Construction Business News
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September 2016 We design.. we construct.. we build.. Kingdom of Saudi Arabia, PO Box 65697 Riyadh 11566 Tel: +966 11 293 1193 Fax: +966 11 293 1170 www.albawani.net Classified Class 1 ISO 9001 The End of the Road A 10-year project to reach the highest point in the UAE enters the final straight THE DEFINITIVE GUIDE TO THE REGION'S CONSTRUCTION PROFESSIONALS
construction business news me September 2016 3 Editor’s note News Contracts Market Report Cover Feature A 10-year project to reach the highest point in the UAE enters the final straight In Person Tarek Shuaib, MD of Pace, on how the company has left a lasting impression on Kuwait Event Preview Big 5 Kuwait takes place from 25-27 September Country Report Kuwait is pouring billions of dollars into infrastructure and healthcare projects Legal Viewpoint Termination by Employer: Why, How and How Much? 6 8 18 22 26 36 42 46 52 26 46 contents
construction business news me September 2016 4 S U B S C R I B E subscriptions@bncpublishing.net CEO Wissam Younane wissam@bncpublishing.net Managing Director Walid Zok walid@bncpublishing.net Director Rabih Najm rabih@bncpublishing.net Group Publishing Director Diarmuid O'Malley dom@bncpublishing.net Group Sales Director Joaquim D'Costa jo@bncpublishing.net +971 50 440 2706 Business Development Director Rabih Naderi rabih.naderi@bncpublishing.net +966 50 328 9818 Group Editor Melanie Mingas melanie@bncpublishing.net Editor Jason O'Connell jason@bncpublishing.net Art Director Aaron Sutton aaron@bncpublishing.net Sales Manager Mostafa Abdo mostafa@bncpublishing.net +966 56 6695 333 Sales Manager Vishvanath Shetty vish@bncpublishing.net +971 52 6745378 Marketing Executive Mark Anthony Monzon mark@bncpublishing.net PO Box 502511 Dubai, United Arab Emirates P +971 4 4200 506 | F +971 4 4200 196 For all commercial enquiries related to Construction Business News ME contact sales@bncpublishing.net T +971 55 339 5097 All rights reserved © 2015. Opinions expressed are solely those of the contributors. Construction Business News ME and all subsidiary publications in the MENA region are officially licensed exclusively to BNC Publishing in the MENA region by Construction Business News ME. No part of this magazine may be reproduced or transmitted in any form or by any means without written permission of the publisher. Images used in Construction Business News ME are credited when necessary. Attributed use of copyrighted images with permission. All images not credited courtesy Shutterstock. Printed by International Printing Press www.ippuae.com Comment Take 10 Iconic Buildings in the GCC Building Materials Supplier News Supplier Special Event Preview Save the Date Editor’s Pick 56 58 64 66 68 70 72 74 58 36 70
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construction business news me September 2016 6 A rocky road In a land famous for developing mega pro- jects, there have been few bigger undertak- ings in the UAE than the road being built to the top of Jebel Jais, the highest point in the country located in the Emirate of Ras Al Khaimah near the border with Oman. Though it has cost a small fraction of some of the glitzier projects in the region, it has taken General Mechanic Company more than 10 years to get within sight of the finishing line. In that time close to 6 mil- lion cubic metres of limestone and clay have been excavated by Volvo Construc- tion Equipment and Trucks provided by FAMCO. The rugged terrain and some- times difficult weather posed no end of challenges to the contractor. To say it has been a rocky road to get this far would be an understatement. But now, the summit is within reach and the final six kilometres of road are expected to be complete by the end of March 2017. The handover will mark yet another addi- tion to the UAE’s fast expanding tourist of- fering. With plenty of sun, sea and sand, the country can now add mountains to its portfolio. The road will allow access to a part of RAK that was previously unreachable ex- cept by foot and should prove a big draw for car enthusiasts and adventurers looking for something they can’t find elsewhere in the country. It will also open up the area to more development and that means more op- portunities for construction companies. Elsewhere in the issue we take a closer look at developments in Kuwait ahead of the Big 5 event there later this month. It turns out the country’s construction sector is doing much better than you might expect for a country that depends on oil for 95 per- cent of its revenue. Despite lower oil prices, the government continues to invest heavily in infrastructure while it seems healthcare is also a high priority. Indeed, all the signs are that Kuwait’s construction industry is in good shape. editor’s note Jason o'Connell Editor
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construction business news me September 2016 8 For News, features and more, Visit www.CBNme.com Follow us on twitter for breaking news: @cbn_ME Follow us on Facebook for up-to-the-minute breaking news Read the latest edition on www.CBNme.com NEWS Drake & Scull International (DSI) took a significant hit in first half profit and rev- enue due to the construction downturn in Saudi Arabia where it saw a number of jobs cancelled. The Dubai-based contractor slumped to a net loss of AED 216mn ($59mn) in the six months to 30 June, from a net prof- it of AED 34mn in the first half of 2015. In its financial statement the company re- vealed the loss was due to project cancel- lations and additional one-off provisions taken in light of market challenges. “A majority of these provisions ema- nate from Saudi Arabia, with the total impact on the bottom line amounting to AED 192mn. These cancellations were executed by clients on individual one- off projects with minimal bearing on DSI’s ability to continue operations in Saudi Arabia and other markets.” DSI booked a year-on-year decline of 23 percent in revenue, which stood at AED 1.83bn in H1 2016 as compared to Drake & Scull hit by Saudi cancellations Khaldoun Tabari, CEO of Drake & Scull Intl non-core assets to generate cash and improve liquidity. However it denied re- ports that it had hired a legal advisor to help attract strategic investors. Khaldoun Tabari, CEO and Vice Chairman of Drake & Scull International PJSC, said in the company’s H1 financial statement: “We are in the process of em- barking on a new strategy to reposition ourselves as a leader in the market. We will also initiate fundamental changes to our group and leadership structure which will be supplemented by a re- organization and realignment of senior management roles as part of our efforts to enhance and streamline our operative framework. “Despite the challenges, our business remains operationally and financially ro- bust. Due to our longstanding partner- ship with major international and local banks, we continue to retain strong lines of credit and secured access to funding to deliver our ongoing projects backlog.” Dubai-listed contractor restructures amid construction downturn AED 2.39 bn achieved in H1 2015. Its order backlog fell to AED 9.37bn as of 30 June 2016, from AED 13.24bn in H1 2015, reflecting the project cancellations in KSA. Despite the slowdown in the re- gional project awards, DSI managed to secure AED 570mn worth of new or- ders in the first half, including the AED 343mn Doha Metro Depot and Stabilis- ing Yards contract as well as the AED 227mn Zubair Oil Field project in Iraq. The company said the wins reinforced its strategy of concentrating on sector- specific, core engineering projects with high operating margins. Restructuring DSI is on track with its cost-reduction programme to improve operational effi- ciency and reduce overheads by the end of 2016. The company has implemented a number of measures to optimise its capital structure, including the sale of
construction business news me September 2016 9 TDIC expects to announce the main construction works contract for Phase 1 of the Saadiyat Lagoons residential project in Abu Dhabi before the end of this year. Western Bainoona Group for General Contracting L.L.C. is on site and progressing with enabling works, in- cluding ground improvements and site clearance. Sufian Hasan Al Marzooqi, Chief Executive Officer at TDIC, said: “We launched this project back in April of this year and works are on track in preparation for the main construction of the project. The contractor has mo- TDIC to name Saadiyat Lagoons contractor by year end bilized on site for the enabling works and we expect to announce the main construction works contract before the end of this year. “Saadiyat Lagoons District is such a unique residential project within Saadi- yat Island and we anticipate the interest to only increase moving forward.” Phase 1 of the Saadiyat Lagoons Dis- trict includes 820 townhouses set in a gated community. The district will also include two lifestyle and retail destina- tions: a town centre, which overlooks the central Plaza, the central lagoon and a linear park and a waterfront village. Saadiyat Lagoons construction RMJM has been selected as the Ex- ecutive Architect and Interior Designer for The Tower at Dubai Creek Harbour. The international firm was chosen to work on the super tall structure by South Africa-based Aurecon which was selected as the engineer/architect of record by lead architect Santiago Calatrava. Developer Emaar Properties chose the Spaniard’s design over a number of others in April. RMJM did not say how much the con- tract is worth or provide details of its scope of work on the project. The $1bn Tower is expected to rise around 100 metres above the 828 metre Burj Khalifa, current- ly the world’s tallest building and has is scheduled to be complete around 2020. Arabtec Construction posted its seventh successive quarterly loss but chopped the deficit by 74 per- cent thanks to a series of cost cut- ting measures. The contractor booked a defi- cit of AED 186.4mn in the three months to 30 June – down from AED 718.4m in the same period last year, Arabtec said in a state- ment. Revenue for the period rose by 20 percent year-on-year to AED 2.16bn. New work of AED 9bn so far this year has increased its pipeline by 12 percent year-on-year to AED 22.6bn. Arabtec’s general and administra- tive expenses dropped by 43 per- cent to AED 139m, which it said was a result of the "extensive and ongo- ing" cost reduction programme. RMJM appointed to work on The Tower Arabtec chops loss by 74 percent
construction business news me September 2016 10 NEWS Dubai developer Nakheel is now completely debt-free after it repaid a AED4.4bn ($1.2bn) trade creditor su- kuk (Islamic bond) when it matured on 25 August 2016. The scheduled payment marks the end of the company’s financial restruc- turing, which began in August 2011, with all creditor obligations now ful- filled, the company said in a statement. Two years ago Nakheel repaid all AED 7.9bn of its bank debt – four years be- fore the scheduled repayment date. Ali Rashid Lootah, Chairman of Na- kheel, said: “Today is undoubtedly one of the biggest milestones in our history. Our debt-free status is a true testament to the vision of His Highness Sheikh Mohammed Bin Rashid Al Maktoum and the trust that he and the Govern- ment of Dubai placed in our company. Without it, we would simply not be in the position we are in today. “We are also ever thankful to the trade creditors, lenders, investors, busi- ness partners and regulatory authorities who trusted and supported us through- out, and played a significant role in the successful implementation of the busi- ness plan adopted in August 2011. “In six years since, since March 2010, Nakheel has achieved what some considered impossible: completion – ahead of time – of one of the largest, most complex financial restructuring exercises, followed by the successful execution of a new business plan that placed us on a new path to growth. “As we close the curtain on our re- structuring programme, we look for- ward to starting a fresh chapter in which we are stronger and more resil- ient than ever.” Nakheel reported a 4% rise in first- half profits AED 2.95bn ($803mn) com- pared to AED 2.83bn ($770mn) in the first half of 2015. The developer deliv- ered over 1,177 units during the first six months of this year, with its retail, residential leasing and hospitality busi- nesses all performing strongly. The company plans to hand over more residential units to customers during the second half of 2016, starting at Azure Residences on Palm Jumeirah, with handovers at Jumeriah Park, Ju- meirah Islands, Al Furjan and Warsan Village to follow. Nakheel declares itself debt-free RTA seeks consultants for Dubai Tram expansion Dubai’s Road and Transport Authority (RTA) is seeking consultants to undertake the feasibility study for the next stage of the city’s tram line. In a first phase the service will be ex- panded from its current terminus in Al Sufouh towards major tourist and com- mercial centres such as Burj Al Arab, Ma- dinat Jumeirah and Mall of the Emirates, according to a report in Emirates 24|7. Phase three will extend along Jumeirah Beach Road to 2nd December Street in Bur Dubai, the report said. Currently Dubai Tram serves 11 stations mainly in Dubai Marina, JBR and Media City over a distance of almost 11 km. “The success of the current tram has en- couraged us to look into extending the line up to 5 km covering more iconic des- tinations,” Abdul Mohsen Ibrahim Younes, CEO of RTA’s Rail Agency, told Emirates 24|7 earlier.
construction business news me September 2016 11 Nakheel and Spanish hospitality giant, RIU Hotels & Resorts (RIU) have appointed Dar Al Handasah to oversee design, engi- neering and construction supervision of their AED 900mn resort and waterpark at Dubai’s Deira Islands. A construction tender is expected to be released by the end of 2016, with anticipated completion in the third quarter of 2019, Nakheel said in a statement. Set on a 3.4 million square foot plot at Deira Islands, the 800- key joint venture – one of the biggest in Dubai in terms of rooms – will be the first all- inclusive 4-star concept in Dubai and RIU’s first property in the GCC. There will also be a water- park occupying 10 per cent of the overall area. Infrastructure and coastal works are well under way at Deira Islands, which will add 40 km, including 21 km of beachfront, to Dubai’s coastline. Nakheel is also developing Deira Mall and Deira Islands Night Souk, among other new attractions at the 15.3 sq km waterfront development. Dar Al Handasah to project manage mega resort Seatrade Maritime middle east to return to Dubai next month Dubai’s $3.6bn mega theme park to open 31 October The development of infrastructure and oil & gas projects will be tabled for discussion at the Seatrade Maritime Middle East (SMME) industry event, which takes place in Dubai from 31 October to 2 November, 2016. Held under the patronage of His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai, UAE, and part of Dubai Maritime Week, the biannual three-day exhibition and conference returns to the Dubai In- ternational Conference & Exhibition Centre to welcome the region’s largest gathering of shipping and maritime industry decision makers. Attracting nearly 8,000 attendees from across 69 businesses, the event is a dedicated platform at which to do business with owners, operators, managers, charterers, superinten- dents, senior management and other professionals involved in the procurements of equipment and services within the maritime, offshore, oil & gas and ports industries. This year’s Seatrade Middle East Maritime will be its eighth edition and is now firmly established as the largest event of its kind in the regional calendar. Dubai Parks and Resorts has confirmed it will open its gates to the public on 31 October. The attraction will comprise three separate theme parks – Bollywood, Motiongate, and Legoland together with Legoland Water Park – while work has started on a fourth theme park, Six Flags, which is due to open in late 2019. “This has been a long-time coming and I can’t say enough about how excited we are to welcome our guests to the destination to experience amazing,” said Raed Kajoor Al Nuaimi, CEO of Dubai Parks and Re- sorts. “Nothing of this magnitude has ever been done before, and we look forward to offering our guests close to 100 unforgettable rides, attractions and experiences.” The AED 13.2bn ($3.6bn) development is spread across 30.6 million square feet of land located on Sheikh Zayed Road opposite the Palm Jebel Ali in Dubai equi- distant to Dubai and Abu Dhabi International Airports. Around 6.7 million ticketed visits are expected in 2017, the first full year of operation.
