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Construction industry updates from GlobalData

Construction industry updates from GlobalData

World Cementpublished by Emily Thomas, Editorial Assistant draws a picture of the MENA region related Construction industry updates from GlobalData.


GlobalData shares its forecasts for construction industries across the world in the midst of the coronavirus pandemic.

The revised and further-cut construction output growth forecast for the Middle East and North Africa (MENA) region for the year 2020 is -1.1%, down from the previous projection of -0.8% (as of mid-April) and 4.6% (Q4 2019 update) due to the soaring COVID-19 cases in the region, and the subsequent curfews and lockdown measures, according to GlobalData, a leading data and analytics company.

Yasmine Ghozzi, Economist at GlobalData, says: “The slump in oil prices will dent the sector’s growth. GlobalData expects cutbacks in spending and, in particular, cuts to capital spending on infrastructure, especially for oil and gas dependent countries given that investment plans were set on assumptions for oil at US$50 – US$80 per barrel. The IMF currently predicts that GDP growth in the MENA region will fall to – 3.3% in 2020 because of its exposure to lower oil prices and the extensive disruption in travel and tourism.”

Governments across the MENA region offered direct support to boost activity in construction and infrastructure. In the case of Egypt, for example, the government guided construction companies operating in public projects are set to resume work in full capacity by early April, following a period of two weeks of reduced business.

For Saudi Arabia, the biggest construction market in the region, the country’s finance minister announced plans to make deep cuts to public spending, so any further stimulus to the construction sector would rely on the amount of reserves the government is willing to draw upon, given the limit that lower oil prices have put on government revenues.

It remains to be seen whether governments in the region will lend direct support to companies facing acute financial pressure in the sector.

Ghozzi concludes: “In addition, construction, real estate, and oil and gas sectors are among the most exposed to the business risks created by COVID-19. Force majeure clauses in contracts are being more widely used by firms needing to scale back or rearrange their business plans amid the pandemic. The issue came under the spotlight when the Iraqi government announced the pandemic as an event of force majeure for all projects and contracts. Although construction sites are generally exempted from the lockdowns imposed in many countries in the MENA region, there is an expectation that legal claims, especially from contractors, will be filed citing the crisis as a justifiable reason for failure to deliver work on time.”

Construction industry updates from GlobalData

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Our Duty towards Construction

Our Duty towards Construction

Shreya Chaudhari elaborated on our duty towards construction on in Construction Technology. At a time where it is wondered how fungi can help create a green construction industry, reflecting over our duty towards the construction of buildings cannot do wrong. So read on and find out about the well-founded reasons for doing so.

Construction is the well-known process for men of building houses with some unskilled labours. Thank you for reading the misconcepted sentence. Yes, It’s often seen with an eye of simplicity and frivolous job, which isn’t. We are in much of society’s mindset that a myth is more nurtured than a fact.

Call me old fashioned, but I believe there’s something to be said for doing good, honest work. Construction is sort of the unsung hero of our culture; vital to our infrastructure. Skilled tradesmen build the places we work in, the homes we live and play in, the roads we commute on, and more. Economy’s strength is tightly linked to the construction industry keeping country to move forward. A construction site is moreover different from a person sitting in front of laptop obeying a 9 to 5 cubicle job; it’s an area of daily new challenges to pass on to the next level. It requires a diversity of skills employing everyone deserving to choose as a career.

This is a technical journey of any structure or thoughts right from the foundation to finishing and external works. In building construction, we study how the civil works are carried out in the field after they have been planned by an architect and structurally designed by an engineer. A toddler whenever points his finger towards the swinging tower crane enjoying like the dance of a robot, it’s the duty of the project team to work successfully building block by block over heights.

As we are talking about the heights, so let me take you to the most heighted man-made structure! No required nominees, it’s Burj Khalifa, Dubai (or you can even argue with one of the most famous buildings because 830 metres is really a good number).

Our Duty towards Construction
Burj Khalifa, Dubai (source: internet)

Heard about World One? A structure finding it’s place to be the tallest residential skyscraper, yet under construction of Lodha group, Mumbai.

Our Duty towards Construction
World One, Mumbai (source: internet)

I’ve my stomach full with all these heights as you will mostly get in my next blog; until then let’s see some amazing constructions. The great man-made river project in Libya has listed as the biggest irrigation project in the world. Underneath of the Sahara Desert, it consists of 2800 pipes carrying 6.5 million cubic metres of freshwater every day.

