Time for Change
Time for Change
CONSTRUCTION IN THE GCC REACHES A TIPPING POINT FOREWORD
Foreword
There are two sides to construction in the GCC. One is an industry that is known around the world for delivering some of the most ambitious and ostentatious projects ever seen. The other is an industry that has developed a reputation for being notoriously difficult to work in. Inequitable risk allocation has eroded industry profit margins; late payment has created a cash flow crisis; and an unparalleled level of scope variations by employers has resulted in a culture of chronic cost and time overruns, disputes, and mounting financial losses.
These growing pressures, combined with an ongoing By encouraging greater collaboration amongst recession in the region’s major projects market, have participants, together we can bring about the change created an unsustainable situation that has pushed the necessary to successfully deliver on the enormous GCC construction industry towards a tipping point. opportunity that the region presents for the construction industry. Change is no longer optional, it is inevitable. We hope you enjoy our report. DLA Piper and MEED are delighted to bring you Time for Change, a report that examines the key pressures shaping the GCC construction industry; the underlying Suzannah Newboult factors driving change; and the ways we expect change Partner, DLA Piper to materialise over the coming years. [email protected]
The report is the outcome of a series of interviews and discussions with senior executives from the region’s leading developers, contractors, government bodies, financiers and consultants. Colin Foreman Deputy Editor, MEED In publishing Time for Change, we hope to continue to [email protected] highlight the challenges that exist within the industry whilst introducing fresh ideas and potential solutions for further debate and discussion.
2 3 TIME FOR CHANGE: CONSTRUCTION IN THE GCC REACHES A TIPPING POINT EXECUTIVE SUMMARY
• A more mature funding tendering procedures and Tighter legislation and environment: Increased better contract terms. This stricter enforcement on the reliance on external and will foster more collaborative construction industry over international funding and productive working the coming years is inevitable. Executive will bring a greater level relationships between With changes expected to of sophistication to the employers and contractors. the law in areas such as contracting process and We expect to see an increase worker welfare, modern Summary delivery of construction in two-stage tendering for slavery, health and safety projects in the region. niche areas of construction and corruption, barriers to Employers will need to show a and landmark developments entry will increase. It will be Some $3.1 trillion worth of projects are planned or greater return on investment but continued one-stage more difficult for lower-cost resulting in a shift in priorities, open tendering for other contractors to pre-qualify for underway in the GCC, giving rise to renewed optimism away from “lowest price”, government funded work and projects, which will result in for a return to growth for the regional projects market. towards quality workmanship more standard developments. improved standards and a and requirement to meet In addition, the need for move level playing field for Behind this optimism, however, the GCC construction realistic completion dates. By quality will continue to drive international contractors. industry is an industry under pressure. leveling the “playing field” for investment companies • Moving forward with tenderers with more realistic and developers to secure quicker fixes: Whilst not contract prices and terms, resources by taking stakes changes that we can expect Tightening liquidity in the private Key Findings and contractors are mounting. we will see an improvement in construction companies. to see in the short to medium sector and reduced capital spending Contractors are becoming more in payment conditions and Developers will continue • Five key pressures are shaping term, as the industry matures, by governments has resulted in selective, with many choosing a reduction in the volume of to lock-in resource from the GCC construction industry: it would benefit from the fewer contract awards. This has to exit the market. The GCC disputes. specialist subcontractors in introduction of mechanisms significantly increased competition • Ambitious agenda: The is under increasing pressure order to increase efficiency in • Global standard contracts, such as statutory adjudication levels amongst contractors; construction industry plays a to meet global standards and procurement and ensure the for global standard projects and legislation that outlaws reducing order books and eroding vital role in the delivery of the expectations. Both contractors timely delivery of projects. and locking in of resources: pay-when-paid provisions. profit margins. At the same time, GCC’s economic vision. and employers acknowledge that For large, complex schemes, • Game changing legislation, Such mechanisms would help interim payments are slowing and • Tightening liquidity: change is needed. the industry will be forced improved standards and to protect cash flow in the project costs and time overruns Fluctuating oil prices have • Whilst it will not happen to adopt more attractive increased barriers to entry: supply chain. are escalating, squeezing cash flow continued to strain the entire overnight, change is materialising and leading to a rise in disputes. In construction supply chain. in several ways: such challenging market conditions, • Payment delays: Payment it is increasingly difficult for the delays, variations and • Increased impartiality of GCC construction industry to deliver overruns resulting from contract administrators, projects efficiently. a liquidity squeeze are project managers and increasing. engineers (“consultant”): The industry has reached a tipping • Low barriers to entry: Lower The role of the consultant is point and the message is clear - it is cost players are challenging expected to evolve. We will time for change. international contractors. see greater differentiation • Lack of innovation: There in the execution of those is a continued reluctance by duties for which the the industry to change its consultant is purely an agent procurement and project of the employer and those delivery methods. duties which see it act in a determinative capacity. • Industry participants have Greater clarity in the new realised that the boom days in the FIDIC contracts will assist lead up to the 2008 financial crash in the recognition of these are not returning. Adversarial differing duties. tensions between employers
4 5 TIME FOR CHANGE: CONSTRUCTION IN THE GCC REACHES A TIPPING POINT GROWING TENSIONS
An ambitious agenda GCC population growth vs world average Growing The construction industry holds a strategically vital position in the GCC economy. tensions P SOCIO-ECONOMIC FACTORS DRIVING INFRASTRUCTURE The GCC construction industry is rich in opportunity INVESTMENT With the exception of the UAE, the and ambition. The drive to meet the needs of a rapidly region’s populations are growing O S A growing population, coupled with the implementation at a faster rate than the world UAE average and after three years of of strategic initiatives by governments to diversify their reduced spending on projects, the Source: MEED Projects economies away from oil, has seen over $951 billion of infrastructure deficit has widened. STRONG REGIONAL AMBITION • The Red Sea Project, a 34,000 contracts awarded in the GCC over the past five years. The low oil prices since 2014, square kilometre luxury island Governments in the region know has renewed the economic focus resort project; that critical infrastructure is required on diversification away from to improve the lives of their citizens • The $3 billion New Taif Project, a Currently, some $3.1 trillion worth of capital spending by governments are further compounded by a lack of hydrocarbons revenues to stimulate and to support investment and job mixed-use development including projects are planned or underway in has resulted in fewer project innovation in procurement methods non-oil GDP growth. creation. an airport; and the region. The volume of projects awards. This has significantly and the emergence of a two-tier together with the improving outlook increased competition levels market with low barriers to entry. The new diversification drive can be • The $2.7 billion Al Qiddiya Project, They also know that capital for oil prices has given rise to among contractors, reducing seen most clearly in the economic a 334 square kilometre cultural, investment in projects will drive renewed optimism for a return to order books and eroding profit With such challenging market visions, strategies and initiatives of sports and entertainment city long-term economic growth. growth for the regional projects margins. At the same time, interim conditions, it is increasingly difficult each country. market, after three years of decline. payments are slowing; squeezing for the GCC construction industry These socio-economic drivers were DESERT VISIONS cash flow. Certification of variations to deliver projects efficiently and The largest and most recognised in the 2018 budget Long-term economic strategies Beneath this optimism the GCC and extensions of time are being effectively. comprehensive vision is Saudi statements issued in December under way in the GCC: construction industry is under delayed; project costs and time Arabia’s Vision 2030. 2017 by Saudi Arabia and Dubai. pressure. Tightening liquidity in overruns are increasing and We explore five growing points of Both budgets placed a heavy • Bahrain: The Economic the private sector and reduced disputes are rising. These tensions tension in further detail. Launched in April 2016, Vision 2030 emphasis on infrastructure, with Vision 2030 includes ambitions for a raft of Dubai increasing spending by • Kuwait: New Kuwait 2035 strategic megaprojects that promise 43 per cent, and Saudi Arabia • Oman: Future Vision 2040 significant opportunities for the committing to an additional • Qatar: Qatar National Vision construction industry. These include: $90 billion of capital expenditure. 2030 1,600 UAE $3.1 trillion Whilst the two governments • Saudi Arabia: Vision 2030 1,400 • The $500 billion Neom project, of projects Saudi Arabia have quite different priorities, • UAE: Vision 2021 and UAE 1,200 a megacity and economic zone; are planned both governments highlighted a Centennial 2071 1,000 Kuwait or underway significant commitment to spending • The $4.8 billion Downtown Jeddah • Abu Dhabi Vision 2030 800 in the Gulf $bn Iran on housing projects for nationals as urban regeneration project; 600 part of these 2018 budgets. 400 Oman
200 Iraq 0 Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Bahrain
Qatar Source: MEED Projects
6 7 TIME FOR CHANGE: CONSTRUCTION IN THE GCC REACHES A TIPPING POINT GROWING TENSIONS
Together, these projects take Even for a region used to In Dubai and Qatar, the pressure at Tightening liquidity, As oil prices fell, GDP growth slowed Across the industry, the spending the value of projects planned multibillion-dollar schemes, the the government level will be felt for payment delays and GCC governments hurriedly reduction by government or underway in Saudi Arabia to sheer size and scale of project slightly different reasons. While the and reduced slashed spending and delayed the manifested itself in a number approximately $1.5 trillion. announcements, particularly in hosting of global events provides contract awards award of future contracts. of ways: Saudi Arabia, is unprecedented. the cities with the opportunity to The lower oil revenues of the past Outside Saudi Arabia, the primary To put this into context, the showcase themselves on the world Between 2014 and 2017, the annual • New contract awards have been three years have meant less cash markets for construction activity are announcement of the $500 billion stage, equally, the reputational total of contract awards across delayed, deferred or put on hold; is available. With less money to go Dubai and Qatar, fuelled by several Neom scheme alone increased consequences for failing to deliver the region fell by 34 per cent from around, the entire supply chain has • Projects are being redesigned or large-scale infrastructure and real Saudi Arabia's project pipeline by on time or to a high standard are $181 billion to $118 billion. been put under immense strain. rescheduled to reduce the capital estate projects underway and the almost 50 percent and the entire significant. This pressure at the expenditure required; hosting of global events - Expo 2020 GCC pipeline by almost 20 percent. government level has a ripple effect The impact of reduced The rapid decline of crude oil prices in Dubai and the 2022 FIFA World throughout the entire supply chain. government spending was • Payments to contractors have in the second half of 2014, from Cup in Qatar. For GCC governments, all eyes most felt in Saudi Arabia, where been delayed; $115 a barrel in June to just $50 a are watching as they attempt to fast-track programmes of work, barrel by the end of the year, set in • Contractors are being asked HIGH STAKES FOR FAILURE translate their bold visions for such as the Mecca Metro and a place a negative chain reaction of to accept discounts on This new wave of projects adds to an diversification into reality. Proof Saudi Aramco-led project to build 11 “The reform programme will take events that continues to impact GCC payments due; and already sizeable backlog of schemes, will be in the number of projects stadiums across the Kingdom, were developers and contractors today. with the total value of planned or to reach completion over the next time to kick in and while we can put on hold. • Contractor claims for variations unawarded projects across the few years, with the true measure expect to see key projects moving and prolongation costs are not GCC reaching $1.68 trillion. For the of success being non-oil related being awarded. region's construction industry, the GDP growth. The pressure will be forward this year, there is still pressure to deliver is considerable, felt most strongly in Saudi Arabia, considerable uncertainty about with the stakes high for everyone where Crown Prince Mohammed involved. bin Salman has been openly critical delivery timelines.” GCC contract awards 2014 - 2017 of the way projects such as King — MEED Abdullah Financial District have been delivered in the past.
