Kuwait has issued a global tender to seek international experts for a major project to help diversify the economy.
Kuwait has issued a global tender looking to companies to help develop a new Entertainment City in the country.
The mega-scale tender seeks to locate the right partners to undertake planning, development, execution, operation, maintenance and investment in the project which forms part of Kuwait Vision 2035.
Al-Diwan Al-Amiri said in a statement that it aims to sign up partners “at the nearest possible opportunity”.
Considered to be one of the largest projects of its kind in the region, the mega project will actively support the ongoing efforts by the government to diversify sources of income and will contribute to the revitalisation of the cultural, leisure and tourism sectors in Kuwait, the statement added.
As part of the project, a global entertainment and tourism city will be established, featuring an amusement park and a world-class integrated entertainment complex.
Project components primarily include a ride based outdoor theme park, an indoor theme park, an aqua park, a kids’ activity and entertainment centre, in addition to gaming arcade, a snow/ski park and a multiplex and open air theatre.
Other components comprise a sports centre, a museum, public parks and social entertainment areas with landscaped areas and trails. The project also comprises 4 and 5 star villas, apartments, a retail mall, commercial areas and restaurants. It also includes an observatory, an amphitheatre, indoor water channels.
The current location for Al-Diwan Al-Amiri’s Entertainment City in the Doha region in the north of Kuwait will be expanded and developed to cover 2,750 million square metres.
The deadline for the global tendering and bidding process is set for February 27.
Al-Diwan Al-Amiri’s other projects include the Jahra Medical City, Sheikh Jaber Al-Ahmad Cultural Centre, Sheikh Abdullah Al-Salem Cultural Centre, Kuwait Motor Town and Shaheed Park.
Where do real estate and construction opportunities exist in this region?
GCC and the wider Middle East were recognised for standout construction opportunities
The most opportunities to be found in the United Arab Emirates (56%) followed by Saudi Arabia (44.4%)
36% of those interviewed said their business would enter the UAE within the next 12 months either directly or via a joint venture
The Middle East and Africa’s largest construction event, The Big 5, which takes place from 25 – 28 November, has officially revealed a first of its kind research paper, TheVoice of the Construction Industry Report, during the CEO Forum on its opening day.
The report is based on research conducted by GRS Research & Strategy Middle East, in conjunction with The Big 5. A total of 5,951 senior construction industry professionals were surveyed from136 countries on the trends and outlook of the construction sector in the GCC, Middle East and Africa.
Ben Greenish, Senior Vice President of dmg events said: “Thanks to the size, strength and history of The Big 5, we not only deliver a world-class trade event, we are also a trusted source of insight and intelligence for the construction industry. This new research from a huge cross-section of senior construction professionals underscores our reputation as a source of knowledge, and helps global industry stakeholders generate revenues, save money, and shape future strategies.”
“The responses come from professionals in sectors including manufacturing and distribution through to developers, contractors, engineers, architects and consultants, with each being segmented by business type, seniority, geographic location, and company turnover, allowing for a detailed analysis of the issues influencing each sector and how they are shaping the industry,” added Greenish.
The research revealed that the GCC and the wider Middle East were the standout opportunities recognised by respondents not already active in those regions when considering where their business may look for opportunities in the future.
Of the GCC countries, respondents felt there were the most opportunities to be found in the United Arab Emirates (56%) followed by Saudi Arabia (44.4%). In line with these findings, 36% of those interviewed said their business would enter the UAE within the next 12 months either directly or via a joint venture.
According to Andrea Piccin, Partner – General Manager, GRS Research & Strategy, the findings represent good news for the UAE and the wider Middle East region: “Economic growth is seen as a key factor generating business opportunities in the GCC. This is undoubtedly piquing the interest of international companies, which are now looking to expand in the Middle East for the first time.”
“Also, the increase in tourism, particularly in the UAE, is a major driver for business growth and one that many construction companies have already capitalised upon,” he added.
As part of the research, the top trends impacting all aspects of the construction industry were addressed with respondents stating prefabrication and modular construction, energy efficiency, and sustainability are the most important.
“These trends reflect the UAE and Saudi governments’ recent focus on the development of smart and sustainable cities. According to the results, it is anticipated during the next 12 months governments from these two countries will place even greater emphasis in these key areas providing an additional boost for the industry,” added Piccin.
Technology and the impact it has on the construction industry is also outlined within the data. Advanced software, building information modelling (BIM), and digitalisation are identified as the top three disrupters of the sector. These are closely followed by the Internet of Things (IoT) and smart technology, and 3D printing.
The Voice of the Construction Industry Report was unveiled at The Big 5’s invite-only CEO Forum, a conference for 150 CEOs from the region’s leading construction firms, which took place at The Big 5’s opening day.
AMEinfo staff members report business news and views from across the Middle East and North Africa region, and analyse global events impacting the region today.
New Delhi Times Bureau on October 23, 2019, produced this article on a more and more obvious fact, that of Egypt’s options dwindle as Nile talks break down. The Nile basin is the greatest in geographical extent of the transboundary water resource and makes it vital that the neighbours to carry on talking regardless. They should sit and agree with some understanding. But we have this situation instead, all as described below.
The latest breakdown in talks with Ethiopia over its construction of a massive upstream Nile dam has left Egypt with dwindling options as it seeks to protect the main source of fresh water for its large and growing population.