construction business news me September 2016 12 NEWS Saudi Arabia continued to see a fall in construction contracts in the second quarter of the year. The total value of awards slumped by 27 percent to SAR 20.3bn ($5.4bn) in the three months to 30 June compared to the first three months of the year, ac- cording to the latest NCB Construction Contracts Index. The decrease was mainly attributed to the reduction in contracts for mega- projects as a result of the fiscal restruc- turing by the government, the report said. However, there was a significant rise in the number of smaller contracts that focused on strengthening the King- dom’s infrastructure capabilities. After amounting to SAR 9.3bn in April, the value of awarded contracts in May dipped to SAR 3.1bn, which was one of the lowest levels since April 2010. Ap- proximately SAR 48.2bn worth of con- tracts were awarded during the first half of 2016, less than half the SAR 116.9bn seen during the same period of 2015. “While the Kingdom’s largest metro projects in Jeddah, Medina, and Dam- mam will stall in 2016, investment in oil and gas projects is continuing, as well as in power sector,” the report said. Oil & gas contracts accounted for SAR 6.5bn or 32 percent of the total value of awarded deals, followed by petro- chemical at SAR 5.6bn (28 percent), and residential real estate at SAR 2.9bn (15 percent).The power sector witnessed a rise in the value of awards compared to the previous quarter to reach SAR 2.4bn (12 percent). “The project awards in the second half of the year and into 2017 will be depen- dent on the government’s current plan of scaling down and prioritization of projects,” NCB said. “An upward trend in oil prices will ease the situation, but since this is an unlikely scenario, further decline in contract awards appear to be the most likely outcome.” Saudi construction slump continues Construction of Bahrain’s new $1.1bn airport to start in October TAV and Arabtec will begin construction of Bahrain’s new $1.1bn airport terminal in October following completion of preparatory work. The prep work, which began in February and includes demolition of old airport buildings, is in its final stages, Transportation and Telecommunication Minister Kamal Ahmed told Gulf Daily News. Turkish airport construction specialist TAV Group is building the new terminal along with UAE-based contrac- tor Arabtec. Benoy is designing the interiors as sub-con- sultant to project manager Hill International. The upgrade will boost the capacity of Bahrain Interna- tional Airport from nine to 14 million passengers per year when it opens in 2019. The cost is being covered by the Abu Dhabi Fund for Development (ADFD).
GETTING CLOSER TO THE TOP... Getting closer to the top of the tallest mountain in the UAE will soon be a lot easier, thanks to the fleet of Volvo construction equipment used in the building of the road to the Jebel Jais mountain. When it’s finished, the route will run from Ras Al-Khaimah right to the 1,910 metre summit. The road has already become a popular destination for motoring enthusiasts, who like to show off what their machines can do. But when the road runs out, that’s where the Volvo operators show off their machines. And it’s impressive to see what they can do. If you want to get closer to the action, scan the code and watch the video. Building Tomorrow. VIDEO http://goo.gl/FPsU43
construction business news me September 2016 14 NEWS Majid Al Futtaim has announced a comprehensive redevelopment of City Centre Ajman that will see the mall almost double in size, from 29,000 to 52,000 sqm. With an estimated cost of AED 600mn ($163mn), the expanded City Centre Ajman will feature 150 retail and dining outlets, as well as an ex- panded VOX Cinemas with innovative 4DX screens as well as specially-de- signed children’s theatres. The mall’s expansion is anticipated to conclude in the third quarter of 2017, followed by refurbishment of the existing mall. City Centre Ajman’s redevelopment is a significant component of Majid Al Futtaim’s recent commitment to invest a further AED 30bn in the United Arab Emirates (UAE) by the end of 2026, bringing the company’s total UAE in- vestment to AED 48bn. “The UAE’s Northern Emirates are a key growth area for Majid Al Futtaim, enabling us to deliver an entirely new set of retail, dining, leisure, and enter- tainment experiences to both residents and overseas visitors,” said Kim McInnes, Chief Executive Officer - Shopping Malls at Majid Al Futtaim - Properties. “As Ajman’s population increases and a growing number of tourists visit this part of the country, the redevelopment of City Centre Ajman will deliver the highest standard of design and diversity of choice while contributing significant- ly to the emirate’s economic and em- ployment landscapes.” Majid Al Futtaim unveils $160mn City Centre Ajman revamp Nakheel tenders for two new hotels in Dubai Dubai master developer Nakheel has released construction tenders for new hotels at Dragon City and Ibn Battuta Mall that will add another 670 rooms to its hospitality portfolio. Nakheel will build a 295-room ho- tel at Dragon City and a 15-storey, 375-room hotel at Ibn Battuta Mall, where a 300,000 sq ft extension opened in May. The 3-star hotels – due for completion in 2017 – comple- ment existing hotels at the two retail hubs, where further major expansions continue. Nakheel opened a 251-room Accor-operated ibis Styles hotel at Dragon Mart 2 in February, while its 372-room Premier Inn at Ibn Battuta will open in Q4 this year. With a built-up area of over 180,000 sq ft, the new Dragon City hotel will feature a restaurant, coffee shop and gym, while the 280,000 sq ft estab- lishment at Ibn Battuta, located by the Metro entrance, will have an all- day restaurant, gym and pool deck. Nakheel also has hotels under development at Palm Ju- meirah and Deira Islands, with more in the pipeline. Dragon City
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construction business news me September 2016 16 Appointments Steve Ramsden has made the step up to managing director of fit out special- ist ISG Middle East, replacing Alan Mc- Cready who is leaving the company af- ter almost eight years at the helm. Ramsden will take up his new role this month, having been ISG Middle East's general manager from February 2016. Ramsden said: "ISG has continued to grow both internationally and here in the UAE since 2009. My ambition is to build on this with our leadership team and to continue developing the busi- Architecture and design firm Perkins+Will has appointed Firas Hnoosh as new de- sign director for its Dubai office. Hnoosh has over 17 years of design ex- perience and has held design director roles for the Abu Dhabi practices of two large international architectural firms and served as the head of a studio for the London practice of a renowned global design firm. His portfolio includes projects such as The National Bank of Abu Dhabi Global Headquarters on Al Maryah Island; the Abu Dhabi Cruise Terminal in Mina Zayed for the Abu Dhabi Port Company; a large Volvo Construction Equipment has elevated Carl Slotte to the rank of President of Sales Region EMEA, succeeding Tomas Kuta, who was appointed Senior Vice President of Global Sales in June. With over 20 years’ experience in the construction in- dustry, Slotte has held senior positions within Volvo CE’s global functions, the sales organization and within the dealer network. They include Senior Vice President for Global Key Ac- counts, Vice-President of Hub North within Sales Region EMEA, Managing Director of Volvo CE Russia (Volvo Vostok ZAO) and Managing Director of owned dealer Volvo CE Finland OY. He assumes his new role from October 1. Steve Ramsden named managing director of ISG Middle East Perkins+Will appoints new design director for Dubai Office Volvo CE names new president of sales ness - delivering exceptional service and fit out solutions to our clients." Prior to joining ISG, Ramsden was the Middle East managing director of a ma- mixed-use development in Dubai for Ma- jid Al-Futtaim Group; Manhattan Loft Gar- dens, a 42-story mixed-use residential and hotel tower in east London at the Olympic jor global fit out company, where he led the premium and travel retail divi- sion delivering projects for some of the world's most prestigious retailers and airport operators. ISG Middle East recently completed refurbishment of the Kempinski Mall of the Emirates hotel, which is Dubai's biggest ever live hospitality refurbish- ment project. The company is also currently under- taking a number of large-scale corpo- rate fit out projects, particularly in DIFC and Abu Dhabi Global Market Square. Village; and a large retail center in Bahrain Bay in Manama. In his role as design director for Perkins+Will’s Dubai office, Hnoosh will guide a growing team of 30 architects through all stages of design for mixed-use developments, high-rise office buildings, hotels, universities, and cultural centers. With a strong background in digital design, he will introduce new tools and production software, building information management (BIM) platforms, and envi- ronmental and parametric applications to the Dubai studio.
contracts Turkey’s Tekfen wins $2.1bn Qatar highway contract TDIC awards enabling works for Saadiyat Lagoons Nakheel awards $40mn Dragon City contract DEWA awards $10.4mn advisory contracts DAMAC awards $260mn deal for London project Turkey’s Tekfen Construction has signed an engagement letter worth $2.1bn for a highway project in Qatar. The Al Khor Expressway project will be 34 kilometers long and have 10 lanes in total along with a number of viaducts, road junctions, overpasses and underpasses. It will be built and submitted on the turnkey model and is planned to be finalized within 36 months, the company announced in a stock exchange filing. The Tourism Development & Investment Company (TDIC) has awarded the enabling works contract for Phase 1 of the Saadiyat Lagoons District to Western Bainoona Group for General Contracting L.L.C. The six-month contract covers ground improvements, in addition to site clearance, the master developer of major tourism, cultural and residential destinations in Abu Dhabi. Al Ghurair Contracting & Engineering Works has landed a AED 117.5mn ($40mn) contract with Nakheel to construct a new showroom complex at Dragon City in Dubai. The retail centre will have 18 showrooms and a multi-storey car park for 900 vehicles. Construction of the showrooms will begin in two months’ time with completion set for the fourth quarter of 2018, Nakheel said in a statement. Dubai Electricity and Water Authority (DEWA) has awarded two advisory contracts worth a combined $10.4mn for major upcoming projects. The first AED 16.3mn ($4.4mn) deal is for a 150,000 cm3/day capacity reverse osmosis seawater desalination plant at the Jebel Ali Power and Water Complex. The second was a AED 22.2mn ($6mn) consulting contract for the 700MW expansion of the Aweer Power Station ‘H,’. DAMAC Group has awarded Lendlease a AED 960 ($261mn) contract to build the AYKON London One residential tower, the Dubai-based developer’s first major project outside the Middle East. Sited in Zone 1 on the South Bank, the 50-storey tower will provide 450 new homes together with office and retail across two- interlinking towers. The project is part of a wider multi-billion pound regeneration scheme that includes the redevelopment of the famous Battersea Power Station. construction business news me September 2016 18
Shriram EPC bags $230mn Oman order Nakheel awards $408mn Al Khail Avenue contract Tharwaa/Al Mansouri 3B JV wins main contract for Park View Keller Group clinches $65mn contract in Abu Dhabi Hill wins $43mn Doha Metro contract extension India-based Shriram EPC has been awarded a $230mn contract by Oman’s Moon Iron & Steel Co to construct the balance of plant for a 1.2 million tonnes per annum steel mill project in Sohar. The project execution period will be 32 months. T Shivaraman, MD and CEO of Shriram EPC, said: “Given the slowdown in the steel and metals business in India with capacity expansions on hold, this overseas order will enable us to maintain and strengthen our position in this sector.” Nakheel has awarded Dhabi Contracting a AED1.5bn ($408mn) contract to build its Al Khail Avenue mall which now includes a 252- room hotel. Earthworks at the site – alongside Dubai’s Al Khail Road on the edge of the Jumeirah Village Triangle (JVT) community – were completed in June and construction is set to begin in early October. The project is scheduled for completion in the first quarter of 2019. Bloom Properties has awarded a joint venture of Tharwaa / Al Mansouri 3B with the main contract to build its mixed-use development on Saadiyat Island in Abu Dhabi. With enabling works on Park View in the final stages of completion, site mobilisation has commenced and main works on the project are set for completion by the end of 2017. Keller Group, the world’s largest geotechnical contractor has been awarded a GBP 50m ($65.3mn) contract in Abu Dhabi. The job comprises ground improvement works and will be conducted in a 50-50 consortium, Keller said in a statement without revealing details of its partners or the project in question. Work is expected to commence imminently and to be completed by third quarter 2017. A Hill International-led consortium has scored a contract extension to continue providing project management services for the Green Line of the new Doha Metro transit system. The thirty-month extension with Qatar Railways Company has an estimated value of approximately QAR 157mn ($43.1mn), Hill said in a statement. construction business news me September 2016 19
construction business news me September 2016 22 Market report Residential and hospitality sectors still driving Dubai’s construction market, according to data from Rider Levett Bucknall (RLB). Dubai lifts Gulf crane market T he number of cranes added to the Dubai skyline in the first half of the year provides fur- ther evidence that the emir- ate’s construction sector is defying ex- pectations and bucking the stagnation trend seen elsewhere in the Gulf. Rider Levett Bucknall’s (RLB) latest Crane In- dex report shows the number of cranes operating in Dubai rose 18 percent in the six months to 30 June, compared to 6 percent in Abu Dhabi and 5 per- cent in Doha. In total there were 1,714 cranes in use across the three countries at the end of the period, a rise of 12 percent on the previous six months. The report highlights the progress on some of the major projects launched in the past year such as the Doha Rail pro- gramme, Dubai South and Dubai Creek Harbour as well as the development of Al Mussafah industrial area and Reem Island in Abu Dhabi. Though the resi- dential, civil and commercial sectors remain strong, we are seeing the high- est increase in 2016 government spend- ing in the infrastructure, hospitality and retail sectors where governments are clearly focusing on ensuring proper social and economic development to strengthen and increase governmental income from non-oil industries. While Abu Dhabi continues to work on substantial projects related to the industrial sector, Dubai is still expanding its suburbs to offer more affordable and spacious housing to its residents, and Doha is focusing on strengthening its infrastructure and implementing a new railway system to increase the city’s efficiency and optimise its economic growth. With the current economic and po- litical challenges faced in the Middle East, the United Arab Emirates and Qa- tar are facing a pressing need to deliv- er mega projects on time for the Expo 2020 and the FIFA World Cup 2022
construction business news me September 2016 23 which has left them contemplating new possibilities and partnerships that are key to addressing efficiency and capacity issues. The 2016 crane count is a testament that both countries are sustaining a robust construction mar- ket while continuously exploring in- novative ways to enable strong social and economic development. DUBAI The residential and hospitality sectors are still leading Dubai’s construction market with 473 and 146 cranes respec- tively. While the residential projects are scattered throughout the city’s skyline, more than half of the hotels crane count are associated with Business Bay and Palm Jumeirah developments. The commercial sector shows an increase of 46 percent since the De- cember 2015 crane count bringing up the number of cranes to 130 with new office buildings being constructed in Dubai Silicon Oasis, Jumeirah Lakes Towers and Business Bay. As Dubai gets ready for the Expo 2020 and con- tinues to strengthen its core sectors, such as services and tourism, retail projects continue booming, with ex- amples such as Nakheel’s major mall developments on the Palm Jumeirah and on Deira Island. The 2016 RLB Crane Index highlights the top 5 densest areas in Dubai with ongoing construction as Business Bay, Palm Jumeirah, Jumeirah Village Circle, Dubai Silicon Oasis and Downtown Dubai. The necessity for Dubai to ex- pand its income sources calls for a vari- ety of projects encouraging innovation, creativity and successful businesses and touristic attractions. ABU DHABI The residential and industrial sectors remain the most dominant ones in Abu Dhabi representing together over 80 percent of the total number of cranes. It is clear however that one of the highest increases since the last count is in the education sector with 19 cranes spread between Shakboot City and Mohamed Bin Zayed City. With Abu Dhabi’s aim to ensure economic sustainability and build a secure and confident society, the cap- ital is placing strong focus on areas such as education, health, and social and economic development although its current market is the most exposed to the fall in oil prices. The 2016 RLB Crane Index accounted for 264 cranes in Abu Dhabi. Govern- ment spending remains stable in order not to hinder on-going activities and future economic growth. This is notice- able with a slight increase of 6 percent since the last crane count. DOHA In preparation for the World Cup 2022, the city of Doha has recorded over 500 cranes in its skyline, despite the fall in oil prices which has im- pacted most of the GCC. The Qatari government with its revised budget and prioritised projects, maintains ro- bust spending in 2016. The RLB Crane Index report has shown how critical the civil sector is for Doha’s economic development, on a global and national level. The city’s infrastructure and transportation net- works have boosted the crane count by 30 percent since the last count in December 2015. With 237 cranes, the crane count related to the civil sector is nearly half the number of cranes pres- ent throughout Doha. Activities around the Qatar National Museum and Msheireb Downtown Doha are moving forward, resulting in the crane count in most of the re- maining construction sectors decreas- ing. However, the 2016 RLB Crane In- dex recorded a 5 percent increase in the total crane count. KEY CONSTRUCTION SECTOR CRANE MOVEMENTS DUBAI ABU DHABI DOHA TOTAL 2016 SECTOR % 2015- 2016 MVT % RESIDENTIAL 473 117 74 664 39% 8% CIVIL 31 - 237 268 16% 33% COMMERCIAL 130 11 54 195 11% 2% HOTEL 146 3 31 180 11% 23% OTHER 55 98 - 153 9% 19% CIVIC 12 6 48 66 4% -15% RETAIL 57 - 26 83 5% 22% RECREATION 11 6 30 47 3% -6% EDUCATION 9 19 6 34 2% 17% HEALTH 17 4 3 24 1% -4% TOTAL 941 264 509 1714 12% OVERALL CRANE MOVEMENTS 2016 +/- % 2015 +/- % 2014 DUBAI 941 143 18% 798 211 36% 587 ABU DHABI 264 14 6% 250 3 1% 247 DOHA 509 25 5% 484 131 37% 279 Source: RLB
