Construction Business News
Page 1 / 68
Being one of the fastest growing construction industries today, we look at the optimistic future for Kuwait as well as the globe, with whom the country has been collaborating effectively JUNE 2015 THE DEFINITIVE GUIDE TO THE REGION'S CONSTRUCTION PROFESSIONALS KaleidoscopiC SECTOR Kuwait’s
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.
CONSTRUCTION BUSINESS NEWS ME JUNE 2015 1 20 NO WAIT IN ‘BUILDING’ KUWAIT BEING ONE OF THE FASTEST GROWING CONSTRUCTION INDUSTRY TODAY, WE LOOK AT THE OPTIMISTIC FUTURE FOR KUWAIT AS WELL AS THE GLOBE, WITH WHOM THE COUNTRY HAS BEEN COLLABORATING EFFECTIVELY NEWS IN PERSON SAYYID WASFI JAMSHID, CHAIRMAN OF THE BOARD OF DIRECTORS AT NAPCO, TALKS ABOUT CURRENT DEVELOPMENTS TAKING PLACE IN OMAN AND GIVES US AN INSIGHT ABOUT WHAT OMANISATION TRULY IS SUSTAINABILITY WE LOOK AT ‘GREEN CITIES’ WHERE RENEWABLE ENERGY WILL DRIVE EVERYDAY LIFE AND ALL THE DESIGN ELEMENTS THAT MAKE FOR NORMAL LIVELIHOOD ANALYSIS A REPORT ABOUT THE GULF RAILWAY PROJECT WHICH HAS ONLY BEEN, UNTIL RECENTLY, A HISTORIC VISION IN-THE-MAKING TO REVOLUTIONISE TRADE AND COMMUNICATIONS WITHIN THE SEVEN- STATE CUSTOMS UNION IN THE FIELD MUSTAFA POOYA, CHIEF COMMERCIAL OFFICER OF SELECT GROUP DISCUSSES THE COMPANY’S LATEST PROJECT MARINA GATE SITUATED IN THE DUBAI MARINA ABOVE: HOW THE DUBAI SEVEN-STAR HOTEL WORKS 6 16 24 28 32 cover story 46 32 CONTENTS
CONSTRUCTION BUSINESS NEWS ME JUNE 2015 2 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 Editorial Director Giorgios Retsinas giorgios@bncpublishing.net Editor Lorraine Bangera lorraine@bncpublishing.net Business Development Director Rabih Naderi rabih.naderi@bncpublishing.net Marketing Executive Mark Anthony Monzon 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@bncpublising.net 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 COMMENT CRAIG GIBSON WRITES ABOUT HOW TO DEMONSTRATE DISRUPTION AND HOW TO VALUE IT MARCOS BISH WRITES ABOUT HOW THE COMMERCIAL FIT-OUT INDUSTRY NEEDS TO JOIN THE UAE'S GREEN REVOLUTION SHIVRAM MUKHERJEE WRITES ABOUT THE EMERGENCE OF SMART CITIES IN THE GCC AND ITS STAGES OF GROWTH OVER THE NEXT DECADE DOUGLAS RALPH WRITES ABOUT THE INCREASE IN PROPERTY INSPECTIONS IN THE REGION FACILITIES MANAGEMENT AS THE FM INDUSTRY GROWS EXPERTS SAY THAT THE NEGLECTED SECTOR NOW HAS A CHANCE TO BE AN INDUSTRY LEADER PROJECT REVIEW ANALYSIS ON THE PROGRESS OF THE UPCOMING KINGDOM TOWER IN JEDDAH AND ITS NEW FEATURE OF HAVING NEW FASTEST ELEVATORS IN THE WORLD RP GLOBAL’S CEO, DR RAVI PILLAI, TALKS ABOUT DUBAI’S PROPERTY MARKET AMID THE COMPANY’S GROUNDBREAKING CEREMONY FOR UPCOMING RESIDENTIAL TOWER, RP HEIGHTS Q&A TIM ARMSBY, PARTNER AT EVERSHEDS TALKS ABOUT INFRASTRUCTURE DEVELOPMENT IN THE MIDDLE EAST, SOME OF THE KEY TRENDS AND CHALLENGES SUPPLIERS IN A BID TO DIVERSIFY FURTHERMORE INTO THE METALS INDUSTRY, THE GCC IS PRODUCING A REMARKABLE HAUL OF ALUMINUM AND STEEL GRAPHIC CONCRETE, AN INNOVATIVE FINNISH COMPANY, MANUFACTURING AND MARKETING GRAPHIC CONCRETE ENTERS THE MIDDLE EASTERN MARKET EVENT PREVIEW CONSTRUCTION MACHINERY EDITOR’S PICK 36 42 44 52 38 46 50 54 56 58 60 62 64 28 18 CONTENTS
Porto Arabia Towers Doha, Qatar ©2014 Hill International, Inc. Hill International The Global Leader in Managing Construction Risk www.hillintl.com For nearly four decades, owners and developers in the Middle East have turned to Hill International to manage their construction projects and programs throughout the region. Hill is proud to have helped our clients turn their most challenging visions into realities. We have participated in over 10,000 projects with a total construction value in excess of $500 billion, managing all phases of the construction process from concept through completion. Hill is also the leading construction claims firm in the world, having helped resolve problems on some of the most complex projects throughout the Middle East and around the world. To minimize risk and maximize results on your next project, turn to Hill International Dubai Office: 971 4 227 0078 Doha Office: 974 4 435 8381 Corporate HQ: 800 283 4088 If you can imagine it, we can manage it. Qatar National Museum Doha, Qatar Mall of Qatar Doha, Qatar Viva Bahriya Towers Doha, Qatar
4 construction business news me JUNE 2015 CHECKMATE Kuwait This month’s cover story looks at the changing landscape of Kuwait’s economy. We analyse the country’s affluent pool of projects and what makes the state a de- sirable option for investors from across the globe. According to reports, GCC is to witness construction projects worth US$103 billion this year, an increase of 21.2% over last year. Within this, Kuwait is expected to award about $47.2 billion of projects this year, almost double the value of those awarded in 2014. Our story looks at upcoming changes in the indus- try that will boost companies to invest and set up. We also examine how the cur- rent boom in the construction market in the country will have a trickle-down effect on the economy, the real estate market and its tourism sector. We also include a Facilities Manage- ment section this month to demonstrate our support for the habitually disregarded sector. During the FM Expo in May, we talked with exhibitors at the show as well as speakers at the FM Congress about how the facilities management sector has played a vital role in establishing success- ful cities. When we talk about buildings, the sector is often pushed in the sidelines when in fact it is the crucial reason why a building can keep standing for the next 20 to 30 years. We discuss with experts in the industry how essential it is for the sector in improving with the rise of tech- nological advancement in construction and its need to adapt and adjust from the conventional approach. Another highlight in the June issue is our interview with Muscat-based Nation- al Aluminium Products Company. The new Chairman of the Board of Directors, Sayyid Wasfi Jamshid, sheds some light on his company’s new transformation goal by keeping up with the ever-chang- ing and competitive market. He also talks about the importance of Omanisation and what it means to the company. We also speak to Mounib Hammoud, CEO of Jeddah Economic Company, developer of Kingdom Tower in Jeddah. The project is said to be the tallest tower in the world by 2018. We look at the pro- gress made on the project, the health and safety measures incorporated and Kone’s high-speed elevators which will set new records in vertical transportation. Among other features we look at resi- dential projects including RP Global’s new residential tower placed in the prime location of Downtown Dubai and Select Group’s Marina Gate planned to open in Dubai Marina. Lorraine Bangera Editor editor’s note Not quite there yet Could do better... A little more colour? Perfect! TQuibustesedis eos aliquo int am, in enimus ipsuntus sequodisque deliquiducia dolorem. Itatem im dendignimi, explitate et auta pro JUNE 2015 THE DEFINITIVE GUIDE TO THE REGION'S CONSTRUCTION PROFESSIONALS KUWAIT RISING 1 CBNME0615 COVER.indd 1 26/05/2015 10:24
construction business news me JUNE 2015 6 NEWS The Abu Dhabi Urban Planning Council (UPC) hosted the third Charettes series which oversees the Seychelles Strategic Plan in May 13 to 15. This was the final Charette organised to dis- cuss the preferred sustainable growth strategy of Seychelles over the next 25 years. The event was attended by 120 stakeholders including gov- ernment ministers and officials who gathered in the country’s capital, Victoria. The meeting was the last opportunity for plan- ners and stakeholders to reach a consensus on the urban de- velopment framework. Asset design and consultancy firm, Arcadis, will be developing a new pub- lic transport system in Jeddah, Saudi Arabia. The firm, through its subsidiary, Hyder Consultancy, has been appointed as a part of Foster + Partners team to deliver the project. The plan will include the design of met- ro stations, high-spec trains and even the branding. The commercial develop- ments associated with the metro system will create a new urban service features at key locations around the city. Sameer Daoud, Infrastructure Global Business Leader of Arcadis Middle East, said that over the last two years, the his railway team has helped the Metro Jeddah Company to set up and move the project forward. He empha- sised how the progress comes from a combined effort, strength and technical expertise of multinational companies like Hyder and Arcadis. The project is in line with the long-term sustainable vision for Jeddah’s city-wide transport network which includes metro, ferry, bus and cycle services. New transport system for Jeddah New development in Victoria, Seychelles UPC is providing technical assistance for the project which began in May last year, and will set out to work on the sustain- able growth of Seychelles up to 2040. Amer Al Hammadi, Executive Director of the planning and in- frastructure sector in UPC, said: “The final Charette reviewed and tested the three draft plans including the strategies, frame- work plans and policies contained within them. It also focussed on refining the Victoria Master Plan and undertaking detailed design of areas within the capital city to help realise its potential to 2040.” Stakeholders meet to finalise Seychelles Development Strategy
Ras Al Khaimah has been included in the Global Cities of the Future 2014/15 Awards compiled by world-leading business news outlet, Financial Times. The northern emirate has been included in categories such as the Top 10 Small and Mid-Sized Cities list for human capital, lifestyle, connectivity, economic potential, cost effectiveness, as well as business friendliness. Criteria for the awards include average annual salaries for a variety of skills levels, annual rent for prime office and industrial space, and the costs associated with establishing a business, registering property, and obtaining construction permits. Property developer, Al Hamra Real Estate Development, which has been a ma- jor contributor to the growth of the emirate extended congratulations to HH Sheikh Saud Bin Saqr Al Qassimi, Ruler of Ras Al Khaimah, for the foresight that has thrust the region into the international spotlight. Barry Ebrahimy, Head of Commercial of Al Hamra Real Estate Development, said that the emergence of RAK Freezone has also brought a new level of cost effective- ness to the city. Ajman Sewerage Private Company Limited (ASPCL), a public-private partnership en- tity, has signed a deal to expand the Ajman wastewater treatment plan by 50% after completion. The construction contract was awarded to Six Construct and is expected to be completed before the end of 2016. The work will be done near Ajman’s Jurf Indus- trial one and will begin immediately. Christophe Ledur, General Manager of ASPCL, said that the plant upgrade would allow treating an additional 40 million litres of wastewater per day. He added: “We continue to constantly monitor the residential and commercial property market in Ajman with the aim of ensuring that ASPCL, in close collabora- tion with Moalajah the operator of the Ajman sewerage system, has adequate infrastructure and capacity to collect and treat the surplus wastewater by expanding the plant’s treatment process significantly. “By expanding the treatment plant, ASP- CL will also increase the production of treated water, which has become an impor- tant water resource, and which, if utilised fully, would reduce the emirate’s reliance on borehole and desalinated seawater.” APEI includes first Middle East based company HMG Properties has been the first real estate group in the Middle East to receive the membership of Aso- ciación Profesional de Expertos Inmobiliarios (APEI) or the Profes- sional Association of Real Estate Experts in Spain. According to APEI, HMG Properties has established world-class standards in its opera- tions and as a member it be able to share their learnings in the Middle East region. Raed Bourjass, CEO of HMG Properties, said that being part of the APEI is an example of the grow- ing presence of Middle Eastern companies. “The APEI membership caps a successful season for HMG at the beginning of 2015, which has continuously explored avenues to expand beyond the traditional boundaries we operate in.” The APEI awards membership to companies, institutions and groups that set benchmarks in real estate services. The selection process re- views the business’ contribution, quality of customer service, market innovation and the depth and pen- etration the business has in markets by country and regional cities. Upcoming canal at Falcon Island Ajman’s wastewater treatment plant set for major expansion RAK makes Financial Times future cities list Raed Bourjass, HMG CEO Al Hamra real estate in Ras Al Khaimah Ramy Jallad, Acting CEO of RAK FTZ H.H. Sheikh Rashid bin Humaid Al Nuaimi, Chairman of ASPCL (centre), and Christophe Ledur, General Manager of ASPCL (far right)
Al-Futtaim Auto & Machinery Co. LLC United Arab Emirates: 800 32626 Saudi Arabia: 800 1244414 e-mail: famco@alfuttaim.ae www.al-futtaim.com It is, without doubt, one of the harshest environments on earth: the Empty Quarter in the Kingdom of Saudi Arabia – the largest and most barren sand desert in the world, spreading itself over four Arab nations and covering 650,000 km2 which is comparable in size to France. Temperatures range from 50° to -1°C in the course of a single day and the sand and dust are relentless. The nearest city is 1000 kilometres away. So the construction of the road cutting through the desert, linking Saudi Arabia to the Sultanate of Oman, called for an extraordinary solution. The response: a fleet of 95 Volvo machines was assembled. Together, they shifted over 130 million m3 of sand just to build the bridge of the road – an extraordinary feat in such harsh conditions, yet the quality and power of Volvo engineering was up to the challenge. The difficulties created by the remote isolation of the worksite were answered with excellent customer support from FAMCO, the authorised Volvo dealer in Saudi Arabia, which included the organisation of mobile 24/7 service workshops that moved forward with the construction operation. Discover a new way. Exclusive distributor of Volvo Construction Equipment in the UAE and Saudi Arabia
www.emptyquarter.volvoce.com Watch video www.famcouae.com www.famcosaudi.com
construction business news me JUNE 2015 10 NEWS Emirates Green Building Council (EGBC), an independent forum aimed promoting green building practices, honoured the winners of the 2015 EGBC Awards to recognise excellence in sustainabil- ity at the award ceremony held at Al Murooj Rotana hotel, in Dubai. Saeed Al Abbar, Chairman of EmiratesGBC, said: “The EGBC Awards have become a core part of our activities in promoting sustainable built environments in the UAE, and in turn contributes to the ‘green economy for sustainable development’ vision.” Some of the awards included the Green Facility Management Organisation of the Year which was awarded to Imdaad LLC, the Green Building Material/Product of the Year which was awarded to Khansaheb Bionest and the Green Building System which was awarded to Box Industries LLC for its Technopark Geochem Office. 2015 Annual Emirates Green Building Council Award winners EGBC honours winners for excellence in sustainability KEY TRENDS One of the most popular prediction themes to come from the research is the idea of sustainability and design. Whilst some felt that design and architecture needs to move to becoming 100% sustainable and explore self-recycling potential others felt that the future holds new materials and technologies which will tackle ecode- sign dilemmas and see scientists working more closely with designers A common belief among those polled was that commercial and residential building design in the future will need to be intuitive to each end user whether that is intel- ligent building skins which respond user needs or even buildings which are able to pre-empt user needs before the user realises their own needs With the continued rise of social media and society’s desire to share, several re- spondents felt that the future of design lies in the ability for design to be a more collaborative industry; where communities are involved in architecture and social media is far more integrated into building architecture The research was commissioned to mark the 25th anniversary of the Index International Design Exhibi- tion and featured varied responses as expected, but there were several key themes that were highlighted throughout. From company CEOs, directors and founders to profes- sors, architects and trend transla- tors, the group of 25 interviewees are all directly involved in the design and architecture industry from both commercial and residential design arenas predicted key themes of the future. All the responses were on display at Index at the Dubai World Trade Centre in May. Design gurus predict future trends Sustainable design Morphing design and architecture Design sharing and collaboration