Talks collapsed earlier this month over the construction of the $5 billion Grand Ethiopian Renaissance Dam, which is around 70% complete and promises to provide much-needed electricity to Ethiopia’s 100 million people.
But Egypt, with a population of around the same size, fears that the process of filling the reservoir behind the dam could slice into its share of the river, with catastrophic consequences. Pro-government media have cast it as a national security threat that could warrant military action.
Speaking at the U.N. last month, Egyptian President Abdel-Fattah el-Sissi said he would “never” allow Ethiopia to impose a “de facto situation” by filling the dam without an agreement.
“While we acknowledge Ethiopia’s right to development, the water of the Nile is a question of life, a matter of existence to Egypt,” he said.
Ethiopian President Sahle-Work Zewude, also speaking at the U.N. General Assembly, said her country believes “the use of the river should be (decided) according to international law and fair and equitable use of natural resources.”
Egypt has been holding talks for years with Ethiopia and Sudan, upstream countries that have long complained about Cairo’s overwhelming share of the river, which is enshrined in treaties dating back to the British colonial era. Those talks came to an acrimonious halt earlier this month, the third time they have broken down since 2014.
“We are fed up with Ethiopian procrastination. We will not spend our lifetime in useless talks,” an Egyptian official told The Associated Press. “All options are on the table, but we prefer dialogue and political means.”
Egypt has reached out to the United States, Russia, China and Europe, apparently hoping to reach a better deal through international mediation. The White House said earlier this month it supports talks to reach a sustainable agreement while “respecting each other’s Nile water equities.”
Egypt said it has accepted an invitation from the U.S. to meet in Washington with the foreign ministers of Ethiopia and Sudan to break the deadlock.
Mohamed el-Molla, an Egyptian Foreign Ministry official, said Cairo would take the dispute to the U.N. Security Council if the Ethiopians refuse international mediation.
That has angered Ethiopia, which wants to resolve the dispute through the tripartite talks.
An Ethiopian official said the packages offered by Cairo so far “were deliberately prepared to be unacceptable for Ethiopia.”
“Now they are saying Ethiopia has rejected the offer, and calling for a third-party intervention,” the official added. Both the Ethiopian and the Egyptian official spoke on condition of anonymity because they were not authorized to discuss the talks with the media.
The main dispute is centered on the filling of the dam’s 74-billion-cubic-meter reservoir. Ethiopia wants to fill it as soon as possible so it can generate over 6,400 Megawatts, a massive boost to the current production of 4,000 Megawatts.
That has the potential to sharply reduce the flow of the Blue Nile, the main tributary to the river, which is fed by annual rainfall in the Ethiopian highlands. If the filling takes place during one of the region’s periodic droughts, its downstream impact could be even more severe.
Egypt has proposed no less than seven years for filling the reservoir, and for Ethiopia to adjust the pace according to rainfall, said an Egyptian Irrigation Ministry official who is a member of its negotiation team. The official also was not authorized to discuss the talks publicly and so spoke on condition of anonymity.
The Nile supplies more than 90% of Egypt’s freshwater. Egyptians already have one of the lowest per capita shares of water in the world, at around 570 cubic meters per year, compared to a global average of 1,000. Ethiopians, however, have an average of 125 cubic meters per year.
Egypt wants to guarantee a minimum annual release of 40 billion cubic meters of water from the Blue Nile. The irrigation official said anything less could affect Egypt’s own massive Aswan High Dam, with dire economic consequences.
“It could put millions of farmers out of work. We might lose more than one million jobs and $1.8 billion annually, as well as $300 million worth of electricity,” he said.
The official said Ethiopia has agreed to guarantee just 31 billion cubic meters.
El-Sissi is set to meet with Ethiopia’s Prime Minister Abiy Ahmed, winner of this year’s Nobel Peace Prize, on Wednesday in the Russian city of Sochi, on the sidelines of a Russia-Africa summit. They may be able to revive talks, but the stakes get higher as the dam nears completion.
Ahmed told Ethiopian lawmakers Tuesday that negotiations are the best chance for resolving the Nile deadlock and that going to war is “not in the best interest of all of us.”
“Some say things about use of force,” he said, referring to Egypt. “It should be underlined that no force could stop Ethiopia from building a dam. If there is a need to go to war, we could get millions readied. If some could fire a missile, others could use bombs.”
Late on Tuesday, Egypt said in a statement it was “shocked” and “surprised” by Ahmed’s remarks, which came just days after he was awarded the peace prize.
The statement said it was inappropriate to talk about military options in dealing with the dispute and that it thought the peace prize would have prompted Ethiopia to demonstrate political will, flexibility and “goodwill toward a binding and comprehensive legal agreement that takes into account the interests of the three countries.”
Ethiopia hopes to finish the much-delayed project by 2023. The dam’s manager, Kifle Horro, said the project is now 68.5% complete and preparations are underway to finalize power generation from two turbines by next year.
The International Crisis Group, a Brussels-based think tank, warned earlier this year that the “risk of future clashes could be severe if the parties do not also reach agreement on a longer-term basin-wide river management framework.”
In recent weeks there have been calls by some commentators in Egypt’s pro-government media to resort to force.