Value of planned, unawarded GCC projects by country
997
295 O S A UAE
165 94 90 45 Source: MEED Projects O S A UAE
C
Source: MEED Projects
8 9 TIME FOR CHANGE: CONSTRUCTION IN THE GCC REACHES A TIPPING POINT GROWING TENSIONS
Add to this a reduction in liquidity by per cent increase in their losses While oil prices have improved and the region's banks, and cracks in the in 2016, with five out of eight are easing budgetary pressures, supply chain have emerged. listed construction contractors in the situation for contractors the GCC in loss, and the ones in in the region may get worse Margins are being eroded through profit either very well-diversified before it gets better. Government constant price wars, we are seeing or predominantly operating in a reform initiatives will take time to cash flow issues, and contractors country that can break even on their materialise and regional economists and developers are finding budget with a lower oil price. are urging to proceed with caution, themselves increasingly in disputes. citing the current period as a time of This is leaving projects at risk of As the larger contractors suffer, relief, rather than recovery. being completed late, running over these problems have been passed budget, and becoming mired in down to subcontractors and litigation and arbitration. suppliers.
Contractors in particular are The squeeze in market liquidity is struggling. In Saudi Arabia, also being felt by private sector Oman, Qatar and the UAE, delays developers. A decline in government in payments have caused huge deposits with the local banking problems, affecting the cash flow of sector has meant less liquidity for contractors and forcing thousands the private sector to tap into for “It is not untypical for four of layoffs. new projects. or five of our suppliers or
The region’s largest contractors are In addition, private developers subcontractors working on the most exposed to the vagaries have found it more difficult to sell any major project to stop of the market. We have seen many real estate with property prices public examples over the last few weakening, forcing developers to trading while construction years of contractors in financial become more competitive when is still being carried out, distress, their poor performance selling properties off-plan and “Delivery risk is a major concern. Contractors are struggling highlighting the challenges that thereby reducing margins. jeopardising the scheme’s to survive because paymasters on other projects are not the GCC construction industry as a completion” whole now faces. Even in Dubai, which is widely paying. We don’t want them going bust on our projects” regarded as the GCC’s best- — International Contractor — Local Developer These public examples are not performing property market, unique. Speaking privately, most property prices have declined for local construction companies admit 12 consecutive quarters, with large to having difficulties completing volumes of new supply coming onto projects. According to a report the market imminently. released by Ubhar Capital in 2017, “There is a lot of optimism, but nothing is moving… construction companies across the GCC witnessed a further three there are not enough jobs for the market and people are still hungry”
— International Contractor
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Delayed certification of received until the end of the project. Over the coming year, do you the contract period, it can have a contract variations and Contractors say this is due to their expect payments to improve, major impact on the contractor’s time overruns requests for extension being held remain the same or worsen? cash flow. This is exacerbated by by the employer to the end of the contract administrators not acting Closely linked to the issue of project and used as a bargaining independently where they have market liquidity is the issue chip when settling the final account 15 15 a decision-making function. of payment delays and in particular, against any cost overruns. payment for contract variations and The problem of variations not being prolongation costs. Variations have become a more processed is further compounded difficult issue for contractors since when project completion is delayed. In a 2017 survey of contractors the global financial crisis. The statistics for the region conducted by MEED, 30 per cent highlight the scale of this problem. of respondents reported that the 70 In 2008-09, many client bodies in A 2015 report by PWC found that payment situation had worsened the region were lumbered with more than 95 per cent of projects over the previous year. The majority spiralling costs from projects that in the GCC were delayed and 71 per said the situation had stayed the had not been properly managed, mprove Stay the same Worsen cent were over budget. About 44 same, and just 15 per cent said it and in some cases money had also per cent were delayed by more had improved. been lost from corrupt practices. Source: MEED Projects than six months and 6 per cent of projects were more than 50 per cent Companies working for government Keen to avoid the mistakes of the over budget. and semi-government entities past, client bodies responded Are variations certified progressively are most likely to be paid on time, by introducing extra layers of and in a timely manner? while firms working for private governance to their organisation sector companies are more likely to bringing in audit and project experience payment difficulties. management departments to track A two-tier market with ENHANCED CAPABILITIES OF An example of this phenomenon and control spending on projects 26 Many of the contractors interviewed, low barriers to entry LOCAL AND REGIONAL PLAYERS can be found in relation to the in order to prevent costs from however, said that the larger issue and fewer projects Over the past decade, the market construction of high-rise residential spiralling out of control. lay within their ability to recover requiring top-tier has changed considerably. and commercial towers in Dubai. costs for contract variations. 74 expertise As the region started to take on At the beginning of Dubai’s The challenge for contractors an increasing number of sizeable real estate boom, international with this new approach by The region’s construction market In the survey of contractors, 74 per projects, larger local and regional contractors dominated the market employers is that the extra is traditionally structured in tiers. cent of respondents said variations players gained valuable experience, for high-rise construction. As the layers of bureaucracy slow down The top tier has been dominated by are not being certified in a timely creating future opportunities to volume and size of projects decision-making, which delays international contractors bringing manner. Similarly, 84 per cent Yes No work on larger-scale, high-value increased, however, local and formal variations being issued and their expertise to major projects said extensions of time are not projects. regional firms gained the experience paid. When it occurs throughout such as airports, ports, bridges and Source: MEED Projects required to build the towers by high-rise towers. At first, these contracts were themselves. typically completed in joint ventures The second tier has comprised a with an international partner, but Today, these larger local and small number of larger local and increasingly these local contractors regional contractors have completed “Variations are part of construction; regional contractors capable of “We have a lot of change in this region. have been using their experience to more tower projects in the GCC taking on larger building projects. change is part of construction This is the crux of the issue at the prequalify to bid on major projects than many of their international on their own, negating the need for competitors. and that is part of our life. So you Tier three is made up of a significant moment. We are getting paid on time, their larger, more experienced joint- number of smaller, local contractors have to learn to deal with it. The venture partner. but we are not getting paid for change”. working on lower-profile building problem is it doesn’t get dealt with.” and infrastructure projects. — International Contractor — Major Local Contractor
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Number of $500m+ construction and FEW OPPORTUNITIES FOR Lack of innovation in transport contracts award in GCC “Unfortunately it is going to be business TOP-TIER EXPERTISE procurement In addition to regional and local as usual…Clients don’t learn. They want 40 A general reluctance by the industry players enhancing their capabilities, to award to the lowest bidder, even if the market is offering fewer 35 to change its procurement and opportunities that require top- tier 30 project delivery methods is a going to other contractors [new players] growing point of tension. construction and engineering 25 may cost them more. Due to tight budgets, expertise. 20 Table 1on pages 18 and 19 15 the market is moving more and more into highlights the advantages and Data from the past few years 10 disadvantage of traditional or lump-sum bidding.” demonstrates how the market is 5 established procurement models now moving forward with fewer 0 — Major Local Contractor in further detail against four key major contracts. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 project objectives: time, quality, cost Source: MEED Projects and bankability. According to regional projects Widespread adoption of partnering Such a change is therefore unlikely and alliancing models, however to be forthcoming in the GCC in tracker MEED Projects, the number The pre-qualification stage in many Even if a contractor can differentiate Over the last decade, more (whether in the form of project the near future, especially in the of contract awards valued at more international jurisdictions will often themselves due to exemplary health, established markets such as the partnering, strategic partnering, absence of government policies than $500 million has declined require information on, and an safety and environmental record for United Kingdom, Australia and framework agreements or 'pure' designed to promote these significantly since reaching a peak in evaluation of, the contractor's health example, GCC public procurement Canada have seen a move towards alliancing), would require a structures and appropriate industry 2014, when there were 38 contract and safety records, environmental laws often prevent this from being more collaborative procurement fundamental shift in attitudes and standard form contracts that have awards valued at more than compliance records and related considered by the government models such as partnering and relationships from all sides within been drafted with partnering $500 million. In contrast, by late policies and procedures that are in procurer where the contractor's bid alliancing. December 2017 there were just 15. place. By the time bidders get to bid is more expensive. the GCC construction industry. principles in mind. submission, procurers may often Such models are designed to create The industry would need to move LOW PRE-QUALIFICATION also require bespoke health, safety As a result, many procurements long term relationships with clear away from a focus on risk allocation, STANDARDS WITH A FOCUS ON and environment plans that have in the GCC are structured so as to measurements of performance and legal obligations and contractual COSTS been tailored to the project. promote a race to the bottom, with promote sustained improvements in recourse to a focus on collaboration Many public procurement laws the lowest price generally winning quality and efficiency. and project management. in the GCC require government In contrast, for the pre-qualification and being awarded the contract. entities administering procurement stage in many GCC projects processes to award contracts to the primary emphasis is on the the lowest bidder that meets the contractor's track record and “What we have also seen minimum requirements of the experience in completing previous request for proposals. projects, and their financial strength. over the period is that a The contractor's prior health, safety lot of work has been at the Like many international jurisdictions, and environmental performance project procurement in the GCC on similar projects is typically not lower end of the market. Yes, often includes a pre-qualification considered as a pre-qualification there are plenty of cranes up stage, which contractors must pass requirement that must be passed in prior to being invited to submit bids order to bid on projects. in the air, but they are being for the project. operated by developers that contractors like us would prefer not to work for.” —International Contractor