Great man-made River, Libya (source: internet)

The most beautiful building in Jakarta, Regatta Hotel complex was designed by Atelier Enam. The project’s centrepiece is the aerodynamic hotel itself that overlooks the Java sea. Now wondered that struggle to be in top 10 beautiful buildings!

Our Duty towards Construction
Hotel Regatta, Jakarta (source: internet)

But, who knew that continuous endless building of structures would permit to cease for a no while. Because of the nature of his projects, all industries and companies are surged down to a force majeure. The workers are avoiding the work at construction sites due to fear of coronavirus infection. Threatening situations are discovered due to this pandemic endangering future of the construction world.

People are particularly trying to reach out finding alternatives as I mentioned in my previous blog (A virus outside the computer). Also, many cities have adopted a definition of essential construction that allows any work necessary to build, operate, maintain or manufacture essential infrastructure without limitation construction or the constructions required in response to this public health emergency, hospital constructions, etc.

According to the industry body, there are around 20,000 ongoing projects across the country and construction work is being undertaken in around 18,000 of them i.e. involvement of workforce of about 8.5 million in construction work alone! These numbers are breath-taking when health concerns. The scenario implies that the construction work will be slow, pushing costs upward given the interest and debt servicing needed for that extra period. Definitely it will have its own consequences but would be better far than doing nothing.
Hoping the same as everyone to defeat this monster, hiding myself from the fact that I’m bored writing about it  ; )

Global construction output growth revised to 0.5pc in 2020

Global construction output growth revised to 0.5pc in 2020

A leading data and analytics company GlobalData as reported by Trade Arabia on 4 April 2020, informs that Global construction output growth revised to 0.5pc in 2020. It must be said that it will be more acutely felt in the Gulf area of the MENA region with the Gulf economies to pick up this year following spending spree per a Reuters poll.


Global construction output growth revised to 0.5pc in 2020

Prior to the coronavirus (COVID-19) outbreak, leading data and analytics company GlobalData had predicted that there would be an acceleration in the pace of growth in the global construction industry, but given the severe disruption in China and other leading economies worldwide following the outbreak, the forecast for growth in 2020 has now been revised down to 0.5% (from 3.1 per cent previously). 

The current forecast assumes that the outbreak is contained across all major markets by the end of the second quarter, following which, conditions would allow for a return to normalcy in terms of economic activity and freedom of movement in the second half of the year.  However, there will be a lingering and potentially heavy impact on private investment owing to the financial toll that was inflicted upon businesses and investors across a wide range of sectors, stated the top analytics company in its ‘Global Construction Outlook to 2024 – COVID-19 Impact’ report.  

While growth in 2021 will be marginally higher than previously expected owing to the projected rebound (and high year-on-year growth rate) in the first half of next year, in the event that the spread of the virus continues into the second half of 2020, further downward revisions to the growth outlook are likely, it added. 

Danny Richards, the lead economist at GlobalData, said:

“With extreme quarantine measures including lockdowns of entire countries as well as international travel restrictions being imposed across many major economies, the supply shock is expected to dampen economic activity.” 

“The direct impact on construction has been the halting of work with labour unable to get to sites or because of disruption in the delivery of key materials and equipment,” he noted. 

“More generally, the construction industry will be heavily affected by the expected widespread disruption to economic activity and a likely drop in investment, with planned projects being delayed or cancelled,” he added.  

GlobalData foresees particular struggles in the commercial and industrial sectors; businesses in these sectors are most at risk from the severe drop in economic activity, domestically and globally, and their immediate priorities will be on staying afloat and rebuilding their core operations, rather than expanding and investing in new premises or capacity.  

The residential sector also will struggle as economic activity weakens and unemployment rises, despite low-interest rates and direct government support, revealed Richards.  “There is a high risk that a considerable proportion of the early stage projects in these sectors will be cancelled or at least pushed back, with few new projects starting in the second quarter of 2020 as firms review their expansion plans,” he added. 

According to Richards, the governments and public authorities would likely be aiming to advance spending on infrastructure projects as soon as normality returns so as to reinvigorate the industry.  

“With interest rates falling to record lows, borrowing costs will be at a minimum, but the success of government efforts to spend heavily on infrastructure will be dependent in part on their current financial standing,” he explained.  

“Moreover, with most governments prioritizing cash hand-outs, particularly to the economically weaker segment, their capability to invest in the infrastructure segment is likely to be constrained, especially in countries with high debts,” he added.