construction business news me JUNE 2015 11 GCC projects can benefit from a new line of sound- absorbing ceiling panels, industry experts announced at Index International De- sign Exhibition in Dubai World Trade Centre. With the GCC’s interior contract- ing and fit-out sector set to reach US$8 billion in 2015. Ceiling manufacturer, Hunt- er Douglas, has introduced the XLnt swing-down ceil- ing panels, designed for airports, train and metro stations, offices, and other utility buildings - spaces in which architects wish to use large, flat finishing elements. “GCC countries are heavily investing in major projects from transportation, to finan- cial hubs, and office towers – which require the most advanced interior design so- lutions to reduce noise and absorb sound, while contrib- uting to a pleasing working and traveling environment,” said Santhosh Vallil, Senior Sales Manager of Hunter Douglas Middle East. XLnt ceiling panels have an unrivalled stiffness be- cause of a layered composi- tion of honeycomb alumin- ium – based on composite technology from the aviation industry. As a result, archi- tects have tremendous free- dom in creating their own designs, without worrying about ceiling tensile stress, bending, or sagging. Gulf Asia Contracting, part of the US$4.5 billion RP Group of Companies, has been awarded over AED2.28 billion in civil and industrial construction contracts in the UAE. Mid to high-rise residential projects like the City Towers, Ajman Corniche, Yasmeen Towers and the Oasis Towers with distinctive architecture and state-of-the-art amenities are currently underway to modernise Ajman’s skyline. The combined estimated worth of all six Gulf Asia Contracting projects in Ajman is AED1.78 billion making it one of the biggest contractors to operate in the emirate of Ajman. Vinod Pillai Group General Manager, RP Group said: “Gulf Asia Contracting is currently working with the Ajman Real Estate Investment Company to construct several residential landmark projects in Ajman which we believe are symbolic of the aspirations of a new generation. Gulf Asia Contract- ing works closely with local companies and partners to pro- vide valuable industry expertise.” RP Group’s Gulf Asia Contracting Co awarded AED2.28 billion in UAE contracts Sound-absorbing ceiling panels by Hunter Douglas H.E. Sheikh Nahyan bin Mubarak Al Nahyan, UAE’s Minister of Culture, Youth, and Community Devel- opment, inaugurated the groundbreaking event of the Bascom Palmer Au- gust Medical Eye Institute (BPAMEI) on May 18 this year. UAE-based SOZA Group, in partnership with the Bascom Palmer Eye In- stitute and August Medical, welcomed a select group of guests at the St. Regis Saa- diyat Island in Abu Dhabi. Funded by SOZA Group, the cost of the project is an estimated AED200 million. This is the first time the Bas- com Palmer Eye Institute has ventured outside of its home in South Florida. Dr Zain Kenderian, Chief Medical Officer of August Medical, said: “This proj- ect will allow us to meet the healthcare needs and more specifically the eye care needs of this commu- nity and its future genera- tions with state of the art clinical care. We believe that it is really important to have a facility that matches the quality of physicians that will work here. So we’ve come up with some- thing unprecedented.” Located in Mohammed Bin Zayed City, the new facility – to be named The Bascom Palmer August Medical Eye Institute - will consist of 7,600 square metres spread over three floors in phase one and 4,000 square metres with an additional three floors in phase two, totalling 11,600 square metres. The first phase of the institute will open in the first quarter of 2017 with the fellowship program launching in the last quarter 2018. BPAMEI to open in Abu Dhabi Marble entrance of Emirates Palace City Tower project in Ajman
construction business news me JUNE 2015 14 NEWS A customs transit system which will dra- matically speed up the transport of goods across the UAE’s borders with its neigh- bouring countries is on course to be in- troduced by the end of this year. The TIR (International Road Transport) System re- duces the time trucks spend at frontiers from days to hours, and its arrival in the emirates moved a step closer today with the signing of an agreement between Fu- jairah Customs Authority and the Automo- bile and Touring Club of the UAE (ATCU- AE) at the Novotel Fujairah hotel. This follows earlier agreements between the ATCUAE and the customs authorities in Abu Dhabi, Dubai, Ras Al Khaimah and Aj- man to work together to introduce the TIR system. ATCUAE’s President Mohammed Ben Sulayem expects similar agreements to be reached soon with the customs authori- ties in Sharjah and Umm Al Quwain, paving the way for the system to become fully active in the UAE before the end of 2015. In preparation for this, the ATCUAE in cooperation with the International Road Transport Union (IRU) will stage a two- day workshop from June 7 to 8 this year in Dubai this month to introduce cus- toms officials to the highly computerised TIR system. Subodh Shah, Managing Director of Marmo Classic Stones Factory KalingaStone, one of Marmo Clas- sic Stones Factory’s stone brand has launched Tiberio. The new product is created from aggregate and natural stone surplus. Through technology, it has managed to get the thickness of in- dividual tiles down to 9mm, in 60cm x 60cm tiles. Using by-products from the natural stones industry means that Tiberio can be used in place of natural stone, or can even be used as an alternative to ceram- ic tiles. Additionally Tiberio makes use of surplus material from the natural stone industry and aggregate, making it more environmentally sustainable. Subodh Shah, Managing Director for Marmo Classic Stones Factory LLC said: “By creating Tiberio, we are targeting customers seeking natural stone alter- natives, but also providing a solution to designers and end users that are look- ing for an alternative to ceramic tiles. Ti- berio is incredibly hard wearing, it gives the luxurious appearance of marble, and is a cost effective solution at AED125 per square metre.” Marmo Classic Stones Factory LLC introduces new advances in engineered stone Transit system improves transporting goods for UAE
CONSTRUCTION BUSINESS NEWS ME JUNE 2015 15 IMDAAD TO INSTALL WASTE SEPARATION SYSTEM IN DUBAI MADE IN UAE www.intermetal.com www.verdadoors.com Dubai, UAE Tel: +971 4 884 1650 Email: sales@verdadoors.com MANUFACTURING QUALITY DOORS, KITCHENS & INTERIOR FIT-OUT DIRECT FROM MANUFACTURER AT FACTORY PRICES Imdaad, a provider of integrated facilities management, has forged a strategic new partnership with WMS Metal Industries, a local company that specialises in the design and manufacture environmental products. Under this new part- nership, the two parties have expressed their commitment in the development and installation of a new waste separation system in Dubai. According to Imdaad senior executives, the new novel recycling initiative is expected to divert approximately 2,000 tonnes of waste annually from the landfill. The installation of the new waste separation system is expected to help consolidate Dubai's leading position in the region's efforts towards waste recycling, which falls in line with Dubai Government's efforts to recycle 75% of municipal solid waste by the year 2020. Mahmood Rasheed, Chief Operating Officer at Imdaad, said: “This collabora- tive effort not only ensures the proper disposal of solid waste but also helps drive in an increased awareness on the importance of recycling—particularly in the move to protect our environment.”
CONSTRUCTION BUSINESS NEWS ME MAY 2015 16 IN PERSON Sayyid Wasfi Jamshid, Chairman of the Board of Directors at NAPCO, speaks on three key factors: undergoing a complete company transformation, current developments taking place in Oman and what Omanisation really means. Lorraine Bangera writes to understand the importance of creat- ing shareholder value by identifying the drivers of sustainable financial performance, focussing relentlessly on accomplishing objectives and stay- ing ahead of the curve. He says, “In today’s ultra-competitive landscape, shareholder value cannot be achieved in isolation. All stakeholders, includ- ing employees, customers, suppliers and partners, must benefit for them to thrive in the long term.” In addition to his current high pro- file job, Jamshid also holds the posi- tion of Deputy General Manager and spokesperson for the National Bank of Oman. Talking about his success, he says, “There are many secrets to suc- cess but for me, I can mainly attribute it to my passion to excel and succeed in all my endeavours.” He says that by identifying early on the few critical success factors Sadi calling him a “talented” man who led the company to success, however even Al Sadi knew that in order to survive the intense competitive envi- ronment NAPCO hand to completely transform. Jamshid is now in charge of leading this transformation. Jamshid, who is always true to his team, says that the transformation at NAPCO would be impossible without the “invaluable contribution” in terms expert advice and guidance of every board member at NAPCO. Jamshid has previously worked as an investment banker in the State General Reserve Fund (SGRF) and pioneered several new investment pro- grammes to transform the operational and cost structure at SGRF. He draws from his experience as an investment banker to help himself lead his current team in the right direction. According to him, investment bankers are trained A fter being unani- mously elected as the Chairman of the Board of Directors in 2014, Sayyid Wasfi Jamshid took up a specific mission in formulating and overseeing the implementation of a brand new strategy for aluminium extrusions company, National Alu- minium Products Company SAOG (NAPCO), based in Oman. Prior to his promotion, Jamshid served as a board member and member of the Executive Committee since 2010. Honoured by the votes, Jamshid says that it is a privilege to serve under and succeed his predeces- sor, Sheikh Rashid Al Sadi. He says, “Sheikh Rashid Al Sadi is one of the country’s most sophisticated and respected investment professionals and corporate leaders.” He praises Al
construction business news me MAY 2015 17 required for the job and maintaining a laser sharp focus on execution is key. He also adds that working with the right people is a crucial factor in suc- cessfully attaining a mission. Speaking furthermore about NAP- CO's aim and its critical transforma- tion, the Chairman says that it is their objective to become one of the top five aluminium extruders in the region over the next five years. “We will do this by at least doubling our produc- tion capacity,” he states. The company also aims to gain supremacy in their home market of Oman by further enhancing quality and exceeding specific customer re- quirements in all current markets. “To attain successful and sustain- able changes, everyone, from top management to our people in our plant facilities, must be energised and synchronised with the corpo- Sayyid Wasfi Jamshid, Chairman of the Board of Directors at NAPCO Holkamp recently being appointed as the new CEO. He adds: “Possess- ing the right qualities to succeed, Holkamp is very driven with leader- ship skills that can align and galvanise people.” He also says the company’s board has been very pleased with the progress the new CEO has made since taking the helm of the company. Responding to increase in demand In terms of NAPCO’s services, Jamshid says: “We have the right blend of creativity and efficiency. That is a very important dynamic to have in any suc- cessful business and we have it here.” NAPCO is not purely an alumin- ium extruder as they facilitate with anodising, powder coating, wood finish, a thermal crimping and bend- ing facility. They also have their own door and window systems for com- mercial projects. rate game plan.” Equally important, Jamshid says is the crafting of the corporate game plan which at least on a tactical level must include cre- ative inputs from the lower levels of the organisation. In NAPCO’s case, he affirms, “We achieved both of them. Every division was analysed and tuned to achieve optimal levels of performance.” With more attractive incentives for their staff and a boosted production capability by 40% to 50%, they are on their way to double their capacity over the next few quarters. There would be an increase from roughly 12,000 to 18,000 metric tonnes for the year. “One of the main challenges howev- er is to find and recruit the right cali- ber of leadership to execute NAPCO’s transformation strategy,” says Jamshid. Fortunately, this did not stop the com- pany to find the right fit with Robert
construction business news me MAY 2015 18 IN PERSON line, will be operational by September 2015. Phase two, meanwhile, will be ready by early next year. Jamshid says that so far, they have been able to purchase all the necessary machinery for their expansion effort. “We have also commenced civil works for the construction of the land space. “We believe that our expansion ef- forts are great initiatives not only for NAPCO but for the whole of Oman. Once the expansion is completed and fully operational within the first quarter of 2016, we are confident that NAPCO will make into the top five GCC aluminium extruders in terms of production capacity.” NAPCO will double its extrusion output from 18,000 to approximately 36,000 metric tonnes and we will quadruple our powder coating ser- vices. He says: “As 2016 commences, we will have a total of four extru- sion presses, vertical and horizontal powder coating lines, one anodising line, two wood-finish lines, a thermal crimping facility and a bending facil- ity. With this expansion, we will be able to create more jobs for Omani citizens and residents and substan- tially give back to the community through our corporate social respon- sibility initiatives.” Fulfilling the Omani dream The Sultanate of Oman launched its Omanisation policy in 1988 to significantly increase the number of citizens working in various industries. Companies that successfully meet the set quotas in terms of percentage of Omani to foreign workers will obtain a ‘green card,’ which translates to press attention and preferential treatment in their dealings with the government. It is NAPCO’s long-term goal to in- Their premier vertical powder coating system, has a continuous running production capacity of more than 2,000 kilograms per hour, which will enable NAPCO to address the region’s increasing demand for aluminium-based powder coating systems and meet specific orders for higher length profiles. Adding this new system to its existing horizontal line, the company will be able to accommodate up to 27,000 metric tonnes per year. To date, NAPCO, the only alu- minium extruder in Oman, is one of the three companies in the entire GCC capable of addressing the demand for powder-coated extrusions with profile lengths of up to eight metres. Jamshid says: “Our line only uses chrome-free chemicals and has been provided with all the necessary auxiliary equip- ment, air conditioned segregation for powder booth, wastewater treatment, de-mineralised double line, chiller and air compressor.” Time to expand NAPCO announced their expansion plans in July last year in line with the objective to increase market presence and gain wider reach across regional and international markets. Jamshid says: “We made the announcement following the decision of the company’s share- holders and Board of Directors to bring NAPCO to a whole new level by tap- ping into newer markets and introduc- ing more products and services. The move comes at a time when our recent performance indicators showed in- creased demand for NAPCO’s products.” The company’s expansion initia- tives will be implemented in three key phases to ensure that they increase their output and production capacity. Currently the company produces prod- ucts through two extrusion presses. To date, NAPCO has already exported a total of 70% of its output to key mar- kets such as the GCC, Europe, Africa and Asia. The first phase kicked off this year up until 2016. Construction is now in progress and phase one, which in- volves commissioning the first new ex- trusion press and new powder coating NAPCO factory in Oman