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Even incremental and modest “Generally, all our tenders are open and public. I think developments in the tendering process within the GCC's existing it is better to give everybody a chance. You create more procurement models have proven competition and you open the door for newcomers.” difficult to implement. The region's — Local Developer preference for single-stage, open market tendering, together with constraints, which would benefit programme and preliminaries to fixed-price, lump sum contracts from an early start on site and be prepared at the initial pre- awarded to the lowest bidders greater contractor involvement at construction tender stage; concern can be contrasted with the two- the outset. as to the competitiveness of the stage and selective tendering preferred contractor's bid at the policies commonly seen in other The reasons cited for this include: conclusion of the pre-construction jurisdictions. the additional fees incurred by the stage; and a lack of sophistication in employer for the pre-construction the market. Two stage tendering is rarely used services; projects which are in the GCC, despite the multitude insufficiently well defined for of projects with programme
“[We] carefully choose
TWO-STAGE TENDERING • It gives contractors the ability • It allows greater contractor the best contractors DEFINED to pre-order materials and input into planning and according to their ability Under two-stage tendering equipment such as long-lead buildability issues at an early the contractor is appointed in items under the PCSA, stage (which should also to meet the requirements Open versus select-list tendering entrants not always capable of at the conclusion of the first further assisting to minimise contribute to cost economies) of a specific project. To stage of the procurement or delays. and allows the design team has also contributed to the delivering projects as planned tender process based on an to influence sub-contractor succeed when developing industry's increasingly low barriers and ultimately compromising the • It allows contractors to outline scope of work under selection. to entry and eroding profit ability for a project to be delivered price more realistically by an effective procurement a pre-construction services margins. Whilst some government on time, within budget and to a eliminating some of the risk • Collaboration between the agreement (PCSA) (or similar). strategy, the contractor agencies in the region are bound high standard. premiums and contingencies employer, contractor and They then enter into the by tendering laws stipulating that which would be introduced design team during the should fully understand construction contract at the contracts must be publicly tendered, Select-list tendering, on the other into a single stage tender and pre-construction phase may conclusion of the second stage. the project characteristics, many private clients also choose to hand, shifts the procurement reducing the need for future create a more productive, less In this way it achieves the early publicly tender their contracts. emphasis away from cost. By only contract variations, since adversarial relationship during the market and the client’s appointment of the contractor on opening the tender to a limited pricing can be undertaken on the construction phase. a provisional basis to undertake priorities. The contractor Operating on a competitive public group of pre-qualified contractors, the basis of more complete pre-construction services. This or open tender basis allows the employer is provided with information. should be able to identify approach offers several benefits: new entrants the opportunity greater certainty surrounding the • Employers may benefit opportunities for packaging to compete for upcoming work. contractors experience and ability • It seeks to shorten the While the resulting competition to deliver. Selective tendering from pre-contract value work and contracts – for pre-construction period engineering during the second means better pricing for project also expedites the procurement by overlapping design tender stage, as contractors example, splitting contracts owners, it can often lead to a process as it reduces the need for and procurement, and race to the bottom, with new evaluation. can start developing where speed is a high allows for contractor input solutions to anticipated into programming and problems in advance of the priority, such as enabling sequencing issues. construction phase. and main works.” — Major Local Developer
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TABLE 1: ADVANTAGES AND DISADVANTAGES OF EXISTING PROCUREMENT ALTERNATIVES
TRADITIONAL/ TRADITIONAL/ DESIGN & BUILD/EPC CONSTRUCTION MANAGEMENT DESIGN & BUILD/EPC CONSTRUCTION MANAGEMENT CONSTRUCT-ONLY CONSTRUCT-ONLY
Employer appoints its professional Employer invites contractors to quote The employer enters into separate Detailed design prepared by The employer can lose control of design The employer retains control over team (including design consultants) for the design and construction of the appointments with members of its professional team prior to the quality as the contractor engages and design and construction by contracting to prepare the design for the project. works. The selected contractor will enter design team and other professional contractor commencing works. interfaces with the design team and may directly with the consultants and trade Once the full design, specification, into the design and build contract and consultants in the same way as traditional seek to 'design-down' to save costs. contractors. and pricing documentation is subcontract the design of the works, procurement, however rather than Employer can retain control of design complete, contractors are invited to thereby remaining fully responsible entering into a single construction quality by direct engagement of and Employers can attempt to ensure that Employer can retain control of design quote their price and programme for for both design and construction and contract with the selected contractor, the interface with the design team. their design intent is preserved by quality by direct engagement of and carrying out the works. The selected providing the employer with a “single work is divided into a number of different engaging the design team to prepare interface with the design team. Late involvement of the contractor contractor enters into a construct- point of responsibility” for defects in the specialist packages and the employer the initial design under the employer's means that the project is unlikely only contract and does not assume works (whether due to defective design enters into a separate “trade contracts” supervision, and when the contractor to benefit significantly from liability for the design of the works. or defective workmanship). with specialist “trade contractors” QUALITY is appointed, novating the design team the contractor's expertise as to who carry out defined packages of appointments to the contractor. the “buildability” of the design. work. The employer also enters into a
KEY CHARACTERISTICS Contractor not incentivised to identify construction management agreement errors or omissions in the design with a “construction manager” who is pre-contract (more profitable to claim responsible for the organisation and variations in respect of errors and management of the project (but not for omissions post-contract). This can be the performance of the trade contractors mitigated by two-stage tendering. or breaches of the trade contracts). Provided tender documentation Lump sum pricing can be relatively Payment can be made quickly and is accurate and complete, pricing certain but contractors will typically directly by the employer to trade Traditional/construct-only Design and build procurement with Very unusual. should be relatively certain. charge a price premium to factor in the contractors undertaking the works: the procurement with single-stage single-stage tendering is widely used on assumption of a greater level of risk and direct relationship between the employer tendering is very widely used in the PPP schemes and for works relating to Cost of any design changes lies with the need to control and manage the and trade contractors eliminates main real estate sector where the majority mechanical and electrical plant, as well the employer. design team. contractor's mark-up, thus reducing of large complex projects are as for less complex projects in the real the overall cost of the project. However THE GCC procured using contracts based on estate sector. COST No price premium for contractor's since the work is divided into a number the FIDIC Red Book. assumption of design risk. of different packages, construction FREQUENCY OF USE IN FREQUENCY OF USE IN management does not usually provide cost certainty: the employer will not know Contractor builds to a complete Programme certainty is possible as the Because the work is divided into the total price for the works until the last design, reducing the probability contractor is responsible for design a number of different packages, trade contract is let. of delays. Programme certainty is and construction (this may be easier to construction management does not possible if design and other contract achieve if the employer procures the usually provide programme certainty: Risk is divided between the Since the contractor is fully responsible In general not as bankable as design and documentation are accurate and initial design and novates the design the knock-on effect of delays caused by contractor and employer as the latter for design, the client achieves a single build or traditional procurement. Multiple complete prior to the tender. team to the contractor). one trade contractor may result in claims assumes responsibility for the design: point of responsibility for design and points of responsibility for both design from subsequent trade contractors. no single point responsibility for construction. and construction - work is divided into Not generally suited to “fast-track” design and construction. a number of different trade packages projects which require an early start Can reduce the length of the construction The covenant strength of the contractor so appropriate warranty protection on site: a significant period of time phase as it allows for an early start on is of prime importance and employers and security against trade contractor TIME may be required for the preparation site by some trade contractors: since and funders are more likely to require is critical. of the full design and other contract the work is divided into packages, early warranty protection from key design
documentation before tender, packages can be designed, priced and BANKABILITY subcontractors, funder step-in rights as giving a long lead-in time before commenced before the design of the well as security against contractor default construction work can start. This can entire project is complete. and insolvency. be mitigated by two-stage tendering. Appropriate for use on “fast-track” projects.
