Growth trajectory

Thrasos Thrasyvoulou
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Diversification

“Our diversification also covers the infrastructure, MV and external facilities in projects like Sheikh Zayed University, Paris Sorbonne University and Khalifa Port and Industrial Zone that the company is currently carrying out. We also have qualified engineers and designers in-house who are LEED-accredited, which is another trend in terms of green building and sustainability. Needless to say, within MEP we cater for complex systems like ELV, audio-visual, CCTV, fire alarm and fire fighting, for example,” says Thrasyvoulou.

Commenting on the current state of the market, he says: “Personally I believe that after the initial shock of the downturn in late 2008, the market in general has absorbed this and stabilised. I do not foresee a much bigger downturn; I cannot say we have reached the absolute bottom either, because there are so many factors involved.

“From a personal point of view, I do believe we are nearly at the bottom. One thing I am sure about is that the liquidity, the availability of money through the banks, is better than a year ago.

During the downturn, finance for projects was largely unavailable, as banks were in a more difficult position than contractors even. These days I am optimistic that even if we are not at the bottom, we are nearly there and that the liquidity is getting better.

“I believe that opportunities are good in areas like Qatar, Kuwait, Saudi Arabia and Bahrain for an MEP contractor of our quality and depth. Weaker companies have closed down or merged, and the number of major competitors capable of executing big projects has been reduced,” says Thrasyvoulou.

However, increased competition for a diminished pool of projects has placed increased pressure on pricing. “I have recently seen a drop in prices. A lot of MEP contractors, in order to sustain themselves, are becoming more competitive. I hope they will not go to the extreme of dropping prices to the level where quality is sacrificed and projects cannot be executed properly. This is a dangerous thing in my opinion. Clients must be very cautious in this respect.

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Dubai has suffered most

“Certainly the global economic recession has affected all countries. In the UAE, Dubai, due to the previous unsustainable boom and the sudden global downturn, has suffered more than other areas in the Gulf in terms of growth, fewer new projects, a slowdown in existing projects, especially hotels and residential/commercial developments. I believe that, after the initial shock in 2008 and the sustained recession in 2009, 2010 will still be a low-growth year – specifically in Dubai, but even in general in the Gulf region.”

Thrasyvoulou says this view is reflected in a shift in the market. “In terms of work, there is a definite shift from the residential/commercial sector to education/healthcare and industrial/infrastructure work – what I call the traditional sectors.

“Our recent success in carrying out two of the major educational projects in the area – Sheikh Zayed University (in a joint venture with Hastie) in the magnitude of AED540 million and Paris Sorbonne University (in the magnitude of AED240 million) – is itself evidence of this shift. “Both of these projects include related infrastructure works and complex specialised systems. In addition, the Khalifa Port and Industrial Zone project we secured recently, in the magnitude of AED320 million, verifies this further.

“There are many other projects in the pipeline, like New York University, Tawam Hospital, Al Ain University and the Abu Dhabi Airport. At present we are participating in almost all of these tenders, and are optimistic that some major projects will be secured,” says Thrasyvoulou.

Such optimism is based on the company’s good engineering background and in-house design capability.

A big problem to date has been the time constraints demanded by clients in order to enable them to capitalise speedily on their returns.

“Often the design is not completely finished and the scope is not very well defined. Then if the MEP contractor does not have the capability to check the design in terms of system workability, the end result will be a project with problems. MEP is the biggest single element after the main contractor in a building project. Buildings suffer if the air-con does not perform properly or there are plumbing problems at the end. We are a major part,” concludes Thrasyvoulou.