-TradeArabia News Service 

How we can recycle more buildings

How we can recycle more buildings


The insatiable demand of the global building boom has unleashed an illegal market in sand. Gangs are now stealing pristine beaches to order and paradise islands are being dredged and sold to the construction industry was the introduction to an article of The Guardian. A less partial response to that would definitely that of Seyed Ghaffar, Brunel University London proposes here below to how we can recycle more buildings.


More than 35 billion tonnes of non-metallic minerals are extracted from the Earth every year. These materials mainly end up being used to build homes, schools, offices and hospitals. It’s a staggering amount of resources, and it’s only too likely to increase in the coming years as the global population continues to grow.

Thinking big. Shutterstock

Thankfully, the challenges of sustainable construction, industrial growth and the importance of resource efficiency are now clearly recognised by governments around the world and are now at the forefront of strategy and policy.

A critical component of the UK government’s sustainability strategy concerns the way in which construction and demolition waste – CDW, as we call it in the trade – is managed. CDW comes from the construction of buildings, civil infrastructure and their demolition and is one of the heaviest waste streams generated in the world – 35% of the world’s landfill is made up of CDW.

The EU’s Waste Framework Directive, which aims to recycle 70% of non-hazardous CDW by 2020, has encouraged the construction industry to process and reuse materials more sustainably. This directive, which favours preventive measures – for example, reducing their use in the first place – as the best approach to tackling waste, has been implemented in the UK since 2011. More specific to the construction industry, the Sustainable Construction Strategy also sets overall targets for diverting CDW from landfill.

Policies worldwide recognise that the construction sector needs to take immediate action to reduce greenhouse gas (GHG) emissions, tackle the climate crisis and limit resource depletion, with a focus on adopting a circular economy approach in construction to ensure the sustainable use of construction materials.


Read more: Circular economy: ancient populations pioneered the idea of recycling waste


Instead of simply knocking buildings down and sending the CDW to landfill, circular construction would turn building components that are at the end of their service life into resources for others, minimising waste.

It would change economic logic because it replaces production with sufficiency: reuse what you can, recycle what cannot be reused, repair what is broken, and re-manufacture what cannot be repaired. It will also help protect businesses against a shortage of resources and unstable prices, creating innovative business opportunities and efficient methods of producing and consuming.

Changing the mind-set

The mind-set of the industry needs to change towards the cleaner production of raw materials and better circular construction models. Technical issues – such as price, legal barriers and regulations – that stand in the way of the solutions being rolled out more widely must also be overcome through innovation.

Materials scientists, for example, are currently investigating and developing products that use processed CDW for manufacturing building components – for example, by crushing up CDW and using it to make new building materials.

Technical problems around the reuse of recycled materials should be solved through clever material formulations and detailed property investigations. For instance, the high water absorption rate in recycled aggregates causes durability problems in wall components. This is something that research must address.

Robots and AI should play a key role in future circular construction. Shutterstock

Moreover, it is illegal in the EU to use products that haven’t been certified for construction. This is one of the main obstacles standing in the way of the more widespread reuse of materials, particularly in a structural capacity. Testing the performance of materials for certification can be expensive, which adds to the cost of the material and may cancel out any savings made from reusing them.

For the construction, demolition and waste management industries to remain competitive in a global marketplace, they must continue to develop and implement supply chain innovations that improve efficiency and reduce energy, waste and resource use. To achieve this, substantial research into smart, mobile and integrated systems is necessary.

Radically advanced robotic artificial intelligence (AI) systems for sorting and processing CDW must also be developed. Many industries are facing an uncertain future and today’s technological limitations cannot be assumed to apply. The construction industry is likely to be significantly affected by the potential of transformative technologies such as AI, 3D printing, virtual/augmented reality and robotics. The application of such technologies presents both significant opportunities and challenges.

A model for the future

As the image below shows, we have developed a concept for an integrated, eco-friendly circular construction solution.

Author provided

Advanced sensors and AI that can detect quickly and determine accurately what can be used among CDW and efficient robotic sorting could aid circular construction by vastly improving the recycling of a wide range of materials. The focus should be on the smart dismantling of buildings and ways of optimising cost-effective processes.

The industry must also be inspired to highlight and prove the extraordinary potential of this new construction economy. We can drive this through a combination of creative design, focused academic research and applied technology, external industry engagement and flexible, responsive regulation.

