al Tayer, CEO of DEWA. During the workshop, the organisation aimed to include more professionals and talk about technical know-how on how to move forward. The workshop covered topics including upcoming opportunities in the market, potential for cost reduc- tion, best practices in the industry, different global policy approaches in residential solar, and how to imple- ment it on the ongoing and new initiatives in the GCC. Mohamed El-Farnawany, director of strategic management and execu- tion direction at IRENA, says that the cost of renewables in the global market is the same, if not lower, than fossil fuels. “Renewables are becoming one of the most cost-effec- tive source of electricity around the world. It is also economically attrac- tive in this country, and according to IRENA’s latest joint work in the UAE, the deployment of 10% share of renewable energy in the total energy mix could generate annual savings of $1.9bn by 2030. “What we are witnessing in the region today is historical and revolutionary.” Al Tayer says that through this initiative DEWA also aims to educate its customers about Shams Dubai launched earlier this year. EDITOR'S PICK Solar update Saeed Al Tayer speaking at the workshop Saeed Al Tayer, CEO of DEWA, speaks with Construction Business News ME during a joint workshop organised by DEWA and International Renewable Energy Authority on unlocking the potential of residential and distributed solar in the UAE and GCC were installed in the first three months of this year as a result of improved technologies and falling costs. He emphasises that the goal of most entities is the find the “right balance” between innovation, policy, and project implementation. One of the key challenges he recognises is to create a market for renewables and for that the market needs to be able to afford it. “True efficiency is not only improvement, but also reducing cost.” He says that when renewables were introduced a few years ago, it was quite expensive, whereas now the industry has recognised that in order to move forward they need to be more affordable. The workshop discussed the poten- tial of residential and distributed solar in the UAE. It included a cost session presented by PV installer, a presenta- tion on policies and subsidies and its capability to accelerate the solar movement, and discussion about pos- sible actions and recommendations. Solar panel in Dubai The CEO also exemplifies the US, where there are approximately 700,000 households with solar systems and, according to the Solar Energy Industries Association (SEIA) out of that total, 66,440 new solar systems

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