Smart ALEC

Ben Roberts , August 15th, 2010

In the ascent of Dubai and Abu Dhabi’s building markets over the last decade Al Jaber LEGT Engineering & Contracting (ALEC)’s building business grew from almost nothing to a US$1 billion company.

Winning its first contract in January 2002 for the Mina a’ Salam complex – commissioned by His Highness Sheikh Mohammed, Vice President and Prime Minister of the UAE and Ruler of Dubai, no less – the company and its managing director, Keiron ‘Kez’ Taylor, haven’t looked back, except perhaps to marvel at the dramatic decade just gone.

“We’ve been through the two extremes: a massive boom whereby the only restriction was your capacity – whatever it was, you could perform at that level – to an extreme where you are consolidating where it’s a tight market,” says Taylor in the company’s office in Dubai Industrial City.

ALEC has another office in Abu Dhabi, and Taylor points out that the more challenging market conditions in the region’s contracting markets has resulted in a ‘huge shift’ in business from the former to the latter. But when it comes to some of the company’s projects – in particular the AED 4.5 billion contract to build the third concourse for Dubai International Airport – calculating the work split between the two emirates is not so straight forward.

“The airport is a huge job in terms of resource, and we have a lot of people here working on it. With that project the split in business is about 60% Dubai and 40% Abu Dhabi in terms of work, value and turnover,” he says. “If we didn’t have it, it would be a totally different mix – I’d say 80 or 90% of business based in Abu Dhabi. There has been a huge shift towards Abu Dhabi.”

Alec’s construction business has produced some large and eye-catching projects. Its growth and attraction to developers has allowed it to work on major projects across the two emirates in retail, airports, hotels as well as high-rise buildings.

This has included work on hotels and golf clubs on Saadiyat Island and Yas Island in the capital, both the Abu Dhabi and Dubai international airports, the Dubai Marina mall and the ambitiously green Mirdiff City Centre, and the multi-purpose Madinat.

The company was forged through a joint venture between Al Jaber Group and Grinaker-LTA, a multi-disciplinary construction firm in South Africa. After a few years Al Jaber bought out the shares from Grinaker-LTA and offered 20% of them to what is now the current management.

But Cape Town-bred Taylor and around 8% of the staff retain the connection to South Africa. Graduating in construction management in University of Witswatersrand in Johannesburg, Taylor’s association with Grinaker-LTA began with a bursary at the firm. The company’s joint venture with Al Jaber took him north east in October 2001, to Dubai, to help set up the construction division of Alec.

Within three months, the company had snapped up that all-important mandate from Dubai’s ruler.

As he looks back now on that first project, he smiles: “We couldn’t fail, we had to succeed! That was the first project and it was a very quick programme. We had to building it in 17 months in time for a conference and we successfully did that.”

Over the last few years ALEC has grown by adding new business lines – sensibly termed Related Businesses – that complement its core construction strength, and in a sense fill in the gaps along the contracting chain. These include MEP work, fit-out, ceilings and partitions and architectural precast.

“These related businesses complement what we do as activities,” says Taylor. “The reasons for setting these up are that they assist us to complete our projects in a timely and integrated way.”

Of the MEP work, now four years old, he adds: “At the time we were struggling to find good, confident MEP contractors with the capacity who could meet our kind of demands. That pretty much started it off, and we decided: let’s start up an MEP arm. It’s been very successful.”

The Qasr Al Sarab Desert Resort & Spa project, a 156-room five-star hotel in the Liwa Desert, is one such project in which the company has been mandated for MEP work. It is also providing the same service for the Park Hyatt Hotel on Saadiyat Island (in a joint venture with TransGulf), a project for which it is also main contractor – a good example of Alec’s ability to work on multiple parts of a project based on its expanded suite of services.

“This is pretty much a resort design, right on the beach and will be the first operational hotel on Saadiyat Island,” he notes. “We have completed the structures and are now busy with the finishing.”

Saadiyat Island is also the venue for the company to explore ways in which it can use technology to build more environmentally beneficial buildings.

“We’re looking at a project now on Saadiyat Island that has a glazed roof,” he explains. “We are investigating whether you can utilise photovoltaic glass sections that can be incorporated into the design.”

The process by which subsidiary businesses are created is a matter of accommodation, he says.

Alec typically brings in specialists who are known in the industry, often those the company has worked with before. There is a degree of fluidity in bringing in new talent – the companies are not tied exclusively to Alec and so their range of experience as to how the rest of the market is building can only increase.