18 19 TIME FOR CHANGE: CONSTRUCTION IN THE GCC REACHES A TIPPING POINT THE TIPPING POINT FOR CHANGE
“Super normal profits can’t persist, so eventually the legal teams have been engaged to The tipping point deal with multiple arbitrations and market will [need to] become more sophisticated, court cases. more grown up.” for change Yet, whilst disputes have always been — Local Developer a common feature of the region’s construction industry, draining cash flow and tying up resources, as the Expectations of a market return Adversarial tensions trading environment worsens, they to the glory days have now faded mounting, disputes pose tipping point now pose an increased threat. Project and there is a growing acceptance greater risk completion is made all the more that the current environment – an noun As project delays, cancellations challenging, putting employers under environment characterised by high and cost overruns become far pressure by key stakeholders, and competition and low margins – is noun: tipping point; plural noun: tipping points too common, tensions between the financial survival of businesses here to stay. This acceptance of a new employers and contractors rise. throughout the entire supply chain is norm is forcing contractors to seek 1. the point at which a series of small changes or incidents becomes The GCC construction industry has being put at risk. reform in other ways in an effort to reached an unhealthy point whereby significant enough to cause a larger, more important change. protect margins from being further more and more projects are falling Contractors remain the most eroded and ultimately survive in into dispute and employers and frustrated by the situation. Already Oxford Dictionary Online a difficult market. contractors are caught in a sea of struggling to deliver on contracts arbitration and litigation. having committed to low prices, their frustrations are compounded With employers and contractors contractors were able to negotiate GCC governments adjust their In a 2017 report by Arcadis, the by the issue of payment delays and finding the market increasingly contracts with employers and capital expenditure programmes, “The big risk for us, as Middle East ranked second in the in particular, the inability to recover difficult, appetite for change is charge higher margins, and delaying, cancelling, or repurposing world in terms of the average value payment for variations introduced mounting. Continuing contractual employers had to agree to carry future projects, there has been little contractors, is when jobs of construction disputes. Whilst the by employers. While they accept and cash flow challenges, combined greater project risk in order respite. overrun we enter what we call report showed positive signs that change and variations as part of the with a three-year recession in to attract the contractors. For the situation was improving, with the creative process during construction, the region’s projects market, has contractors, life was good, but it also Volumes have never been great the danger zone. Costs on a average value falling 30 percent from contractors interviewed stressed created an unsustainable situation. provided an environment fuelled enough to force a rebalance of the big project could be upward of the previous year and the average that it is the way that variations are by operational inefficiencies and employer/contractor relationship length of disputes decreasing by currently being dealt with that is There are clear signs that the GCC unrealistic expectations. and tendering continues to become AED10 million a month and we 9.8 percent, the volume of claims jeopardising projects. construction industry is close to more protracted driving prices and have to service everyone else submitted in the region overall was its tipping point. Change is now This period of superior profits margins down even further. [on site] as well. We haven’t reported to have increased. The problems are most severe on inevitable. came to an abrupt end in 2008 with large projects, where the value of the onset of the global financial allowed for it because the Anecdotally the evidence suggests potential losses to the contractors A realisation of a crisis, leaving contractors with “The global financial crisis was project has started to overrun that a spike in disputes is also involved threaten their very new norm few new work opportunities. The a difficult period, but when you coming. With disputes tending to trail existence. Contractors speak of market swiftly changed to a buyers’ and then [on top of this] Globally, construction is regarded contract awards by two to three years, a “danger zone” on projects when market and with it came a return to face difficult times this is when as a low margin business with low we have variations that problems on projects over the past the value of unapproved or unpaid competitive tendering. Seemingly barriers to entry and a relatively you have to change the way you two years may only now start to move variations increases, while at the overnight, contractors found are not being paid. Those low number of projects and clients. into the formal dispute processes. same time the works are delayed themselves in a race to the bottom, play the game. Otherwise you This has not always been the case two things compounded The majority of large construction and the contractor runs the risk bidding for contracts with meagre in the GCC. are not going to get what you are companies report that they already of the employer levying liquidated returns in order to win work. together is a massive aiming for.” have at least one major legal case damages for delay. From 2003 to 2008 a region-wide problem for contractors and underway, and in many cases large Today, as private sector clients projects boom led to too much — Local Developer curtail their ambitions in line with subcontractors.” demand for the GCC construction weaker economic outlooks and industry to supply. International — Major Local Contractor
20 21 TIME FOR CHANGE: CONSTRUCTION IN THE GCC REACHES A TIPPING POINT THE TIPPING POINT FOR CHANGE
“Minimising and Both employers and contractors Contractors becoming Whilst their underlying drivers differ, consultants in the market, most employers for cost-plus contracts agree, however, that prevention more selective. reputation is important for both major contractors have worked with and other more favourable effectively managing is the best way to deal with the Employer reputation public and private sector employers. the pool of consultants and based conditions. So far this has yielded overruns comes with issue and reduce the potential for growing in importance. For public sector employers, it is on their previous experience have little change from employers, disputes in the long run. important to deliver projects on formed a clear view as to who they with second-tier contractors still As acceptance of the new norm great preparation time in order to meet government will and will not work with. typically prepared to commit to the grows, contractors are being more Contractors spoke openly of the budgets and policy objectives, whilst traditional conditions tabled. It does, and planning, which selective when it comes to choosing need to have an employer that for the private sector, employers Rising tensions between contractors however, illustrate increasing the projects they work on and the is the most important understands the importance need to complete projects within and contract administrators or concerns about risk and the employers they work for. With this, of assembling a collaborative budget and on time to satisfy their engineering consultants are willingness of major contractors component and the need for employers to maintain project. Equally, some of the larger investors. underpinned by the growing issue to decline work if they feel that the a good reputation in order to attract most efficient tool in developers acknowledged the of impartiality. There is a widespread contract conditions are unfair. quality contractors is becoming importance of better preparation Not all client bodies have been view amongst contractors in the preventing overruns.” increasingly important. and planning at the outset to finalise able to maintain a reputation for region that consultants act on The combination of these factors — Local Developer designs and clarify the variation delivery, however, and organisations behalf of the employer rather than means that business development When projects are tendered there is process in order to prevent overruns that have treated contractors impartially, with some even claiming executives in the region are saying now far greater effort being made from occurring down the line. badly in the past are now finding that property developers go so far that it is becoming increasingly by contractors to understand the it difficult to attract bids from as to draft the correspondence difficult for them to get senior “We try to put our employer, their record for payment This view was further supported by leading contractors. Instead, between the consultant and the management approval to bid on and delivery on previous projects energy into how we the Arcadis report, which cautioned they are being forced to engage contractor. projects due to concerns about and their ability to fund the project the industry against making rushed second-tier firms or new market the project itself or the particular prevent overruns before bidding starts. decisions around contract and entrants to complete their projects, The problem of impartiality appears employer developing the scheme. from occurring. procurement strategies in an effort putting their reputation at risk of to be more acute in the GCC, with If we can get a to get projects underway. being undermined through poor international contractors saying that Without change, the impact of this workmanship and coordination. they work with the same consultants will be felt increasingly by employers project team in in other markets without any cause who will be faced with a more place that is making “We try to get to know clients better Employer reputations are to doubt their impartiality. limited pool of bidders from which than before… try to understand damaged most when they liquidate to choose. This impact will have a decisions at the performance bonds1. Over the The consultants privately more profound impact on projects right point in time more about the organisation and past decade, several high profile acknowledge the issue exists. requiring specialist expertise, the structure, who is behind, who is employers have made demands Many commented on the “with such as airports and healthcare and you can avoid on contractors’ bonds, and their us or against us” mentality held infrastructure. overruns. That is funding. We prefer to decline than be reputations have been severely by employers and accompanying involved if we are not convinced the tarnished within the sector. Whilst expectation for them to act on “We are saying no the best solution the reputational damage sustained the employer’s behalf rather than for everybody. The money is there.” has not been sufficient to mean that impartially. In addition, in contrast more often than we contractors will refuse to work for with other markets such as the — International Contractor did before. We are client has to create them, it has meant that many of the UK, no laws currently exist in the an environment top-tier contractors have declined region that require consultants to getting more and to participate in tenders for new act fairly and impartially in their more respectfully that allows all the projects offered by such employers. administration of the contract. project participants honest. Our risk The composition of the project In addition to the project team profile in the region to do their work team is also increasingly influencing influencing a contractors decision effectively a contractors’ decision to bid. to bid, contract conditions are also has significantly With a limited number of external being scrutinised more closely. changed.” and succeed.” contract administrators, project On large-scale projects many — International Contractor managers and engineering contractors have started to ask — International Contractor