construction business news me MAY 2015 19 crease their current Omanisation level of 35% well beyond the minimum requirement. “Since our field is highly specialised, it is a challenge for us to find qualified personnel,” says Jam- shid. “This is the reason we highly in- vest in capacity-building programmes for the locals to equip them with the right skills needed by the industry. “We are 100% committed to help- ing Omani nationals achieve their full potential so that they will be able to make maximum contributions to NAPCO, their colleagues, communities and families.” NAPCO also works closely with the Ministry of Manpower and have selected 30 Omanis from the Mohsin Haider Darwish Training Institute to join their team in the coming months. “We want each employee, whether Omani or non- Omani, and stakeholder to feel proud that they are part of the NAPCO family.” Jamshid praises Oman’s Sultan, Qa- boos bin Said Al Said, and is inspired by his vision. He looks forward to the promise of “fruitful future” for NAPCO shaped and driven by “talented, ambi- tious and committed” Omani nationals. He adds: “Omanisation is not just a number for NAPCO. It runs far deeper than that.” Growth and development in Oman In Oman, one of the major trends Jamshid points out is the continuous rapid expansion of the local construc- tion sector thanks to the government’s steady investments in major infrastruc- ture projects, private sector-driven tourism development, and strong growth in the oil and gas industry. Vision 2020’s economic diversification strategy, meanwhile, provides new opportunities for growth and develop- ment along with the introduction of new reforms and increased industry transparency. “We know for a fact that the public sector is the largest procurer of con- struction services as demonstrated by the rising government-led transporta- tion and social infrastructure projects,” says the chairman. These improve- ments aim to better facilitate trade and reinforce the non-oil sectors. The government already earmarked an estimated US$77.68 billion for devel- opment projects as part of its eighth five-year development plan. Tourism has become a key source of revenue for Oman. He says: “By 2024, the sector’s contribution to GDP is expected to jump to 8.2% from 6.4% in 2013. The construction sector is projected to benefit from Oman’s bur- geoning tourism sector and the size- able new opportunities it presents.” Oman might be having a stable growth at the moment, but there are still changes in the construction market that need to be made. According to Jamshid, despite the country’s sound environmental law there is still a need to intensify green or sustainable initiatives in the industry. He says, “We need to introduce more sustainable construction programmes in line with the growing global eco-friendly movement.” He says that admittedly, the country must keep up with its neighbors in terms of implementing sustainable programmes within the sector. “Strict implementation of the country’s en- vironmental legislations and regula- tions across industries, including the construction sector, must be diligently carried out by concerned authorities.” He explains that supply pres- sure for materials eases when we widely promote the use of recycled resources. However, he admits that coordinated approach with regard to the approval of standards for recycled content must be strategically coordi- nated to ensure quality. Another challenge Jamshid points out is the exponential growth in demand for labour in the country. He says: “To attract qualified and pro- fessional expatriates, any state must increase the standard of living by providing a safe working environment, international curriculum schools, and suitable accommodation and leisure facilities, to name a few.” Finally even if the country has a booming construction industry, it requires a centralised logistics strategy to guarantee smooth flow of materials into and within the country according to Jamshid. “The government is work- ing towards this end as demonstrated by continuous infrastructure improve- ments in the Sultanate.” “Once the expansion is completed and fully operational with the first quarter of 2016, we are confident that NAPCO will make it into the top five GCC aluminium extruders...” Vertical powder coating line
CONSTRUCTION BUSINESS NEWS ME JUNE 2015 20 COVER STORY From building boats in the late eighteenth century to being home to one of the fastest growing construction industries today, Kuwait’s past turbulences seem too far away. It has parlayed its natural rich resources, hearing the soft voice of intellect, which has indeed led to an optimistic future for Kuwaitis as well as the globe, with whom the country has been collaborating effectively. By Giorgios Retsinas CONSTRUCTION BUSINESS NEWS ME JUNE 2015 20
construction business news me JUNE 2015 21 I t is not just the abundance of affluence that makes Kuwait a desirable destination, its resources support its prosperity and its stra- tegic location is just apt to greet the world. According to MEED’s proj- ect database MEED Projects, in terms of future projects, there are some US$116 billion-worth of projects planned or unawarded in Kuwait. Gearing up, the government has set a budget of $79.6 billion for 2015, which will be split between spend- ing on salaries, commodities and services, transport, construction and other expenses. Kuwait News Agency quoted the chairman of the National Assembly's state budget committee, MP Adnan Abdualsamad, stating that ‘$7.2 billion would be spent on con- struction...The budget, which runs from the beginning of April to 31 March 2016, has been set with the expectation that Kuwait will earn around $65 billion from oil revenues, which will provide around 90% of total income. It is also based on the premise of crude oil at $75 a barrel considerably higher than its current rate of around $60.Over the past year, contracts for several major projects have been awarded, such as the $12 billion clean fuels project to upgrade refineries and the $4.8 billion Kuwait International Airport expansion’. construction business news me JUNE 2015 21
construction business news me JUNE 2015 22 country is also focusing on improving its business climate and reduce red tape through the Direct Investment Promotion Law agreed by government at the end of 2014. Strengthening its belief on strong public-private partnerships, in October last year, Kuwait revised its PPP laws, establishing a clear regulatory frame- work for implementation of projects. According to reports, GCC is to witness construction projects worth $103 billion this year, an increase of 21.2 % over last year. Within this, Kuwait is expected to award about $47.2 billion of projects this year, almost double the value of those awarded in 2014 as the government concentrates on infrastructure. The Kuwait's Central Tenders Commit- tee had already awarded around $5 billion of tenders this year. According to Kuwait News Agency, the Com- mittee held 26 meetings which led to around 152 tenders being awarded though the vast majority of the tenders were in the oil sector with five worth $4.17 billion, were issued by Kuwait Oil Company. Last year Kuwait awarded $25 billion of con- tracts, four times as much as in 2013 and more than the last three years combined, stated the report by MEED Projects. The total value of Kuwait’s projects market (planned and active projects) is estimated to be in the region of $212 billion, it said. Another boost for the plethora of construction works is a new law which makes it uncomplicated to invest in Kuwait. There have also been dramatic changes which pamper new compa- nies to be set up in just 30 days. The COVER STORY Macroeconomic Forecasts (Kuwait 2013-2016) Indicator 2013e 2014e 2015f 2016f Real GDP growth, % y-o-y 1.9 2.7 2.6 2.4 Nominal GDP, USD bn 175.7 171.3 130.8 135.2 Consumer price inflation, % y-o-y, eop 2.9 3.0 3.8 4.0 Exchange rate KWD/USD, eop 0.28 0.29 0.30 0.31 Budget balance, % of GDP 25.5 26.4 17.0 6.1 Current account balance, % of GDP 39.7 34.3 12.2 12.3 “We expect the Kuwaiti economy to perform relatively well over 2015 and 2016, and retain our forecast for real GDP growth of 2.6% and 2.4%, respectively, from an estimated 2.7% in 2014.” – BMI Research Now the Partnerships Technical Bureau (PTB) will be superseded by the Kuwait Authority for Partnership Projects (KAPP), an independent gov- ernment body with greater executive powers in order to more effectively manage all PPP projects. According to KFH Research, the residential/non-residential construction sector is set to benefit greatly from
construction business news me JUNE 2015 23 these initiatives and the country’s will to diversify the economy and move itself up the hydrocarbons industry value chain. Also, Kuwait was one of the first countries in the region to an- nounce an increase in social spending in the wake of the Arab Spring and, buoyed by elevated oil production, researchers believe the government is well placed to sustain its social spend- ing commitments. The research identifies education as an emerging major new thrust of government policy. The country's healthcare development plan centres on the construction of eight public hospitals by 2016, in order to deal with the heavy pressure placed on the healthcare sector. Other develop- ments, such as a $160 million project to build nine towers to be annexed to hospitals, adding 2,000 hospital beds, suggest that there is political support for the necessary health- care drive. There is also a series of planned investments to overhaul medical facilities and health centres. Another sector which is not being ignored by Kuwait is tourism. The government had announced a five- year development plan for its tourism industry back in 2011. And since, the country has spent billions to fortify the sector. One of its major projects is the construction of a massive new terminal at the Kuwait International Airport. By 2016, annual capacity will jump from six million to 13 million, and then up to 25 million by 2025. And then there is the metro railway system. Kuwait’s metro is part of the Kuwait National Rail Road System project, which will be a 511-ki- lometre network. These developments will only compliment the growth of the construction business in the country. According to a BMI Research, ‘Kuwait has seen a flurry of popu- list legislation recently, including several measures specifically target- ing expatriate workers. This runs the risk of increasing uncertainty within the private sector, as well as cement- ing perceptions of the country as a hub of policy instability.We expect the Kuwaiti economy to perform relatively well over 2015 and 2016, and retain our forecast for real GDP growth of 2.6% and 2.4%, respective- ly, from an estimated 2.7% in 2014. After a long period of stagnation, the Kuwaiti investment outlook appears to be improving, while the prospects for consumption remain bright. How- ever, we again highlight Kuwait's ever-volatile political situation as the key downside risk to economic activ- ity. We forecast average consumer price inflation for Kuwait of 3.8% and 4.0% for 2015 and 2016 respec- tively, up from 3.0% in 2014. While we expect a slight fall in Kuwaiti food inflation over the near term on the back of lower global prices, a tight supply picture in the real estate market will fuel housing inflation over the coming quarters, in a trend seen across the GCC’. Given the positive mood, new and friendly laws, forward-looking statistics and a welcoming partnership from around the globe, time seems to be just right for the construction industry to boom further. Kuwait’s landscape has been changing, but it is time to widen the scope, higher. Top: Daniel Safarik, Director of the China Office for the Council on Tall Buildings and Urban Habitat Middle: Hussam Abdelghany, Associate Director at Atkins Right: Senior Sustainability Manager for KEO $2.6bn $1.8bn $1.2bn $1.2bn $1bn $.97bn $.96bn $.90bn $.88bn $.88bn Subiya Causeway Oil and Gas Pipelines from Mina Al Ahmadi Refinery to Kuwait Power Plants Kuwait project market Total value of projects planned or under- way = US$202B (MEED) Mubarak Al- Kabeer Seaport Project: Phase 1: Package 2 Al Zour South Power Plant Upgrade Jaber Ahmed al- Jabber al-Sabah Hospital Al Zour North IWPP: Phase 1: Power Plant Al-Jahra Road Upgrade Booster Sta- tion 171 Mina Al Ahmadi Refinery: Gas Fraction- ation Train 4 Jamal Abdul Nasser Development Project
construction business news me JUNE 2015 24 SUSTAINABILITY Painting the Cities GREEN
construction business news me JUNE 2015 25 In the 21st century, in many parts of the world, mankind has managed to hold the Malthusian disposition, which suggests that population increases faster than its means of subsistence resulting in disaster, unless population is checked by natural calamities or by people exercising control and having fewer children. What happens in another five decades will be too much of a foresight, but in another decade, humanity will survive, keeping reserves for sustenance W hile cities across the world are growing vertically, mankind will have to ‘unwillingly’ force itself to find ways to move away from conventional norms of infrastruc- ture development, and come up with unconventional ways, which is ‘health- ier, safer, economical and robust.’ The thought towards this end has been evolving over more than a decade or so - Going Green. But for some reason, its evolution has been dwarfed. Many proponents strongly vouch that ‘Green cities’ are the only way forward. They would be cities where renewable energy will drive every- day life and all the design elements that make for normal livelihood would have been given a stern warning to not emit anything harm- ful. The examples, though minus- cule, is already thriving, with pock- ets of the idea being implemented to quickly innovate with small but impactful results. For example, LEED is a beginning. Leadership in Energy & Environmental Design is a ‘green building certification programme that recognises best-in- class building strategies and practices. LEED certified buildings save money and resources and have a positive im- pact on the health of occupants, while promoting renewable, clean energy. To receive LEED certification, building projects must satisfy prerequisites and earn points to achieve different levels of certification.’ Then there is BREEAM (Building Research Establishment Environmental Assessment Methodology), ‘the world’s longest established method of assess- ing, rating, and certifying the sustain- ability of buildings.’ Green Building Initiative (GBI) is ‘a nonprofit organ- isation that administers green building assessment and certification services in the United States.’ In the Middle East, there is Estidama. ‘Abu Dhabi's Plan 2030 establishes a clear vision for sustainability as the foundation of any new development occurring in the emirate and Abu Dhabi. Estidama promotes a new mindset for building a forward thinking global capi- tal. To establish a distinctive overarching framework for measuring sustainability performance beyond the usual plan- ning and construction phases, Estidama assures that sustainability is continually addressed through four pre-defined angles: environmental, economic, social and cultural.’ Qatar has one too. The Qatar Sus- tainability Assessment System (QSAS) is ‘a green building certification system developed for the State of Qatar.’ So, while world over, there is a certain level of interest to go green, the effort still is in its dormant stage, even though its benefits seems to be attractive. The Green Economics By taking the example of LEED building, one may not be quite im- pressed with the kind of value that is derived from an investment point of view. The certification focuses entirely on designs that ensures minimal damage to the environment, ignoring the humongous damage to the owner’s bank account. Often, when a LEED rating is pursued, the cost of initial design and construc- tion rises. Also, there may be a lack of abundant availability of manufac- tured building components that meet LEED specifications. But then that is what comes out in the short-term. Those looking in the long-term perspective would be more than proud with the initial spend. Ac- cording to a McKinsey survey covering 15 well-developed green-district tech- nologies, covering buildings, waste, water, transport, and utilities, ‘green districts are economically viable. The difference is not so much a matter of cost as of timing. For example, installing a combined-heat-and-power system costs about twice as much as a conventional natural-gas system. But the operating costs are less than half, and the payback on the higher incurred costs is about five years. And that does not even take into account the associated environmental benefits, such as 30 to 50% lower emissions.’ Research shows that investing in technology that conserves an ecologi- cal balance by avoiding depletion of natural resources, can substantially escalate the resale price by reducing annual costs and ensuring that the building is less expensive to maintain for a new occupier.