Abdallah el-Senawy, a prominent columnist for the daily newspaper el-Shorouk, said the only alternatives were internationalizing the dispute or taking military action.
“Egypt is not a small county,” he wrote in a Sunday column. “If all diplomatic and legal options fail, a military intervention might be obligatory.”
Anwar el-Hawary, the former editor of the Al-Masry Al-Youm newspaper, compared the dispute to the 1973 war with Israel, in which Egypt launched a surprise attack into the Sinai Peninsula.
“If we fought to liberate Sinai, it is logical to fight to liberate the water,” he wrote on Facebook. “The danger is the same in the two cases. War is the last response.”
Significance of construction in Saudi Arabia is accentuated by key transport and mobility schemes
An Asian labourer looks on as he works at the construction site of a building in Riyadh, Saudi Arabia. Image for illustrative purposes.
REUTERS/Faisal Al Nasser
By Seban Scaria, ZAWYA
Construction activity in the Middle East and North Africa (MENA) region has been relatively sluggish and is forecast to grow at 3.3 percent in 2019.
However, after a lacklustre 2019, construction growth in the region is forecasted to steadily improve in the next four years, to reach 4.9 percent by 2022-2023, data and analytics company GlobalData said in its Global Construction Outlook report.
Government revenues in the Gulf countries have been affected due to low oil prices. Assuming oil prices stay relatively high, large-scale investment in infrastructure projects – mostly related to transport – will be a key driving force behind the growth in the region, the report said.
Saudi Arabia remains the largest regional construction market in the Middle East, despite a contraction in construction in the kingdom in recent years. Construction output is forecast to recover in 2019, growing by 2.6 percent, before posting average growth of 3.8 percent in 2020-2023, the report said.
Yasmine Ghozzi, Economist at GlobalData, said: “The construction market started on a positive note in Saudi Arabia in 2019, growing by 1.3 percent year-on-year in Q1 in real value-add terms, attributed to rising oil prices and a surge in the non-crude sector.”
“The significance of construction in Saudi Arabia is accentuated by key transport and mobility schemes such as Riyadh Metro; social infrastructure developments such as the Ministry of Housing’s Sakani programme; and energy megaprojects such as the state-owned Aramco’s Berri and Marjan oil fields,” she added.
The report pointed out that construction boom in Qatar, that began almost a decade ago, seems to have run its course as major projects are largely completed. Construction output decreased by 1.2 percent year-on-year in Q1 2019, a sharp deceleration after years of rapid expansion.
“The Qatari construction sector will slow relative to previous years, in general, but the turnaround will come from the North Field Expansion (NFE) project where Qatar Petroleum announced its aim to increase Qatar’s LNG production from current 77mtpa to 110mtpa within five years and has assigned Qatargas as the operator of the project. Meanwhile, work on the Hamad International Airport and New Doha Port will support growth in the airport and port sectors,” Ghozzi said.
However, one of the region’s brightest spots will be Egypt, where GlobalData predicts that construction will expand by an annual average of 11.3 percent between 2019 and 2023.
“Egypt’s economy is forecast to expand at a relatively rapid rate over the next two years, driven by sustained growth in natural gas production and a recovery in tourism. Delivering an ambitious renewable energy program is a priority for the government. Construction activity is also being driven by Cairo’s urban development program, which could involve building 23 new cities,” Ghozzi said.
The pace of growth in sub-Saharan Africa will be particularly strong, averaging 6 percent a year in 2019–2023, Global data said.
According to the report, construction activity in Nigeria will accelerate steadily, supported by government efforts to revitalise the economy by focusing on developing the country’s infrastructure.
But Ethiopia will be Africa’s star performer, with its construction industry continuing to improve in line with the country’s economic expansion, but the pace of expansion will ease back to single-digits, it said.
ISTANBUL (Reuters) – Turkey has started filling a huge hydroelectric dam on the Tigris river, a lawmaker and activists said, despite protests that it will displace thousands of people and risks creating water shortages downstream in Iraq.
Citing satellite images, they said that water was starting to build up behind the Ilisu dam, a project that has been decades in the making and which aims to generate 1,200 megawatts of electricity for southeast Turkey.
Turkish officials have not commented on work at the dam. Turkey’s State Hydraulic Works (DSI), which oversees dam projects, referred questions to the Presidency, and the Agriculture and Forestry Ministry was not available to comment.
However, President Tayyip Erdogan said earlier this year that Turkey would start filling the Ilisu dam in June, a year after it briefly held backwater before backing down following complaints from Iraq about reduced water flows in mid-summer.
The dam, which first gained Turkish government approval in 1997, is a key part of Turkey’s Southeastern Anatolia Project, designed to improve its poorest and least developed region.
Iraq says the dam will create water shortages by reducing flows in one of two rivers which the country depends on for much of its supplies. Around 70% of Iraq’s water supplies flow from neighboring countries, especially via the Tigris and Euphrates rivers which run through Turkey.
Satellite images from the past two weeks show the dam has started holding water, said Necdet Ipekyuz, a lawmaker from Turkey’s pro-Kurdish Peoples’ Democratic Party (HDP). He said a road in the area has already been submerged.
“They are taking steps slowly to decrease the reactions to water being held. That is why they are not informing the public,” he said, adding that several HDP lawmakers tried to visit the dam in July but were prevented by police.