The work by its ceilings team on the 587,000m² Mirdiff City Centre mall, the second biggest shopping centre in the Middle East, is a key example.

“ALEC is an umbrella – a platform whereby these businesses can flourish and operate,” Taylor explains.

“If you look at Mirdiff City Centre, ALEC did all the ceilings and there was no issue in holding up the project. It was actually a benefit that we had the in-house business and the expertise to do that job – and there was about 80,000m² of ceiling there.

“I think what we strive for is to pull off jobs on time. We have a track record of completing projects on time and that’s what we try to achieve.”

The Yas Links Golf Club House on Yas Island saw the company win an even wider mandate, this time driving both the design, construction, MEP work, ceilings, fit-out and pre-cast components in an AED195 million contract from Aldar Properties, the developer.

Taylor points out that although the company might end up working on more elements of a single project than before, the input from the consultant remains the same. But he is adamant that closing the gap between design and construction is vital for producing the most cost-effective building.

“A lot of the delays in construction are in design flow,” he says. “So if you can be participating in the design and getting it integrated with the construction, what you end up with is a much more cost-effective result. Often a designer working in isolation without a specialist contractor working side-by-side doesn’t always end up with the best result.

“We found we can add a lot of value in that process; our specialist MEP guys will know what equipment is most cost effective than if a designer is in isolation.”

It is an argument likely to gain more credence as cost saving becomes a daily priority for developers across the region.

“By working together you can get a lot of value. It’s not just about the cheapest price up front. It’s been proven in research that a good designer will save a developer up to 5% [when] coupled with guys in tune with their business; you can end up saving a development substantial amounts of money.

“Often the wrong choices are made, and maybe once a decision is made it is difficult to change down the line, as everyone is under pressure time-wise.”

Talk of efficiency brings him onto the latest business line that ALEC is considering: facilities management. This would be through its MEP business, he says, and there are clear benefits in being able to use the knowledge of how a building has been constructed and finished to provide ongoing maintenance.

But the growth and success of the subsidiaries and the portfolio of renowned projects does not detract from an undeniable reality in the wake of the economic slowdown: the market is contracting, and with it the companies. Taylor – who admits that like a lot of firms there have been staff cut-backs – says that overall, a period of contraction is a good thing.

“As opposed to growth, you’ve got to say: ‘what is a sustainable business going into the future?’

“We feel our present size is probably sustainable. We can refocus internally on efficiency, and utilisation and making sure we’re working well together. You’ve got to diversify and you’ve got to look at expanding geographically. I think it would be quite difficult to grow and just focus on this market in the current scenario.”

With an eye on Qatar – notably due to the presence in that market of its parent Al Jaber – Taylor is particularly excited by the opportunities in Oman.

Though the country will probably be always modest in scope, the potential for the areas of construction in which the company has proven itself – hotels, multi-use complexes, and airports – present a horizon of possible new developments.

“Oman is beautiful – the country is upgrading the airport, and tourism will definitely be on the up there,” he believes. “The kind of work that happened in Oman we feel suits what we are looking at.”

He emphasises that choosing new countries in which to expand needs to be done with care. It is partly down to the demand in the market and also assessing what that market needs next.

“Pretty much our strategy is to follow select clients into specialist knowledge into areas of operation. ALEC has done large retail centres, as well as completing a line of resort hotels in the UAE. Now we’ve looked at taking very specialist knowledge – with an ability to construct and sometimes be part of the design – into others areas.”

THE BIG DEALS:
Dubai:

Dubai Marina Mall & Hotel/Apartments – AED2.25 bn
Mirdiff City Centre – AED2.3 bn
Kempinski Hotel – AED407 mn
Madinat Jumeirah Resort (phase 3) – AED382 mn
Al Manzil & Qamardeen Hotels – Burj Dubai- AED255 mn
Mina A’ Salam – AED215 mn

Abu Dhabi:

Qasr Al Sarab Desert Resort & Spa – AED1.4 bn
Manarat Al Saadiyat – AED350 mn
Yas Links Golf Club House, Yas Island – AED195 mn
Abu Dhabi Airport Termi

BIOGRAPHY
Kez Taylor studied a Bsc. Building (Construction Management) at the University of Witwatesrand in Johannesburg. Starting his career as a bursar for Grinaker-LTA, Taylor’s career has seen him work throughout South Africa, Namibia and Zambia, before transferring to the Middle East to establish a building operation in the UAE in 2001.

He has more than 22 years experience in construction management and project execution in building works, including nine years’ experience in the UAE working for ALEC. He is married to Micheline and has two sons.