1 financial instruments guaranteeing the contractor’s performance
22 23 TIME FOR CHANGE: CONSTRUCTION IN THE GCC REACHES A TIPPING POINT THE TIPPING POINT FOR CHANGE
operations. For instance, contractors including the world’s biggest airport, Regional ambition to further International carrying out operations in the UK “All contractors are going to a range of causeways, bridges support the business and leisure contractors exiting may still have to prepare a slavery have to change over the next “This is a region and tunnels, metros, railways, sectors by winning the hosting The call for change is further and human trafficking statement that is rightfully and highways. rights for international events like escalated by the increasing number for the Slavery Commissioner in 10 years or leave the market. Expo 2020 and Qatar 2022 is also of international contractors accordance with the UK Modern If they can’t operate on lower proud of its projects. As other cities and regions around forcing changes to the way projects withdrawing from the region. Slavery Act (2015), relating to their It should also be the world pursue similar ambitions are delivered. subsidiaries' operations in the GCC. mark-ups, they are going to and aim to become regional centres Over the past three years, we have go out of business or leave.” proud of the way of excellence, competition for foreign Intended for a global audience, witnessed the decision by several In other circumstances, pressure they are delivered” investment will intensify and the these projects carry much higher leading international construction from international shareholders is — International Contractor GCC's current competitive edge will expectations regarding the companies to exit the GCC. The first the driving factor, with many large — Major Local Contractor become more difficult to maintain. adherence to international best was South Africa’s Murray & Roberts. institutional investors, such as practice than ordinary projects in In 2016, the company announced pension funds, choosing to avoid Unlike in the past, where the region the region. For example, Qatar has health, safety and environment that it intended to close down any reputational risk associated destination for business and leisure. was building almost everything from come under global scrutiny for its provisions inserted into the its operations in the UAE, Oman, with investing in firms that operate As the GCC plays a more active role the ground up, in the future it will treatment of foreign workers. This contracts by the procuring entities. Qatar, Saudi Arabia and Egypt. in the Middle East out of concern on the world stage, it will be forced need to build upon what already has led to Qatar implementing new This decision was followed in early that these firms may not provide to meet certain global standards exists. As the market shifts towards regulations to improve workers’ These commitments to higher 2017 by the UK’s Balfour Beatty, adequate worker welfare in and expectations. upgrading its infrastructure rather welfare in ahead of the 2022 World standards come at a cost, however, which announced it was selling the region. than just building something new, Cup event. Aware of the criticism and as a result, many international its 49 per cent shareholding in its For business, the region has greater consideration will need to that Qatar has received, Dubai contractors' operations are more Dubai-based joint venture Dutco Compliance with international established itself as a hub for be given to what is needed. Once has been keen to ensure that expensive to implement in the Balfour Beatty. Later in 2017, legislation coupled with a finance, trade, transport and decided, projects will need to be the welfare of its workers is also region compared to their regional UK contractor, Carillion, announced commitment to “best practice” logistics that serves the broader completed with a higher degree protected on its Expo 2020 projects, competitors, who are not subject to it was withdrawing from the Saudi, globally has led to international Arab world, Central Asia, South Asia, of quality to improve on what they and contractors competing for work such high standards and have little Egypt, and Qatar markets and that it contractors formulating world- and Africa. The development of have already created. on the scheme have had to meet far incentive to change. had sold 50 per cent of its business wide policies for their operations quality infrastructure such as ports, higher levels of regulation than what interest in Oman-based contractor to adhere to. The result is that roads and airports, in addition to The changing landscape will bring they have become accustomed to If the trend towards international Carillion Alawi. In early 2018 Carillion standards are raised across their commercial districts and residential with it different requirements. on other projects in the region. contractors withdrawing from the went into liquidation in the UK and entire global operations to meet the communities, has made it attractive Projects of the future are likely to market continues, the fear is that its shares were sold in Al Futtaim highest standard of the countries in to businesses looking to establish a be more technologically complex Desire to change from the pressure required to drive Carillion. which they operate. This is true of regional base. and will command a higher degree both sides critical reform and fundamentally many international firms operating of expertise to deliver. The GCC trigger a universal shift towards While contractors are undoubtedly One reason that international in the GCC. For leisure, the region, led by construction industry must ensure it higher standards within the GCC more vocal when questioned about contractors are finding it Dubai, has established itself as an can continue to attract the brightest construction industry will be the need and degree to which the increasingly difficult to compete The most noticeable area has been international tourism destination and best talent worldwide to deliver further reduced. With that, the GCC GCC construction industry must with local and regional players is the health and safety, where there with an abundance of luxury resorts, its ambitious pipeline of projects. construction industry will fall further change, the argument for change higher overheads they carry. have been considerable efforts retail, leisure and entertainment behind international standards. is not completely one-sided. by international contractors and options. In doing so, the GCC Yet with the region fast developing Employers also recognise that the International contractors are often some local contractors to improve construction industry has earned a reputation for being a difficult Meeting global current situation is unsustainable committed to upholding standards construction records in the region. a reputation for delivering some of market in which to work, especially expectations and that change is required in order that their local and regional Flagship projects, such as Dubai the most challenging and ambitious for international contractors, it risks for the industry to prosper. competition do not have to satisfy. Expo 2020, Qatar World Cup 2022 At odds with the fear of falling projects in the world. Despite the losing out to more sophisticated and The Louvre, Abu Dhabi, have behind, is the GCC's desire to market being less lucrative than it markets that offer more collaborative Essentially, both employers and In some circumstances, legislation helped to advance efforts with retain its competitive edge. Over once was, contractors in the region procurement practices and contractors want the same thing. in force in their home country the past two decades, the GCC has have still competed for contracts to regulatory frameworks that are more Employers want to deliver good may extend to their other foreign developed into an international build the world’s tallest structure, in line with international standards. quality projects on time and on the world’s largest shopping mall, budget. Meanwhile, contractors and designs are being prepared want to complete projects for for major infrastructure schemes
24 25 TIME FOR CHANGE: CONSTRUCTION IN THE GCC REACHES A TIPPING POINT WWW.DLAPIPER.COM
their employers to the quality construction costs mean that they contractors that will collaborate specifications required, on time and have insufficient funds to complete to develop the capabilities and within budget in order to win future the project. resources needed to deliver future work, while at the same time making projects within the kingdom. a reasonable profit. While many contractors remain skeptical that the employer's At the same time, contactors are Employers are under increasing desire to change will result in recognising that they too must pressure to deliver their projects real action, there are some positive improve their own processes to better more effectively. In the public sector signs and developments in the ensure that their interests on projects particularly, there are numerous market, indicating a willingness are safeguarded. Contractors are examples over the past decade by employers to consider new often guilty of failing to manage the where major projects have run years approaches in an effort to change contract properly once the project beyond their scheduled completion the current situation. has started, leading to disputes and date. These include some of the significant losses on projects. Again, region’s most high profile projects Across the UAE, some employer the impact of this failure has been such as the Hamad International bodies have looked at how they amplified in recent years as margins Airport in Qatar, the Midfield procure contractors’ services and tighten. Terminal Complex at Abu Dhabi are seeking to set up contractor- International Airport and the Muscat led framework agreements with With the desire for change International Airport. selected firms. These agreements growing on both sides and positive are aimed at reducing the time developments being made by Even where schemes have been spent tendering and in addition, employers, the undercurrent for completed within an acceptable by working with a set panel of change is moving the industry closer period, legacy issues remain with contractors, achieve benefits from to its tipping point. some of the region’s best known the development of more consistent pieces of infrastructure, mired with working relationships. Whilst court cases, arbitration proceedings none of these frameworks have and allegations of late or delayed been established yet, if they are payments. These disputes are costly successful, they could become more and absorb valuable resources that commonly used. could be better deployed to other construction projects in the region. More radical solutions are also being considered by client bodies in Private sector employers are equally Saudi Arabia. Saudi Aramco and the feeling the pressure, having also Public Investment Fund is planning encountered problems with projects to establish a super contractor across the region stalling as rising vmade up of local and international
“Change is in the interest of all parties. As stricter governance and an expectation of transparency is put in place for employers, both public and private, they will not be able to risk delays and disputes”
— DLA Piper
26 27 TIME FOR CHANGE: CONSTRUCTION IN THE GCC REACHES A TIPPING POINT
to specify that the engineer or for which the engineer or PMC Placing an obligation on the New horizons: Project Management Consultant is purely agent for the employer employer to not interfere or is “acting for the employer”. and those duties which see it act constrain the engineer will With the introduction of the new in a determinative capacity. Figure introduce a new, albeit not without What will change FIDIC contracts, we will begin to 1 explains the changes bought its difficulties, avenue of recourse see greater clarity around the by the new FIDIC contracts in for the contractor faced with look like? differentiation of those duties greater detail. a partisan engineer.