Environmental campaigners have unsuccessfully challenged the dam project at the European Court of Human Rights on the grounds it would damage the country’s cultural heritage.
The rising waters of the dam are also expected to eventually submerge the 12,000-year-old town of Hasankeyf. Residents are being moved from the ancient town to a “New Hasankeyf” nearby, while historic artefacts have also been transported out of the area.
A group of NGOs, lawmakers and labor unions shared satellite images of the dam showing the increase in water levels between July 19-29.
“The current situation is strengthening the idea that the valves have been closed permanently,” the group, known as Hasankeyf Coordination, said in a statement.
“Because the dam lake is growing every day, the people who live in these areas are worried. They cannot know when the water will reach their residential or agricultural areas.”
The Iraqi government said in a statement that Turkish and Iraqi officials had discussed the water resources of the two rivers in Baghdad on Wednesday to see how they could “serve the interests of both countries”.
Turkey proposed setting up a joint research center in Baghdad for water management and to work together on some agriculture plantations in Iraq, as well as projects for development of drinking water infrastructure. FILE PHOTO: The Tigris river flows through the ancient town of Hasankeyf, which will be significantly submerged by the Ilisu dam being constructed, in southeastern Turkey, August 26, 2018. REUTERS/Sertac Kayar
The European Court of Human Rights in February dismissed the case brought by environmental campaigners to block the dam project, saying heritage protection is the responsibility of Turkish authorities and it had no jurisdiction.
The government needs to make an announcement, even if the dam were being filled for a trial run, said HDP’s Ipekyuz. “They are trying to tie a belt around the Tigris river’s neck and suffocate it,” he said.
Additional reporting by John Davison and Ahmed Aboulenein in Baghdad; Editing by Dominic Evans and Susan Fenton
You may have seen a variant of this meme before. A map of North Africa is shown, with a surprisingly small box somewhere in Libya or Algeria shaded in. An area of the Sahara this size, the caption will say, could power the entire world through solar energy:
Over the years various different schemes have been proposed for making this idea a reality. Though a company called Desertec caused a splash with some bold ideas a decade ago, it collapsed in 2014 and none of the other proposals to export serious amounts of electricity from the Sahara to Europe and beyond are anywhere close to being realised.
It’s still hard to store and transport that much electricity from such a remote place, for one thing, while those people who do live in the Sahara may object to their homeland being transformed into a solar superpower. In any case, turning one particular region into a global energy hub risks all sorts of geopolitical problems.
The Imagine newsletter aims to tackle these big “what if” questions, so we asked a number of academics to weigh in on the challenges of exploiting the cheapest form of electricity from perhaps the cheapest and best spot on Earth.
Sahara has huge energy potential
Amin Al-Habaibeh is an engineer at Nottingham Trent University who has researched various options for Saharan solar.
He points to the sheer size and amount of sunshine the Sahara desert receives:
It’s larger than Brazil and slightly smaller than the US.
If every drop of sunshine that hits the Sahara was converted into energy, the desert would produce enough electricity over any given period to power Europe 7,000 times over.
So even a small chunk of the desert could indeed power much of the world, in theory. But how would this be achieved?
Al-Habaibeh points to two main technologies. Both have their pros and cons.
Concentrated solar power uses lenses or mirrors to focus the sun’s energy in one spot, which becomes incredibly hot. This heat then generates electricity through a steam turbine.
In this image the tower in the middle is the “receiver” which then feeds heat to a generator:
Some systems store the heat in the form of molten salt. This means they can release energy overnight, when the sun isn’t shining, providing a 24h supply of electricity.
Concentrated solar power is very efficient in hot, dry environments, but the steam generators use lots of water.
Then there are regular photovoltaic solar panels. These are much more flexible and easier to set up, but less efficient in the very hottest weather.
Overall, Al-Habaibeh is positive:
Just a small portion of the Sahara could produce as much energy as the entire continent of Africa does at present. As solar technology improves, things will only get cheaper and more efficient. The Sahara may be inhospitable for most plants and animals, but it could bring sustainable energy to life across North Africa – and beyond.
Solar panels could have remarkable impact on the desert though
Installing mass amounts of solar panels in the Sahara could also have a remarkable impact on the desert itself.
The Sahara hasn’t always been dry and sandy. Indeed, archaeologists have found traces of human societies in the middle of the desert, along with prehistoric cave paintings of Savannah animals. Along with climate records, this suggests that just a few thousand years ago the “desert” was far greener than today.
Alona Armstrong, an environmental science lecturer at Lancaster University, wrote about a fascinating study in 2018 that suggested massive renewable energy farms could make the Sahara green again.
This may be a nice side effect of a huge Saharan solar plant, but it doesn’t necessarily mean it should happen. As Armstrong points out:
These areas may be sparsely populated but people do live there, their livelihoods are there, and the landscapes are of cultural value to them. Can the land really be “grabbed” to supply energy to Europe and the Middle East?
Is this climate colonialism?
If we want to deploy millions of solar panels in the Sahara, then who is “we”? Who pays for it, who runs it and, crucially, who gets the cheap electricity?