construction business news me September 2016 24 Ahmed Alkhoshaibi, Group CEO of KBW Investments, on plans to take Raimondi Cranes to new heights. The Next Level Raimondi became part of KBW Investments in 2014. What has changed for the com- pany since then? The January 2014 acquisition of Rai- mondi Cranes by KBW served to turn the entire company around. From a corporate perspective, we first got to work on streamlining processes and hierarchies, then we looked at the company’s operational silos and in- creased internal communication and cross-department collaboration. Re- garding facilities, we invested in the latest manufacturing technologies to improve production and optimise output. In regards to research and development, the acquisition allowed for capital injections that were put to work enhancing Raimondi’s techno- logical capabilities. The company’s R&D arm was placed at the forefront and given the resources to execute trials, involve more field expertise in design and planning, and run consis- tent testing. The results of the huge focus on this segment of the business is that our technical teams were able to develop innovative solutions, and then apply these solutions to our lat- est product launches. Over the past six months Raimondi has launched three new products, and all had in- depth R&D analysis in planning and prototype stages. Was Raimondi big in the Middle East before the acquisition? Prior to KBW’s 2014 acquisition of Raimondi, the company’s Middle East market share was reasonable - in Qatar specifically, Raimondi was the market leader. Market awareness and knowl- edge was obviously stronger across European nations - especially since Raimondi is an Italian heritage com- pany - and across other Western mar- kets including Turkey, Australia, and North America. The company’s Middle East operations are inclusive of full circle facilities including both yards and offices in the UAE, Saudi Arabia and Qatar, and employs more than 150 people across the three Gulf states. We’ve applied a direct client relation- ship model, meaning that clients are liaising directly with Raimondi Cranes in centrally located GCC construction hubs, not an agent of Raimondi. This has increased market share, and al- lowed for cost and time efficiencies that the manufacturer has benefitted from immensely. The sector is going through a challenging time. How have you found the crane market over the past 12 months? Over the past 12 months, Raimondi has sold 35 cranes across the Middle East and the company’s newest luff- ing LR213 demonstrated strong pre- sell interest. Despite the fact that at this time last year we had sold more units, we expect the second half of the year to demonstrate good sales taking into consideration our newest product lineup. In terms of popular- ity and sales frequency in the Middle East, the Raimondi MRT294 16 t. does very well. Our technical side attributes this interest to the MRT294’s attractive aspects such as the maximum lifting capacity, and the 3.5 t. at 70 meter tip load. It has been really well received with Middle East based general con- tractors and developers that employ precast systems. The highest demand appears to be across the GCC. In particular, I would single out Dubai, Doha and Riyadh; this is most likely due to tenacious ef- forts to maintain industry movement by the public and private sectors. What's the outlook for the next 12 months? Raimondi will be KBW’s second strongest portfolio company in terms of profits; we’re very optimistic as our regional sales personnel are consis- tently fielding new queries. KBW’s first driver is the construction sector, and our group is currently at work on a number of large scale projects in several countries and sectors across the region. Two recent examples in the UAE would be the AED120mn Novotel Sharjah Expo in the hospi- tality sector, and in infrastructure, the new automated parking structure for Dubai Courts, a PPP BOT project that we announced in May with ITNL. These projects, amongst others in the Group portfolio, ideally will be put- ting Raimondi’s cranes to work on different jobsites regionally. “In terms of popularity and sales frequency in the Middle East, the Raimondi MRT294” Market report
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construction business news me September 2016 26 A 10-year project to reach the highest point in the UAE enters the final straight The End of the Road I t’s taken more than a decade to build but finally the summit of Jebel Jais is within sight. In Oc- tober 2014, the government of Ras Al Khaimah (RAK) opened a 30km stretch of a road that snakes its way towards the highest point in the UAE, at 1,900 metres above sea level, near the border with Oman. The road, which for now stops 6km short of the mountain top, has already be- come a magnet for day trippers, sight- seers and car enthusiasts, keen to test their machines and their wits on one of the most fun-to-drive surfaces in the world. In fact a Youtube search reveals that a number of prestigious car mak- ers have already chosen the scenic route as a filming location to show- case their brands. Its’ perfectly paved surfaces and smooth hairpin curves allow drivers to put a vehicle safely through its paces while drinking in the incredible view as they ascend or de- scend the mountain. Without a doubt the road is up there with Jebel Hafeet, near Al Ain in Abu Dhabi as the best in the country and some have already placed it among the best driving roads in the world. Initially the road is flat and follows the harmony of the wadis. For the first 12km there is just one lane in either direction but once the road begins its ascent it widens into two lanes going up, allowing more powerful vehicles to overtake slower ones. Once you get to the top and have spent some time taking in the breathtaking views, which stretch as far as the RAK coast- line on a clear day, the only way down the mountain is to do a U-turn and go back the way you came. So what’s the rationale for building a ‘road to no- where’, so to speak? Well, partly, the RAK government decided to build the road to provide access to the area for economic reasons, for example to ac- cess a quarry to produce aggregate for the construction trade. But the main reason was to reach the highest point in the UAE and create a new tourist destination that is unique in the coun- try. While all emirates in the UAE have Cover story
construction business news me September 2016 27 developed tourist infrastructure along their coastlines and to a lesser extent in the desert, this part of the country offers something different because of the mountains. A trip up Jebel Jais can provide re- spite during the sweltering summer months, with temperatures as much as 10 degrees cooler than at sea level. But there is little sense in ploughing huge sums (around $82mn to date) into building a road to the top of a mountain just to admire the view - there has to eventually be a return on that substantial investment. The road opens a whole new part of the country to economic development and signs of this are already in evidence within sight of the route, where a number of standalone villas have been built. There are plans to eventually develop a high end resort near the summit of the mountain as well as a cable car to provide an alternative means to access the summit. RAK also has its sights on becoming the adventure tourism capi- tal of the UAE, with plans unveiled this year to build the world’s longest zip line at 2.6kms. There has even been talk of a ski resort on the mountain. The final stretch But none of this can really happen un- til the road is complete. Its construc- tion has been a long and arduous pro- cess that began all the way back in 2005, but contractor General Mechanic Company is now working to com- plete the final 6km which it expects to handover in March 2017, barely six months from now. For project man- ager Yaghoub Alipour Vaezi, who has been on site since 2008, that milestone will mark the culmination of over 10 years of hard work. The construction timeline has been protracted by one or two hiccups along the way, though that is only to be expected of a com- plex project that is a first for the UAE. Until the main stretch of road opened two years ago this part of RAK was completely inaccessible due to the rocky terrain, Mr Alipour explains. For the first site visit they had to use a
construction business news me September 2016 28 helicopter because the only alternative would have been to walk 36kms in the heat. Local people could drive for just 4kms of the route in a 4x4 but there was no public road. Accessing the site was a huge challenge for the consul- tants who first surveyed the road and that difficulty led to a miscalculation in the amount of excavation that needed to be done, resulting in delays. Fur- ther delays were caused by local land- owners refusing permission to cut the road through their land, which forced the contractor to change the route. The Dealer Volvo Trucks and Construction Equipment Provided by FAMCO Though the project started in 2005, FAMCO has supplied both Volvo Construction Equipment and Volvo Trucks from 2009 onwards. In total, the dealer has provided the contractor with 50 Volvo Construction Equipment and 33 Volvo Trucks. Nigel Johnson, Senior Managing Director – FAMCO Group , explains: “This project had a significant importance to FAMCO as it was the first project undertaken by FAMCO’s Rental & Used Equipment Division at a time that equipment’s rental was a new thing for the contractors in the market. “FAMCO’s Rental & Used Equipment Division, offered a major option to the contractor and provided him with solutions to meet his requirement for a large fleet of machinery and trucks for as critical and challenging project as Jebel Jais mountain road. “We provided the contractor with the much needed resources for this project and helped him save capital expenditures which reflected positively on the project’s budget and delivery timelines. FAMCO did not only provide the machinery and trucks, it provided also the operators and drivers, the outstanding aftersales support, the flexibility of replacing any unit with a support one to ensure the optimum uptime and smooth flow of operations. “All these factors as well as FAMCO’s leading position in the market as a solution provider for construction equipment and commercial vehicles played a key role why the contractor selected FAMCO to support him in this challenging and iconic project.” • Volvo Crawler Excavators: EC700, EC480, EC460, EC380, EC360, EC290 and EC210. • Volvo Soil Compactors: SD110 • Volvo Articulated Haulers: A35F and A35E. • Volvo Wheel Loaders: L120F and L180G. • Volvo Trucks: FMX370 Tippers • Volvo Breakers The combination of these two factors meant that the volume of excavation doubled from the initial estimates. To date between 5.3 and 5.5 million cubic metres of material has been excavate from the site and that is expected to rise above 6 million cubic metres by the end of the project. Making your way up the winding route towards the end of the paved section of the road, the mind can barely comprehend how the contrac- tor has managed to build the project. Once you pass the barrier that marks Cover story Nigel Johnson, Senior Managing Director – FAMCO Group
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construction business news me September 2016 30 the end of the completed 30km sec- tion of the road, you get a much better sense of how they go about it and the challenges they have faced. Still under construction, this part of the route is unpaved and much narrower, without concrete barriers to prevent a vehicle from going over the edge and tum- bling down the mountain. Unlike many construction projects, building a mountain road is not very labour intensive. At its peak there were around 300 workers on site which has now been reduced to just 150. The real work is done by machines but just getting the breakers and excavators up the mountain is a perilous challenge. Accessing the site requires powerful Cover story The Trucks Volvo Trucks supplied Volvo FMX 6X4 Rigid, equipped with the I-Shift automated gearbox for this project. This innovative gearbox is the first transmission of its kind which has been specifically designed for heavy long-haulage and construction applications. The truck has high ground clearance to operate in tough environments and comfortable cabin for the drivers which made the job less physically draining and allowed them to drive for longer. Jan-Erik Thoren- Business Team Director, Volvo Trucks Middle East, says the nature of this job means that vehicles suffer more wear and tear than usual due to a lot of stopping and starting on hills with heavy loads. However, the Volvo I-Shift gearbox and Engine Braking system minimizes the wear and tear on certain driveline and brake components. trucks with the ability to safely man- age the very steep gradients of the ac- cess tracks. “We had to have safe and reliable machines on the project,” says Mr Alipour. “Mostly we used Volvo ma- chinery because of their after sale services and because they are avail- able in both Dubai and RAK. Other brands we would have had to call them from Dubai for repair work. We had a Volvo roller, dump trucks, six wheel trucks, different sized of exca- vators, even 70 t, loader and breaker. FAMCO is equipped to do this faster than others.” Another challenge is the climate which is very different from the base of the mountain. There is fog almost every day in the cold season, which can delay work by hours until visibility improves enough to safely move ve- hicles and machinery. Heavy rainfall and floods are not uncommon on the mountain which can produce treach- erous conditions to work in, especially as the mountain is made up of a mix- ture limestone and soft clay. A severe downpour has the ability to destroy a half built road meaning the contrac- tor has to start all over again. It also raises the risk of damage to rock faces carved out of the mountain, which in some cases can be as high as 71 me- tres. As cutting tends to happen from above while filling and rolling is done Jan-Erik Thoren- Business Team Director, Volvo Trucks Middle East
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construction business news me September 2016 32 below, rainfall can result in rocks falling onto areas where work is go- ing on. In fact rockfall is a perpetual threat as excavation is initially done by blasting which can destabilise a whole area. The more risky rock faces are stabilised by gritting and bolting to protect it from rainfall. Visiting the site, it is clear the end is within reach. With a basic track now lead- ing almost to the top of the mountain, all that remains is to widen the passage with more cutting and filling before the road can be constructed. This involves a 15cm thick sub base overlaid by a 15cm road base topped by a layer of asphalt. Once the whole road is done and walls are sta- bilised, a second layer of asphalt will be laid to the entire 36km route to provide a quality finish. And with that Mr Alipour can finally hand over the result of almost a decade’s worth of work. Cover story The Machines The extreme terrain around Jebel Jais was inaccessible for years until the project started and the remote location provided a number of challenges. These include limited access points around the mountain areas, unpredictable and harsh weather conditions such as snow, fog and wind storms as well as the surrounding hazards like loose rocks and avalanches at the mountain. “The Volvo machines used on this project were carefully selected for their durability and reliability in such extreme and challenging work conditions as well as for all the built in safety features in them,” explains Shahir El Essawy, Business Director, Volvo Construction Equipment. Shahir El Essawy, Business Director, Volvo Construction Equipment
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Getting closer to the top of the tallest mountain in the UAE will soon be a lot easier, thanks to the fleet of Volvo construction equipment used in the building of the road to the Jebel Jais mountain. When it’s finished, the route will run from Ras Al-Khaimah right to the 1,910 metre summit. The road has already become a popular destination for motoring enthusiasts, who like to show off what their machines can do. But when the road runs out, that’s where the Volvo operators show off their machines. And it’s impressive to see what they can do. If you want to get closer to the action, scan the code and watch the video. Building Tomorrow. VIDEO http://goo.gl/FPsU43
GETTING CLOSER TO THE TOP...