Only through a combination of efforts can we start to recycle more buildings, but I’m confident that with the right will – and the right investment – we can start to massively reduce the amount of materials we pull from the ground each year and move towards a truly sustainable future.

Seyed Ghaffar, Associate Professor in Civil Engineering and Environmental Materials, Brunel University London

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The Conversation

Will future buildings manage and fix themselves?

Will future buildings manage and fix themselves?

Construction Week online‘s Anup Oommen on 27 November 2019, queries in the context of The Big 5: Will future buildings manage and fix themselves?


Aurecon’s Daniel Borszik shares insights on modular buildings “clipped together like Lego” and IoT-integrated buildings.


The building industry, which has historically lagged in terms of technology adoption, is beginning to have a dialogue on shifting from projects to products, with a particular focus on modular construction.

Speaking at the 40th edition of the region’s largest and most influential event for the construction industry The Big 5, Aurecon MEP associate, Daniel Borszik, said: “Modular construction could scale easily to an industry worth $100bn in the US and Europe alone. Even though that’s quite a large number, the industry could deliver about $20bn in annual savings.”

During his talk at The Big 5, Borszik shared details on the various methods of modular construction from modular 2D panels in high-quality single-family housing units that permit for design flexibility and optimised logistics; to 3D volumetric modular systems that create standardization, repeatability, and cost reduction in low- and mid-rise apartment buildings or hotels.

Borszik also elaborated on the combination of automated fabrication with what he called ‘buildable tech’, which called for new materials and fabrication methods that might initially attract a premium but will result in cost savings in the long run.

He pointed to a construction industry where future building parts are printed using cutting-edge 3D printing technology; where these building parts are then “clipped together like Lego”; where machine learning technology and Internet-of-Things (IoT) is integrated into these buildings; and where the completed buildings will be able to self-manage, and fix themselves.

“What I find exciting about the buildings of the future is that you will see a lot more of integration of technology in our buildings. Sooner or later, if the air conditioning has an issue in your house, the air conditioner itself will be able to send an email to the maintenance team to come and fix it, without the need for a human to raise a complaint, and all you get is a notification on your phone that maintenance has been scheduled,” Borszik said.

This will disrupt every player in the construction industry from developers, architects, and designers to contractors, subcontractors, suppliers, consultants and others. Borszik stated that all stakeholders in the industry need to prepare for the disrupting shifts in value pools.

“From engineers to designers, city planners to politicians, it will take all hands on deck to turn a truly transformative design into the city’s new normal,” Borszik concludes.

Big 5 or a Practical assessment of the industry’s growth in the MENA

Big 5 or a Practical assessment of the industry’s growth in the MENA


AMEInfo Staff post dated November 26, 2019, and titled The Middle East construction industry considered one of the top locations to invest as the Big 5 or a practical assessment of the industry’s growth in the MENA region despite the generalised slow down of all related investments, clearly shows. Meanwhile, the Construction industry should look to proven tech to weather difficult times, and alleviate the impacts of the world’s decarbonisation.

Big 5 or a Practical assessment of the industry's growth in the MENA

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, The Voice 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.”

Read: The Voice of the Construction Industry report brought to you by preliminary edition 2019

Big 5 or a Practical assessment of the industry's growth in the MENA

“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.

Read: Slower growth expected for MENA region construction industry in 2019, says GlobalData

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.

Read: Experts issue stark warning for construction firms that ignore urgency of tech transformation

“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.

#REAL ESTATE #DUBAI #MIDDLE EAST #CONSTRUCTION

MENA construction boom with Saudi leading and Egypt, Ethiopia shining

MENA construction boom with Saudi leading and Egypt, Ethiopia shining

Seban Scaria, ZAWYA of October 3rd, 2019 reported that MENA construction boom with Saudi leading and Egypt, Ethiopia shining in Africa but according to GlobalData, construction in the same region has been relatively sluggish and is forecast to grow at 3.3% in 2019, with the pace of growth then accelerating throughout the forecast period to reach 4.9% by 2022 – 2023.  Whilst awaiting some more clarifications, here are Seban Scaria’s thoughts.

MENA construction boom: Saudi leads market, Egypt, Ethiopia shine in Africa

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.

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

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.