construction business news me JUNE 2015 26 SUSTAINABILITY The Green Environment No doubt that green cities are bound to abide by its very core principle - be environment friendly. It is widely ac- cepted that most buildings today have a huge impact on our environment. According to an official District of Columbia (DC) report on green build- ings, it is estimated that about 40% of raw materials consumed globally are used by the building construction in- dustry. ‘In the United States, buildings are responsible for approximately 68% of total electricity consumption, 38% of carbon dioxide emissions, 12% of potable water usage, and 272 million tonnes of construction and demolition waste annually,’ the report indicates. Given these unpleasant but true statistics, proponents of green build- ings have a reason to rejoice - their solution guarantees lower operational costs, enhances asset value, improves risk and liability management, and build brand equity and reputation. The DC report suggests that many of the principles of sustainable design lead to longer building lifetimes and better adaptability of the building for future uses that cannot always be foreseen. ‘Maximising water efficiency in buildings and surrounding land- scapes saves money and reduces their environmental impact. More effective and efficient water use can provide additional benefits by recharging groundwater and growing healthy landscapes. Increased energy efficien- cy saves money, improves air quality, conserves natural resources, and cre- ates a healthier ecosystem for every- one. Innovations in energy technology make incorporating high-efficiency mechanical and lighting systems easier and greatly reduces a building’s energy consumption. Developments in renewable energy makes on-site use of solar, wind, geothermal, and other technologies feasible and several incentive programmes are in place to help projects take advantage of renew- able options.’ McKinsey report concurs. It em- phasises that “green districts have the greatest potential to produce economic savings in areas with high resource demands and costs.” For example, technologies for reducing water use have a much faster payback period in the desert nations of the Middle East than in regions with more water.’ The Green Life If we were to venture in to South Pole, we would clearly make out the differ- ence in the air - it is clean, probably the cleanest we can ever get to breathe air in the whole globe. But there too, pollu- tion around the world has caused a hole in the ozone layer. So, in a decade, you may just stay where you are, Antartica will be as polluted. The Blacksmith Institute in collabo- ration with Green Cross Switzerland recently evaluated the most dangerous pollution problems we face today. As a result, they put together a top ten list of the most deadliest factors - ground- water contamination, industrial mining activities, metals smelters and process- ing, radioactive waste and uranium People with face masks due to severe air pollution in Beijing, China
construction business news me JUNE 2015 27 mines, untreated sewage, urban air quality, used lead acid battery recycling, contaminated surface water, indoor air pollution and artisanal gold mining. All of them are the result of the evil created by mankind. But for some rea- son, they are necessary evil. According to an estimate by World Health Or- ganisation (WHO), ‘air pollution kills about seven million people worldwide every year, with more than half of the fatalities due to fumes from indoor stoves.’ The agency said air pollution caused about one in eight deaths and had now become the single biggest environmental health risk. ‘One of the main risks of pollution is that tiny particles can get deep into the lungs, causing irritation. Scientists also sus- pect air pollution may be to blame for inflammation in the heart, leading to chronic problems or a heart attack.’ But if the green concepts were to applied in tandem across the world and with as much impetus as is re- quired, then it could all change. Take Calgary, Canada for instance. It is ‘considered’ to be the world’s cleanest city. ‘Even though there is a large oil and gas industry in the area, the city features a well-planned out, grid-like structure that reduces traffic congestion. It also features light rail transportation, and transfer stations that sort through garbage and take out biodegradable and recyclable materi- als.’ Then there is Honolulu, Hawaii. It has ‘a light manufacturing industry. The American Public Transportation Associationhas highlighted Honolulu for its transit system, which includes dedicated bus lanes. By promoting bus travel, Honolulu has been able to reduce traffic and exhausts fumes.’ And although Helsinki is ‘a fairly large city with more than 500,000 inhabit- ants, it has the feel of a much smaller city thanks to the fact that the light rail commuter system is so well used. Helsinki residents take pride in their city and do a lot on their own to make sure the city stays clean. The streets are wide, which makes them less prone to congestion and reduces fumes from cars.’ The Green Future It is difficult to go green. No won- der, the idea, however moral and healthier, is not taking up as it should have been in an ideal world. We are not living in an ideal world because our life is accustomed to certain norms, however unhealthy or illogical it may be. The biggest brands of eateries and cold drinks have been widely shunned by nutritionists of promoting junk food. But we have more than wel- comed it. Smoke and alcohol have proven itself to harm, but we have increasingly had pleasure with the hazy stupor. Similarly, builders and developers have been used to a particular model all through their lives. They have relied on conventional materials and always lived with the model of build and sell, as quickly as possible. The will to change for a better model and thus a better world is non-existent. The initial cost is what is a let down, but if there is some dramatic shift in thinking, probably, it will go a long green way to the future, a much secured one for many more millenniums, till the time when even “green” comes up with some form of evil. “Air pollution caused about one in eight deaths and had now become the single biggest environmental health risk.” – World Health Organisation Calgary skyline, Canada
CONSTRUCTION BUSINESS NEWS ME JUNE 2015 28 ANALYSIS Until recently, the US$ 140 billion Gulf Railway project has only been a historic vision in-the-making, stirring much excitement for its potential to revolutionise trade and communications within the seven- state customs union. But as the wait for a concrete blueprint outlining its execution continues, it is the next few years that will ultimately decide how close this vision is to truly becoming reality By Giorgios Retsinas STANDING AT THE BRINK OF A RAIL REVOLUTION
construction business news me JUNE 2015 29 W hile the GCC may be a century or two late in hop- ping onto the bandwagon, it isn’t entirely foreign to the notion of rail transport. In fact, the presence of locomotives in the Gulf, though having eluded the majority of its coming- of-age urban capitals, dates back as far as back as the 20th century when the then ruling Ottoman Empire established the celebrated Hejaz Rail Link to transport pilgrims from Damascus in Syria to Makkah in Saudi Arabia for the annual holy pilgrimage of Hajj. Since its destruction in World War I, however, there remains only a single surviving relic of the region’s limited foray into railways- an independent cargo line that con- nects the Saudi capital of Riyadh to the coastal city, Dammam, in the Persian Gulf. Despite its partial coverage of the eastern city of Hardh, the prized rail link has no path through Jeddah, Tabuk, and Rabigh, thus having, for long, created a pressing need to set up a complementary line that would aid the shipment of goods, and growth of industry in general,
construction business news me JUNE 2015 30 ANALYSIS fuel, even when oil prices began to soar in other parts of the world, pro- pelled travel by road as the primary means of transport in the region. The relatively small geographical size of the Gulf nations also did not set a strong precedent for high-speed rail travel and the hefty investments its establishment would entail, produc- ing promising returns for its operators only in the long run. The turning point arguably arrived with the dawn of the 21st century, when the GCC states began to reap the advantages, and also face the challenges of the extensive pace of urbanisation they had embraced in the preceding decade, such as rampant population growth and escalating congestion on existing road and infra- structural networks. Freight and cargo conveyance also emerged as a priority as several countries expand their mining and raw material industries, additionally providing a long-awaited boost to inter-GCC trade which cur- rently stands at less than 10% of total business within the region. The search for alternative modes of surface transport inevitably began with rail travel, though the most decisive push for a full-fledged regional network only arrived with the inauguration of the landmark Dubai Metro in the UAE and its extensive subsequent success, alleviating all fears about the feasibility of operating such a service for travel within and across the GCC. The pace of the Dubai Metro’s development, which was concluded Welcoming a new era of mass transit Despite these distinct advantages, the Gulf had a longer road to conquer before becoming positively rail-ready. For one, rail transport had been wide- ly viewed as a superfluous ‘accessory’ rather than an absolute necessity to economic progress in the Gulf for the better part of the past century. The inherent rationale behind this was a complete lack of prior infrastructure or expertise in the field on which to build upon, coupled with the difficulty of establishing one given the region’s troubling geographical circumstances, such as shifting sand dunes and volatile ground surfaces in the harsh desert environment. The onset of the hydrocarbons industry did not help matters either as the availability of cheap, subsidised “It is an interesting time to observe the development of the strategies. The clients are informed and ambitious. They would like to receive the best that they can get and they should. We need a system that looks good in 10 years’ time and is sustainable in 20 years to come” - Arash Aghdam, MENA Director of Rail and Transit at Parsons Brinckerhoff along one of the most significant com- mercial belts in the Kingdom. Even so, the factors that have driven the prospect of a national, and in due course, regional-level rail network across the GCC from a mere idea to a tangible possibility are as many and diverse as the number of nations in the council itself, not the least of which is the vast economic benefits it is bound to offer. Besides being about 30% cheaper, rail transport is also considered to be a more eco-friendly alternative, utilising 60-80% less energy per kilometre than road transport, according to a recent statistical analysis by global agency Frost & Sullivan. It also produces 80% less carbon dioxide emissions and 9 times less noise damage, with one freight train carrying about 1,000 tonnes of cargo replacing the use of 50 trucks by road.
construction business news me JUNE 2015 31 in 2009, set a new precedent for the realisation of the Gulf Railway, a target completion date for which has been set in 2017. Plans for national-level rail networks, which are a crucial prelude to the foundation of a region-wide link, were soon announced, including the $11 billion Union Railway cross- ing all seven emirates in the UAE, as well as nine individual rail links in Saudi Arabia, besides an additional, much-anticipated line connecting the Kingdom to Bahrain. Other GCC countries have been surprisingly quick to catch up, such as Oman which has put in place a massive $10 billion plan to estab- lish far-reaching and accessible rail connectivity throughout the nation. Kuwait, which has thus far been found to lag behind infrastructural develop- ment due to lingering elements of disharmony and tensions within its internal political fray, is eager to shake off its lethargy with the launch of two ambitious projects worth a combined $17 billion set to become operational in 2020 in order to complement its massive housing development spree. In spite being one of the GCC’s smallest economies, Bahrain was among the first to catch the ‘rail-fever’, announcing plans to launch a mono- rail network across its capital city of Manama shortly after the launch of the first phase of the Dubai Metro in 2009. Today, the country’s investments in the area total nearly $9 billion, with the first phase commissioned for completion as early as 2016. Tribulations abound While the Gulf nations may have strongly entrenched their commit- ment and determination to realising the $148 billion dollar mega-project, taking all preliminary measures to fol- low through with the plans within the past few years, there is evidence that doubts surrounding its timely comple- tion are not completely unfounded. Construction works on the majority of initial phase developments are yet to begin in all but the UAE and KSA, and even though budgets have been announced and feasibility studies con- cluded, plans to finance the projects are yet to be fully determined as over- seeing authorities for each country’s rail endeavours contemplate the extent and nature of private sector involve- ment. Public funding, mostly from sizeable budget surpluses generated by buoyant international oil prices, is expected to cover a significant propor- tion of the costs, especially as PPP (Public Private Partnership) financing models continue to be an oddity in the region, having suffered another debili- tating setback in the global economic events of the past few years. Another major hindrance that has already proved costly to the project in terms of delays, cost overruns as well as conflicts in procurement procedures and strategies is the lack of a common authority managing the seamless in- tegration of the national-level railway systems. After much idle speculation and vague timeframe announcements, a final, definite deadline of 2014 was mutually agreed upon by member states early this year, thus allowing decision making across the individual rail authorities to successfully become streamlined and pave the way for implementation of unified standards and specifications throughout the regional network. “The railway industry in the GCC is at its early stages of development,” states Arash Aghdam, MENA director of rail and transit at Parsons Brinck- erhoff, a US-based pioneer in infra- structural development that is closely involved with the project. “It [the railway system] has to fit the purpose of the GCC and its various member countries. The timeframe is unknown (for the projects) but the mandate is huge,” he adds in a statement to Zawya, effectively summarising the outlook for the project. “It is an interesting time to observe the development of the strategies. The clients are informed and ambi- tious. They would like to receive the best that they can get and they should. We need a system that looks good in 10 years time and is sustain- able in 20 years to come,” concludes the executive.
IN THE FIELD Mustafa Pooya, Chief Commercial Officer of Select Group discusses the company’s latest project Marina Gate situated in the Dubai Marina. He talks about the progress made since design and how the building represents community building and comfort COMMUNITY BUILDING T he Residences at Marina Gate, an upcoming three- tower project by Dubai-based property developer Select Group, will be occupying one of the last remaining plots in the coveted neighbourhood of Dubai Marina. Looking at the rising towers in Dubai Marina in the last decade, the new development is likely to be the final opportunity to purchase luxury wa- terfront property in the area. The project consists of three residen- tial towers with connected walkways for retail and a wide range of recre- ational amenities including swimming pools and spa areas located on the ground, mezzanine and podium levels. Proud of the latest development, the CEO of Select Group Rahail Aslam says: “The AED3 billion three tower project represents our tenth, eleventh and twelve residential development in the Marina.” He says that Marina Gate overlooks the marina, the sea or the cityscape and this is an exclusive opportunity to purchase a new property in such a prime location.
construction business news me JUNE 2015 33 Architects – AEDAS One of the five largest international architectural firms in the world, the firm provides architecture, interior design, landscape design, urban design and masterplanning, along with graphics services to a wide range of developments span- ning across mixed-use, office, retail, residential, hotel, infrastructure, education, civic and culture, and urban planning. Some of Aedas notable works include the Dubai Metro Station, Ocean Heights in Dubai Marina and Al Bahr Towers in Abu Dhabi. Construction work at Marina Gate tower one Not an architectural wonder but a home Mustafa Pooya, Chief Commercial Officer at Select Group, says that the location of Marina Gate is ideal. It is placed near the original marina next to iconic towers like Cayan Tower and towers by Damac. Though Pooya admits that Marina Gate is not going to be an iconic building praised for its stellar structural design. He says that creating an iconic building is not really the purpose. “We want to build some- thing classic and timeless.” Architects on the project, Aedas, have been very thoughtful when it comes to the design. Pooya says that it is simple yet elegant and very well designed. He says that the archi- tects designed the building from the “inside out,” which means that the building is not just designed to look beautiful on the outside but made convenient and enriching to live in. Keeping the future residents in mind, the project is designed to deliver a good quality of life rather than just shallow exterior beauty. "The apartments are designed to add value to the quality of life," Pooya says. For example, the space looks richer with floor to ceiling windows that accentuate the view of Dubai Marina. Architects have made sure that every opportunity the residents have to see the view is grabbed. Pooya also talks about how Select Group has introduced more three bed- room apartments than one and two. He says that though three bedrooms are harder to sell, they are looking at their long term goal when making a conscious decision to increase the number of three bedroom apartments in the project. He says: “The people who choose three bedroom apart- ments are in the city for the long term, and Select Group wants Marina Gate to build a community of people who are here to stay. The idea is not just to build a project but a community.” Along with building a community, Pooya also knows the importance of the trending buzzword “sustainable.” The Residences at Marina Gate are be- ing developed in compliance with the Dubai Green Building standards. He says that although they are incorporat-
construction business news me JUNE 2015 34 to save consultant costs, as well as cuts in construction costs. For the Marina Gate development, Black & White Engineering have cre- ated an efficient MEP design. Hopefully, this energy efficient residential building design and associated cost evaluations can be used as an example to future developers and investors to bring green building discussions on to the agenda before the concept is dismissed as an unaffordable or wishful list. The mechanical and electrical design incorporates highly efficient plant and equipment which will ensure reduced energy consumption and carbon emis- sions (when compared to a traditional residential buildings). Residents will also in turn appreciate the savings on their utility bills. In addition, the efficient design has reduced the number and type of motors in the building as a whole which will contribute to a reduction in noise pollution in the development. The design also necessitated closer control of all aspects of the buildings’ ventilation systems and as such the ’on-demand’ ventilation is actually capable of providing ventilation when and where it is actually needed, all of which contribute to a more liveable environment. Construction underway Select Group has awarded an AED1 billion contract for the first two phases ing quite a few of the LEED require- ments, they will not be applying for a LEED certification at this stage. Efficient design and cost saving The majority of buildings in the region are known for their excessive en- ergy consumption which usually falls short of all internationally recognised benchmarks and environmental recommendations. Aside from lack of the residents’ energy awareness, there are numerous design reasons for this shortcoming including designer aware- ness, insufficient modelling, inefficient equipment selection, lack of building management systems, correctly imple- mented commissioning, etc. However, the main underlying theme usually relates to a lack of innovation by adopting previous inefficient designs “Creating an iconic building is not really the purpose. We want to build something classic and timeless.” – Mustafa Pooya, Chief Commercial Officer at Select Group Final design of Marina Gate IN THE FIELD MEP Contractors – Black & White (B&W) Launched in 2007 as REME (or Red), the UAE based B&W became an independent company in 2014. B&W has extensive experience in producing energy efficient, practical electromechanical designs that are feasible, robust and meet the exacting demands of the local conditions. The company is a fully licensed MEP design consultancy in the UAE and is capable of making direct submissions to UAE authorities. Clients can therefore have confidence in knowing that no third-party involvement is needed to gain official ap- proval for their MEP requirements. Some of the projects B&W has worked on include the Muscat International Airport MC2, Dubai Festival City Phase 2B, Barclays Capital Riyadh, and Al Jalila Research Building.