This is what worries Olúfẹ́mi Táíwò, a philosopher who researches climate justice at Georgetown University. He mentions Saharan solar power as one of the possible policies involved in a Green New Deal, a wide-ranging plan to enact a “green transition” over the next decade.
He points out that exports of solar power could: “Exacerbate what scholars like sociologist Doreen Martinez call climate colonialism – the domination of less powerful countries and peoples through initiatives meant to slow the pace of global warming.”
While Africa may have abundant energy resources, the continent is also home to the people who are the least connected to the grid.
Solar exports risk “bolstering European energy security … while millions of sub-Saharan Africans have no energy of their own.”
What if we’re looking at the wrong desert?
All of this will be moot if Saharan solar never actually happens. And Denes Csala, a lecturer in energy systems at Lancaster University, is sceptical.
It’s true that much of the world’s best solar resources are found in the desert. Here’s a graph from his PhD research which shows how Saharan nations dominate:
But Denes says that we’re looking at the wrong desert. In fact, the countries of the Arabian peninsula are better placed to exploit the sun. He argues several factors work in favour of Saudi Arabia, the UAE and co:
They have a history of exporting oil.
In the energy market, worries over security of supply means countries tend to do business with the same partners over time.
Ports, pipes and other infrastructure that have been built to ship oil and gas could be repurposed to ship solar energy as hydrogen.
[Energy security] would be the Achilles heel of a northern African energy project: the connections to Europe would likely be the continent’s single most important critical infrastructure and, considering the stability of the region, it is unlikely that European countries would take on such a risk.
It would be fair to say academics have mixed views about the idea of mass Saharan solar. While the energy potential is obvious, and most of the necessary technology already exists, in the long run it may prove too complicated politically.
Still think this is all fantasy?
Maybe Europeans should look closer to home. The UK Planning Inspectorate is currently examining the Cleve Hill solar farm proposal in Kent, which would involve installing nearly a million solar panels across a marshland site the size of 600 football pitches. To protect against flooding, the panels would be mounted several metres in the air. If built, despite opposition from locals and conservationists, Cleve Hill would be by far the country’s largest solar farm and about the same size as Europe’s largest, near Bordeaux.
Alastair Buckley from the University of Sheffield points out the project would be groundbreaking as, unlike other ventures of this kind, it doesn’t rely on subsidies. With solar power getting ever cheaper, Cleve Hill – if it happens – seems to mark the moment when solar may start paying for itself – even far from the world’s deserts.
Imagine is a newsletter from The Conversation that presents a vision of a world acting on climate change. Drawing on the collective wisdom of academics in fields from anthropology and zoology to technology and psychology, it investigates the many ways life on Earth could be made fairer and more fulfilling by taking radical action on climate change. You are currently reading the web version of the newsletter.
CAIRO (Reuters) – Egypt expects the 1.6-gigawatt solar park it is building in the south of the country to be operating at full capacity in 2019, the investment ministry said in a statement on Sunday.
The $2 billion project, set to be the world’s largest solar installation, has been partly funded by the World Bank, which invested $653 million through the International Finance Corporation.
Some parts of the park are already operating on a small scale, while other areas are still undergoing testing.
Egypt aims to meet 20 per cent of its energy needs from renewable sources by 2022 and up to 40 per cent by 2035. Renewable energy currently covers only about 3 per cent of the country’s needs.
“Egypt’s energy sector reforms have opened a wider door for private sector investments,” World Bank President David Malpass said during his visit to the site alongside Egypt’s Investment Minister Sahar Nasr.
Egypt is on a drive to lure back investors who fled following the 2011 uprising with a slew of economic reforms and incentives the government hopes will draw fresh capital and kickstart growth.
Most of the foreign direct investment Egypt attracts goes toward its energy sector.
Reporting by Ehab Farouk; Writing by Nadine Awadalla; Editing by Yousef Saba and Jan Harvey.
A MEConstructionNewsANALYSIS by Andrew Skudder, CEO. CCS, Guest Author, warning construction firms of the risks of not digitising operations, posted on April 25, 2019, is republished here for its obvious benefits to the MENA’s development.
With the Middle East construction sector under growing pressure as a result of a tightening economy, construction companies should be looking at ways to streamline their business processes, improve cash flow management and tighten risk management. Those that sharpen internal processes and systems today will be best positioned for an upswing in government and private sector investment in the years to come.
The sector faces numerous challenges – challenging economic growth, shrinking margins, skills shortages, rising resource and labour costs – which means it’s under pressure to start innovating.
Investment in tech is behind the curve
The challenges the industry faces are compounded by the fact that many construction groups have not digitised operations such as cost-consulting. This means they lack visibility into – and control over – the many variables, changes, people and equipment involved in any construction project.
Middle Eastern construction companies should be looking for ways to use technology to drive higher productivity, achieve cost-savings and improve project management to weather a tumultuous time for the industry. However, the lean years of late, have seen IT spending in the construction industry stagnate, despite the accelerating pace of innovation around the world.
For example, adoption of wearables, 3D printing, driverless heavy vehicles, drones and building information modelling is rising in the global construction sector. To take full advantage of these advanced technologies, many local construction companies will first need to modernise their core back-office systems.
They should be looking towards tried and tested solutions for estimating, project control, enterprise accounting and operational costing. These solutions will enable them to drive down the costs of maintaining legacy applications, help them to become more agile and give them clearer real-time visibility into business performance.