(Writing by Seban Scaria seban.scaria@refinitiv.com, editing by Anoop Menon)

Thorough Reviews of proposed Capital Projects

Thorough Reviews of proposed Capital Projects

Governments in developing economies often lack the capacity to conduct thorough reviews of proposed capital projects. A streamlined approach can identify those ready for funding. 

By Rima Assi, Nicklas Garemo, and Arno Heinrich studying an issue of vital importance for all developing countries, came up with the following essay.

They addressed the most likely to be affected which are the oil-exporting countries of the MENA region as impacted by the volatility of their earning capacities.  In the recent past, and before 2014, when free-flowing budgets allowed development without such restrictive measures, governments that get about 90 per cent of their revenue from oil exports did not bother about such issues. However plunging oil prices could mean budget cuts for major exporters like the GCC countries, but these are not expected to be large enough to stop growth, hence the need still of what is proposed by Mckinsey’s people here.

How developing economies can get more out of their infrastructure budgets

In developed economies, policies and practices for balancing diverging interests in public infrastructure spending are well established. South Korea, for example, established the Public and Private Infrastructure Investment Management Center in 1999 to conduct feasibility studies on large public investments and expanded its mandate to include appraising and managing public–private infrastructure partnerships in 2005. Since then, the center has reduced project overruns by 82 percentage points. Similar units include the United Kingdom’s Infrastructure and Projects Authority, Germany’s Bundesrechnungshof, and Australia’s Infrastructure Australia.

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But in developing markets, many governments have yet to build a capacity for conducting extended project reviews and feasibility studies, because talent is scarce or internal priorities conflict. As a result, these governments often end up funding ill-prepared, poorly designed capital projects, whose scope often diverges from real demand. Overlaps between projects are not uncommon—and actual project costs often exceed forecasts. In fact, nearly 40 percent of the money devoted to global investments around the world is spent ineffectively as a result of bottlenecks, a failure to innovate, or market failures. In developing economies, these ineffective expenditures amount to over $1 trillion a year.

It may be too much to ask that every proposal get a full-scale, in-depth evaluation that takes months to complete. Even in developed markets, that’s not always possible. But it is possible for finance ministries to conduct more streamlined financial assessments of the preparedness and design of projects in only days or weeks. Indeed, we have seen developing countries in the Middle East and Africa embark on such programs by adapting centralized control units and the required level of governance to their own circumstances.

The initial assessment of project preparedness

As a first step, a government must ensure that all projects have been thought through at a sufficient level of detail. This may sound obvious, but projects that fail to describe their rationale properly, don’t evaluate alternative solutions, or lack detailed budget plans are hardly uncommon. What’s more, implementing ministries often lack strong capabilities in project planning, and rely instead on the private-sector organizations that design and implement such projects to review their own work. The resulting incentive structures, far from optimizing costs, tend to inflate the scope and specifications of these projects. 

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When the finance ministry in one African country reviewed proposals to build new roads, for example, it found a number of them significantly exceeded benchmark costs—often coming from design firms that consistently produced designs with higher costs. When a more thorough evaluation isn’t feasible, a streamlined one- or two-day review can help. Typically, an oversight body would pose a series of straightforward questions assessing how clearly a problem is defined, along with a capacity and demand analysis and a consideration of alternative solutions. This kind of evaluation would examine a proposal’s financial aspects, like planned budgets and cash-flow requirements. It would also probe the operational elements: a realistic implementation plan, compliance with regulatory requirements, and interdependencies and overlaps with other projects. Knowing that it lacks this capability, the government of the country in the example is now setting up an in-house unit to oversee contracts with design companies and challenge their products.

The impact can be considerable. One government in another developing economy took this approach with more than 250 projects in its portfolio and found that only a quarter of them were adequately prepared. Most frequently, project owners failed to quantify the capacity–demand analysis and alternative ways of meeting future demand. As a result, they were granted only enough of their requested budget to conduct studies to increase their preparedness.