construction business news me JUNE 2015 35 of its flagship Marina Gate develop- ment in Dubai Marina. The contract has been awarded to UAE based Alec contractors who have won a number of awards for their projects. The project will be jointly executed in collaboration with Related Busi- nesses, Alemco and Alec Fitout. The full development consists of three high-end residential towers and retail area and stands at the gateway to Dubai Marina. The construction of the first tower, Marina Gate I commenced in the beginning of March this year with the second, of the three towers, Marina Gate II construction planned to start four to five months later. Marina Gate I was launched in April 2014 and was sold out within weeks of the launch. In light of the success of Marina Gate I, Select Group launched Marina Gate II in October 2014, which was also exceptionally well-received by investors. The two projects com- prise 881 residential apartments, 19 penthouses and 18 duplex Marina Vil- las in addition to 100,000 square feet of retail space. Under the terms of the contract, Alec will provide a clearly defined scope of construction management services to Select Group for what is expected to be a quality development project. The Residences at Marina Gate are valued at over AED4 billion and have a built up area in excess of 3.8 million square feet. The project is scheduled for completion by 2018. “Awarding a contract of this quan- tum early on is not only a reflection of our confidence in Dubai’s real estate market, but is a culmination of our detailed financial and techni- cal planning work over the last two years, which has been reinforced by the strong investor appetite for this project,” says Rahail Aslam, CEO of Select Group. Experience in the region Select Group, the largest private developer in the Dubai Marina area, has worked on major projects like Marina Gate in the UAE, UK and across central-eastern Europe since its establishment in 2002. Select Group’s has nearly 3,000 property units in total already delivered, and a further 2,000 units to be delivered during the next 12 months. Pooya says that Select Group has 12 to 13 years of experience in the real estate sector in Dubai, and one place they don’t go wrong is choosing locations for the proj- ects. Every project has been built in Dubai Marina since the company’s formation in 2002, and the reason according to Pooya is because Dubai Marina is one of the most luxurious and liveable locations in Dubai. He says: “What is different about Dubai Marina is that real estate prices vary for almost every building.” Aslam says, “Select Group’s com- mitment and passion for property has not waivered even though the sector has faced financial adversity. Our aim as a group is to continue our com- mitment and passion by providing quality developments at every level.” As Dubai picks up momentum in the property sector, the time is right for developers to build on consumer and investor confidence. Main Contractors – Alec Alec has a wide range of construction projects such as airports, retail, themed hospitality and commercial sectors with operations in Abu Dhabi, Dubai, Qatar and Oman, ALEC has delivered developments including Concourse A of Dubai International Airport, Yas Waterworld Abu Dhabi, Dubai Marina Mall and The Address Hotel Apartments. Alec functions as a main contractor on projects like the Marina Gate, however it has also established related businesses which complement its core activities including Alemco, an electromechanical services business; Alec Fitout that specialises in fit out and refurbishments and Alec Precast, specialists in civil and architectural precast.
36 construction business news me JUNE 2015 How do we demonstrate disruption, and how do we value it? It’s a conundrum so many construction professionals have faced. Craig Gibson writes F irst of all, remember that delay and disruption are not the same thing. Disruption is the effect an event (or a number of events) has on the efficiency and productivity of a project. Delay and disruption events can be very similar in nature; such as receiving design informa- tion late or drawings being uncoordinated but they are not the same. There are two kinds of disruption claims. The simplest is when a non-critical activity is disrupted, so the activity takes longer, but float time allows for the project not to suffer critical delay. The lack of efficiency in completing the activity will lead to a greater cost but, because time is not critical, there is no delay and the contractor is not entitled to an extension of time. A more complex predicament, is when cumulative and extensive disruption leads to what may previously have been a non- critical activity becoming critical, resulting in delay and prolongation of the time for completion. In this event, the contractor is entitled to an extension of time, and the demonstrable prolongation costs associated with it. As disruption does not always delay the time for completion, its assessment is not as simple as prolonging the particular activity as contractors often claim (as they would for a delay claim). So how does one explain what he wants? A contractor would normally pursue a dis- ruption claim based on impeded efficiency, loss of labour productivity and the uneco- nomic use of equipment. The problem is that these aspects are often extremely difficult to assess because they are reliant upon comprehensive records; not only the records kept through the execution of the works but also records that were used when tendering for the project. The contractor needs to demonstrate his pre-contract calculations of the anticipated productivity for labour, plant and so on were reasonably accurate. The reason this is so important is because the only way to prove disruption is by compar- ing the anticipated figures with those actually achieved. A strong disruption claim requires the following pre-requisites: i. Analysis of the activities that suf- fered disruption. Simply saying it was, doesn’t make it so ii. Establishing the cause and effect of the disruption iii. Reasonable evidence that the disrupted activities planned in the tender were correct; including the anticipated output, resources and time to complete iv. Sufficient calculation of how and why the impacted activities suffered disruption through inefficiency v. Demonstration that the duration logged in labour and plant time sheets matched what was really happening on site Records, records, records… If the contractor has correct records avail- able, he can readily calculate the cost of disruption by simply subtracting the num- ber of hours his tender anticipated from the number of hours actually worked, then multiplying the result by the cost of the particular resources disrupted per hour. Nevertheless, and as per (iii) above, the contractor should also be able to dem- onstrate clearly that the number of hours originally anticipated were realistic and that he has tried to mitigate the effects of the disrupting events. In the event the contractor doesn’t have such sufficient records throughout the proj- ect, he may look to support his claim for disruption by comparing work performed in one particular period that was adversely affected by events which evidently resulted in a loss of productivity and efficiency. The contractor would need to have ac- curate records as those referred above for his disruption claim to be credible. How- ever, if he is in the midst of a project that historically has not kept sufficiently good records, a special effort could be made to improve the records thereon and focus his claim on that period. Acceleration? When acceleration of the progress of the works is required, the cost may include the expense of working additional hours, providing additional labour, providing additional or different equipment, and advancing the date of delivery of manufac- tured elements. Notably, the contractor will likely suffer disruption as a result of accelerating his work through loss of productivity due to the dilution of supervision (more labourers per supervisor), and the lack of sufficient detailed design information to support the accelerated work. As per (ii) and (iv) above, this needs to be supported by calculations. At project level, many prolongation and disruption claims are presented as an all-encompassing “global” claim for com- mercial or resource reasons. However, that is unadvisable if the claim goes so far as arbitration. To succeed at arbitration, a global claim must demonstrate that it is not possible to disentangle cause and effect and is therefore a last resort to demon- strating loss: the risk with this is that if the contractor doesn’t push the tipping point of probability in his favour, he risks all of his claim falling away. As for the conundrum; records, re- cords, records! Craig Gibson, MRICS MCIArb MScL LLM Pg. Dip. Law BSc (Hons). He is dual-qualified in law and quantity surveying. A Chartered Surveyor with experience of ICC and DIFC arbitrations and a passion for simplifying construction, commerce and conflict. Disrupting solutions COMMENT
CONSTRUCTION BUSINESS NEWS ME JUNE 2015 38 FACILITIES MANAGEMENT T he FM Expo 2015 took place at the Dubai World Trade Centre from May 18 to 21 and brought togeth- er industry professionals from the facilities management (FM) sector under one roof. During the four-day event, research papers and the FM Congress highlighted some of the major developments in the sector and key drawbacks as well. British Institute of Facilities Management (BIFM) commissioned a white paper in association with FM Expo and ifm.net, which shows a positive outlook within the FM market in terms of expectations for growth in business turnover and opportunity for future training and qualifications. The paper, ‘The Middle East FM Business Confidence Monitor,’ indicated the confidence of FM employees in the region of a pay rise and expansion of workforce. It found almost 51% of the employees were confident of an increase in sal- ary in the next 12 months, and 61% who believed that their workforce will increase during the same period. The study also revealed key oppor- tunities for training and professional qualifications, enabling FM compa- The growing importance of the facilities management sector could affect the construction and real estate industry as a whole. Experts say that the neglected sector now has a chance to be an industry leader if it makes the right decisions about technological advancement and innovation. Lorraine Bangera writes INCREASING FACILITIES
construction business news me JUNE 2015 39 nies to meet the demand for profes- sional workforce and at the same time help address business challeng- es of recruiting and training staff. Jaafar Shubber, Senior Project Manager of FM Expo says that the report shows a high confidence in the region’s FM services where 41% were positive about the cur- rent FM business environment and 57% believed that their FM budget will increase in the next one year. “This highlights how important FM Expo, brings the industry together to talk about how to capitalise on this growing industry.” Gareth Tancred, CEO of BIFM, says: “The story emerging from this report is a positive one for the FM industry in the region; it’s a picture that we have seen in the UK ver- sion of this study. What is clear though is that there is going to be an increasing demand for talent to take advantage of the many oppor- tunities and it will be the organisa- tions that take a long term, stra- tegic approach to the recruitment and development of their FM talent that will reap the rewards.” The FM industry has witnessed a boom in recent times as the industry is being estimated at AED20 billion per annum by 2016. The rise stems from an AED155 billion turnover in the construction sector for the year of 2015 owing to the thriving construction, hospitality and aviation sectors in Dubai. Rapid construction developments, building infrastructure for airports, roadways, parking, ports and railways have resulted in never- before demand for the FM and its allied industries. Even though there has been an increased interest in FM, it is not enough to get the attention of the developers and policymakers who “The fundamental economic drivers, coupled with government’s ambitious regulatory plans suggest to us that after many years of failing to deliver on its potential, the Saudi market is about to emerge into the giant it has always promised to be.” – Alistair Stranack, Partner at Credo Business Consulting
construction business news me JUNE 2015 40 FACILITIES MANAGEMENT are responsible for operating costs that affect the service providers. Elie Matar, Head of Electricity at Dubai Regulatory and Supervisory Bureau, says that FM managers understand the working of a build- ing better than anyone else. He says that policymakers and govern- ment entities have a satellite view of a building, they don’t understand the working of a building entirely. While de- velopers or property owners have a helicopter view where they can see and understand a building better. Facilities manag- ers, however, have a ground view of a building. He says that they understand the actual working of the building and its lifecycle. As the construction industry moves to a more sustainability oriented direction, the FM industry, Matar says needs to leave its con- ventional methods and catch up. He says if an FM company decides to make a change they can not only be successful but also lead the way in the industry. Hayen Sayed, CEO of ETA, says: “FM is a young industry in the Middle East, even though in the last 20 to 25 years there has been a quick growth.” According to him, it is important to move with the technological advancement in similar industries. He explains that as new technology comes into the market, FM companies must learn about them. Though he agrees that FM companies are showing signs of change and investments are being made in technology. Linda Engstrom-Condon, Associate Director and Head of Assets & Facili- ties Management Consultancy of AE- COM Middle East, says: “Technology and innovation go hand in hand. It is a big part of innovation. In terms of innovation, what gets lost is our impact in the industry.” She says that the industry has a certain social responsibility because FM professionals work in spaces people work and live in. But in order to improve FM services and invest in better technology, FM providers need better budgets. The developer needs to in- crease capital investment by 10 to 15%. Engstrom-Condon says that it is tough to get the client to invest more towards operating cost especially be- cause they want to start saving on cost by the time the building has been built. Setting a standard in the industry could help but Engstrom-Condon thinks that standards are only as good as the company. “Sometimes a standard could be a barrier to in- novation because you tend to stick to thinking inside the box.” However she praises the region as opposed to the competitive market in the UK. She says that here people are more open and willing to share best practices and innovative solu- tions as opposed to mature markets in the West. She admits that this region is going through a transition which is a really good spot to be in. She says: “With the theme of the World Expo 2020 being innovation, it makes Dubai the hub for everything innovative. Even though it is a young industry, given a few years it will be at the forefront.” Her advice to FM professionals who wish to evolve with the market Decision Making Operations and Use Implementation “Sometimes a standard could be a barrier to innovation because you tend to stick to thinking inside the box.” – Linda Engstrom-Condon, Associate Director at AECOM Facilities Management Kingdom tower in Riyadh, Saudi Arabia.
construction business news me JUNE 2015 41 is to “be curious, try new things and don’t stick to the box.” Case study – Saudi Arabia A research paper released this May by Credo Business Consulting and Middle East Facilities Manage- ment Association (MEFMA) reveals that facilities management (FM) in Saudi Arabia represents 55% of the FM market in the GCC, and will be worth US$29.1 by 2017. Alistair Stranack, Partner at Credo Business Consulting, says that trends in the private and public sector suggests that the FM industry must realise its higher potential and shed its low- cost quality image. Currently the industry is worth $20.1 billion, according to Credo and MEFMA, and it has also forecasted a growth based on new infrastruc- ture projects coming on board as well as noting the consequences of a government initiative launched to improve the standards of FM. If predictions are right, the 13% annual growth of FM in Saudi Arabia would make it the largest market in the Middle East. Stranack says: “The fun- damental economic drivers, coupled with government’s ambitious regula- tory plans suggest to us that after many years of failing to deliver on its potential, the Saudi market is about to emerge into the giant it has always promised to be.” He says that this region has one of the highest margins in terms of bud- geting. “UAE has budgets up to 15 to 30% which is a dream come true for the UK where it is only 10 to 15%.” When comparing the UAE with Saudi Arabia, he says that the UAE is developing quickly whereas Saudi Arabia is still right at the beginning phase. Though UAE and Saudi Arabia combine account for 80% of the industry in the GCC and have strong potential to grow over the next five years. However, there are challenges to be overcome during development. Cost driven customers award con- tracts to the lowest priced contrac- tors which creates a false economy and diminishes the value FM could add to the building’s life cycle. Talent acquisition and training were also cited as barriers holding back industry development, as was a lack of regulation. Stranack says: “Saudi Arabia’s market remains unso- phisticated with much of the market being served by labour supply com- panies.” One of the main reasons this is true, according to him, is that training in the country isn’t exist- ing especially in FM and operations. He says that most Saudis would like to work in key positions but FM is looked at as an unattractive career option. Nevertheless, Stranack says that this could change through two key trends; firstly through the massive increase in infrastructure development in Saudi Arabia; and secondly the government are taking an active role in promoting FM. However, Mohammed Al Duraibi, the CEO of Da'em Real Estate Invest- ment Company and a MEFMA board member says this will change. He says that whilst current regulation has been a barrier to growth it can become a catalyst for development following a Saudi Government initia- tive to upgrade the quality of FM across its estate. “Set up by Royal Decree, NCLOM will introduce inter- national best practice in operations, cost control, monitoring and mea- surement and supplier accreditation.” FACTS & FIGURES • FM in Saudi Arabia represents 55% of the GCC market • FM in Saudi Arabia will be worth US$29.1 by 2017 • FM is estimated at AED20 billion per annum by 2016.