Tarek Shuaib has led Pace to its position today as a leading architecturally led multi- disciplinary practice, serving Kuwait, the wider Middle East and Africa with a mix of creative and innovative vision and practical delivery. Managing Partner since 2005, Tarek has been involved in the delivery of a host of high profile, successful projects, the most recent of which include the Jahra Road Development Project, Jamal Abdul Nasser Highway, Arraya Centre, The Avenues Mall, Kuwait Business Town, Central Bank of Kuwait, College of Basic Education, Kuwait International Tennis Complex, and Subiya Road. With a commitment to functional design and for producing results that last, he has left a lasting impression on Kuwait’s built environment. Jason O’Connell writes. Setting the Pace Pace was founded by your father. Tell us about the early years of the company. My father Hamid Shuaib and his partners founded Pace in 1968 when Kuwait was blossoming in terms of architecture, cul- ture and economy. They recognised that the country’s newly discovered oil wealth and a strong national desire to see prog- ress and development opened up limit- less opportunities. The original firm – called at that time Pan Arab Consulting Engineers – was born as a direct consequence of my father identi- fying a unique opportunity for local archi- tects and engineers to be a part of this on- going quantum leap. He wanted to leave his mark on the country’s modern history. His ambition was to give Kuwait the best architecture with the highest international standards. Simply put, to give Kuwait the architecture it deserved. How has Pace evolved over time? Even today one can see companies in all sectors suffer from their over ambi- tion. They become stretched across too many sectors or regions, resulting in fail- ure. Pace has always taken a more cau- tious, pragmatic and realistic approach to growth. And we also always wanted to maintain the almost ‘family business’ In person environment that my father and his team instilled. So I would say that we have evolved with sound financial and busi- ness practices in place, working with strong and visionary clients who recog- nised the quality of services. After all, it is only by delivering our customers’ vision, consistently well, that any growth is pos- sible. We have been doing that since 1968 and we still do that now. The success of our strategy of focus- ing on quality and service rather than just number of projects is evidenced by the fact that Pace is now a market-lead- ing architecturally-led multi-disciplinary design practice, in Kuwait and beyond. Our portfolio of work totals more than 1,300 commercial, governmental, resi- dential, recreational and educational projects, not only in Kuwait, but world- wide. Landmark projects such as Central Bank of Kuwait Headquarters, Arraya Tower and Kuwait Business Town are now recognised elements of Kuwait’s skyline. Some of our projects have even been featured on postage stamps and the Kuwaiti currency. High praise, in- deed, of which I am immensely proud! Now of course we have a fully-fledged international division with multiple re- gional offices and branches in several markets, including Bahrain, Iraq, Djibouti and Tunisia. Saudi Arabia has now be- come a major focus for us, and we are currently working on several large proj- ects to keep up with the immense devel- opments taking place there. Which project is the company most proud of and why? Each and every one of our projects makes me proud, of both the result and of my team delivering that result. And each and every one is unique, so it is impossible for me to compare one with another. If you want highlights, then I guess that the Arraya Tower was a land- mark building for both us at Pace and for Kuwait as whole. Kuwait’s – and our – first skyscraper at that time, designed and supervised by us in 2009, the Arraya is now a landmark iconic building, and will always stick in my memory. Our design of the Arab Organizations Headquarters Building represented a memorable blend of modern architectural techniques with traditional Arabic artisan crafts, whilst at the same time presenting unique technical and engineering chal- lenges. So that too is special. I am proud to say that we have for some time demonstrated excellence in engineering and infrastructure projects in addition to building design. Significant and vital infrastructure projects such as the Jahra Road and Jamal Abdul Nasser
Our portfolio of work totals more than 1,300 commercial, governmental, residential, recreational and educational projects, not only in Kuwait, but worldwide.
construction business news me September 2016 38 consultants has been notable. I believe we may have been in the vanguard of partnering with many world-renowned consultancies such as SOM, Gensler, HOK, Fentress, Zaha Hadid, Arup, Buro Happold, and TRO. What’s been the secret of your success as a company? Well, good business in my view is no secret. Pace has evolved into a leading multi-disciplinary practice in Kuwait by delivering the right professional exper- tise to a wide range of public and pri- vate sector clients. Through integrating our services in one office – architecture, urban design, engineering, interior de- sign, construction supervision as well as project management - we made sure that we were always able to meet or exceed clients’ expectations. We’ve also managed to stay successful by focusing on our vision and adhering to our values and beliefs. Adaptability, commercial awareness, seeking solu- tions to the toughest of problems in a consistently innovative manner…. Those Street provide us the opportunity to help improve the country as a whole, as do our healthcare projects such as the new Maternity Hospital at Sabah. I’m proud to be delivering such important improve- ments to Kuwait. I have to mention the Riyadh Metro Line 3 work – a project any engineer- ing and infrastructure business would be proud to be involved with. And finally, I am proud – very proud – of my team, our people and the collaborative means by which they bring their considerable skills to bear on each and every project, whatever the size, whatever the industry, whatever the location. Which was your first project outside Kuwait? Bahrain, 1982…Beit al Quran, I think, was preceded just by a residential scheme in that country, but that was our first major project beyond Kuwait borders. I have always been confident that we could succeed in other territo- ries as long as we deliver on our brand promise. Whether in the KSA, Bahrain or Africa, if we deliver on the large in- frastructure, the engineering and health and buildings we will succeed. What are the main changes you've seen in how business is done in this region over the years? Clearly there are two parts to this: one, business as a whole, and then the archi- tectural sector itself. From an architectural and design and infrastructure viewpoint, we have seen seismic change over the last decade. The contrast between the cultural forces of globalisation and locali- sation have been instrumental in shaping today’s architecture; i.e. the modern ver- sus the traditional, the Islamic versus the Western, and the local perspective versus the global. And I see more change to come, as recognition grows of the impor- tance of environmental factors, sustain- able and ‘green’ buildings and construc- tion methodologies. From a purely business outlook, the exposure to and the opportunity to collaborate with acclaimed global In person Arab Organisations HQ
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construction business news me September 2016 40 are our secrets. Key to all this is the Pace philosophy: to always deliver outstanding designs, whether it is a building or an en- gineering solution. It’s that simple. What is unique about your of- fering as a company? I am extremely proud to say that I have with me at Pace a hugely talented group of professionals. Bringing together such a diverse team of highly experienced and skilled experts sets us apart from our competitors and gives us, I believe, an upper hand. As an organization, we of- fer remarkable cohesion to our custom- ers. Having a complete multidisciplinary offering housed in one building brings significant advantages to our clients, with inter-departmental communication taking place from the very beginning. More- over, our commitment to the latest con- struction and software technologies helps us to maintain a competitive edge in the market and to uphold our position as in- novators and industry leaders. Finally, our unique design approach and our willing- ness, where appropriate, to challenge the brief is different to our competitors in the region. It is of the utmost importance for us to maintain the highest calibre in our designs with an innovative twist. How challenging is the market in Kuwait at the moment? Right now the economy and market in Kuwait is feeling the effects of the oil price fluctuations, and the investment decisions that it has influenced. Conse- quently there is uncertainty over the tim- ing of key government investment proj- ects in which Pace would hope to play a part. But this is not unique to Kuwait, nor is Kuwait shielded from the other disrup- tive and unsettling events worldwide, so it is my responsibility, along with my se- nior colleagues, to navigate a secure path through these challenging times. What is the key to success- fully navigating the company through tough times? Working with the right people, and stay- ing ahead of the game. We diligently maintain our firm’s status as market lead- ers through constantly ensuring we incor- porate the latest developments in tech- nology into our practices, adhering to the highest of quality standards regardless of resources, and increasing the scope and location of our projects on an internation- al scale. We focus too on understanding and building strong, durable relationships with our clients; we have always been known for our partnership approach with clients. We try to be selective with our cli- ents and the projects we accept, and we maintain close financial control over the lifetime of each project. What kind of opportunities are arising in Kuwait at the moment? Kuwait’s Development Plan 2020 is nat- urally the driver to where the city and the market are going. The government sector is still moving strongly forward with huge investments in many large scale development projects, of which, infrastructure, transportation and health- care feature prominently. On the commercial side of the market, Kuwait is still an attractive proposition for many businesses for relocation, and re- mains an attractive destination in its own right, providing fertile ground for contin- ued retail and leisure and hospitality proj- ects and investment. What’s next for Pace? How do you plan to stay ahead of the competition? I am immensely proud, personally, of what pace has achieved before and what it is achieving now. As a business we look forward to a bright but challenging future, confident that we have the strategy and the expertise in place to overcome any unforeseen issues. We continue to focus on design quality by reengineering our processes and refining our systems. We will always seek to recruit the most talent- ed of architectural, design and engineer- ing experts locally and internationally, and our unrivalled mix of new and sea- soned professionals continues to keep us at the forefront of our industry. Our plans for future expansion are well researched, measured and achievable. We face the fu- ture in Kuwait and beyond with anticipa- tion, relish and excitement. Four major projects Pace has in the pipeline The Avenues - Phase 4 This last phase will complete the Avenues, which has become one of the largest retail destinations in the GCC. The mall offers a distinctive blend of high-quality retail ‘districts’, each with its own character and each with unsurpassed attention to detail. With two new hotels, the Avenues 4 will add some 130,000 sq. m retail space to the existing mall, with a development cost of over KWD 250mn (approximately $900mn). Jamal Abdul Nasser Street and Jahra Road Projects We are working with the Ministry of Public Works of Kuwait to deliver these two vitally important projects in joint venture with Louis Berger, which will significantly enhance the existing infrastructure and transportation network. Kuwait National Museum A large-scale collaboration with the National Council for Culture, Arts and Letters aiming to restore this iconic heritage building. Our work will deliver a total rehabilitation of the museum to offer a cultural centre Kuwait can be truly proud of. On completion, the museum will house one of the greatest collections of Islamic Art in the World, which has been composed with the guidance of HH Sheikh Hussah Sabah al-Salem al-Sabah, Princess of Kuwait. New Jahra Hospital One of the largest healthcare development projects in the region, let alone Kuwait. With the massive increase in patient flow rate, the Amiri Diwan commissioned Pace to undertake the design of a new hospital, which is worth in excess of KWD 350mn (approx. $1.2bn). The new 1171-bed hospital will include a full range of state of the art services and will function as a trauma center for the Jahra district. The Avenues phase 3
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construction business news me September 2016 42 Big 5 Kuwait This year’s Big 5 Kuwait tradeshow and exhibition will take place amid billions of dollars of new investment in the Kuwaiti construction sector, with infrastructure developments a particular focus. The event will host over 200 local and international exhibitors across 4,700 sqm of space, where thousands of products from 24 countries will be showcased. Last year, The Big 5 Kuwait grew by 21 percent across all participants, with a 43% growth in international exhibitors. Showtime A shley Roberts, Event Director of The Big 5 Kuwait, said: “These figures are a clear sign of the show’s success and they are set to grow even further in 2016 as we will bring the best of The Big 5 show to Kuwait tailor- ing our 36 years’ experience to the needs of the local construction industry.” Recently, the Kuwaiti construction sector has profited from the New Di- rect Investment Promotion law which addressed flaws in the previous system, encouraging the creation of new, large companies in the country. Roberts said: “The sector is now benefitting from the government’s initiative to develop the public private partnership (PPP) model. To leverage the fresh momentum ex- perienced by the Kuwaiti market, our event will highlight advanced solutions and products for the local construction sector. Following three hugely success- ful editions, we are developing the event to ensure that The Big 5 Kuwait maintains its position as the leading event for the construction community in Kuwait.” The latest trends, findings, insights and issues in the sector will be dis- cussed at The Big 5 Kuwait in free- to-attend CPD-certified workshops delivered by industry experts from DLA Piper, KEO International Consul- tants, Kuwait Oil Company and many more. Moreover, the ‘How to Trade in Kuwait’ seminar will offer useful tips and information to tap into the Kuwait market and effectively con- duct business. On the final day of the show a Sustainability Day will offer strategic insights on the topic and highlight best practices and opportu- nities for industry players. Ahead of this year’s Big 5 Kuwait, which runs from 25 – 27 September 2016 at the Kuwait International Fair, two exhibitors told Construction Busi- ness News why they will be at the event.