Breaking down silos
Construction performance and progress cannot be monitored on financial data alone; engineering information is just as critical. Engineering control includes generating and managing allowable and actual quantities of resources, wastages, manhours of labour, production of equipment and time for construction activities.
Without digitisation, an organisation has no clear indication of the status of the contract because it doesn’t have real-time visibility into these factors. Today’s business solutions can break down the silos, enabling estimators and accountants to produce real time-reporting, and yet continue to work in the language that is meaningful to them.
Integrated back-office systems spanning procurement, project control, cost estimation, sub-contractor management and accounting give construction companies one source and view of the truth, enabling them to manage an entire project with real-time visibility into costs and performance.
Using this data can help construction firms make better strategic and operational decisions. Data-driven insights can enable them to better manage cashflow and project risks, so they can better predict and mitigate payment delays, rising costs and other challenges. It can also help companies to drive higher levels of profitability through better project planning.
Building a foundation for the future
Looking to the future, a robust business solution is also a foundation upon which construction companies can layer drones, robots, Internet of Things (IoT) sensors, artificial intelligence (AI) and other advanced digital technologies. Such solutions enable construction companies to manage and analyse big data produced by sensors, devices and workers so they can drive productivity and innovation – AI, for example, can help them rapidly process the data to find key insights.
Construction companies should embrace digital transformation to drive higher productivity, improve efficiency and gain a competitive advantage. Transforming their core business with a proven solution will help them prepare for the future, with a possibility that infrastructure spending will show signs of life again in the near future. Now is the time to lay the foundation for the next wave of growth.
Around the world, trillions of dollars are spent each year building skyscrapers, highways, pipelines, schools, and countless other structures, and the resources that could be saved using advanced analytics, automations, machine learning, and other technologies that are available now is staggering. As a primary investor and procurer in infrastructure projects and the shepherd of national economies, governments have a clear incentive to help accelerate adoption within the construction industry.
New technologies can advance project outcomes in the construction industry. Governments are well-poised to cultivate greater adoption.
An industry notorious for cost and time overruns, the construction sector can capture significant efficiencies by adopting new technologies. While many executives acknowledge the potential of new technology, they often hesitate to risk multi-billion-dollar projects on applications they consider unproven. To create greater value from public and private spending on large capital projects, governments can help clear the path and bring new technologies to bear.
New technologies—advanced analytics, automation, machine learning, and the Internet of Things, for example—have delivered substantial benefits to industries at the forefront of adoption, particularly telecommunications and finance. And while these disruptive forces will eventually wash over every industry, the construction industry still lags.
Digital tools are already available, with $18 billion invested in construction technology between 2013 and early 2018. McKinsey research, however, finds that leaders struggle to adopt these applications—not because of cost concerns or lack of interest, but rather because of insufficient internal processes and risk aversion.
Pressing need for improvement
Using technologies to boost construction productivity can have a profound impact on public and private spending. In the United States alone, expenditures on construction reached $1.29 trillion in 2018, after rising an average of 7.4 percent annually over the previous five years.1 1.US Census Bureau.
The public sector accounts for a significant share of this total. Stripped of residential and private-use projects, construction expenditure on public infrastructure—for instance health care, education, and transportation—reached $334 billion in 2018 (Exhibit 1). Public spending will finance almost 80 percent of these infrastructure expenditures, by our estimates.
And the rise in construction spending is unlikely to abate soon. Increased urbanization is creating demand for projects that support denser population centers, such as transportation, power, and sewage. And in the United States, deteriorating public infrastructure must be addressed urgently. McKinsey research found that the country requires an additional $500 billion in infrastructure funding between 2017 and 2035 to meet its estimated requirements.
Amid this growing need, public and private projects have struggled to keep costs and construction times within original projections, especially for complex, high-cost projects. Early adopters have already begun to test new technologies to improve project outcomes. For instance, some companies are using wearable GPS devices or smartphone apps to optimize workflows and resources. Others have begun using virtual-reality systems for supervisors and crew to “walk through” processes to prepare sequencing, identify potential problems, and conduct safety trainings more efficiently.
Governments are well positioned to catalyze change
Despite these early efforts, many companies are reluctant to experiment in untested waters. This is understandable since billions of dollars and corporate reputations are at risk with these projects, and there is no room for do-overs. These hurdles, however, present a prime opportunity for governments to take the lead and break the inertia that slows the construction industry from entering a digital era.
Public expenditures account for a significant portion of non-residential, public-use construction projects, and government agencies work closely with private companies of all sizes to deliver these complex infrastructure projects. Such projects span a wide range of infrastructure, from roads to buildings to sewer systems (Exhibit 2). The government’s purchasing power touches every corner of the construction industry, while its regulatory power allows it to set standards that are most easily met using new technologies or even to mandate their use.
Our experience and research suggest five measures available to governments that can be powerful tools in accelerating adoption.
Set bold aspirations
At the outset, governments can articulate bold aspirations for the adoption and use of technology in public sector projects. Beyond increasing awareness, such public aspirations demonstrate the priority given to developing a more efficient construction industry through broader deployment of new technologies.