A deeper review of project design

Once the initial assessment—often of hundreds of projects—narrows down the pool, finance ministries can conduct a more thorough review of each project’s overall design. That, too, can be streamlined. The finance ministry of the country in the example developed a way to conduct reviews that lasted just two weeks. In that time, it identified opportunities to reduce costs by an average of 20 to 40 percent, without reducing outputs. During the reviews, which will now be a standard part of the annual budgeting process, the cost-review unit of the finance ministry met with owners of projects and tested their design through a series of questions aligned with the initial assessment exercise above. These included the following:

  • ·         Public priorities. Does the scope of a project focus on services and features that people really want? Is there evidence that the project is truly needed and meets the country’s socioeconomic objectives?
  • ·         Capacity and demand. Does capacity match future demand? Are the expectations for demand realistic? Can alternative solutions reduce demand?
  • ·         Costs. Do unit costs reflect benchmark levels? Can costs be cut by adjusting a project’s time frame (to reduce the need for tight deadlines) or by calibrating the schedule to the availability of capital?
  • ·         Productivity. Could existing assets improve operations?
  • ·         Funding. Are the funding requirements realistic? Are there any opportunities for private-sector funding? Will the assets generate revenues that could fund the project? Can implementation be deferred or slowed down to stretch out the need for funding?

These project reviews can be significant: a two-week review of a public convention complex, for example, identified $1.7 billion in potential savings (Exhibit 1). Elsewhere, one ministry of health’s $300 million request for additional beds for intensive-care units (ICUs) was nearly halved after reviewers considered benchmark utilization data. They found that the proposal’s assumptions about the average length of stay per ICU bed were twice as high as the benchmark, mainly because facilities lacked intermediate beds and had nowhere to send discharged patients. As result, the ministry of health was advised to procure lower-cost intermediate beds and fewer ICU ones.

Exhibit 1

A two-week capital-expenditure review of a public convention complex identified $1.7 billion in savings.

 

Or consider a proposal by another country’s housing ministry to develop affordable housing. In-depth reviews found that the proposed design included features—such as skylights, longer driveways, and larger bedrooms—that increased costs but would not necessarily be valued by residents. The optimized design featured more bathrooms, but (unlike the original proposal) with showers instead of tubs; more but smaller bedrooms; and shorter driveways with less internal parking. These homes were better aligned with the expectations of likely residents, but cost 15 percent less—so the ministry could build more homes on its $4 billion total budget.

 

 

 

 

Trending ambitious projects in the Gulf countries

Trending ambitious projects in the Gulf countries

Trending ambitious projects in the Gulf countries Dubai and Abu Dhabi in the UAE, Doha in Lusail, Qatar, Manama in Bahrain have always been competing one another for commercial limelight. These days despite all oil related exports revenues these have not been witnessed to slumber somehow so they seem to be projected out by the local media.   The first thing that one would notice is not only the size of investments but the unconventional nature of the extraordinary schemes that are shaping up certain areas of each of the above. Doha, for instance launched its $ billion Lusail urban development in early 2000 as a government inspired private public partnership operation that is eventually to foreign and non-resident ownership.   The construction industry in the Gulf countries has always been served and serving the national private citizen and organisations alike. Dubai being the precursor in starting to allow some freehold to go to foreign and resident investors stayed at the forefront until joined by almost all of the others member countries of the GCC.

Deira Island project in Dubai

Doha News published this ‘pictures and text’ report of the work still in progress that is republished here with our thanks to Shabina Khatri, Executive editor and co-founder of @dohanews with some sort of unavowed intent to help spread wide and far the word of the country whilst undergoing a blockade from its neighbours is nevertheless in need of builders. 

Qatar restarts ambitious Katara Towers project in Lusail City

 

Construction on the swooping structure of a twin-towers project in Lusail Marina is expected to start soon, with the launch this week of tenders for a main contractor. Katara Hospitality opened the application process for a contractor to build the 36-story, crossed-swords design Katara Towers. The towers’ curves are inspired by the crossed swords of the seal of Qatar, and were designed by German civil engineering and design firm King Consult.. When complete, the complex will house two hotels, luxury apartments, restaurants and entertainment and recreation facilities, according to the notice on its website and in local media this week.

Katara Hospitality first launched the towers project in May 2012, and at that time aimed to finish by 2016. At the time, the total budget for the project, covering a 300,000 sq m area, was QR2.2 billion. Since then, progress on the project has been stop-start, and subsequent deadlines have come and gone.

Enabling and piling works got underway in late 2013, and in December 2014, Katara Hospitality tendered for subcontracting and basement works packages. According to its website, the towers are now scheduled to open in 2020.

Contractor search

The state-funded hospitality group said it is currently looking for a Qatar-based contractor, or a joint venture with local official representation. They will be tasked with building the above-ground structure and facade and to handle the MEP works.

The successful bidder will also be appointed as main contractor for the rest of the works to the project until it is finished, the notice states. Eligible bidders should have done at least three similar projects in the last six years, each valued at QR2 billion or higher.

