Face to Face: DSI's Khaldoun Tabari

DSI CEO Khaldoun Tabari.
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Critics who thought that Drake & Scull International (DSI) listed at the worst possible time, namely at the height of the construction boom and just prior to the real-estate crash, have since had to concede that the company did so at the best possible time, as it generated sufficient cash to transform the business.

At the helm of this transformation has been the firm hand of CEO Khaldoun Tabari, who has remained constant in his vision of diversifying DSI from a geographical and business-stream basis.

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Today the company has moved from its MEP roots into the power and water, utilities and civil sectors, as well as concluding a string of major acquisitions. It is also active as far afield as Saudi Arabia, Qatar, Kuwait and Thailand.

Topping off a very successful 2011 is the news that DSI’s order book is expected to amount to $2.7bn by the end of the year.

How DSI has progressed from those heady days of 2008, and overcome the numerous hurdles posed by the downturn, holds a valuable lesson for all contractors.

“As 2009 and 2010 unfolded, a lot of uncertainty existed, which negatively impacted asset evaluations, weakened balance sheets and caused a wave of consolidations around this region and the world,” Tabari explains.

“However, as the early part of 2011 unfolded, we witnessed signals of improved activity and liquidity flows, fostered by an increased level of government spending and credit availability through the central banks.”

Tabari says that a subsequently “huge offering of infrastructure work in the region, coupled with lower interest rates, prompted growth as we have never seen before. As we moved into the second half of 2011, we began to see a valid economic outlook, with speculation whether the world would enter a double-dip recession.

The Arab spring, although very much positive, is causing uncertainty, which is negatively impacting the growth of these economies, at least in the short term. We anticipate lower cash availability by governments, which might put a hold on current infrastructure projects.

It is often said that the world is becoming a riskier place; contractors in this region operate in areas with inherent risks, and our acceptance of risk is at an all time high,” says Tabari.

The main question facing contractors in the current environment, from small players to larger and more diversified ones like DSI, is whether or not the region is immune to such global turbulence.

“How do we foresee or anticipate risk through such economic and political turbulence? The compelling truth is that there is no real measure of control in those markets. There are generally valid frameworks that help contractors mitigate their risk exposure; risk is a function of the flexibility of your business model and proactive responsiveness to the changing dynamics of the construction industry.”

Tabari explains that DSI deals with such a fluid situation by constantly questioning its internal risk assessment, management capability, human resources and cash flow.