These challenges and pressures will not be solved overnight, Figure 1: The New ‘The Engineer may exercise the Contract, taking due regard of all FIDIC contracts authority attributable to the Engineer relevant circumstances. Within the but we can expect change. as specified in or necessarily to be time limit for determination under In December 2017, over 17 years implied from the Contract. If the Sub-Clause 3.7.3 [Time limits], the after the publication of its 1999 Change 1: Increased in a determinative capacity under them to price the risk. Over time, as Engineer is required to obtain the Engineer shall give a Notice to both first editions, FIDIC published the impartiality of contract the main construction contract, employers become aware that they consent of the Employer before Parties of his/her determination. This second editions of its “Rainbow administrators, project ultimately, the contractor can do are losing quality contractors from exercising a specified authority, the Notice shall state that it is a “Notice Suite” of contracts (the Red, Yellow managers and engineers nothing to challenge the consultant. the tender list and seeing prices requirements shall be as stated in the of the Engineer’s Determination”, and Silver books). The FIDIC forms (“consultants”) The contractor has no contractual rise, they will be forced to vet their Particular Conditions. There shall be and shall describe the determination of contract are firmly established relationship with the consultant and consultants or require a change in no requirement for the Engineer in detail with reasons and detailed Contractors will force greater as the pre-eminent standard forms therefore can make no contractual their behaviour. to obtain the Employer’s consent supporting particular.” impartiality of consultants and in of construction contract in the Gulf, claim against them. In theory, it may before the Engineer exercises his/ doing so the reversal of the trend so the publication of new editions be possible to bring tortious claims Anecdotally, the industry talks of her authority under Sub-Clause Although it is clear that the for late and non-payment for is of particular interest to the against consultants but the initial one major developer who is alive 3.7 [Agreement or Determination]. Engineer is deemed to act for the variations and project overruns. industry. threshold for bringing such claims is to the issue: the additional costs The Employer shall not impose Employer, this is qualified by the In turn releasing the pressure on high and will involve proving matters they may incur as well as the impact further constraints on the requirement for the Engineer to supply chain cash flow. The new FIDIC Red Book provides such as fraud, crime and/or gross on the supply chain and threat to Engineer’s authority. act as a skilled professional; and by greater clarity between and mistake. In short, the contractor project completion dates. They know expressly stating that the consent In common law jurisdictions (such as management of the “agent” role is impotent to hold the consultant it is not in their interests to have “Clause 3.7 Agreement or of the Employer is not required for the United Kingdom and Australia) and the “decision making” role to account for its actions in consultants acting in a partisan role Determination the Engineer to carry out functions the impartiality of consultants is of the engineer. The clauses are administering the contract, short of and have started to put steps in requiring determinations. legislated, meaning the manner lengthy but the following extracts referring a determination to dispute place to enforce change. When carrying out his/her in which contract administrators, illustrate the new approach. Clause resolution, which could result in duties under this Sub-Clause, In addition the clauses specify project managers and engineers 3.2 (Engineer’s Duties and Authority) lengthy litigation or arbitration. WHAT CHANGE MAY LOOK LIKE the Engineer shall act neutrally if the Engineer is carrying out a are obliged to fulfill their duties and clause 3.7 (Agreement or As appetite grows for greater between the Parties and shall not determination function: fairly does not only arise out of a Determination) (with emphasis FORCING THE CHANGE clarity in the role of the consultant, be deemed to act for the Employer. contract, it also arises out of the law. added): With major contractors having we expect to see changes to Whenever these Conditions provide • he is required to act “neutrally”; The GCC region does not currently worked with most contract the main construction contract that the Engineer shall proceed • is not deemed to be acting for have any laws imposing overriding “Clause 3.2 – Engineer’s Duties administrators, project managers documentation, with provisions under this Sub-Clause to agree or the Employer; AND duties for consultants acting in and Authorities and engineers in the past, they for a prohibition on employer determine any matter or Claim, the • shall make a fair determination determinative roles. have clear views formed based on interference where the role is following procedure shall apply: taking due regard for all relevant Except as otherwise stated in these their previous experience. These determinative. circumstances. As a result, consultants are only Conditions, whenever carrying views may lead them to decline to “3.7.2 Engineer’s Determination bound to act in accordance with out duties or exercising authority, tender for future projects where Contracts commonly used in their own contracts with the specified in or implied by the certain consultants are involved, the region (most of which are The Engineer shall make a fair employer. This means that whilst Contract, the Engineer shall act as or alternatively, if they do bid, lead based on the FIDIC forms) tend determination of the matter or there is an important role to play a skilled professional and shall be Claim, in accordance with the deemed to act for the Employer
28 TIME FOR CHANGE: CONSTRUCTION IN THE GCC REACHES A TIPPING POINT NEW HORIZONS: WHAT WILL CHANGE LOOK LIKE?
Change 2: A more mature “If a contractor has greater visibility or greater confidence about his funding environment payments then it reduces the risks and everyone is a winner. Export The pressure caused by the tightening of financing enables the project when a project might not otherwise be liquidity will be relieved by new sources of funding. At the same time driving more done. It maybe gives that contractor an edge against competitors favourable contract terms and raising standards that may not be able to provide that same kind of financing. It gives to create a more level playing field for international contractors. that contractor and the supply chain security, so they are able to deliver a better faster project, and maybe even the contractor An increased reliance on external and international funding will shift employer reduces his margins because some of the risk is not there.” priorities away from “lowest price” towards — Major Local Contractor higher quality workmanship and an ability to meet a realistic completion date. This in turn will create a more level playing field for tenderers ensuring more realistic contract prices are set Main contractors are also project only. They also provide and reducing payment issues and disputes optimistic in relation to the ability greater payment security as the caused by variations. of international funders to bring a funds can be drawn down directly greater level of sophistication to the from the bank or escrow agent There have been several examples of local contracting process and delivery of upon completion of contractual banks demanding fairer contract administration construction projects. International milestones. practices. In an interview first appearing in a financiers are subject to a higher MEED Business Review, Abdul Aziz Al Ghurair, level of governance and standards GREATER USE OF EXPORT CREDIT CEO of Mashreq Bank, is quoted as saying (including the Equator Principles – FINANCE “Contractors have suffered in the past due to see Figure 2) in relation to anti- Whilst export credit finance has late payments by clients... We expect every bribery and corruption and modern been common in power and water client and government once in [an agreement] slavery. Their very involvement projects around the GCC, there is with a contractor, to honour their commitment. in the funding of construction now a trend for its use in major real It is not good that paymasters withhold money. projects may therefore automatically estate and infrastructure projects. Contractors not getting paid can trigger disqualify some of the “lower tier” This trend will also assist in reducing a big chain of defaults, which is not acceptable.” contractors from the tender list, payment delays and keeping making it easier for international international contractors in the contractors subject to the same market. level of governance and standards “Change needs to be driven by banks. to compete again. The UK has been at the forefront of the provision of UK export credit Banks should take a greater role in PROJECT BANK ACCOUNTS support for projects in the UAE reviewing and vetting both the contractor With greater financier control we and also Oman. It has supported can also expect greater measures to winning bids for construction work and the contract terms.” be put in place to protect the supply on various real estate projects chain in order to ensure successful that include stipulated levels of — International Contractor project delivery. One such measure UK goods and services. UK Export may be the express requirement by Finance (UKEF), the UK’s export financiers for project bank accounts credit agency, has also offered to be put in place. Project bank accounts ensure that payments to contractors are used on that
30 31 TIME FOR CHANGE: CONSTRUCTION IN THE GCC REACHES A TIPPING POINT NEW HORIZONS: WHAT WILL CHANGE LOOK LIKE?
Figure 2: The Equator the EPs, covering over 70 percent of Multilateral development banks, to provide $2 billion-worth of From a contractor’s perspective, Funding procured from Europe Principles explained international Project Finance debt including the European Bank for export guarantees for the expansion there are several benefits to be and North America where high in emerging markets. EPFIs commit Reconstruction & Development, and of Al-Maktoum International Airport. derived from arranging funding levels of political scrutiny exist, will The Equator Principles (EP) is to implementing the EP in their export credit agencies through the guarantees. Firstly, it differentiates also require the project to adhere a risk management framework internal environmental and social OECD Common Approaches are Other countries have made similar the contractor from the competition to strict standards on health and adopted by financial institutions policies, procedures and standards increasingly drawing on the same moves. Italy’s SACE is providing by bringing access to funding that safety and worker welfare, and for determining, assessing and for financing projects and will not standards as the EPs. funding support for a shopping would not otherwise be available also corruption, a primary area of managing environmental and provide Project Finance or Project- mall project in Dubai, and has in the region. Secondly, it provides concern for foreign governments social risk in projects and is Related Corporate Loans to projects The EPs have also helped spur signed an agreement with Dubai greater certainty that the project when supporting projects overseas. primarily intended to provide a where the employer will not, or is the development of other Aviation City Corporation to provide will not fail due to a lack of funding. Again, such standards will further minimum standard for due diligence unable to, comply with the EP. responsible environmental and $1.14 billion of credit for the Dubai Thirdly, it regulates the payment assist in rebalancing the focus by to support responsible risk decision- social management practices in South development, which includes process by typically ensuring employers away from lowest cost, making. EPFIs also apply EPs to the the financial sector and banking Al-Maktoum International Airport timely direct payments to project back to a focus on highest quality expansion or upgrade of existing industry (for example, Carbon and the Expo 2020 site. participants at all levels of the and fairer margins. The EP apply globally, to all industry projects where changes in scale Principles in the US, Climate supply chain without the employers sectors and to four financial or scope may create significant Principles worldwide) and have interference. products 1) Project Finance Advisory environmental and social risks and provided a platform for engagement Services 2) Project Finance 3) impacts, or significantly change with a broad range of interested Project-Related Corporate Loans the nature or degree of an existing stakeholders, including non- and 4) Bridge Loans. impact. governmental organisations (NGOs), “We are involved in every stage of the procurement process. clients and industry bodies. Typically international funders The EPs have greatly increased We have a team that works with the contractor that knows (including many of the major local the attention and focus on banks in the GCC) impose the how to manage the supply chain. For paying contractors, we social/community standards and Equator Principles on large power, responsibility, including robust implement a project account where funds are ring-fenced for energy and infrastructure projects. standards for indigenous peoples, The contractual obligation to our project only.” labour standards, and consultation comply is invariably passed down by with locally affected communities — Financier borrowers to EPC contractors. within the Project Finance market. They have also promoted Currently 92 Equator Principles convergence around common Financial Institutions (EPFIs) in 37 environmental and social standards. countries have officially adopted