construction business news me September 2016 43 Ralph Geyer, General Manager for Commercial Vehicles & Daimler Buses Mercedes Benz Why are you exhibiting at the Big 5 Kuwait? We are keen to utilize our participation as an opportunity to launch new Mer- cedes-Benz Medium Duty Truck Mod- els “Accelo” and “Atego”, as well as to showcase and demonstrate our already existing products to Kuwaiti construc- tion industry professionals, also to our new and existing customers. Is this the first time you have exhibited here? We are participating at Big 5 Kuwait for the second consecutive year after our last successful participation in 2015. What is the main product you're showcasing here? At the Big 5 we are focusing on dis- playing construction solutions for the Kuwait market such as Concrete mixers & Steel tippers installed on Mercedes- Benz Actros trucks. This year we will officially launch the new Medium Duty Truck «Accelo 915C», for the first time in Kuwait during the Big5 2016. This compact and agile truck has a spacious cab with car-like interior, suitable for a driver and 2 co-passengers. The Accelo is equipped with a fuel-efficient 4-cyl- inder diesel engine producing 150hp and an astonishing torque of 580 Nm and it provides an impressive payload of more than 5 tons. Maximum safety, comfort and reliability are other focal points in the development along with weight-optimization resulting in maxi- mum payload. There are a large num- ber of assistance systems available, which make this truck highly attractive. With these highlights, the Accelo 915C will be the new shining star in the Me- dium Duty segment of Kuwait. We will further display the latest Mercedes-Benz Actors Truck featur- ing Mercedes PowerShift® technology which incorporates over 30 years of Mercedes-Benz experience and exper- tise in the production of automated manual transmission for trucks. Thanks to its rugged gearbox technology and a superior shift strategy, as well as the availability of a 12-speed and a 16-speed version, MercedesPower- Shift® is the number one choice even in the most demanding operating con- ditions, thus contributing to low fuel consumption and reduce emissions. Who is you target audience? The Big 5 is the perfect platform for construction professionals to access thousands of key construction suppli- ers to find the products that they are looking for. The Big 5 Kuwait is the country's meeting place for the con- struction industry, attracting serious buyers from Kuwait. The event pro- vides an easy and essential route into the market for us, enabling construc- tion professionals from across the in- dustry to develop their business and network with a wide range of visitors who are ready to do business in a pro- fessional environment. What challenges are you facing in the market at the moment? Kuwait is one of the leading countries in the Middle East in terms of construc- tion activities, and the Government of Kuwait spends a substantial amount of budget to support this sector. Despite that there are however challenges in the market with high competition for contracts with low operating margins and limited financial resources. What are your vision and the views on 2017? With national funding for major infra- structure projects, a booming retail sec- tor, and a real estate sector with growth prospects, there are plenty of reasons to be excited about Kuwait’s construction sector in 2017. Overall, the construc- tion industry in Kuwait is poised for in- creased project activities in 2017 which will give us more opportunities to in- crease our market share and achieving more growth & development in future.
construction business news me September 2016 44 NEWS Mark Westermayer, Marketing Director KIMMCO Tell us about your company KIMMCO has a proud history of supply- ing energy efficient insulation solutions for buildings applications such as roofs, walls, floors, and metal structures as well as HVAC. Some of our iconic refer- ence projects across the region are the Burj Khalifa, Burj Al Arab, Etihad Tow- ers in the UAE, Princess Nora University in Saudi Arabia, Aspire Tower and Burj Qatar in Qatar and the Kuwait Towers and Al Hamra Tower in Kuwait, to name a few. KIMMCO is also the sole insula- tion supplier and official collaborator of Masdar City, the world’s first zero-car- bon, zero-waste city. Why are you exhibiting at the Big 5 Kuwait? KIMMCO has always participated at the BIG 5 Dubai considering the exhibition as the leading building and construction event in the GCC region. As the leading insulation solution provider across the MENA and SE Asian region, we look for specific events that will help us show- case our unique portfolio of solutions and superior technical services to our clientele. The Big 5 attracts the required audience and creates a platform for us to do just that – allows us to meet and interact with a broad group of stake- holders, including existing and poten- tial customers, key decision makers and government officials. What is the main product you are showcasing here? KIMMCO will present an innovation for the HVAC market in GCC and reinforce its position in sustainable insulation solu- tions. CLIMAVER is a lightweight pre-insu- lated ductwork system which enables the designers to meet the stringent thermal, acoustic and fire performance require- ments of the HVAC market. The product is the solution to a variety of challenges when it comes to design and execution. It starts with energy efficient solutions in order to keep the operational costs as low as possible. According to a recently pub- lished report, 20% of the air that moves through the duct system is lost due to leaks and poorly sealed connections. The challenge ends with the acoustic require- ments and the time pressure at the build- ing site during installation. CLIMAVER, as an all-in-one alternative to sheet-metal, saves valuable space, saves on logistics, and reduces instal- lation time. An extra benefit is that no additional insulation work is required once it is installed. Hence it is more cost-effective in comparison to tradi- tional metal ductwork. The products are light in weight, mechanically strong, and easy to cut and handle, making the installation process very comfortable. It occupies less on-site space for storage, which improves job site efficiency. The fabrication process allows precision-cut joints, ensuring very low leakage rates and flexibility that is key to do on-site changes in design and layout when projects are progressing. KIMMCO is promoting CLIMAVER in GCC under the license of Saint-Gobain ISOVER, a worldwide leader in insula- tion solutions that has been manufac- turing and delivering the product since 1967. During the last years, more than 150 million square meters of CLIMAVER glass wool duct boards have been in- stalled in Europe in all kinds of residen- tial, commercial and public buildings.
construction business news me September 2016 45 Made for the job Ford Trucks Construction Series has been designed for the toughest jobs out there, from mixing cement or moving great mounds of earth, working in the vastest of quarries to the smallest sites. Drop into one of our authorised dealerships today to find out more about how our tenacious and efficient 350 PS Motor-powered Series can help you. www.fordtrucks.com.tr Ford Trucks Sharing the load – Almoayyed Motors – Manama / venugopal.nair@almoayyed.com.bh – Al Kasid Commercial Agencies Ltd Erbil & Baghdad / ahmed.ali@al-kasid.ae – The Commercial & Industrial Company - Amman / w.albajjali@cic.com.jo – Mohsin Haider Darwish LLC / Muscat -bhaskar@mhd.co.om – Almana Motors Company W.L.L – Doha / oghobrial.aa@almanagroup.com – Al Jazirah Vehicles Agencies Co Ltd – Riyadh, Dammam, Jeddah / smomea@aljazirahford.com – Al Tayer Motors – Dubai / razmy@altayer-motors.com – Premier Motors – Abu Dhabi / homohamed@altayer-motors.com Bahrain Iraq Jordan Oman Qatar Saudi Arabia United Arab Emirates United Arab Emirates – Almoayyed Motors – Manama / venugopal.nair@almoayyed.com.bh – Al Kasid Commercial Agencies Ltd - Erbil, Baghdad / ahmed.ali@al-kasid.ae – The Commercial & Industrial Company - Amman / w.albajjali@cic.com.jo – Mohsin Haider Darwish LLC - Muscat / bhaskar@mhd.co.om – Almana Motors Company W.L.L – Doha / oghobrial.aa@almanagroup.com – Al Jazirah Vehicles Agencies Co Ltd – Riyadh, Dammam, Jeddah / smomea@aljazirahford.com – Al Tayer Motors – Dubai / razmy@altayer-motors.com – Premier Motors – Abu Dhabi / homohamed@altayer-motors.com Bahrain Iraq Jordan Oman Qatar Saudi Arabia United Arab Emirates United Arab Emirates
construction business news me September 2016 46 COUNTRY REPORT The northern Gulf country is pouring billions of dollars into infrastructure and healthcare projects Kuwait in rude health
construction business news me September 2016 47 C onstruction spending in Kuwait continues unabated despite a drop in the price of oil that the country depends on for 95 per- cent of its revenue. A combination of gov- ernment money and private investment, thanks to a recently introduced PPP law, is helping to see the northern Gulf state’s economy through a tricky period. Under the country’s Vision 2035, de- velopment of road, rail, airport and re- lated infrastructure will be major drivers for the construction sector over the next two decades. Investment in healthcare, educational facilities and new hous- ing projects will also fuel the industry’s growth, experts say. Timetric’s Construction Intelligence Center (CIC) predicts the Kuwaiti con- struction industry will continue to grow in real terms to $13.8bn in 2020 from $10.1bn in 2015, notably as a result of the government’s drive to develop infrastruc- ture. Infrastructure was the third-largest market in the Kuwaiti construction indus- try in the last five years, accounting for just over 20 percent of the total industry’s value in 2015. However Timetric expects the sector to become the industry’s larg- est market in 2020, rising from KWD 626.6mn ($2.1bn) in 2015 to value KWD 1.5bn ($5bn) in 2020. This growth is partly thanks to the government’s ambition to develop infra- structure through Public Private Partner- ships (PPPs). “The country’s attractive PPP policies and regulatory framework encouraged foreign and domestic inves- tors to invest in the country’s railways, highways and road and seaport infra- structure,” says Danny Richards, Lead Economist at Timetric’s CIC. “Looking forward, the market will continue to ex- pand up until 2020, driven by increased investments in transport infrastructure, including through the Kuwait five-year development program 2015–2020.” Girish Dinakaran, Partner - Corpo- rate Finance, RSM Albazie Consulting, concurs: “The biggest opportunity pre- sented by the Kuwaiti construction mar- ket is the government’s commitment to infrastructure development, followed by fast-tracking PPP projects under the Part- nerships Technical Bureau (PTB) and an increasing diversity in PPP projects (i.e. schools, metro, power, rail, parks, energy and health). Private investments are ex- pected to further boost the construction sector with mega real estate development projects thanks to the current commodity prices that keep construction costs low”. Recent major project awards Kuwait awarded KWD 570mn ($1.7bn) worth of construction projects in the first half of 2016, according to a recent report by National Bank of Kuwait (NBK). One of the biggest awards was a KWD 219mn ($730mn) deal for Italian firm Pizzaroti to build the 600-bed New Maternity Hospi- tal, opposite the existing maternity hospi- tal in Sabah Medical Area. Under the direction of His Highness the Amir, the Amiri Diwan has taken on sev- eral key projects in Kuwait, NBK reports. The Diwan answers directly to the Amir, enabling it to bypass the usual approval channels and take projects forward much faster the normal. The Diwan’s portfolio includes projects such as the new Al-Jahra Hospital, Al-Shaheed Park and Kuwait’s two cultural centers (Abdullah Al-Salem & Jaber Al-Ahmed) set to be complete by the end of the year. In June, the Amiri Diwan awarded a KWD 49mn contract to local developer Bayan National Trading Company to design and build Kuwait’s Motor Town, a project which aims to develop seven race circuits that would enable Kuwait to host Formula 1 and MotoGP races in the future. The contract also includes the construction of a pit building and a media center while a tender for a hotel and a shopping mall are expected to be issued at a later stage. The Amiri Diwan has also recently taken control of the Passenger Support Terminal Project at Kuwait’s Interna- tional Airport. The project was originally tendered by the Directorate General of Civil Aviation (DGCA) but ownership was transferred in May 2016. Construc- tion of the 4.5 million passenger per year Passenger Support Terminal is ex- pected to take 450 days once the con- tract is awarded which is expected to be in November. The support terminal will handle passengers while the airport’s major new terminal is being built. Turkish firm Limak Construction land-
construction business news me September 2016 48 COUNTRY REPORT ed the KWD 1.3bn ($4.3bn) contract in May to construct the new passenger ter- minal with a provision of maintenance for two years. Scheduled for completion in 2022, the 708,000 square metre terminal will have the capacity to handle 25 mil- lion passengers per year, have 51 gates and stands and be capable of handling 21 A380 jumbo jets simultaneously. According to MEED Projects, Ku- wait is planning the development of the North & East Regional Highway, a KWD 517mn upgrade to roads that will facilitate the growth of inter-regional and international trade within the GCC. In May, local contractor Kuwait Com- pany for Process Plant Construction & Contracting was awarded a KWD 97mn ($324mn) contract for a renovated road from Saad Al Abdulla area to Buhaith (north of Kuwait). The Ministry of Public Works is also evaluating bids for a KWD 181mn road connecting Salmi near the Saudi Border to the 6th ring road. In late June, The Public Authority for Housing Welfare (PAHW) signed Kuwait’s second largest contract so far this year, awarding the KWD 288mn ($955mn) South Mutlaa City Major Infrastructure Works Package Contract 1 to a joint ven- ture between Italy’s Salini Impregilo and Turkey’s Kolin. The contract oversees the development of the main roads and infra- structure for the city, which is expected to house almost 30,000 residential units. PAHW is also preparing to tender two ad- ditional roads and infrastructure packages related to the project before year-end. Healthy Growth A fast growing population, aging demo- graphics, lifestyle illness such diabetes, medical tourism and government drives to improve healthcare services through state-of-the-art facilities are fueling growth in the healthcare sector. According to the BNC Project Intelligence Database, there are currently 453 construction projects in the GCC related to hospitals with a com- bined estimated value of $55.6bn and an additional 256 construction projects re- lated to medical research centers worth a further $10bn. Though Kuwait constitutes only 6% of all healthcare projects, in dollar terms it makes up around 11% of total project values in the GCC because of the size of some of the projects under construction in the country. Three of the five highest value healthcare projects in the GCC are in Kuwait - including Jaber Ahmed Al Ja- ber Al Sabah Hospital ($1.6bn), Al Jahra Hospital Extension ($1.2bn) and the New Farwaniya Hospital Expansion ($1bn). A report commissioned by The Big 5 Kuwait 2016 reveals that healthcare investments are one of the major driv- ers of Kuwait’s construction industry’s growth. Out of the top ten projects in Kuwait, six are devoted to the develop- ment of new or existing hospitals, with an aggregate value of $5.5bn. “Looking forward, the market will continue to expand up until 2020, driven by increased investments in transport infrastructure, including through the Kuwait five-year development program 2015–2020” Jaber Ahmed Al Jaber Al Sabah Hospital
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construction business news me September 2016 50 COUNTRY REPORT Kuwait International Airport (KIA) - Terminal 2 - $4.3bn Turkey’s Limak is building the $4.3bn expansion of the Ku- wait International Airport’s passenger terminal. With com- pletion estimated in 2022, the new terminal building will allow accommodate approximately 25 million passengers per year. The project involves the construction of a new terminal building comprising of a basement level, a ground floor, two additional floors, a 400 bed transit hotel, waiting rooms and parking areas with a capacity of 4,500 cars. The list was produced by BNC Network for Dmg events Middle East, Asia & Africa, the organisers of The Big 5 Kuwait Jaber Ahmed Al Jaber Al Sabah Hospital - $1.6bn With estimated completion in November 2016, the $1.6bn project includes the construction of a hospital complex over an area of 47,000 square meters. It also features a dental building on an area of 5,000 square meters, a staff and doc- tor's residency building, and a three-storey underground car park with a capacity of 7,000 cars. New Farwaniya Hospital Expansion - $1bn Valued at $1bn and due for completion by the end of 2019, the project involves the construction of a hospital complex, a dentistry building with 100 specialized clinics, 27 operation theaters and 233 ICU beds. Childrens Hospital - Al Shuwaikh - $850mn The hospital will feature a total of 792 beds, 2,000 car parking spaces, a helipad and a free-standing day care centre. Valued at $850mn, completion is expected in the last quarter of 2018. Top 10 Construction Projects in Kuwait Kuwait Maternity Hospital - $790mn Although still at the tender stage, the $790mn hos- pital is due for completion in 2018. The maternity hospital is expected to accommodate 36,000 annual births. New Al Sabah Hospital –$635mn The $635mn hospital currently under construc- tion will cover an area of 88,000 square meters with a capacity of 671 beds and a multi-story parking area. Cancer Treatment Hospital - Al Sabah Hospital Campus - $574mn Due for completion by the end of 2016, the $574mn hospital will cover 200,000 square meters with program elements like Radiology, Nuclear Medicine, Chemotherapy Units, Surgical Units, Intensive Care Units, Physical Therapy Facilities, an audi- torium and a car park building. Special Needs Education School Complex – $504mn The project, valued $504mn, will develop a Special Needs School comprising 16 to 18 buildings with the capacity to ac- commodate 3,000 students over a 22,000 square meters gross building area. Tamdeen Square - Sabah Al Salem - $500mn Currently under construction, this mixed-use development worth $500mn comprises six towers of low-to-medium-rise resi- dential and retail complexes, as well as a high-rise building line. Sabah Al Ahmad Sea City Development (Phase 5) - Al Khiran Pearl City - $491mn Worth $491mn, the project is developing the Sabah Al Ahmad Sea City (Al Khiran Pearl City) Phase 5, building internal and ex- ternal roads, infrastructure work and related facilities by 2020.