42 construction business news me JUNE 2015 The commercial fit-out industry needs to join the UAE's green revolution. Marcos Bish writes A s a fit-out contractor special- ised in green and sustain- able office interiors in the UAE we are encouraged by the green ambitions of the leadership. The country has just been rec- ognised as “an exemplary model of leader- ship in the green economy regionally and nationally” in a report released last month by The Climate Group, a London-based environmental non-profit organisation. This is due recognition of the country’s focus on sustainable development outlined in its national strategy UAE Vision 2021. This national strategy really reinforces the need for the commercial fit-out industry to lead the development of sustainable workspace in the region. One of the objec- tives of UAE Vision 2021 is to enhance the adoption of international sustain- ability standards in the country. What a great opportunity for our industry to raise awareness of green interior certifications and press for specific legislation region- ally, following the example of Europe and North America. Green interior certifications deserve the same level of consideration as green building certifications, namely a mandatory status, anywhere in the world. The vision also outlines a comprehensive set of 22 national key performance indica- tors that pave the way for the country’s green revolution. Two indicators deserve our industry’s closest attention. First, the Air Quality Index (AQI) is a daily measure of the quality of air, in terms of pollution and the negative effects it may have on human health. The indicator measures the four main air pollutants: nitrogen dioxide, carbon mon- oxide, sulphur dioxide, ozone. Under the strategy, the objective is to increase the AQI equivalent from 55% in 2013 to 90% by 2021. I think indoor air quality could become a supporting metric of the AQI. This is because there is a direct relation- ship between indoor air quality, produc- tivity and employees’ wellbeing. The second indicator is the Happiness Index, which measures the opinion of individuals about standards of living and life satisfaction. It includes factors such as income level (GDP per capita), average healthy life expectancy, social support, ab- sence of corruption, and freedom to make life choices. The UAE is among the happi- est countries in the world according to the 2015 World Happiness Report published by the United Nations Sustainable Develop- ment Solutions Network. The country ranks 20th out of 158 and tops the list of Arab nations. There is now lots of research showing that happiness and wellbeing at work not only impacts employee produc- tivity and company profitability, but also spills into a person’s family and social life. Workplace design is an important factor influencing wellbeing at work. Our physi- cal environment in terms of natural light, levels of comfort and having space for col- laborative or private work affects employee motivation and their overall perceptions of the workplace experience. The vision offers an opportunity to encourage the adoption of green and sus- tainable office interiors in the region. It also provides a springboard from which we can develop mandatory green interiors certifica- tions, raise awareness of the correlation between wellbeing at work and workspace design, and make indoor air quality a prior- ity. We want all of our industry colleagues to share our passion. Sustainable develop- ment needs the support of all stakeholders. And when it comes to commercial fit-outs we think it needs to become the only ac- ceptable approach. Marcos Bish is the Managing Director of Summertown Interiorsn a fit out contrac- tor based in the UAE. Marcos arrived in the region in 1990 after completing his studies in Leiden and Paris, obtaining his BBA in International Business. Factor in happiness COMMENT
THE NEW GATEWAY TO THE GULF seabury report
construction business news me JUNE 2015 44 COMMENT Smart urbanisation Shivram Mukherjee writes about the emergence of smart cities in the GCC and its stages of growth over the next decade transform Dubai into a smart city has led to global focus on Dubai as the city to watch out for. In line with his vision, the Smart City initiative aims to ensure Dubai ranks among the world’s best-connected and smart- est cities by 2017. And that’s not all. Innovation is also of the utmost importance, as His Highness Sheikh Mohammed’s plans also include Dubai being the leader and not a lag- gard in technological innovation and knowledge advancement. Emergence of smart cities The perception of smart cities is changing across the globe, and the Middle East finds itself at the heart of this exciting new technology. And while the emergence of such projects will admittedly maintain a steady — rather than explosive — pace (with many being small pilots or proof-of- concepts), 2015 to 16 will see more smart city implementations occurring than in all previous years combined. Smart cities have their roots in sustainability, and this remains an important driver for such initiatives. Water shortages and climate change mean that energy and water efficiency are pressing issues in the Middle East. B olstered by visionary lead- ership and well-planned urban development strate- gies, Dubai is on track to achieve its smart city goals by means of a three-pronged focus on smart economy, smart life, and smart tourism. The first revolves around developing smart companies, stock exchanges, port services and jobs; the second looks to enhance health, education, transport, commu- nications, public utilities and energy services; and the third seeks to create a smart tourism hub for visitors, with smart gates, visa, flight and hotel services. Opportunities, therefore, abound in focus areas ranging from mobility, energy, water and waste, solar power and smart grids, to in- formation technology, e-government initiatives, connectivity, automation and smart apps, to name a few. These strategies will be discussed in the upcoming second annual Arab Future Cities Summit Dubai taking place on November 2 to 3 this year at Sofitel Dubai The Palm Resort & Spa held under the patronage of the Government of Dubai. His Highness Sheikh Mohammed Bin Rashid Al Maktoum’s vision to Smart city A smart city uses digital technologies to enhance performance and well-being, to reduce costs and resource consumption, and to engage more effectively and actively with its citizens. Key smart sectors include transport, energy, healthcare, water and waste. A smart city should be able to respond faster to city and global challenges than one with a simple 'transactional' relationship with its citizens. Dubai soon-to-be a smart city
construction business news me JUNE 2015 45 And as urban areas contribute to global greenhouse gases, more and more cities are starting to recognise the role they must play in improving energy efficiency and reducing carbon emissions. As such, we see sustainabil- ity becoming more of a coordinated citywide effort in combination with coherent smart city strategies. Citizen engagement is a key theme, and represents the next step in es- tablishing an open and participatory system of government. To this end, smart cities are focussed on provid- ing greater transparency through the provision of open data and continu- ous data access, increasing the politi- cal clout of citizens by enhancing their ability to use social media and mobile devices at any time and in any place. Ecosystems and partner- ships will see more movement in terms of formalisation and develop- ment of networks that enable various partners to work together on smart city projects. Typically, these are going to include various tech vendors, city de- partments, colleges and universities, and probably other levels of govern- ment beyond the metropolitan level. The final piece of the jigsaw i.e. innovation is the fundamental theme that underpins all the others, since smart cities inherently seek to solve urban challenges in new ways, by changing business processes, shifting worker and citizen behaviour, and, ultimately, institutionalising the pro- cess of innovation. Under focus These region-wide smart city efforts will have a two-pronged focus; first, on raising the standards of existing cities, and second, on Greenfield initiatives. Municipalities in the region will start to allocate resources toward the development of smart city proj- ects that meet the specific needs of their citizens. For example, Dubai is taking a major step toward deliver- ing more green buildings through the Dubai Green Building Code, which has already been unveiled. This should result in a surge in the use of smart building technologies to reduce carbon footprints. Stages of maturity It has been predicted that by 2014-15 only 15% of cities in the world are going to be in the second phase of maturity, the opportunistic stage, and only 5% will be in the third phase, the repeatable stage. Most cities will be in the first phase, the ad hoc stage, which is characterised by business as soloed decision making, unaligned budgets and processes across depart- ment, and information and technolo- gies that are not shared or leveraged across the enterprise. The fourth phase, the managed stage, requires the implementation of formal systems that enable cities to predict the needs of their residents and businesses and provide preven- tive services before problems arise. To reach the final optimised stage, mean- while, entails a long-term transforma- tion process spanning 10 to 15 years. The future of smart cities UAE is in an excellent and fa- vourable position to move up the maturity scale given its strong smart city vision. It has also recently made a strong push in terms of citizen en- gagement by providing key services through smartphones and building its partnership ecosystem by work- ing closely with service providers, technology vendors, and ICT leaders, which is being considered as a giant stride towards a sustainable future. Shivram Mukherjee, is a Consultant with First Climate (India) Private Limited and has been has been associated with Climate Change Sustainability Services since 2011. He holds a B.Tech Degree in Mechanical Engineering and a Master’s Degree in Energy Management. He has worked with Dubai Municipality (as a Consultant) for a Green House Gas Abatement Project registered under the Clean Development Mechanism for United Nations Framework Convention on Climate Change. Smart city initiatives in the GCC: Qatar Lusail’s Smart and Sustainable City Pearl-Qatar Island Energy City Qatar UAE Masdar City in Abu Dhabi Smart City Dubai Saudi Arabia Six Greenfield economic cities
construction business news me JUNE 2015 46 PROJECT REVIEW T he vision of His Royal Highness Prince Al Waleed Bin Talal Al Saud, Chair- man of Kingdom Holding Co, of constructing the tallest tower in the world is taking shape as the construction for the tower is underway. Built by the Saudi Bin Laden Group and developed by Jeddah Economic Company (JEC), the Kingdom Tower, is expected to rise to the height of more than one kilometre once completed in 2018. It will consist of offices, a Four Seasons hotel and serviced apartments, residential apart- ments as well as the world’s tallest observation deck. Kingdom Tower is the centerpiece and first construction phase of the King- dom City development, located along the Red Sea on the north side of Jeddah. Encompassing a construction area of 530,000m2, Kingdom Tower is designed by architect Adrian Smith and Gordon Gill Architecture. Dar Al Handasa is the project’s construction supervisor, while E.C. Harris is managing the project. Vertical LIMIT Construction Business News ME takes a look at the progress of the upcoming tallest building in the world, Kingdom Tower, in Jeddah. The CEO of Jeddah Economic Company says that the project is on track and talks about another record breaking feature: Kone’s high-speed elevators
construction business news me JUNE 2015 47 Mounib Hammoud, CEO of JEC, says that as they are aiming to build the highest building in the world, it will aim to be the greatest by all standards. The project has been underway currently and the CEO says that they have been on track. He predicts that by September they will complete the construction of 47 floors and by the end of the year it should be 55. The project has been carefully un- dertaken by all the entities working on the project. One of the top priorities on the agenda is health and safety. Hammoud talks about one of the major precautions to be taken while building a tower, which is fire safety precautions. He says that the cement used during construction is fire resis- tant for up to four hours. He also says that there is no gas being used in the building and the only spaces that uses it is in the kitchens and hotels located in the ground floor of the building. The tower will also consist of eight refuge floors which is the place peo- ple can go to in case of a fire till the problem is resolved. Hammoud says that there are many precautions taken and the tower will be built in the best possible way with great standards in terms of health and safety. JEC has the full support of the government, Hammoud says that this project is at a national level. “Not only nationally but having the tallest tower in the world will affect the country on an international level.” He says that this project which includes the upcom- ing Kingdom Tower and Kingdom City in Jeddah, will reposition the city amongst other international cities and be a landmark for Saudi Arabia. Another record to break Urbanisation is a key driver for the development of cities and the elevator industry. More than half of the world’s population already live in urban areas, and the United Nations estimates that by 2050 seven out of every 10 people on the planet will be living in cit- ies. Building upwards is seen as the sustainable urban solution, and the number of tall buildings built around the globe has increased rapidly in recent years. Increasingly, tall build- ings are also growing taller. Nearly 600 buildings of 200 metres or more are currently under construction or planned to be built over the next few years, according to the Council on Tall Buildings and Urban Habitat. While there are currently three buildings in the world that top the 500-metre mark, there are plans for 20 more such buildings to be built in coming years. JEC has selected Kone as the vertical transportation provider, to deliver the world’s fastest and highest double- decker elevators to Kingdom Tower. Featuring Kone’s people flow solutions with travel speed of over 10 m/s as well as the elevator rise at 660 metres. The building will be equipped with altogether 65 Kone elevators and escalators. The order includes Kone Double Deck MiniSpace elevators with UltraRope hoisting technol- ogy. The UltraRope is a new high- rise elevator technology that is set to break industry limits and enable future elevator travel heights of one kilometre – twice the distance currently feasible. The UltraRope technology eliminates the disadvan- tages of conventional steel rope and opens up a world of possibilities in high-rise building design. Comprised of a carbon fibre core and a unique high-friction coating, the UltraRope is extremely light, meaning eleva- tor energy consumption in high-rise buildings could be cut significantly. The drop in rope weight means a dramatic reduction in elevator moving masses – the weight of everything that moves when an elevator travels up or down, including the hoisting ropes, compensating ropes, counter- weight, elevator car, and passenger load. Due to the significant impact of ropes on the overall weight of eleva- tor moving masses, the benefits of UltraRope increase exponentially as travel distance grows. “We are proud to introduce this in- novation that we are certain will revo- lutionise the elevator industry for the tallest segment of buildings across the globe. The benefits of Kone UltraRope versus conventional elevator hoisting technologies are numerous and indis- putable,” says Kone’s President and Observatory deck in Kingdom Tower Kingdom Tower in Jeddah Mounib Hammoud, CEO of Jeddah Economic Company
construction business news me JUNE 2015 48 “Without a doubt, the Kingdom Tower project will push the industry’s limits to new heights and we are very proud to be an integral part of that journey.” – Sascha Brozek, Senior Vice President, Major Projects, KONE CEO Matti Alahuhta. The Kone equipment in Kingdom Tower will include 21 Kone Mono- Space elevators, 29 KONE MiniSpace elevators, seven Kone DoubleDeck MiniSpace elevators and eight KONE TravelMaster 110 escalators. ”We have been highly impressed with Kone’s innovative solutions to high-rise buildings. This is another corner stone for a development of this magnitude and we look forward to creating this landmark building in all standards”, says Hammoud. ”Close cooperation between all proj- ect partners, and with Kone Areeco team locally, our technical profes- sionalism and people flow planning expertise was a winning combination in helping us land the order,” com- ments Noud Veeger, Executive Vice President for KONE in Asia Pacific and Middle East. “We hail this project with great excitement.” Kone Areeco is KONE’s Saudi Arabian joint venture company with Kone holding 50% of the shares. Kone Areeco has several flagship projects in Saudi Arabia, such as the successfully completed Makkah Royal Clock Tower Hotel in Mecca, as well as ongoing projects such as the King Abdullah Fi- nancial District in Riyadh, and the King Abdulaziz International Airport and the Headquarters Business Park in Jeddah. KONE Areeco has been involved in the planning and design of all vertical transportation systems for the Kingdom Tower over the past two years in con- junction with KONE’s global experts. The project team arrived on site last January and is currently working on pre-installation activities concerning the fitting of the elevator system’s guiderails, which is expected to begin towards the end of this year. The installation of the guiderails, as well as the eventual installation of the Kone elevator cars, will then progress as the Kingdom Tower’s central structure rises over the coming years. “We are absolutely thrilled at hav- ing our operations up and running at the Kingdom Tower construction site and to start our installation activi- ties alongside the construction of the tower’s core structure,” says Sascha Brozek, Senior Vice President, Major Projects, KONE. “Without a doubt, the Kingdom Tower project will push the industry’s limits to new heights and we are very proud to be an integral part of that journey. We also look forward to continuing our close collaboration with JEC, the Saudi Bin Ladin Group and all the other parties involved in the construc- tion of this epic landmark.” PROJECT REVIEW Ongoing construction work at Kingdom Tower, Jeddah