33 TIME FOR CHANGE: CONSTRUCTION IN THE GCC REACHES A TIPPING POINT NEW HORIZONS: WHAT WILL CHANGE LOOK LIKE?
Change 3: Global Two-stage tendering has been seen Nakheel is an example. construction work on upcoming One such developer is Abu Dhabi- One Zabeel project, a complex standard contracts, in several examples of such projects The prominent UAE based developer, projects, including apartment based Eagle Hills. When it began project that involves building for global standard recently, including contracts being which usually operates open buildings, villas, hotels and developing its international projects, towers around an existing elevated projects and the tendered at Dubai Expo and Dubai tenders, has, in recent times, used infrastructure. it reviewed its conditions and instead section of highway, for another ICD locking in of resource Creek Harbour, as well as selected selected tender lists where it felt it of passing on all the risk to the subsidiary Ithra. projects in Abu Dhabi. Whilst reports was important to ensure a certain Framework agreements designed contractors – as is the typical practice We will see more attractive of its success (and failure) have been level of quality. In 2017, it tendered to build more collaborative, long- in the UAE – it chose to retain some The Alec acquisition followed tendering procedures and more mixed, with the increase in pressures the contract to build the Gateway term relationships and encourage of the risk where it was capable of an earlier move by ICD to take a appropriate contract terms for from external and international Towers next to the Palm Jumeirah ownership will force a relaxation doing so. stake in South Korea’s SsangYong larger, more complex schemes. funding, we can expect it to be to a limited group of prequalified to the often one-sided, developer Engineering & Construction. Since introduced with more rigour. contractors. friendly contract terms. In an effort to further lock in 2015 the company, along with its Whilst it is likely that one-stage contracting resources for projects joint venture partners, has been open tendering will remain as the Similarly, we can expect the At the same time, we expect to As real estate prices have fallen, and retain control over quality, awarded contracts to build the preferred procurement method for continued growth and evolution of see a continued trend towards developers’ margins have been cut, we have also witnessed a move extension to the Atlantis hotel on small to medium sized government two separate construction markets, major developers using framework and the timely delivery of projects by some investment companies the Palm Jumeirah in addition to funded projects and standard with a clear segregation of the agreements with a pre-selected list becomes more important, some and developers to take stakes in the ICD Brookfield Place at Dubai developments, we can expect to see companies that compete in each of contractors. Dubai Properties have developers are starting to see the contracting companies. International Financial Centre. Both an increase in two-stage tendering market, as employers increasingly already taken this route. In 2017, benefit of more appropriate contract of these schemes, like One Zabeel, for niche areas of construction and prize quality, cost certainty and the they invited selected consultants terms. Some developers even spoke In 2017, Binaa, a subsidiary of the are complex schemes that require landmark developments. achievement of their published and contractors to submit proposals of projects whereby they elected Investment Corporation of Dubai significant construction expertise. completion dates. for framework agreements covering to retain an element of risk, rather (ICD), purchased a majority stake than pass it on to contractors, in in Dubai-based contractor ALEC. Other similar acquisitions have order to secure better pricing for The contractor was subsequently been made elsewhere in the region. their projects. awarded the contract to build the Most notably, Saudi Arabia’s Public Investment Fund which acquired a stake in South Korea’s Posco Engineering & Construction.
Employers are also looking to lock “We started using these contracts outside the GCC and the pricing was in resource from further down the supply chain in order to protect encouraging. With the risks we took on, we did not pay any mitigation against delays in bringing projects costs for dealing with those risks, so we prevented money from being lost. on-line and secure key elements of the supply chain to ensure timely In the end, this was reflected in a very competitive selling price for our delivery. This is a long-standing end-users. This is what efficiency in construction is all about. trend with real estate developers such as Emaar, through its We then had the opportunity to test conditions in the UAE. For this subsidiaries, taking strategic stakes in companies ranging from cladding contract, we have set a new benchmark on the cost per key for hotels in and curtain walling suppliers, the UAE. So it was also very good to see the commercial benefit of sharing to development and project management firms. the risk with the contractor and supply chain.”
— Local Developer
34 35 NEW HORIZONS: WHAT WILL CHANGE LOOK LIKE?
Change 4: Game As the Middle East continues to 2. The gap in tender prices “We’ve seen a raft of new changing legislation embark upon more high-profile will narrow creating a more and increased global projects and position itself as level playing field between legislation across the region standards and barriers a serious player on the world stage, international and local raising the standards in respect to enter the market the pressure on GCC governments contractors. Universal compliance to improve standards through with health and safety, worker Legislative changes will raise of a number of global priorities. legislative change and a more welfare and environmental standards and force higher barriers rigorous enforcement of existing protection will be a cost that This appetite for legislative to entry, stemming the flow of top laws will only continue. every contractor will have to price. tier international contractors exiting reform is promising” Legislative change at the local the region. We have already seen considerable level will therefore remove one of — DLA Piper progress made in the area of the main disadvantages currently The region's construction industry legislative reform, with tighter faced by international contractors has variously been the subject legislation and stricter enforcement who are already forced to accept of global criticism relating to expected to manifest in two ways: higher operational costs as they worker welfare, modern slavery, seek to abide by governance from health and safety, and corruption. 1. Barriers to entry will be raised. other countries. The preparations for the 2022 World Companies will find it more Cup in Qatar and projects such as difficult and costly to enter the the Louvre Museum in Abu Dhabi, market as those unable to meet have attracted international spotlight the new legislative requirements and generated a renewed focus by will not be granted a licence media and human rights groups. and/or will fail to pre-qualify for projects; and
and Terrorism between the and will establish the Legislative Reform State and the Europol in conditions and requirements Since 2015 March 2018. If successful, for the registration of UAE it should help with tackling assistant engineers and 1. In May 2018, the UAE issued priority areas such as financial other employees in similar Federal Law No.6 of 2018 on crime, money laundering and positions, in the electronic Arbitration (Arbitration Law). counterfeiting. system. The Law came into force on 4. In January 2018 Dubai 5. The UAE's new bankruptcy 16 June 2018 and applies announced an amendment law came into force on 29 to all on-going and future to their engineer licensing December 2016. It provides, arbitrations in the UAE. procedures, with a central amongst other things, a 2. As of March 2018, Emiratis electronic system to be used new minimum threshold and foreign workers can be to carry out technical tests for creditor-initiated hired by multiple employers of engineers working in the insolvency proceedings and a without first having to obtain construction sector and to new balance sheet insolvency approval from their primary issue approval certificates. The test. employer. Dubai Municipality's Buildings 6. The UAE formally ratified the Department will approve the 3. The UAE ratified the Strategic Paris Climate Agreement on 6 technical standards for the Cooperation Agreement on September 2016. qualification of engineers, Combating Serious Crimes
37 TIME FOR CHANGE: CONSTRUCTION IN THE GCC REACHES A TIPPING POINT NEW HORIZONS: WHAT WILL CHANGE LOOK LIKE?
SAUDI ARABIA the jurisdiction of Qatari BAHRAIN Change 5: To properly promote cash flow do not. In the majority of cases the 1. In February 2018, the cabinet with an independent 1. In January 2018, Bahrain Moving forward throughout the supply chain, subject matter of the adjudication Minister of Labor and Social mandate. The fund will be amended its Penal Code with quicker fixes statutory adjudication would have to decision is never revisited. Development for Saudi Arabia used to pay the workers' dues by increasing penalties go hand in hand with outlawing pay- As the market matures, we can approved the Labor Laws ordered by dispute resolution for bribery, extending the when-paid provisions in contracts, a Embracing adjudication and expect to see mechanisms such as New Schedule of Violations committees before collecting definition to include bribery step which may look more appealing enforcing a temporary decision statutory adjudication introduced and Penalties, which has the same from employers. It offered to employees and to developers and contractors alike in the Middle East will require a to help protect cash flow in the increased and amended will also provide sustainable public officials of foreign where the ownership blurs through considerable change in mindset supply chain. This is not likely to fines for various violations financial resources for the countries in relation to developers locking-in contractor and with the courts in the Middle East happen immediately however and in an attempt to regulate support and insurance of 'international projects', and sub-contractor resource. traditionally taking a long time to so in the short term we expect to the labour market. Notably, workers. widening the jurisdiction of accept arbitration as displacing their see the market moving forward with this has increased fines its courts to cover crimes A leap to a statutory adjudication jurisdiction. 2. Qatar has introduced a quicker fixes. against those who fail to committed outside of Bahrain. scheme is much greater in the GCC, new set of labour welfare comply with work regulations, however, than in markets such as Steps towards adjudication have, standards, developed in line 2. Bahrain amended the The Construction Act 1996 saw upload wages files on the the UK and Australia. however, been taken before and with the International Labour requirements for Entry Visas the introduction of statutory wage management system we believe, as industry pressures Organisation. Contractors and Residency Permits of adjudication and payment rules each month, give entitled Two of the key principles behind continue to mount, they will be must set up bank accounts Dependents of Foreign within the UK's construction vacation periods, comply the UK and Australia's statutory again. Evidence of reason for for workers and adhere Workers in January 2018. The industry. Described as a “pay with occupational safety adjudication schemes are (1) that optimism can be found across to minimum standards of requisite minimum salary was first, argue later” mechanism and health regulations, and a party can refer a dispute to several GCC markets. The Qatar cleanliness, hygiene and living raised, with foreign workers for resolving disputes, statutory those who hold passports, adjudication and expect a decision International Court and Dispute conditions. In the absence of required to earn BHD250 to adjudication helps to protect residence permits or medical within 28 days (or slightly longer); Resolution Centre prepared a sufficient improvement, the BHD400 a month. cash-flow and minimise project insurance cards without and (2) that decision is then binding draft scheme a number of years committee may step in and delays by offering a 28-day legally workers' permission. OMAN and enforceable but not final. This ago. It was “opt in”, rather than a make improvements at the binding tribunal procedure between The Oman Penal Code issued in essentially means that a decision statutory right, but had the potential 2. Saudi Arabia's anti-corruption contractor's expense. contracting parties. Statutory February 2018 and promulgated by is likely to be made on limited to promote significant change for drive, which began in adjudication schemes have been 3. Law 1 of 2015 amended the Royal Decree 7/2018, stipulates information and that for the scheme the region. Unfortunately, it stalled November 2017, is coming used successfully in markets such as certain provisions of the three to five years’ imprisonment, to work, the courts have to accept at the enabling legislation stage, the to an end with 56 individuals the UK and Australia for decades. Labour Law 14 of 2004, dismissal from employment and “rough justice” and be prepared crucial step to ensure enforceability potentially facing trial. making it compulsory a ban on public officials from to enforce adjudication decisions required to underpin the scheme. Whilst not a change we can expect 3. In 2017, Saudi Arabia’s Shoura for employers to transfer performing public duty if they are regardless of whether they are right to see introduced in the region Council approved a new employees' wages to their found to have embezzled public or or wrong. in the short to medium term, the bankruptcy law as part of its bank account, in Qatari private funds. This development introduction of such a mechanism reform under Vision 2030. currency. It further provided is in line with the stricter stance Courts in the UK and Australia are would provide welcome relief to that employees recruited on on and increasing penalties for prepared to do this because it is “Statutory QATAR contractors. It would go a long way annual or monthly wages corruption, being enforced across a method of preventing a project 1. A new law ratified in October to relieving pressures in relation to adjudication must be paid at least once the Middle East. becoming mired in dispute or, 2017 in Qatar established payment delays, non-payment or a month, and all other worse, the insolvency of a supply would sort it out a fund for workers support underpayment of variations and the employees at least once a chain where cash is not flowing. and insurance, under failure of employers to recognise overnight.” fortnight. Crucially, because the decision, entitlements to additional time although enforceable with — Local Developer and associated costs. Statutory immediate effect, is not final; justice adjudication would also help to can be later provided through due sidestep any perceived blockage and proper process in court or caused by a contract administrator, arbitration should either party deem project manager or engineer. it necessary in the future. But most
38 39 TIME FOR CHANGE: CONSTRUCTION IN THE GCC REACHES A TIPPING POINT NEW HORIZONS: WHAT WILL CHANGE LOOK LIKE?