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NEWS Legal viewpoint It cannot be overemphasised that a careful consideration of termination provisions contained in a construc- tion contract and of the provisions of the applicable law is necessary. This article explores common contractual arrangements relating to termination and the impact of the UAE law on such provisions. Employer’s Entitlement to Terminate It is common knowledge that the Employer’s right to terminate a con- tract arises when there is a default or a breach on the part of the Contrac- tor. However, it cannot be said that an Employer is entitled to immedi- Termination by Employer: Why, How and How Much? Termination can be a difficult and costly process, so it’s best to follow the Arab saying of “think about the exit before you enter” prior to inking a contract. Heba Osman, Partner, Fenwick Elliott LLc, writes. C onstruction is a multi- million dirhams busi- ness and terminating a construction contract may well cost the ter- minating party as much. This is why the decision to terminate a construc- tion contract, or any contract for that matter, must be made very carefully. At the start of a construction contract, as with the beginning of a marriage, the parties are quite opti- mistic and somewhat confident about the prospects for their project. The good will and cooperation shown at the start somehow blinds the parties from considering the possibility of contract termination. Heba Osman, Fenwick Elliot LLP construction business news me September 2016 52
ately terminate for any breach or de- fault (unless, of course, the contract explicitly states this in unambiguous wording, which is rarely the case). Most construction contracts entitle an Employer to terminate the contract if the Contractor: • fails to submit the contractually required letters of guarantee; • fails to comply with a contractual notice to correct; • abandons the Works or demon- strates the intention not to contin- ue performance of his obligations under the Contract; • fails to proceed with the Works without reasonable excuse; • fails to remedy any defects in the Works without reasonable excuse; • subcontracts the whole Works or assigns the Contract without the Employer’s agreement; • becomes bankrupt or insolvent; or • gives or offers bribery in relation to the contract. Whilst these events appear to be straight forward, this is rarely the case. By way of example, establish- ing that the Contractor failed to proceed with the Works without a reasonable excuse can become a difficult feat. Typically a construction site has various parties on it with many tasks happening at the same time, whether it is reasonable or not reasonable for the Contractor to proceed with the Works will mainly depend on the actual conditions of the site at the time and the surround- ing circumstances. Moreover, even the simple event of failure to submit the contractual letters of guarantee could become a complicated subject if the Contrac- tor’s failure to do so is in any way attributable to the Employer. In addition to termination for default, many standard forms of con- tract entitle the Employer to termi- nate the contract at his convenience (i.e. without any default on the part of the Contractor). The manner in which each type of termination is operated and its consequences are usually different as detailed below. UAE law also entitles the Em- ployer to terminate the Contract in the event of a breach that cannot be remedied by the Contractor. In particular, Article 877 of the Code, in this respect, states: The contractor must carry out the work in accordance with the conditions of the contract. If it ap- pears that he is carrying out what he contracted to do in a manner that is defective or contrary to the condi- tions [of the contract], the employer may demand that the contract be terminated immediately in the event that it is impossible to make good the work, but if it is possible to make good then the employer may require the contractor to abide by the conditions of the contract and to rectify the work within a reasonable period, and if the period expires without the rectification having been done the employer may apply to the judge to terminate the contract or to give him leave to engage another contractor to complete the work at the expense of the first contractor. The point here is that it is para- mount that the Employer makes a careful decision as to why he is ter- minating the Contract to be able to select the correct legal and contrac- tual path for termination. Formal Requirements for Termination During my years of practice, I have seen all sort of letters claiming to terminate the contract immediately without much of an explanation as to why or on what grounds. A valid termination notice is necessary in order for the legal effects of termi- nation to become effective. Conse- quently, if a notice of termination is not valid, this affects the legality of the termination. In order for a notice of termina- tion to be valid, it must be sent in compliance with the Contract, which typically requires the following as a minimum: • an advance notice requiring the remedy of the breach or default; • time element; example: a 14 day- notice; • reference to the provision under which the termination takes place; • details of why the termination is taking place; and/or • effective date of termination. In addition to these typical contrac- tual requirements, termination as a matter of UAE law does not happen automatically. Termination of con- construction business news me September 2016 53
construction business news me September 2016 54 Legal Viewpoint tracts in the UAE, generally, can be done through one of the following methods: • the parties’ mutual agreement; • a court judgment or decision; or • by law. In this respect Article 267 of the UAE Civil Code provides that: [I]f the con- tract is valid and binding, it shall not be permissible for either of the con- tracting parties to withdraw, change or terminate the contract save by mutual consent, an order of the court, or under a provision of the law. Termination by mutual agreement may occur before or after enter- ing into the contract. However, in practice, when parties are at the termination stage, there is usually a bigger dispute simmering which makes it difficult to agree anything, let alone agree on mutual termina- tion of their contract. Termination provisions establishing the right of one party or the other to terminate the contract are usually not enough for the termination to occur. These provisions usually state something along these lines: If the Contractor fails to carry out any obligation under the Contract, the Employer may by notice re- quire the Contractor to make good the failure and to remedy it within a specified period of time. If the Contractor fails to comply with this notice, the Employer shall be entitled to terminate the Contract. Similarly worded provisions estab- lish a right to terminate, but do not allow for automatic termination of the Contract by the Employer. For a termination provision to establish mutual consent to terminate and to avoid recourse to the UAE courts, the termination provision must un- equivocally state that the termination occurs automatically by the Employ- er’s notice and that there will be no need for a court order or a further notice. This is explicitly provided for in Article 271 of the UAE Civil Code. It is, therefore, quite crucial when drafting a termination provision to ensure that termination occurs auto- matically without need for recourse to the courts to confirm termination. In the absence of such provision, termination would not occur. The Cost of Termination As explained earlier, termination can take place due to some default on the part of the Contractor or for the Employer’s convenience. Each type of termination has a different set of consequences from a finan- cial perspective. On one hand, if termination is for the Contractor’s default, the Con- tract usually allows the Employer to withhold further payments that were due to the Contractor until the Em- ployer assesses his costs and losses incurred as a result of the Contrac- tor’s default (this would include the cost of hiring another contractor to complete the works). On the other hand, if termination is for the Employer’s convenience, the Employer would not typically be entitled to withhold any payments that are due to the Contractor, and would make all due payments to the Contractor in accordance with the Contract without delay. The Employ- er would also not be entitled to com- plete the works himself or through another contractor (if the Employer hires another contractor to complete the works in such instance, then the Contractor may be entitled to claim loss of profit). Termination can be a difficult and costly process, and its best that par- ties follow the Arab saying of “think about the exit before you enter” prior to inking their contracts.
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NEWS COMMENT Dhabi Water and Electricity Authority from the Emirates CMS Power Compa- ny under a 20-year concession contract that obligated the service provider to design, build, fund and operate the facility to produce 710MW of power and 50 million gallons of treated water per day. Elsewhere in region, the Hajj Terminal at Jeddah Airport and the New Madinah Airport have both been procured by the public authority us- ing PPP to involve the private sector to Build, Transfer and Operate the facilities throughout an agreed contract period. Whilst the private sector has delivered a range of education and health care facilities for the authorities in Abu Dhabi, the arrangements have tended to be based around manage- ment contracts where the services, but not necessarily the built assets, have been provided by the private sector. On the rise There has been an increasing inter- est in the use of PPP as a method of Time to team up Ian Tempest, Director, Faithful+Gould explains why Public Private Partnerships are the way forward. project. It would be fair to state that PPP procurement has gained traction within the larger scale infrastructure projects such as power generation and transportation projects but has not yet secured much presence in the provi- sion of accommodation or health/edu- cation services. One of the earliest successful de- liveries of a project within the region following the principles of PPP, was the Taweelah A-2 combined power and desalination plant that achieved financial close in 2002. This 710MW plant was commissioned by the Abu P PP as a procurement methodology has been applied in the Gulf Region since 1994, initially within the power and water sec- tors and only more recently within the property and accommodation sectors. Whilst it has been reported that more than 100 PPP projects have been awarded within the region, the vast majority of these have involved management contracts where the pri- vate sector has provided the required services on behalf of the public sector, but has not taken on the financing or procurement risks associated with the “There is a greater recognition that in some instances, the private sector is better placed than the public sector to design, build, finance and operate facilities” Ian Tempest construction business news me September 2016 56
procuring large scale infrastructure projects in the region as evidenced by the introduction of new PPP laws in Dubai and Kuwait and the plans to do likewise in Oman and Qatar. Principle drivers for the growth of interest in PPP include the increasing demand being placed upon infrastructure ser- vices, the impact of the reduced price of oil upon fiscal planning of GCC authorities and their ability to invest in public infrastructure without increasing public sector borrowing requirements. In addition, there is a greater recogni- tion that in some instances, the private sector is better placed than the public sector to design, build, finance and operate facilities and can take greater responsibility for managing those aspects of project risks over which it has control. Whilst much investment in public infrastructure has already taken place, given the predicted population in- creases within the GCC countries and the consequential increasing demand upon services, there will be contin- ued pressure to satisfy this demand through alternative funding and oper- ating models. It is likely that large scale infrastruc- ture projects within the power and water sectors will continue to attract interest, given the examples already established in region. However, it is also likely that PPP will be applied to other sectors including transportation (roads and rail networks), airports, education and healthcare and in some countries, social housing. As the re- gion develops and greater recognition is given to the benefits of recycling and sustainable business practices, it is envisaged that waste treatment and waste management could also provide opportunities for the private sector to provide their expertise to enhance public sector services. To achieve successful delivery of PPP projects, both public and private sectors need to embrace the principle of partnership working, with both par- ties contributing to the areas in which they have specific expertise or control. Allocation of risk is one area where greater transparency is required – it is essential that risks are identified at the outset and the party best able to manage or control the risk is given the responsibility of doing so. The establishment of common legal frameworks within which PPP projects are to be delivered will assist both public and private sec- tors to understand their respective responsibilities and will speed up the process from project inception to financial close and subsequent operational phase. Long term fund- ing of these large scale infrastruc- ture projects can be challenging to organisations less familiar with the principles of PPP contracts and so a process of information dissemination and explanation will be required to ensure that private sector investment from within and from outside the region, is forthcoming. construction business news me September 2016 57
construction business news me September 2016 58 TAKE 10 The Middle East is home to some of the world’s most recognisable buildings. Iconic Buildings in the GCC It’s been around for less than a decade but the Burj Khalifa became an instant global icon when it was unveiled by developer Emaar Properties in January 2010. At 828 metres, it overtook the previous tallest building in the world, Taipei 101, by more than 300 metres. Burj Khalifa was designed by Chicago-based architects Skidmore, Owings and Merri and built by Samsung C&T of South Korea with Besix and Arabtec. The $1.5bn tower uses the same bundled tube design as the Willis Tower in Chicago but to support the unprecedented height of the building, the engineers developed a new structural sys- tem called the buttressed core, which consists of a hexagonal core reinforced by three buttresses that form the ‘Y' shape. This structural system enables the building to support itself laterally and keeps it from twisting. The skyscraper has won dozens of awards and holds numerous world records. The reinforced concrete structure used 330,000 cubic metres of concrete and 55,000 tonnes of steel rebar while construction took 22 million man- hours. At its tallest point, the tower sways an incredible of 1.5 metres. Though there are plans to build taller towers elsewhere, Burj Khalifa has achieved the developer’s goal of putting Dubai on the map and will continue to be one of the most iconic buildings in the world. Burj Khalifa, Dubai