construction business news me JUNE 2015 50 PROJECT REVIEW T he CEO and Chairman of RP Group of Com- panies, Dr Ravi Pillai, along with some of the company’s officials welcomed key players in the real estate industry for the groundbreaking of its upcoming residential tower project, RP Heights, on May 5 this year. RP Global, part of RP Group of Com- panies a global business conglomerate with an annual turnover of over US$4 billion, used the event to mark its entry into the real estate market in Dubai. The company aims developing two projects in the heart of the city. The first project, RP Heights, is worth $1.5 billion and will be located in Downtown Dubai conveniently located next to The Dubai Mall. The construction contract award for this project has not yet been awarded however it has been announced that the building will be ready for occupation in the last quarter of 2017. The second project, RP One, will be unveiled in the second half of this year. It is said to be a mixed-use development worth $1.1 billion will be located on Sheikh Zayed Road close to Business Bay Metro Station. Pillai says that the two RP Global projects will have optimal floor area ratios, high ceilings and large balconies that add to the quality of life of residents. “We are committed to delivering RP Global’s CEO, Dr Ravi Pillai, talks about the prospective growth in Dubai’s economy and its effect on the property market amid the company’s groundbreaking ceremony for upcoming residential tower, RP Heights HEIGHTs NEW the highest service standards to our customers across all touch points. Already, there is significant demand for our projects, which is a mark of investor trust in RP Group’s strong industry credentials.” “Our expansion to real estate development comple- ments our core competencies in construction and infra- structure projects,” says Pillai. The company’s approach to real estate development is highlighted in its mission - ‘Live Beyond.’ Pillai says that their projects will uphold high standards in sustainability with a focus on promoting energy use efficiency. “It will also draw on the latest in technologies including high- speed connectivity to reflect the Smart Dubai vision.” He explains that what sets RP Global apart is the group’s ability to bring unmatched development syn- ergies through their own construction firm, Gulf Asia Contracting. This, according to the CEO, will ensure strong returns, the highest standards in construction and a firm delivery schedule. “We will pass on this additional value to our customers, who will become part of this development built to the highest standards of quality and sustainability.” The land on which RP Heights is being constructed in Downtown Dubai is owned by RP Global, who will be using its own internal financial resources for the project. Property market in Dubai According to Pillai, Dubai has a strong economy with ro- bust economic fundamentals which is ideal for investing Dr Ravi Pillai, CEO & Chairman of RP Group of Companies
construction business news me JUNE 2015 51 268 luxury residences 2 basements 4 podium 45 floors PROJECT REVIEW in property. He says: “Dubai is a global hub for business and leisure, and the economy is growing at about 5%. With the population is expected to increase by 50%, all the growth sectors – retail, tourism, hospitality, aviation and logistics – are booming. Preparations for the World Expo 2020 has further catalysed the economy. “I have studied the market thoroughly and I believe that now is an ideal time for RP Group to invest in Dubai’s property sector.” Even with the drop in oil prices, the chairman assur- edly believes in the company’s “strong financial funda- mentals,” as they fund most of their projects through internal sources. Pillai says: “With the current population of over two million expected to grow to three million by 2020, and the city’s status as a business and leisure hub, the prop- erty sector of Dubai has strong growth prospects.” He also praises the strategic growth initiatives an- nounced by His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, has boosted international investor con- fidence. He adds: “Today, Dubai is one of the world’s best investment destinations for property compared to RP Group of Companies • 85,000 employees, which is set to increase to • 100,000 by end-2015. The Group has executed • projects worth over US$25 billion globally, and has • 26 business entities in 20 cities across nine countries RP Heights RP Group of Companies six high-growth sectors • Property development • Construction & infrastructure development • Education • Healthcare • Hospitality • Trading Aerial shot of upcoming RP Heights Entrance of upcoming project, RP Heights
52 construction business news me JUNE 2015 With a 50% increase in property inspections in the region, to over 250 completed already this year on private properties in Dubai, compared to the same period last year, Snag and Inspect CEO, Douglas Ralph, draws parallels with the last halt in speculative property investment A sharp increase in re- quests for inspections of finished properties over the first quarter of 2015 signals the end of flipping of properties for quick profit in Dubai and gives a strong sign of the real estate market’s slowdown. We launched this company in 2009 to fulfill the need for a huge spike in inspections, because the market had crashed and people quickly realised they would need to use the proper- ties they had invested in rather than just sell them on for profit. Since the start of the year, we have been servicing the steady end-user market, where people are still buying properties to live, but it is also clear many investors are giving up the ghost of making profit on sale right now and instead inspecting their va- cant villas in order to get them ready to live in or rent out, while they ride the current dip in prices. There is still a need to drive aware- ness in the importance of inspections, as most western European expats consider commissioning a profes- sional inspection a standard part of buying or leasing a property. Howev- er, we find many residents from other cultures are not used to this stage in the process, which can often save huge expense and future heartache. There were 5,662 Dubai Land Department real estate unit transac- tions in the first four months of 2015, compared to 9,655 during the same period last year - a fall of 41% and the lowest number for the first third of the year since 2010. If more property owners are bun- kering in, preparing their investment properties to be lived in for a few years until prices are on the up again, then economics dictates this could signal an increase in supply and potentially a price correction for long suffering renters in the emirate. Leigh Borg, sales director of Bel- leview Real Estate agrees the quick purchase and sale of property for profit may have left Dubai for now, and his agency has witnessed rental prices flat line since the final quar- ter of 2014. “Around 90% of sales handled by our office over the past six months have been to end users. We haven’t seen much in the way of speculating for profit at all in 2015. There was a lot of activity in the off plan market over the last few years, but this has tailed off – particularly since a buyer purchasing an off plan property on the secondary market now pays 10% – Oqood (4%), transfer fee (4%) and agency fee (2%) - plus any premium to the seller and the de- veloper will require up to 40% of the property to be paid before offering an NOC for transfer. These factors make any potential gains from speculation much less attractive compared to the risk involved. “The Dubai rental market is still very strong but the prices aren’t noticeably rising anymore, which is quite significant considering rents in some areas shot up by 30% in recent years. There’s no upward pressure from landlords, as happened in 2013 and 2014, particularly during the hype over the Expo 2020 announce- ment in November 2013. Thanks to clear communication by the authori- ties and consistent reporting by the media, tenants are also a lot more savvy now in terms of the price index, where they know their rights and won’t allow any inflated increas- es or hike attempts after the three month notice period.” With property inspections starting from AED1,800, Snag and Inspect is the only inspection company in the UAE certified by the International Associa- tion of Certified Home Inspectors. Douglas Ralph has gained quali- fications in building maintenance and business management with 30 years of experience in the construction and maintenance of building and mechanical systems. Escalating inspections COMMENT
CONSTRUCTION BUSINESS NEWS ME JUNE 2015 54 Q&A Could you tell us about the work of Eversheds in the Middle East? We are a full service law firm work- ing across the region from seven offices as well as our relationship firms elsewhere. I lead our energy and infrastructure team in the region working on transactions in the oil and gas, power, water, transport, education and other sectors. Our work covers the full spectrum of legal work including commercial contracts, EPC, O&M, concessions, and finance documents. What are some of the key trends you have noticed in the infrastructure sector in the region? Conventional power and water proj- ects continue to be a significant sector in the region but renewable energy has been a key growth sector recently and we only see this becoming more important. We were recently awarded MENA law firm of the year in the an- nual MESIA awards which is an indus- try body focussed on solar. Transport continues to be an important area and obviously real estate is back in growth mode too. The decline in oil prices has had an impact on some down- stream projects but we are still seeing investment at the upstream end all be it on a more conservative scale. What role do conferences and exhibi- tions like Middle East Rail play in developing the infrastructure sector? It is a key event from a network- ing perspective. It is always good to learn more about schemes in the pipeline but this is a really important event for engaging with the decision makers and intermediaries working in this sector. In terms of legal counsel, how is it different working in the Middle East compared to the West? I have spent 15 years working in the region now and the key for me is that you often get involved in assisting FAST TRACKS Tim Armsby, Partner at Eversheds speaks with Construction Business News ME about infrastructure development in the Middle East, some of the key trends and challenges
CONSTRUCTION BUSINESS NEWS ME JUNE 2015 55 them in considering commercial deci- sions. You tend to have much greater engagement with clients and the proj- ects and that makes the work interest- ing. I have never done the same thing twice in my time living and working here which makes the work constantly challenging which I enjoy. Could you elaborate a little on Ever- sheds’ work with the Dubai metro? This was a particularly interesting transaction. We worked with the RTA over a period of six months to assist them in negotiations with the operator under an O&M concession to extend the term of the contract. Because it was a live agreement this made the negotiations especially challenging but we achieved significant changes to the contract as well as cost savings. Our work involved reviewing international benchmarks, updating Which country in the Middle East looks most promising in terms of infrastructure development? There continues to be significant development in the UAE but other countries such as Qatar, Kuwait and Egypt are entering significant growth phases. The reasons for develop- ment in Qatar are well known. In Kuwait they have recently issued a new PPP law and have a large pipe- line of projects. Egypt is a place I know well having spent seven years living and working there and the pipeline of projects is huge. If even 10% proceeds it will make a massive difference. Could you tell us more about your work with the Nile River Bus in Egypt? This is a really interesting project. I worked on a number of PPPs during my time there and am really happy to be working on this one. It aims to develop a new water bus scheme on the Nile in the heart of Cairo. As someone who used to commute down the Corniche every day I can tell you that this will make a major difference to the transport options in the city. “The big challenge is that you are often doing something for the first time - this requires additional preparation and engagement with stakeholders to ensure success. This means building additional time into the schedules that may include hard dates, for example connect with other transport infrastructures.” Faizal E. Kottikollon, Chairman of KEF Holding Dubai Metro and restating the concession to take into account best practice in metro operations, in particular in relation to key performance indicators and reporting and maintenance obliga- tions. We worked closely with the clients’ rail team and operations and maintenance department to draft in these requirements. We are also currently advising the client in relation to potential exten- sions to the Red and Green lines of the Dubai Metro. The client is consid- ering different options for financing the extensions, including purchase of rolling stock, and we are advising on the feasibility of developing transit oriented developments to capitalise on the value of its real estate assets. In terms of infrastructure (especially railway), what are some of the chal- lenges faced in the region? The big challenge is that you are often doing something for the first time - this requires additional preparation and engagement with stakeholders to ensure success. This means building additional time into the schedules that may include hard dates, for example connect with other transport infrastructures.
construction business news me JUNE 2015 56 SUPPLIERS In a bid to diversify furthermore into the metals industry, the GCC is producing a remarkable haul of aluminium and steel. The construction industry is rebounding in tandem, in turn incurring a mountain of profitability. By Giorgios Retsinas Constructing a mine of possibility T he GCC has risen to new heights with the backing of hydrocarbon fuel. As well docu- mented, the Kingdom of Saudi Arabia is the world’s biggest producer of crude oil and sub- sequently the MENA region’s largest economy. Fellow GCC nations Bahrain, Kuwait, Oman, Qatar and the UAE are likewise yielding results, as the grouping of nations possess nearly a third of the world’s hydro- carbon reserves. Worth an estimated US$65 million, the GCC is supplying an increasing share of the world’s fuel. The region has increasingly moved towards diversifying however, and as a result is displaying a swelling interest in metallic manufacturing. The metals industry has customarily been focussed around North Africa. Large deposits of metals and minerals in Iran, Egypt and Algeria have largely given the respective areas key mining advantages. GCC nations have paid a great deal more attention in recent years to differentiating their respective revenue streams by way of larger scale government invest- ment and have thus begun to unearth their own prospects. Aluminium, iron and steel are the key points of focus. Bahrain began the drive towards an assorted brand of expansion as early as 1971. Aluminium Bahrain is majority- owned by the Bahraini government and an aluminium manufacturer which as of today produces more than 870,000 metric tonnes per annum (MTA). The UAE’s Dubai Aluminium, founded in 1979, edges out Aluminium Bahrain with 1,000,000 MTA. Oman, Qatar and Saudi Arabia didn’t follow suit until much later, forming aluminium interests in the new millennium, yet are on pace to offer compet- ing output. Saudi Arabia’s Ma’aden Company produces 720,000 MTA, Qatar’s Qatalum 585,000, Oman’s Sohar 360,000 and a second outfit in the UAE, EMAL, offers 720,000 MTA to the market. The GCC is projecting a 19% share of the global met- als trade by 2016, a resounding prospect considering how recently established most of the regions operations are. An in- teresting driver to the rate of production is the cyclical nature of the provision. With real estate development operating at a steady uptick, the need for locally sourced metal production has become most imperative. As the FIFA World Cup 2022 is scheduled to take place in Qatar, the country requires a swell in aluminium production to support the necessary construc- tion. The call for an increase in aluminium production to fuel grand infrastructure projects has been heeded. GCC alumin- ium production totalled 3.69 million tonnes in 2014, an 18% increase on the previous year. The steel industry has similarly been a source of diversifica- tion in the GCC though its bearings date back even further. Jeddah Steelworks of Saudi Arabia began to produce rein- forced iron in 1966. As one of the first industries in the Gulf, Jeddah’s production facilities were among the first to spotlight the mining possibilities of the GCC. Investment grew for de- cades, resulting in a range of steel producers large and small represented by all GCC nations with the exception of Kuwait. The global steel industry took a tremendous hit during the real estate crisis of 2009 affecting a detrimental downturn in the Gulf. Dubai’s enormous real estate market was most affected
construction business news me JUNE 2015 57 by the crisis, resulting in the abandoning or postponement of $1.5 billion in steel projects. Most small and independent steel contractors were un- able to survive the slump, amounting to industry wide con- solidation. This refocus has accompanied a turn around that has all but remedied the effects of the crisis. Saudi Arabia continues to lead the sector in the GCC, promoted largely by a domestic construction boom. One of the few indepen- dent producers functioning on a large scale is the $3 billion Al Rajhi Steel complex, operating in Saudi Arabia’s King Abdullah Economic City. Abuot 49% of all GCC steel mills are Saudi Arabian with the UAE just behind commanding a 36% share of manufacturing. The market’s rebound operates with an encouraging back- drop of continued growth across the sector. There are 184 steel mills in the GCC compared with 100 mills in 2000 while a commanding $18 billion of steel project funds are in various states of development. GCC nations have long recognised the delusion in relying solely on fossil fuel production. The continual depletion of hydrocarbon fuel has created more of an urgency to create variety among the GCC’s returns. The construction and metallic industries have proven counter beneficial and are experiencing immensely increasing profits that are offer- ing a range of sustainability most enticing. The need for aluminium and steel are climbing on par with the construc- tion industry’s gains and creating a boom of diversification, employment and revenue that amount to just what the GCC has envisioned.