One approach would be to craft a digital construction strategy that encourages the use of new tools to reduce the time and cost of public works projects. For example, clear targets could be set for the use of pre-fabricated or modular components, enabled by digital collaboration tools such as BIM, that would reduce the instances of rework and change orders.
Some countries have already taken steps on this direction. In Ireland, for example, the National BIM Council published a national strategy for the construction industry in 2017 that included clear digital targets.2 2.National BIM Council, Ireland, Roadmap to Digital Transition for Ireland’s Construction Industry 2018-2021, December 2017. As part of its vision, the council strives to reduce project delivery times by 20 percent, increase construction exports by 20 percent, and cut capital costs by 20 percent, all by 2021 compared to 2018 levels.
Create meaningful incentives
Governments can also use their purse strings and tendering processes to create meaningful incentives for construction companies. For example, public grants could be offered to help companies adopt technologies that aid in project design and execution. National competitions and prizes that reward technology adoption in construction projects can also provide first movers with additional financial support, as well as publicly recognizing the importance of using technology to accelerate and bring down the costs of construction. Similarly, governments may consider publicly supported incubators that allow low-risk testing for new applications.
Further, public contracting agencies can insist that successful bidders incorporate digital collaboration tools into publicly-owned projects. For example, the Tennessee Department of Transportation recently announced it will require prime contractors and designers to use construction productivity software on all its projects, beginning with March 2019 contract awards.
In another example, the UK Infrastructure and Projects Authority estimated that public and private investment in infrastructure projects will total about $780 billion between 2017 and 2027 and pledged “to use its purchasing power to drive adoption of modern methods of construction.”3 3.UK Infrastructure and Projects Authority, Transforming Infrastructure Performance, December 2017. Among the announced measures, five major government departments will weigh offsite construction capabilities in assessing tenders for projects.
In addition to creating meaningful incentives to spur adoption, governments can help reduce the barriers and risks that are unique to these emerging technologies. For example, procurement or acquisition regulations often place a great deal of emphasis on a contractor’s past performance in future source selections. However, contractors that wish to pilot new technologies will not have as much experience or demonstrated cases as those offering traditional solutions. If this is seen as a major disadvantage, it could hinder the use of government procurement processes to encourage the adoption of new technologies. Re-thinking these guidelines to make allowances for emerging technologies, giving them time to establish a foothold, may be crucial to accelerated adoption.
At the same time, governments can consider assuming some of the contractor risks associated with trialing new technologies. In selected projects or portions of projects, for example, governments can offer to reimburse contractors if the new technologies fail to deliver projected savings. Such guarantees may sound bold, but they can be successful if focused on targeted project components, phases, or solutions with substantial long-term savings potential.
Measures can also be taken to increase transparency around the costs and progress of public projects. This transparency is supported by digital technologies that provide real-time information on the progress of major projects. In turn, increased transparency creates pressure to complete projects on budget and on time, which becomes easier when new technologies are deployed. The United Kingdom’s infrastructure initiative includes benchmarking tools that track cost and schedule during the life of a project. The system not only follows the progress of individual projects underway, but also assesses the impact of completed projects in their overall asset class, as well as movement toward network goals, such as customer satisfaction and performance, and national goals, such as reduced carbon emissions and economic development.
Ultimately, these benchmarks can be provided on online dashboards that allow the public and other stakeholders to monitor progress, increasing the pressure on construction companies to meet deadlines and costs. For now, like in the United Kingdom, the results of these benchmarking exercises are generally available in annual reports.
As with most industries, the construction sector will struggle to find the talent needed to use new technologies effectively. Governments can play a dual role in helping to meet this challenge. First, they can invest in training programs that not only build needed capabilities but also provide new opportunities to workers displaced by these technologies.
Singapore, for instance, includes construction in its $3.3 billion Industry Transformation Programme, announced as part of the country’s 2016 budget plan.4 4.Singapore Ministry of Trade and Industry, “Industry Transformation Maps (ITMs),” Oct. 31, 2016. In this effort, the government wants to train 80,000 workers in new construction technologies, such as design for manufacturing and assembly methods, integrated digital delivery, tools that enhance collaboration, and offsite construction, as well as green building capabilities. Structured internships and additional training for recent university graduates are two measures the country is using to reach this goal.
And second, governments can lead by example by building their own internal digital capabilities. Developing these skills—for instance by creating an advanced analytics group—would allow public agencies to use new technologies more effectively in overseeing projects and optimizing maintenance operations and to understand more clearly how new technologies can be deployed broadly in the industry.
Editor’s note: Two of the biggest dam projects in
the world – one in Turkey, the other in Ethiopia – are nearing completion. Both
are likely to profoundly affect the lives of millions in the Middle East and
bring further tensions to already severely water-stressed regions.
In his second report, environment journalist Kieran Cooke reports on the
progress of the Grand Ethiopian Renaissance Dam and its likely
consequences for Egypt.
There have been hold ups and reports of large cost overruns but building
work on the lavishly titled Grand Ethiopian Renaissance Dam or GERD, under
construction on the Blue Nile in the north of the country since 2011, is
In Cairo, almost 2,500 kilometres to the north, every step in the GERD
process – the 6,500 MW hydroelectric dam is one of the world’s largest
and the biggest in Africa – is being anxiously watched.