construction business news me September 2016 59 The Abraj Al-Bait Towers is a com- plex of buildings right next to the Grand Mosque in Mecca. Developed and built by Saudi Binladin Group, the complex was completed in 2012 at an eyewatering cost of $15bn. The central tower is the third tallest building and fourth tallest freestand- ing structure in the world with a height of 601 metres including its 71 metre spire topped with a giant crescent. The world’s largest clock faces, measuring 43 x 43 metres, are mounted on each of the four sides of the tower which also contains a five star hotel operated by Fairmont Hotels and Resorts, as well as an Is- lamic Museum and a Lunar Observa- tion Center used to sight the moon during the Holy Months. Completed in 2008, the Atkins-de- signed Bahrain World Trade Centre consists of twin 240 metre office towers and was the world's first to integrate large scale wind turbines. The towers, reminiscent of a dhow's sail, are designed to funnel wind inwards to the three 29 diameter turbines which are mounted on 31.5 metre long bridges that joing the buildings. Each turbine gener- ates 225 kW of electricity while the buildings are equipped with a num- ber of other energy saving technolo- gies. Murray & Roberts, Denmark's Ramboll and Arabtec teamed up to build the towers which are the fourth tallest in Bahrain and 71st tallest in the Middle East. Abraj Al Bait, Mecca Bahrain World Trade Centre, Manama
construction business news me September 2016 60 TAKE 10 A familiar sight to anyone that's driven from Dubai to Abu Dhabi, the headquarters of de- veloper Aldar Properties in Al Raha is the first upright circular building in the Middle East and one of the most eyecatching structures in the world. Designed by MZ Architects with consulting engineers Arup, the shape of the 110 metre build- ing is achieved through the use of a structural di- agrid, a diagonal grid of steel. Completed in 2010, the project was developed in line with the US Green Building Council LEED rating system, and offers 49,000 m2 of office space over 23 floors, the same floor area as a typical 40-storey tower. An iconic symbol of Dubai and fa- mous throughout the world, the Burj Al Arab celebrated its 15th birthday last year. Designed by Atkins, the ho- tel was built on a man-made island 280 metres offshore by contractors Murray & Roberts and Al Habtoor Engineering. It took three years to reclaim the land from the sea and around three years to construct the building itself. The occupying hotel has been dubbed the world's only seven star property, though Jumei- rah Group says that is not a term that it has encouraged. The helipad near the summit of the building has hosted a series of famous publicity stunts including Roger Federer and Andre Agassi playing tennis, golfer Tiger Woods teeing off and David Coulthard doing donuts in a Formula 1 racing car. The Aspire Tower in Doha, is shaped like a torch and held the symbolic flame for the duration of the 2006 Asian Games. Designed by architect Hadi Simaan, lead engineers Arup had just 21 months to design and build the 300 metre skyscraper in time for the games so design of the substructure, superstructure and building services had to proceed in parallel. In fact, work on site started before detailed design was even complete! With no columns at ground level, the whole structure canti- levers off the central concrete core. The same tech- nique created a swimming pool, extending 12m out from the building, 80 metres above ground. Amongst other facilities, the tower includes 17 floors of five-star hotel accommodation and a three-floor sports museum. Aldar Headquarters, Abu Dhabi Aspire Tower, Doha Burj Al Arab, Dubai
The 267 metre Al Faisaliyah Centre located in the business district of Ri- yadh, is the fourth tallest building in Saudi Arabia. Designed by UK-based architects Foster and Partners and engineers Buro Happold, construction was completed by Saudi Binladin Group in 2000. Its 44 floors (30 above ground) contain office space but the building is part of the Al Faisalah Complex which includes a five star hotel, residential buildings and a shopping mall. There is a viewing platform just below the distinctive huge globe at the top of the building which contains a restaurant. The 24 metre diameter orb is made of 655 glass panels. Completed in 1976, Kuwait Towers is the oldest building on this list and an indelible symbol of the northern Gulf state. The towers were designed by Danish architect Malene Bjoern as part of a water distribution project run by the Swedish engineering company VBB. The main tower is 187 metres high and has two spheres. The lower sphere holds in its bottom half a water tank of 4,500 cubic me- tres and in its upper half a restaurant that can accommodate 90 persons. The upper sphere is used as a viewing platform and completes a full turn every 30 minutes. The second tower is 147 metres high and serves as a water tower. The third tower houses equipment to control the flow of electricity and illuminates the two larger towers. The towers, which reopened in March this year after four years of extensive renovation, have been on the tentative list to become a UNESCO world heritage site. Al Faisaliyah Center, Riyadh Kuwait Towers, Kuwait City saie.bolognafiere.it #saiexperience Pathways, visions and knowledge for the future of construction. With the patronage of BOLOGNA 19-22 OCTOBER 2016 SAIE 2016 is an exclusive venue for discovering the new Procurement Code procedures, new tools such as BIM, new smart technologies and materials, innovative products and machines with a low environmental footprint. With its strong focus on urban regeneration, sustainable redevelopment, earthquake protection, land safety and smart building, it will help you play a leading role in the future of construction and new markets. An event by Media partner
construction business news me September 2016 62 TAKE 10 Though not yet fully built, enough of the Jean Nouvel-designed Louvre Abu Dhabi has been complete for it to make this list. The finishing touches have been put to the stunning, space ship like roof structure while the sea now laps at the side of the building itself. Set to open early next year after four years of construction, the $500mn project will be the jewel in the crown of a new cultural quarter on Saadiyat Island which will also include a Guggenheim museum designed by Frank Gehry. The second building on our list to be designed by French architect Jean Nouvel, the $125mn Burj Qatar really stands out from Doha's increasingly impressive skyline, thanks to its distinctive shape and the LED lighting system that illuminates the tower at nighttime. The Council on Tall Buildings and Urban Habitat named the 232 metre, 46-storey skyscraper the best tall building in the Middle East and North Africa in 2012 - the year construction was completed by contractor China State Construction Engineer- ing Corporation - citing the way the building uses "ancient Islamic patterns" in its cylindri- cal design. Louvre Abu Dhabi Burj Qatar, Doha
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construction business news me September 2016 64 Spotlight on fire safety B uilding fire safety will be one of the hottest topics when construction industry experts and government of- ficials gather at an event in Dubai this month. Central to the discussion will be an updated fire safety code that UAE au- thorities have produced in response to a series of headline making fires that have struck high rise buildings in re- cent months. Andy Dean, Head of Façades for the Middle East at WSP Parsons Brinck- erhoff, believes that UAE high-rise buildings present several unique chal- lenges, including complex evacuation strategies, fire department accessibility, smoke movement and fire control. Speaking ahead of his participation in the Middle East Façades Summit, he said: “The much-anticipated update to the country-specific UAE Fire and Life Safety code has been introduced and includes a significantly enhanced sec- tion on façade materials (Chapter 4). “Since its original introduction in 2012, the market has consequently learned and absorbed this information and, at the very least, an awareness of the need for the control of fire perfor- mance has become self-evident, which is the first step in any learning process.” A panel discussion, ‘Fire safety in design – translating policy into prac- tice’, featuring Dean alongside David O’Riley, Brittania International, and moderated by Christopher Seymour from Mott MacDonald, will focus on the best practices for ensuring highest safety standards of new construction projects as well as the ways existing buildings can be brought up to code. Dean added: “The design challenge here isn’t innovation in safety, but in using robust and verified methods of evaluating new and innovative build- ings, construction materials and tech- niques. However, tools such as build- ing information modeling (BIM) and parametric modelling allow us to iden- tify buildability problems before con- struction starts and, most importantly, provide us with opportunities to use cutting edge methodologies and ma- terials while ensuring safety measures are met.” In 2012, 70% of UAE high-rise build- ings were estimated to be clad with flammable paneling, but Dean believes the use of such materials has dropped significantly since thanks mainly to the introduction of the UAE code. “A great deal has changed and mate- rials going onto new buildings are now fundamentally different as a result,” Dean said. “Crucially, developers have started looking at their existing build- ing stock as well as new design and this is the next important step the entire construction industry must take.” The Summit will host three separate sessions dedicated to fire and safety in building design, including a panel discussion focusing on the recent UAE Fire and Life Safety Code of Practice and the ways it can be implemented. A panel discussion assessing com- mon errors in design and approaches to maximise quality, safety, and building integrity will follow, and the one-day conference will close with a presenta- tion of a project in Beirut designed by the late Zaha Hadid, featuring an inno- vative façade whilst adhering to highest levels of fire safety in materials selec- tion. The summit takes place on the first day of the Windows, Doors & Façades Event at Dubai World Trade Centre from 18 – 20 September, 2016 at Dubai World Trade Centre. Building Materials “A great deal has changed and materials going onto new buildings are now fundamentally different as a result” Andy Dean
construction business news me September 2016 65 Rivals boost cladding panel production T wo firms have announced plans to ramp up produc- tion of fire rated cladding panels in the UAE in re- sponse to the release of new building fire safety regulations. Danube Group has already kick- started the production of A2 alumin- ium composite panels at its Dubai factory while Mulk Holding plans to follow suit from early next year. With these panels now manda- tory under the latest version of the UAE Fire and Life Safety code, both companies can expect to do brusque business in the coming years. The stone core within A2 alumin- ium composite panels (ACP) helps prevent the spread of fire, unlike the polythene (LDPE) core that has been blamed for a string of infernos at high rise buildings in Dubai. Alubond U.S.A is investing AED 50mn ($13.6mn) to upgrade and ex- pand its factory in Sharjah to pro- duce six million square metres of A2 panels per year with the addition of three new production lines from the first quarter of 2017. Owned by Shaji Ul Mulk, founder and chairman of Mulk Holdings, Alubond USA al- ready produces 2 million m2/year of A2 panels at a factory in Turkey. "Alubond U.S.A stands for quality fire resistant aluminium composite cladding products,” Mulk said. “We would like to set an example for other products in the cladding in- dustry and build a new era of fire resistant and accident free cladding products. We hope the industry play- ers will follow the trend, taking a cue from this." Just a day later Rizwan Sajan’s Dan- ube Group cut the ribbon on a new AED100mn A2 panel production line at its factory in Dubai Technopark. The 4,600 facility will produce four million square meters per year of non-combustible panels in conjunc- tion with Alucopanel USA. Commer- cial production started at the Tech- nopark plant immediately following the launch on 21 August. Plans to open a second facility in the UAE are currently in the pipeline and will be announced early next year. Zohaib Rahman, Division Head, Alucopanel Middle East, said: “Panels produced by Alucopanel do not allow the diffusion of flames and restrict smoke, which discourages the up- ward spread of fire. The application of the non-combustible panel from Alucopanel will definitely improve fire safety in the region, representing a new era in building materials.” Shaji Ul Mulk Rizwan Sajan
construction business news me September 2016 66 A slowdown in the construction market has not de- terred Leminar Air Conditioning Company from forging ahead with its aggressive growth strategy. The HVAC distributor has opened its seventh show- room in the UAE and its second in the Deira neigh- bourhood of Dubai. It follows the inauguration earlier this year of Lemi- nar’s first venue in Kuwait. Pramodh Idicheria, General Manager, Leminar Air Conditioning Company, said: “Our existing showroom in Deira showcases the entire product range of Lemi- nar whereas the new one is exclusively dedicated to engineering products like air conditioning units, ven- G erman pump manufacturer Wilo has announced plans to build a major new facil- ity in the south Jebel Ali Free Zone (JAFZA). The company will build offices, a train- ing centre, warehouses and a local as- sembly plant over an 8,000 square metre plot of land by the end of next year. The new facility will include the “Wilo Academy,” where distributors, engineers, installers and end-users can receive training on its various wa- ter technology solutions. Carsten Krumm, COO of WILO SE, said: “By further expanding to a big- ger facility by the end of 2017, we believe we can better serve our dis- tributors in the region by offering lo- cally tailored and assembled products and services. “The new offices will strengthen Wilo’s position in the Middle East as a regional platform that supports the Gulf and surrounding countries.” Wilo Middle East FZE currently serves 10 countries in the region from its base in Dubai. Bishara Khalil, Managing Director of Wilo Middle East FZE said: “The company’s rationale for making the investment in Dubai was based on several factors, including the city’s role as a platform and hub for lo- gistics and commercial trade in the Middle East, Dubai’s efficient sea, land and airports infrastructure, and of course, its long-standing business stability.” Wilo to build new JAFZA headquarters Leminar Air Conditioning unveils seventh UAE showroom SUPPLIER News tilation fans, valves and pumps. “Moreover, we have application engineers based in this showroom to provide technical advice and recommend re- liable solutions to assure complete customer satisfaction.” Navin Valrani, CEO of Leminar Air Conditioning Company, added: “Even as other businesses are trim- ming down their workforce and adopting containment measures, Leminar has kept up the momentum. “This is possible because of the sound fundamen- tals on which our company is built and the experi- ence we have gained over the past 25 years of our operations.” Showcasing products from international brands such as Rheem, Mueller, S&P and Hattersley, Lemi- nar’s new showroom is located in close proximity to its existing shop in the ‘Air Conditioning Market’ cluster of the Al Rigga area in Deira.