They must also show experience in constructing projects of a “similar size, character and complexity” in the Gulf or MENA region in the last five years, the notice said.  The deadline to apply is Oct. 15.

What to expect

Once completed, the towers will be among Lusail City’s landmark buildings. It is located in the marina district, which is still under construction. It is already home to the multi-colored Marina Twin Towers, among other buildings.

Lusail’s Twin Towers. Credit: Damon McDonald/Flickr

According to the latest tender notice, Katara Towers will house two hotels — a “luxurious premium” hotel for business travelers, and a “five-star deluxe hotel.”

There will also be permanent apartments as well as “a variety of suites, restaurants and state-of-art entertainment and recreation facilities.”

Previously, an artificial beach island was planned, to be linked to the towers’ promenade by bridges. It was slated to host aquatic sports, restaurants and contain water parks, Katara Hospitality previously said. However, there was no mention of the beach island in the latest notice.

New city

Some 20km to the north of Doha, Lusail is being built from what was empty desert. The aim is to eventually house nearly 200,000 people by 2022, and half-a-million residents when it is fully complete.

Lusail City rendering. Credit: SCDL

At that time, visitors to the “city of the future” will be able to get around via light rail, water taxi or through a cycle and pedestrian network. Construction on the marina district has been underway for years, and a number of towers and other projects are already complete, although progress in some parts has been slow. Lusail will also be home to Qatar’s showpiece stadium when it hosts the World Cup in 2022.

A Qatari-Chinese JV was announced late last year as the main stadium contractor. But the design for the arena — being undertaken by British architectural firm Fosters + Partners — has yet to be publicly revealed.

Among the stops on the light-rail is Place Vendôme. The QR4.6 billion mixed-use, Parisian-inspired development will have a shopping center with up to 500 retail outlets in a 1 million square meter area.

Place Vendôme — Lusail. Credit: United Developers

Scheduled to be finished next year, it will include a a hypermarket, entertainment zones, restaurants and two five-star luxury hotels and serviced apartments.

 

3D printing technology by 2030

3D printing technology by 2030

3D printing has been pioneered in the GCC region for some time now especially in the building industry generally but more specifically in a skyscraper as recently reported in Dubai. The local media reported that a ‘quarter of buildings in Dubai will be based on 3D printing technology by 2030 under a new strategy launched by Sheikh Mohammed bin Rashid Al Maktoum’. Indeed, 3D printing of building combines mobile robots with existing construction methods to make the construction processes faster, cost-effective and possibly sustainable.

The GCC media elaborated at length on how 3D printing could decrease construction costs and shorten delivery timelines making it, in the future, easy for developers to propose affordable housing hence decreasing all risks of delayed delivery and above all costs overruns.
The only snag is that of the current legislation having been set for conventional building methods and developed by reference to the traditional approaches to construction and materials procurement would have to be revisited so as to allow a full extent of this technology in the future. This would objectively be an interesting road to go down on especially for the heavily populated regions of the MENA such as those of North Africa.
In any case, and if 3D printing as a construction method were to be widely adopted notably in the affordable housing segment, it would certainly give rise to new business models and contractual relationships between the different regions of the MENA.
Meanwhile, an interesting article of the World Economic Forum written by Alex Gray, Formative Content  and published on Thursday 30 March 2017, illustrates well this new model of business and is reproduced here for hopefully our viewers’ appreciation.

This robot can print a house in just 24 hours

A 3D-printed home in Russia Image: Apis

House-building can be an irritatingly slow process. In the US it takes six months on average to construct a home. But now a robot can assemble the basic frame of a house — foundations, floor, walls and roof — in a single day.

Image: Apis Cor

The San Francisco start-up behind the robot, Apis Cor, says that it is the first company to develop a mobile 3D printer able to print entire buildings.

Here’s their first home going up on a site in Russia.

At 400 sq ft (38m²) the house is cosy but proves the point that fast turnaround home-building is now possible.

 

Image: Apis Cor

The cost of construction is about $10,000. And the buildings can be any shape, a potential boon for architects.

Such technology could help in areas with drastic housing shortages. And one American NGO, Field Ready, thinks that 3D printing could be deployed directly to disaster zones.

The WEF recommends reading the following:

 

Saudi Construction & More … Boom

Saudi Construction & More … Boom

Saudi Arabia’s Hotel construction boom . . .

