Practical benefits

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My building’s front door has been broken for more than a year. It’s a relatively small annoyance that leaves my building open to anyone 24 hours a day.

As a result, every day, the corridors are littered with marketing detritus from every takeaway service within a 50km radius. The hawkers, beggars, freelancing maids and DVD pirates, all have free and easy access to my small slice of Dubai.

There was an initial attempt at repair about a year back. The result saw me joining a cluster of other residents, all locked out at 2am in the morning. Since then it just hasn’t worked at all.

When the issue was raised with Nakheel, at an owner’s association meeting, the company’s representative said the door was not just broken, but was in fact suffering from a manufacturing fault. Many doors, it seemed, were enjoying an equal state of dysfunction.

Now, since it was a manufacturing fault, the problem apparently lay with the contractor who had fabricated and installed the doors. Fixing them was the contractor’s responsibility and not that of the community maintenance team.

It seems, after all this time, the contractors have been reluctant to come round and sort out the issue. Rumour has it this was because they had not been paid, but this may all be changing.

A number of contractors have spoken publicly in recent weeks about the start of payments from Nakheel, which is beginning to address its outstanding debt, a little at a time.

Anyone owed under AED 500,000 can expect to get everything they are owed, those awaiting more would get an initial AED 500,000. Then came a company statement, reported by Bloomberg, saying a 40% cash payment to its biggest creditors was in process.

A Nakheel spokesperson at the time said 75% of trade creditors had accepted the agreement in principle and that payments to them were underway.

Last month, Nakheel also met with senior members from the UAE-based Contractors’ Association in an attempt to ensure settlement of claims to these trade creditors.

The developer has also announced its intention to ‘fulfill its obligations to customers through the prompt completion of near term projects’, having received US $1.5 billion from the Dubai government through the Dubai Financial Support Fund to help achieve this.

For small operators, if they still exist, this cash may bring welcome relief from the web of bad debt entangling contractors in the Gulf. For larger organisations, better cash flow will be welcome, as will a bottom line boost.

Contractors will hope this is not a position they ever find themselves in again.

One construction executive told me recently that his outfit had sharpened its payment collections practice, with direct benefits to his organisation’s financial performance.

It was an area where they had been a little loose in the past, but having come to arrangements with clients who were in a pinch, the company now did its best to be fair but firm, when it came to overdue accounts.

I’m hoping to see some practical performance benefits too, though it may take a while for the trickle-down effect to make it to my building. In the meantime, my door is always open.