Dubai has also now created an ideal environment to support Statutory Adjudication Explained an adjudication mechanism KEY FEATURES OF ADJUDICATION through the DIFC courts earning The key features of statutory adjudication schemes in the UK and confidence in the enforcement of Australia are: both its court and arbitral awards. September 2017 also marked the 1. that a party can refer a dispute to adjudication and expect establishment of the Technology a decision within 28 days (or slightly longer); and Construction Division of the DIFC courts. The establishment 2. the decision is likely to be made on limited information of a specialist construction court and so for the scheme to work the courts have to accept headed by a former English judge, “rough justice” and be prepared to enforce decisions Justice Sir Richard Field, opens regardless of whether they are right or wrong; a potential avenue for enforcement 3. that decision is then binding and enforceable but not of contract-based adjudication final (which means it can be immediately enforced as decisions by judges familiar with a judgment in the court); the concept. From there it is only a short step to a statutory based 4. challenges to adjudicators' decisions rarely succeed mechanism. because of the court's robust approach to enforcement; and We can expect to see more 5. crucially, because the decision, although enforceable examples of softer methods of with immediate effect, is not final, justice can be provided dispute resolution or dispute through the same subject matter being heard in a due avoidance being advocated and proper process in court or arbitration should either and facilitated by the DIFC and party be dissatisfied by the outcome. potentially in other markets across the GCC. ADJUDICATION AND SHARIA LAW Sharia principles make the leap to a statutory adjudication We are encouraged by the scheme in the region much greater. anticipated introduction of the new Government Tenders and Sharia law does not object to the idea of appointing a neutral, Procurement Law in Saudi Arabia qualified, third party adjudicator to determine a dispute. for example. The draft of which Nor does it object to the right of the parties to choose an (released last year for consultation) adjudicator in a contract to determine a construction or radically shifts the position for civil action dispute. It may be difficult, however, to enforce a government projects. Formally, temporary decision in a Sharia jurisdiction where that decision a contractor would not be able “The Dubai International Financial might cause irreparable damage to the person against whom to raise a dispute as to payment Centre (DIFC) has already established the decision is given even if the decision is subsequently until after the final certification overturned by the court. of a project, in the future such a more suitable environment for the challenges will be capable of being resolution of construction disputes. The administration of such an adjudication scheme is likely raised contemporaneously. It is a to cause the most difficulty in the region as it will require a small step but a step nonetheless. A ‘quick fix’ resolution such as statutory law that governs the adjudication procedure, together statutory adjudication is not such a with the possible establishment of a construction division of the big leap from there.” local courts to specifically enforce adjudications decisions.
— DLA Piper
40 41 TIME FOR CHANGE: CONSTRUCTION IN THE GCC REACHES A TIPPING POINT
The crucial role of the “If the GCC construction industry employer – driven by can work collaboratively to seize the opportunity, the rewards will the funder be substantial. With a $3.1 trillion pipeline of large-scale, world- The construction process itself is highly collaborative with thousands of professionals class projects to deliver, the GCC’s and hundreds of companies coming together to deliver major projects. It is the industry construction industry can become a employers, however, that are in the ultimate driving seat when it comes to change. world leader that exports expertise rather than imports it.” As project sponsor and construction Yet, whilst a lack of appetite on the of a scheme rather than simply for paymaster, the employers are part of the employers may slow the construction of a project, will — MEED responsible for assembling the the pace of change, fundamentally, shift the focus towards output value. teams that work on projects, and for it will not prevent the series of With this shift, project delivery will be determining how the many project small incremental changes that we measured against a broader set of entities work together. While effective expect to see in the shorter term key performance indicators through reform will help to force a change in from driving a much larger change the whole life of the project rather habits from all industry stakeholders, overtime. than simply the cost and time targets it is only the construction employers set during the construction phase. that have the power to make change As financial liquidity in the region really happen. continues to contract, employers Additionally, the international will have no choice but to explore institutional funding used in these If the right environment is established alternative ways of funding projects. models will drive improvements to at the outset, then the other New sources of project finance, such industry standards and create a more components of the project team as export funding by international level playing field as they bring with have the opportunity to play their governments, and the use of private them stringent requirements for part, raise their standards and deliver financing for government projects upholding international standards the project successfully. Conversely, through Public Private Partnerships on welfare issues such as health and if a project is structured poorly, it is (PPP), will become more prevalent, safety and environmental protection. inevitable that even with the best resulting in a return to more efforts of the construction supply collaborative procurement and As these requirements are introduced chain, project delivery will be poor. delivery models. at the inception of projects, they have the potential to transform how Whilst many employers are taking Where ‘lowest price wins’ or ‘cheapest projects are procured and delivered steps to improve the way things is best’ are currently seen to be the in the GCC, creating the ideal a are done in the GCC construction mantras driving the decision making opportunity for the construction industry, the overwhelming view held of construction employers in the industry to change. by contractors is that employers have region, these new models, which little appetite for change. provide funding for the whole life
42 TIME FOR CHANGE: CONSTRUCTION IN THE GCC REACHES A TIPPING POINT
About DLA Piper
DLA Piper is a global law firm with lawyers located in more than 40 countries throughout the Americas, Europe, the Middle East, Africa and Asia Pacific, positioning us to help clients with their legal needs around the world.
We strive to be the leading global is informed by international insight and conditions, we devise and business law firm by delivering and an appreciation of global best negotiate agreements that focus on quality and value to our clients. practice. delivery and reward in demanding We achieve this through the delivery construction schedules and balance of practical and innovative legal Home to one of the largest the needs of various stakeholders. solutions that help our clients construction teams in the region, succeed. we advise developers, contractors, Our team is also there for you government bodies, financiers when things go wrong, helping In the Middle East we have over and consultants on all aspects you to minimise disruption to your 100 lawyers operating from offices of their projects. Our market- business whilst resolving claims and in each of the GCC countries. Our leading experience extends across disputes that arise on any aspect of lawyers are fully versed in their local all sectors including energy, your project. and cultural business communities infrastructure and development. and bring a deep understanding of To find out more visit the laws of the countries in which From identifying project risk, to www.dlapiper.com we operate – understanding that selecting the best type of delivery method, to agreeing terms About MEED
MEED has been integral to delivering business information, news, intelligence and analysis on the Middle East economies and activities for over 60 years.
Attracting a key senior management Recently acquired by GlobalData data solutions and grow through audience through its content and Plc MEED is now part of one of the our comprehensive and world class activities, MEED is a media brand, largest data and insights solution marketing solutions. publication and data business providers in the world with the that covers a spectrum of services capacity to build global communities To find out more email: which inform, engage, connect and for our clients. Our purpose is to [email protected] ultimately support our subscribers support the region’s companies and partners in their business make better and more timely development and strategic growth. decisions through our innovative
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List of authors
Colin Foreman Suzannah Newboult Trevor Butcher Deputy Editor, Partner, Head of Finance & Projects, MEED DLA Piper Middle East, DLA Piper [email protected] [email protected] [email protected]
Sarah Wilson Peter Anagnostou Adam Haque Head of Business Development – Senior Legal Consultant, Senior Legal Consultant, Middle East, DLA Piper DLA Piper DLA Piper [email protected] [email protected] [email protected]
Hasan Rahman Ahmed Hammadi Senior Legal Consultant, Legal Consultant, DLA Piper DLA Piper [email protected] [email protected]
Acknowledgements
We would like to acknowledge and thank the industry participants who openly shared with us their views making this report possible.
47 www.dlapiper.com DLA Piper is a global law firm operating through various separate and distinct legal entities. Further details of these entities can be found at www.dlapiper.com. This publication is intended as a general overview and discussion of the subjects dealt with, and does not create a lawyer-client relationship. It is not intended to be, and should not be used as, a substitute for taking legal advice in any specific situation. DLA Piper will accept no responsibility for any actions taken or not taken on the basis of this publication. This may qualify as “Lawyer Advertising” requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome. Copyright © 2019 DLA Piper. All rights reserved. | JAN19 | 3335055