construction business news me September 2016 67 A tlas Copco has commissioned the first HB 10000 hydraulic breaker – the world’s largest commercially available hydraulic breaker – in the Middle East and North Africa region with the Eastern Province Cement Company (EPCC) in Dammam, Saudi Arabia. Weighing in at 10 tonnes, the HB 10000 is capa- ble of delivering blows with 16,000 joules of impact energy – equivalent to a weight of 760 tonnes, or the landing pressure of an Airbus A380 airplane – at a rate of 380 strikes a minute. The HB 10000 breaker will be used in a primary breaking application on the hard limestone deposits arranged in a dam formation in the quarry. The site not only presents harsh conditions but also extreme tem- peratures, with ambient temperatures of up to 51°C. Explaining the choice, Shafeek Ahmed, mine su- perintendent at EPCC choose the HB 10000, said: “We are facing very hard rock, which lowers tradi- tional dozer productivity [compared with a hydraulic breaker] in this type of deposit and achieved a lower cost per tonne.” T hyssenkrupp has won its sec- ond major order to supply elevators and escalators for a Middle East metro project in as many months. The German firm has been awarded a contract to manufacture, supply, in- stall and maintain more than 500 ele- vators and escalators for the Red Line North, Green Line and two additional major stations of Doha’s upcoming metro network. Last month Thyssenkrupp signed a similar deal to supply 641 elevators and escalators for Lines 1 and 2 of the Ri- yadh Metro in Saudi Arabia. Abdul Hamid El Ayoubi, CEO of thyssenkrupp Elevator (Middle East), said: “We are extremely proud of our continuous participation in Qatar’s in- frastructure-driven development, hav- ing already supplied almost 400 units for the recently inaugurated Hamad In- ternational Airport in Doha. “Thyssenkrupp has long established itself as the preferred supplier for air- port and metro/railway projects in the Middle East with several reference proj- ects in the region, and we look forward to continuing our successful partner- ships in the region.” The Doha metro will consist of four lines: Red, Green, Gold and Blue, with plans for over 100 stations across a total length of more than 200 kilometers. Thyssenkrupp wins Doha metro mega order Atlas Copco bags first MENA order for mega breaker
construction business news me September 2016 68 Ford in Focus Mustafa Caner Sinanoglu, Middle East Countries Manager of Ford Trucks, talks about the company’s strategy in the region. Supplier special What is your vehicle offer- ing in the Middle East? We offer customised solutions for the region’s toughest conditions such as heat, humidity and dust. To ensure this, during the development of our vehi- cles, our engineers carried out various tests in working conditions specifically in UAE and KSA over a period of two years. Durability, efficiency, low fuel consumption, power and comfort are the basic features of our products. Fur- thermore, Ford Trucks offers two years unlimited mileage warranty and long maintenance intervals for the region, with the aim of keeping our customers’ operating costs at a minimum. Which products are sold in the Middle East? All our product lines including Tractors, Road Trucks and Construction Series are offered to customers in the Middle East market. Mainly targeted at construction, long-haul transport and public works all around the region, Ford Trucks offer high quality and durability with low ini- tial investment and low operating costs. Popular Ford Trucks models, tractors, tippers and mixers can be customised with transmission and cabin types for on road and off road conditions. Tractors and construction vehicles are offered with 10 mm 500 Mpa chassis frame which further improves the durabil- ity of the vehicle. The mixer series for construction applications are offered in 6x4 and 8x4 versions with 12.7 liter Ford Ecotorq powerful engine.
construction business news me September 2016 69 Public & Special Trucks are mainly used for municipality, army and vari- ous applications which are offered with many superstructure alternatives. 4x2 and 6x2 models are offered with 9.0 li- ter Ford Ecotorq powerful engine. Besides that the “Hot Climate Pack- age” provides comfort in hot and dusty environments with increased A/C per- formance, improved radiator perfor- mance, improved cabin isolation and improved filtration. During the two-year development period for the Hot Climate Package, ve- hicle durability tests including labora- tory tests that simulate the region’s high temperatures, humidity and dusty con- ditions and also the specific customer expectations were studied and consid- ered with road tests in the region. Hot Climate Package is offered in the whole product line-up on sale in Middle East. What is driving growth pros- pects in this region? Ongoing works still make the GCC very attractive for investment. Medium to long-term infrastructure projects supported by GCC development fund, governments and the private sector are boosting future prospects as well. What is your dealer struc- ture in the Middle East? The Middle East is one of our primary markets and our progress has reached an important point with our new deal- ership inaugurations at Oman, Qa- tar, Iraq and Bahrain, and we will be concluding our new structure by the end of this year. Our distributors in each country offer excellent service and sales experience for our valued customers. We know that sales and service network structuring is key to success in our business. Currently we have a widespread dealer network in KSA, UAE, Oman, Qatar, Bahrain, Iraq, Jordan, and Lebanon. Our plan for the Middle East is to extend our facilities to Kuwait and Yemen. What is your sales strategy? Our strategic vision is to become a global player and operational in 10 markets throughout the Middle East re- gion in the next five years. According to our international expansion plan, the first step is to complete market entries and reach full network coverage across the Middle East. We also aim to expand our product line-up and features in ac- cordance with the latest market trends. Tell us more about your brand Our company has invested a lot of time to understand drivers as well as fleet companies. We took a closer look at our brand and added Ford Truck’s ex- cellence in production and R&D capa- bilities to the Global Ford image as an important value. Following this devel- opment, a very successful brand launch was held in February and we unveiled our new brand promise/slogan: Shar- ing the load. By that we mean standing alongside our customers and establish- ing close relationships with them. “Our strategic vision is to become a global player and operational in 10 markets throughout the Middle East region in the next five years”
construction business news me September 2016 70 Event Preview The 15th anniversary of Cityscape Global will show revival in Dubai property market. Dubai Rising T he time may be right for in- vestors to take the plunge into Dubai’s residential property market which is close to the bottom of its current cycle. Rents and prices have fallen between 10 percent and 15 percent since the market last peaked in mid-2014 and the market is now relatively stable, with little change in rents and prices recorded in the second quarter of the year. That’s according to Craig Plumb, Head of Research at JLL, who will give a keynote presentation on ‘The World of Alternate Investments’, at the upcoming one-day Cityscape Global conference which also features an ex- clusive talk from leading futurist Rohit Talwar on ‘The Disruptive Futures Re- shaping the Property Sector’. “Providing there are no major external shocks, it is likely that this sector of the market will recover again from late 2016 or early 2017,” says Plumb. “We believe the Dubai residential market offers good long term growth opportunities and pur- chasing around the bottom of the cycle is always a good time to buy for those taking a long term view.” He added: “All real estate markets are cyclical and this will continue to be the case over the next five years. But there are a number of encouraging trends that will contribute to the performance of the real estate sector over the longer term. These include the continued diver- sification and open nature of the Dubai economy, high levels of government in- vestment in creating an attractive city in which people want to live and work and measures to improve the transparency of the real estate sector. “It has been shown that improved transparency increases the attraction of real estate markets and the level of in- vestment they receive. We believe the measures the Dubai Land Department is currently taking to improve the transpar- ency of the Dubai market will increase the attraction of the market and the level of investment over the next five years.” The conference takes place during the 15th edition of Cityscape Global which is expected to attract a new wave of real es- tate investors from across the region, fol- lowing the success of recent exhibitions in Turkey, Egypt, Abu Dhabi and Qatar. Returning to the Dubai World Trade Cen- tre from 6-8 September, Cityscape Global iwill span 41,000 m2 of exhibition space, featuring hundreds of exhibitors, a range of country pavilions, including those dedicated to exhibitors from the UK, Pakistan, and India, a seminar theatre for exhibitors and a number of big-league speakers at the Cityscape Conference. Tom Rhodes, Exhibition Director, said: “The Cityscape brand is growing globally, which means we are reaching more investors from around the region and beyond and are connecting more real estate buyers with developers and brokers. Cityscape Global, meanwhile, continues to be the barometer of the real estate market, with many leading developers using the exhibition as the perfect platform to launch new proj- ects to the market. “Last year was a resounding success – the largest the event has been in five years, with more than 43,000 participants from 102 countries and two additional halls to accommodate the demand from local, regional and international exhibi- tors. Our forecasts for this year anticipate a similar response in terms of exhibitor participation and visitor numbers.” “We believe the Dubai residential market offers good long term growth opportunities and purchasing around the bottom of the cycle is always a good time to buy for those taking a long term view” – Craig Plumb, JLL
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construction business news me September 2016 72 Cityscape Global 2016 September 6-8, 2016 Dubai World Trade Center Cityscape Global 2016 is the largest and most influential real estate investment and development event for emerging mar- kets globally. Bringing together investors, developers, govern- ment officials and real estate professionals, there is no better place to find investment opportunities and new business partners. Cityscape Global is taking place on 6 – 8 September 2016, at the Dubai World Trade Centre, UAE, with the confer- ences taking place on September 5 at the Conrad, Dubai. Big 5 Kuwait September 25-27, 2016 Kuwait International Fair Kuwait’s US$175bn construction industry continues to grow and is poised for increased project activity, in addition to the massive infrastructure and building projects underway and in the pipeline. This market growth was reflected in the success of The Big 5 Kuwait 2015, the largest in the event’s history with a total of 7,187 participants, including 200 exhibitors across 4,700 square metre, further underpin- ning the show as the main event of the year within the Kuwaiti Construction industry. Saudi Build 2016 October 17-20, 2016 Riyadh, Saudi Arabia For over 30 years, Saudi Build has been Saudi Arabia’s largest construction trade exhibition, attracting thousands of inter- national manufacturers, exporters and businessmen, as well as tens of thousands of regional engineers, importers and industry professionals to connect and engage with the latest technology that the Kingdom’s largest sector has to offer. Cityscape Kuwait October 17-20, 2016 Kuwait International Fairgrounds Cityscape Kuwait is the premier international real estate in- vestment event in the State of Kuwait and is a key meeting place for real estate developers, home buyers, private and institutional investors, architects, consultants and other real Mark your calendar SAVE THE DATE estate service providers to find investment opportunities, network and do business. SAIE 2016 Bologna October, 19-22, 2016 Bologna Exhibition Centre SAIE is an internationally renowned trade fair for the construc- tion sector. The fair offers the possibility to see and compare the products of the industry´s leading companies. Moreover it as an innovation platform for the construction industry. Visitors can here in depth and comprehensive information on the latest developments, trends, services and products in various fields. The Construction Summit October 26, 2016 Dubai, TBC The Construction Summit, now in its second year, will be beneficial to those interested in the best practices of carry- ing out a successful project. The 2015 event gathered over 100 attendees that included government officials from RTA, DEWA, Dubai Municipality, TECOM as well as top-level management from the region’s best construction firms. The summit is open to top-level managers and decision-makers from companies specialized in architecture, engineering, design, manufacturing, software, facilities management, etc. Bauma China November 22-25, 2016 Shanghai New International Expo Centre Bauma China, the International Trade Fair for Construction Machinery, Building Material Machines, Mining Machines and Construction Vehicles, takes place in Shanghai every two years and is Asia’s leading platform for experts in the sector. Bauma Conexpo December 12-15, 2016 Huda Ground, Gurgaon, Delhi BAUMA CONEXPO INDIA—the International Trade Fair for Construction Machinery, Building Material Machines, Mining Machines and Construction Vehicles—provides the construc- tion industry in India with a professional platform for network- ing, investment and the exchange of ideas and information. Construction Business News ME picks the latest and most sought-after exhibitions, conferences and seminars coming up in the construction industry Dubai World Trade Centre
THE LARGEST INFRASTRUCTURE & CONSTRUCTION MACHINERY EVENT IN THE MIDDLE EAST www.middleeastconcrete.com/stand www.pmvlive.com/stand Speak to Firas on how to grow your business: Firas Abou Ltaif FirasAbouLtaif@dmgeventsme.com +971 (0) 4 445 3655 • Acquire new business and maintain existing clients by exhibiting at the largest infrastructure and construction machinery event in the Middle East • Stand out amongst your competitors with our tailored sponsorship opportunities • Save time by connecting with more than 32,500 current and potential clients over four days • Make use of multiple free marketing opportunities as soon as you join as an exhibitor Co-located with: Audited by: Send us a message on Whatsapp if you have any questions. +971 (0) 50 211 9527 EXHIBITION. DEMONSTRATION. EDUCATION. 21-24 November 2016 Dubai World Trade Centre
construction business news me September 2016 74 Editor's pick Global airport operators look to land business in the Middle East, Deloitte says. Oil prices threaten airport expansion W ith the declining oil prices challenging the Middle East government budgets, the continuing expansion of airport infra- structure across the region will require alternative financing solutions. Deloitte’s latest report on the construction industry in the region highlights the alternative forms of funding available to deliver the required infrastructure across Middle East airports and to counteract the po- tential reduction in the ability to raise necessary finance. “Airport privatisation and the appeal of Public-Private Partnerships (PPPs) have long been talked about in the re- gion with varying application of PPPs as a financing solution,” explains Dorian Reece, Deloitte Corporate Finance Lim- ited Middle East’s Head of Aviation. “However, there is a broad spectrum of differing financing options across the risk, return and control considerations when tapping the PPP market. “The track record of successful air- port PPPs provides a cautionary tale and one that the Middle East region’s governments and investors should con- sider. Some of the challenges witnessed include: lack of regulatory clarity, op- timism bias, and weak dispute resolu- tion,” he added. According to the Deloitte report, there are varying models being applied to air- ports across the spectrum of privatisa- tion options. The art and the science of structuring an optimal airport PPP cen- ters around achieving the best value for money, which comes from carefully ar- riving at the appropriate risk allocation between the public and private sectors. It is also important that the required controls needed to protect the traveling public are in place whilst at the same time putting in place a pricing mecha- nism which maximizes financial returns. A strong reflection of the appetite for airport PPP’s is the current interest from leading global airport operators seeking to secure airport transactions or man- agement agreements in the region, in- cluding Malaysian Airports, the Airport Company of South Africa, and Changi Airport Group’s rumoured interest in the Operate & Maintain concessions in Saudi Arabia currently in the market. The Deloitte reports predicts continu- ing success of the Middle East region’s airports, particularly Dubai, Abu Dhabi and Doha, enabling them in the future to seek to leverage their global brand and pursue international opportunities. With declining funding from govern- ment for major projects, we are also observing the region’s airports increas- ing their focus on maximizing returns from existing assets as well as leverag- ing PPPs delivery models of standalone projects such as baggage system up- grades, security and car parks. “We are increasingly seeing airports within the region seeking to better un- derstand opportunities to generate ad- ditional revenue to improve overall profitability. Recent examples of this are a number of airports introducing a transfer charge for all passengers,” said Cynthia Corby, partner and construction leader at Deloitte in the Middle East. “We’re likely to see further airports in the region implementing similar charges to enhance the financial returns that airports deliver. We are also seeing the need to drive improvements in perfor- mance through airport operators gaining greater insight into the true performance (Return on Investment, Return on Eq- uity) of their assets. This is through airports improving cost allocation and improving the modelling to assess the whole life cost of the assets to ensure the right level of capital investment is being made as efficiently as possible.”
RELIABILITY YOU CAN SEE P.O. Box 13164 - Dubai- U.A.E. Tel (+971) 4 425 8000 | Fax (+971) 4 425 8060 email: info@alshafar.com | web: www.alshafar.com ASGC was established in 1989 and in few years became one of the leading main contractors in the UAE. ASGC completed landmark projects in several sectors such as high rise, residential, commercial, hospitality, social infrastructure & industrial sector. ������������������������������������������������������������������������������������������������������� group portfolio enables ASGC to deliver complete contracting solutions under one roof. With its established track record of over 280 diverse projects, strategic assets, an experienced and knowledgeable team, ASGC is well positioned to be your partner of choice.