Egypt is facing a water crisis. A rapid increase in demand due to
population growth, severe mismanagement of resources and a lack of investment
in water infrastructure have led to Egypt being one of the most ‘water
stressed’ countries in the world.
At the present rate of consumption, says the UN, the country could run out of water by 2025. The GERD will exacerbate these
severe water shortages.
The Blue Nile, which rises in Ethiopia, joins the White Nile in Sudan
and then flows into Egypt. The river is Egypt’s lifeline with more than 90
percent of its 100 million people dependent on it for drinking water and for
‘It is a matter of life and death… this is our country and water must be
secured for our citizens, from Aswan to Alexandria’
– Egyptian President
Abdel Fattah el-Sisi
For years Egypt has viewed the Nile as its own; at one stage its
politicians talked of bombing the GERD in order to preserve what they viewed as
their historical right to the river’s waters.
“No one can touch Egypt’s share of Nile water,” said Egyptian President
Abdel Fattah el-Sisi in November last year.
“It is a matter of life and death… this is our country and water must be
secured for our citizens, from Aswan to Alexandria.”
Yet for all the strong words, Cairo knows the GERD will, at some point
in the near future, become a reality. The project, say close observers of the
project, marks a profound shift of power in the Nile Basin.
The GERD, for Ethiopia, is central to the country’s development and a
symbol of national renewal. The aim is not only to provide much needed power
within Ethiopia but also to raise vital export revenues by selling electricity
to neighbouring countries.
“Traditionally Egypt – as the power in the region – refused to
countenance any upstream dams on the Nile,” said Tobias Von Lossow, a
specialist on dams at the Netherlands Institute of International Relations, who has
spent years studying the GERD and the complex water politics of the region.
“Then along came Ethiopia and, against all the odds and the doubts of
many outsiders, including the Egyptians, the GERD has been built.
“Sudan, the other downstream nation, sees benefits from the GERD and is
backing Ethiopia. Egypt has been forced to recognise a new reality – it has to
negotiate with Addis Ababa as an equal.”
The most immediate concern for Cairo is when the giant reservoir at the
GERD site will start being filled, and for how long that process will last.
If the reservoir is filled over a relatively short period – in under
five years – it’s calculated that water flows on the Nile through Egypt
could drop by as much as 20 percent.
Reduced flows on the Nile would also lead to electricity shortages, with
a sharp drop in power generated at the Aswan hydroelectric dam.
Cairo wants a very gradual filling process which will cause less
disruption to water flows, taking place over a period of between 10 and 20
Ethiopia on the other hand wants to capitalise on its massive investment
and fill the reservoir at the GERD over a much shorter period, enabling it to
start generating electricity and begin selling it to other countries.
“The big question is what if the climate changes and there’s a drought
during the filling process at the GERD, with water levels in the Nile suddenly
dropping substantially,” said Von Lossow. “That could lead to conflict.
“The other issue is that though the GERD is solely for generating
electricity, it will regulate water flows on the Blue Nile, enabling more
opportunities for the development of agriculture and irrigation across the
border in Sudan. That would mean less water flowing into
For the moment, delays and finance problems at the GERD have given Egypt
some much needed time to tackle its chronic water woes.
Under the original construction timetable, power was due to be generated
from the GERD scheme last year, but various factors have been causing delays.
Unwilling to have restrictions placed on it by international lending
institutions and banks, Ethiopia has largely self-financed the GERD, estimated
to be costing $5bn.
China, already a big investor in the country, became a major player in
the GERD, with a $1bn loan for power transmission lines.
A new government, headed by prime minister Abiy Ahmed, came to
power in April this year.
Abiy, seen as less nationalistic and more pragmatic than his
predecessor, has gone out of his way to address Egypt’s fears about the GERD,
meeting Sisi in June this year.
In the course of the Cairo meeting, Egypt’s president asked Abiy to swear to God
“before the Egyptian people” that he would not hurt Egypt’s share of the Nile.
Abiy did so.
“So much depends on the personal chemistry between leaders,” said
Barnaby Dye, a specialist on dams at the University of Manchester in the UK.
“The use of the Nile waters is loosely governed by various historical
treaties and agreements though these are often disputed. In the final analysis
what often matters is how those in power get on.”
Abiy has launched an investigation into large-scale cost overruns at the
GERD. A company run by the Ethiopian military responsible for supplying
turbines and other electrical equipment has been replaced, accused of wasting millions of dollars.
Salini Impregilo, the Italian company and main contractor at
the site, is said to be owed considerable amounts of money for its work though
it has said little about rumours of long project delays.
Another setback for the project was the death in July of
Simegnew Bekele, the project’s chief engineer and a figure much revered in
Bekele was found dead from a bullet wound in his car. Police
subsequently said he had shot himself.
Egypt has begun to take some action
aimed at heading off a full-blown water emergency.
Under a 20-year water management scheme, plans are for more than $50bn
to be spent on desalination plants, including what will be the world’s
biggest such facility.
New, less wasteful, irrigation schemes are also being put in place. With
an estimated 40 percent of water resources lost due to leakages, more money is
being invested in upgrading old piping and in new pumping stations.
Critics say all this is too late, with officials still reluctant to
recognize the scale of the country’s water crisis. They say Sisi’s government
is obsessed with expensive and questionable prestige projects, such as the
construction of a second Suez Canal.
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