construction business news me JUNE 2015 58 SUPPLIERS Graphic Concrete Ltd, an innovative Finnish company, manufacturing and marketing graphic concrete enters the Middle Eastern market T ogether with the Dubai based partner Versatile, a business development company, Graphic Concrete brings a new approach to designing prefabricated concrete surfaces in the Middle East. The patented technology invented by interior architect Samuli Naa- manka is an industrial product for large scale surfaces and a tool with that allows architects to be more visually creative. “Graphic concrete allows designers and architects to design attractive and durable patterns and images to prefabricated con- crete surfaces such as façades, walls and pavement slabs,” said Harri Lanning, CEO of Graphic Concrete Ltd. “Our end prod- uct is a membrane used in the prefabrica- tion process of concrete.” The desired image is printed on the membrane with a surface retarder, after which the membrane is sent to the local concrete prefabrication company. Con- crete is cast on the membrane and when the retarder is washed away the image is revealed. The image results from the contrast between the fair face and the exposed aggregate surface. “Being a standardised part of the prefabrication industry, graphic concrete is easy to use. The solution is also cost effective, as the surface is ready as such and requires no more cladding,” Lanning said. Since the foundation of Graphic Concrete Ltd in 2002, the graphic con- crete solution has been used in over 600 projects in 25 countries around the world. The extensive list of references demonstrates the vast range of designs in which architects can use graphic con- crete: public, residential, industrial and infrastructure. “We are pleased to enter the Middle Eastern market and to an- nounce our collaboration with Versatile a business development company that will be representing our products in the GCC countries, Jordan and Lebanon. As designers and architects are constantly looking for new creative solutions to create wow effects, we believe that we have a lot to offer to this market,” Harri Lanning concluded. Creating inspirational environments through impressions on concrete surfaces Graphic Concrete Ltd offers four main product lines: • GC Collection presents company’s own range of design patterns • GC Pro allows designers to create their own repeating patterns • GC Art&Design allows designers to produce unique images •GC Smooth is used for producing a fairface finish Ospedale Giovanni XXIII Chapel in Bergamo, Italy Crevin Upper Secondary School in Crevin, France Ulappatori in Espoo, Finland
60 construction business news me JUNE 2015 Middle East Stone’s inaugural trade show was dedicated to the region’s stone, marble and ceramics industry. Construction Business News ME has a look at some of latest trends in the industry Set in stone EVENT PREVIEW H.H Sheikh Hamdan bin Rashid Al Maktoum officially inaugurates ME Stone 2015 I ndustry leaders gathered at the debut edition of Middle East Stone (MES) which took place at the Dubai World Trade Centre from May 18 to 21 this year. His High- ness Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance, officially in- augurated the show which welcomed thousands of visitors and exhibitors. Mark Goodchild, Event Director of MES, said that the show was created in response to the huge demand not only from producers and manufacturers, but the designers, architects and contrac- tors who wished to source the finest materials for their projects. He said: “By bringing together major players from the local and international market we aim to provide a platform for this huge market and highlight the benefits it brings for the stone, marble and ceramic industry.” The event especially complements the recent strong growth in the sector. The GCC marble, stone and ceramics market will be expanding by 5.8% this year to US$5.4 billion as developers in- crease their usage old building material. “Make no mistake, this is now a huge market – and it’s only going to get bigger. The region needed a dedicated event for producers and manufactur- ers of marble, stone and ceramics to meet with the architects, designers and contractors who form their prin- cipal audience,” said Michel Bruisten, Export Manager of Brickburgers BV. “This event provides a centralised location for the major players in the in- dustry to meet, examine industry trends, establish best practices and drive future innovation.” Exhibitors at the show highlighted some of their latest cutting-edge products in the sector. One of them, Al Marge marble and granite factory, has been showcasing its Adamas 3D stone covering at MES. Inspired by the diamond, the multiple facets of the Ad- amas surface create light and shadow effects that interact with users. “By being able to physically demon- strate Adamas to prospective buyers, we can showcase the qualities of this stunning new product and how we have started with the valorisation of stone to create a covering that can be used to design endless types of wall,” said Mirko Sala Tenna, Designer at MMA Projects, working with Al Marge. “MES has been the perfect platform for us to bring this concept to life and meet the right audience for our needs.” Another key element at MES was the two-day Designer’s Forum to help designers enhance their projects with the use of stone. The forum focussed on exterior design with a panel discus- sion highlighting design developments from around the region, the design and installation of high-performance natural stone façade, and best practice in pre- venting and treating stone defects. Barry Swayn, Design and Archi- tecture Director at Storm Associates said that stone is now accounting for as much as 12% of the cost for some projects, and understanding how to make best use of related products and what they can add to a development is critical for delivering successful projects. According to him, a dedi- cated platform for knowledge-sharing and understanding the latest innova- tions is a good addition to the industry calendar. He added: “By bringing together local, regional and interna- tional experts the Designer’s Forum will generate dynamic debate, provide network opportunities and advance industry knowledge in the Middle East. We all have a lot to learn on this dynamic subject and look forward to participation from all perspectives” 230 exhibitors from 22 countries showcasing 5,500 products Visitors at ME Stone 2015
61 construction business news me JUNE 2015 Construction Business News ME headed to the second edition of the Smart Skyscraper Summit held by Expotrade at Sofitel Dubai The Palm Resort and Spa to report the latest insights in constructing taller and smarter buildings T his year’s two-day summit was held under the pa- tronage of the Dubai Municipality starting on May 11. The event included a packed agenda with key- note speeches, panel discussions, case studies and networking sessions. The summit was inaugurated by Abdulla Al Rafia, Assistant Director General – Engineering and Planning Department of Dubai Municipality, who also delivered a special address on behalf of the Dubai Municipal- ity. He introduced the Dubai Frame, a new project underway by the municipality. The Dubai Frame is a structural master- piece that separates new and old Dubai and would be used for tourism purposes. Al Rafia said that this project will be a unique architectural accomplishment that will add to the city's list of achievements. Over 300 delegates attended the summit, including senior architects, engineers, policymakers, developers, contractors, sustainability experts and building profession- als from the GCC. Sustainable skyscraper's construction and design was the focus of the two-day event, which showcased the latest and most innovative sustainable building technology and solu- tions for high-rise green buildings, with focus on the special needs for building skyscrapers in Dubai, the UAE and the Middle East region. The agenda for the second day featured sessions on verti- cal transportation and integrated technologies, sustainable design and facades for skyscapers in the Middle East. Also scheduled is a panel discussion on making tall building de- velopments and city infrastructure work. Ahmad K. Abdelrazaq, Senior Vice President of Samsung C & T, said that today tall buildings are influenced by com- puter technology. John Mizan, Vice President Advanced Programs at Schindler Transit Management Group, said that the industry is experiencing a complete renaissance in structural design. Brad Hariharan, Regional Director of Expotrade Middle East, said: “The Smart Skyscraper Summit has grown to become the leading skyscrapers event in the region in a very short period of time. This year, we are privileged to hold this event under the patronage of Dubai Municipality. This sum- mit showcases the latest designs, which is among the global hubs for skyscraper development. We are glad to bring this premier platform to share knowledge and network with the best in the field to our audience.” Rising high Matthew Neidlinger, Director - Marketing MEA at Emerson Climate Technologies, speaking at the summit
construction business news me JUNE 2015 62 Volvo Trucks first with automatic all- wheel drive - for improved driveability and economy Behind the wheel CONSTRUCTION MACHINERY V olvo Trucks have introduced a new feature which activates the drive on the front axle automatically when in motion and if the truck risks getting stuck. The feature called automatic traction control helps the driver enjoy improved maneuverability, and the owner benefits from lower fuel consumption and less wear and tear on the truck. This is the first truck manufacturer to offer automatic engagement of all wheel drive on construction trucks. The automatic traction control function activates the front wheel drive when the rear wheels lose traction on slippery or soft ground. “Many drivers connect front-wheel drive or differential lock in good time before a difficult section of terrain, in order to avoid getting stuck. Volvo’s automatic traction control engages the front wheel drive when in motion, and only for the short time that it is really needed,” said Jonas Odermalm, Construction Segment Manager of Volvo Trucks. Volvo automatic traction control, which has now become standard in the Volvo FMX with driven front axle, is already used by Volvo Construc- tion Equipment in their articulated haulers. The solution consists of software connected to the wheel speed sensors which detect and control wheel drive. When a rear wheel starts to slip, the power moves automatically to the front wheels without the truck losing torque or speed. A dog clutch activates the front-wheel drive in just half a second. The clutch is lighter and has fewer moving parts than a traditional solution with perma- nent all-wheel drive. If the driver encounters particularly rough ground, then it is possible to manually lock the other differentials at both front and rear. The drive on the front axle prevents standstills on slip- pery surfaces. At the same time, the function is often only required for a very small part of the total driving time. With automatic traction control, the front tires’ grip is concentrat- ed on the steering right up until any critical situation. Thus, the driver can take advantage of the better maneuverability for as long as possible. The driver also avoids extra fuel consumption and wear on the driveline and tired, that the constant engagement of front-wheel drive normally results in. Automatic traction control ensures that the optimal drive combination is always enabled and removes the decision from the driver. Ricard Fritz, Vice President of Volvo Trucks said: “Automatic traction control is yet an- other example of how innovative technology can make things easier and smarter than before. Just like the Volvo I-Shift revolution- ised the gearbox, we are confident that this new development will do the same for the driven front axle.” Jonas Odermalm, Construction Segment Manager of Volvo Trucks Volvo Truck with automatic traction control
construction business news me JUNE 2015 64 Asteco’s recent report emphasises on the shifting real estate landscape in the UAE, especially in the northern emirates A steco’s UAE Prop- erty Review – Q1 2015, highlighted that changes to the residential prop- erty ownership laws in the northern emirate of Sharjah has prompted new interest in the develop- ment of affordable expatriate-focussed accommodation. It noted that the emirate was moving into a new phase of development with the Al Rayyan mixed-use announcement earlier this year. Al Rayyan is going to be the first development on a 100-year leasehold basis for all nationalities. John Stevens, Managing Director of Asteco, said: “This project, which will offer 504 high quality apartments with two-bedroom units priced at around AED1 million presents new opportuni- ties for expatriate investors looking for an entry point into the market but for whom affordability is key, and location close to the Dubai border is important,” Located in the busy Al Nahda area, close to the Dubai border, the develop- ment will also feature an office tower and mall, and is due for handover in Q2 2016. “However, despite this groundbreak- ing move, we haven’t as yet seen comparable levels of transaction activity to match the number of enquiries as there is still some price point sensitiv- ity,” added Stevens. There is a rise in the real estate mar- ket in other northern emirates as well. Fujairah, for instance, has witnessed strong leasing demand for apartments in Q1. “The government of Fujairah has made significant investment into infrastructure improvements, such as at its Fujairah Port and Free Zone, to drive economic activity, and this has resulted in increased demand which has prompted considerable real estate development,” said Stevens. Ras Al Khaimah similarly witnessed good levels of residential leasing de- mand largely driven by local economic activity from its ports and free zones. Despite legislative changes and development activity, overall, the number of sales transactions in Q1 remained low, especially in Ras Al Khaimah, despite improve- ment in sales prices over the last few years. Popular developments include the US$2 billion, 25 million-square-foot master- planned Tilal City proj- ect, situated close to the Al Dhaid interchange and Sharjah’s outlying com- munties. Launched in 2014, the project Display of historical artifacts inside Dubai Museum EDITOR'S PICK offers plots of land for development and has attracted considerable interest from both developers and end users looking to construct their own villas. Asteco reports that villa plots have vir- tually sold out due to a low entry land price of AED30 per square foot. In Ras Al Khaimah, villas within the Mina Al Arab and Al Hamra commu- nities continued to be popular with expatriate buyers due to their value for money positioning. Mirroring the situation in Q4 2014, rental rates remained stable in Q1 2015 although marginal declines were re- corded in Ajman and Sharjah as rental rates in neighbouring Dubai continued to settle, effectively reducing any ten- ant migration. Preferred areas in Sharjah remained unchanged with the Corniche, Al Nahda, Majaz and Abu Shagara districts continuing to see high occupancy levels in better quality buildings. These four districts recorded negligible respective quarter-on- quarter movement at between -1% to zero percent. Sharjah’s commercial sector remained stagnant with little or no transactions versus Q4 2014 performance despite small increase in demand from businesses looking to set up in the city, with office space on the Cor- niche, along Mina Road and in Al Wahda, be- ing the most sought after locations. Rocking the rental market John Stevens, Managing Director of Asteco Sharjah Buhaira Corniche
HAMRIYAH FREE ZONE AUTHORITY, SHARJAH, UAE sales@hfza.ae - www.hfza.ae UNPARALLELED INDUSTRIAL LANDSCAPE Hamriyah Free Zone houses more than 6,000 businesses from 155 countries engaged in over 500 activities; from large-scale steel fabrication through maritime and rig maintenance to food packaging production. With its own deep-water port, strategic location, modern facilities and quick setup Hamriyah Free Zone offers unparalleled advantages.