According to local media, the Saudi Construction & More Boom not only remain unabated , 2 years on from the oil price drop but is to the contrary getting to know some kind of spurt growth.  So much so that the Saudi consultative (Shoura) council in a bid to rid the country of certain crimes, all presumably related to, has targeted non-Saudis who do not own Saudi and / or non-Saudi companies so as not allow them buying property in Makkah, Madinah or Riyadh.

The ban is also aimed at protecting as they put it, the two holy cities from corruption and severe punishments will be handed to violators, the council added.

All at the same time, the Saudi authorities are reportedly considering plans to introduce a new mechanism that will compare all the countries 10.4 million number expats’ remittances to their respective income.

In the meantime, the hotel sector mostly owned by multinational chains is part and possibly the main actor of the current construction boom in Saudi Arabia will evidently be affected by the above mentioned pieces of legislation in the making.

Construction generally and that of the hotel in particular is being led by Makkah, according to a new report of TOPHOTELPROJECTS that was commissioned by The Hotel Show Saudi Arabia 2016 with the Abraj Kudai large development in Makkah.

The Report held that the development is of some 24,133 rooms with Riyadh coming next with 10,053 rooms and Jeddah with 6,890 rooms with a majority of rooms forecast to open over the next five years.  It adds that Makkah is ranked second in the MENA behind Dubai which currently has 43,714 rooms at some stage of development.

In Makkah, the Abraj Kudai scheduled for opening in 2019 will remarkably add on its own some 10,000 new rooms to the market.  The Carlson Rezidor Hotel Group amongst numerous others are also involved as one of the top 10 international brands with the most projects currently under development throughout Saudi Arabia.

Meanwhile the $1.3 billion Saudi-UK offer for three hotels in London and New York has as lately reported by the media as a bid valuing the assets below market price.  The bid for the London’s Grosvenor House Hotel together with a majority stake in New York’s Plaza and Dream Downtown hotels owned by the jailed Indian businessman was made by a consortium of Saudi and UK family wealth funds last July 27th.

All media reported that the owner’s representatives were unhappy with the offer because they found it disrespectful and lacking in seriousness and that they stand within their rights to reject this bid.

Middle East CEO’s change highest ever

Middle East CEO’s change highest ever

Middle East top firms’ CEOs change, highest in the world.

The local media reported early this week that the Middle East CEO’s change highest ever rates in the world were in 2016, a report of Strategy&, PwC’s strategy consulting business  said.  21% of the 62 largest corporations in the region saw a new CEO.  that is more than in any of the previous 16 years.

This trend was found to be above the global average of 17% of the largest 2500 public companies, as highlighted in the CEO Success Study of Strategy&.  Also 84% of the appointees are from outside the company and this is according to the study to the result of above average CEO transition rates of Saudi Arabia.  Per-Ola Karlsson, partner with Strategy& explains :

“This growing trend is mostly due to recent political and economic movements, including a recent change in the country’s leadership and ongoing oil price volatility, which has led to a shift in how Saudi Arabian leaders think about, approach and successfully execute the new agenda of the country and where several private sector CEOs have taken on Ministerial or other senior roles in the government.”

58% of all CEOs in the Middle East have been outside hires, up from 33% in the previous four year period.  PO Karlsson commented: “These high succession rates, coupled with a need to improve regional corporates’ leadership development practices, limit companies’ ability to fully develop internal leaders to their full potential, enabling them to effectively take on the CEO role.”

Over the past several years more big companies have been deliberately choosing their new CEO from outside of the company as part of a planned succession, an indication that hiring an outsider has become more of an intentional leadership choice than a necessity.

  • Outsiders accounted for 22% of all CEOs brought in via a planned succession between 2012 and 2015, up from 14% in the previous period of 2004 to 2007
  • Almost three-quarters of all outsider CEOs were brought in during planned successions during that same period, up from 43% in 2004 through 2007

The majority of companies have continued to promote insiders to the CEO position and Strategy& team think this will remain the preferred succession-planning practice  with 77% insiders as opposed to 23% outsiders in 2015.

“Hiring an executive from outside a company to serve as chief executive officer used to be seen as a last resort,” said PO Karlsson.

“That is not the case anymore with the disruptive market-related changes that companies are facing today. While an internal CEO candidate may have an excellent record of achieving the business goals the company has pursued in the past, boards are recognizing that this candidate may lack the skills needed to lead the company through the changes necessary to win in the future,” he added.

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