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Nine months into 2010, and there is a sense in parts of the region that the industry may be through the worst of the economic downturn.
New markets have been a huge focus for most companies, with more Dubai-based construction firms looking across the GCC for opportunities.
But for contractors to win new business, it is not only important that the projects are available, but that the contractors themselves have the necessary funding to bid for them.
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Given today’s highly competitive market, which includes an influx of international players, they are seemingly under more pressure than ever to ensure the appropriate funds are immediately accessible.
“The key to taking advantage of the opportunities which the GCC countries offer the industry is to be suitably positioned to seize the opportunity,” explains Arabtec’s chief financial officer, Ziad Makhzoumi, who is working hard to ensure his company stays at the forefront of new and existing GCC markets by maintaining strong control of cashflow.
“Working capital is rarely a top priority for operating managers, but at times like these, it should be a high priority on the corporate agenda.”
ALEC’s financial director Greg Walsh agrees. “There’s a saying in the construction industry. ‘If you win a tender, you’ve made a mistake or forgotten to price something correctly!’ Clearly, remaining competitive in today’s market is no mean feat considering the portion of provisional sums that make up any tender. It’s getting to the stage now where tenders are won based on who is the bravest and how good your last contract was,” he says.
Challenging times
Certainly one of the biggest symptoms of the global financial crisis within the construction industry has been a difficulty to manage cashflow in the wake of a non- and late-payment period.
As cash-strapped developers struggled to stay afloat, payments to contractors either slowed down or stopped completely in some quarters, causing some contractors to walk off-site.
After months of speculation about whether or not struggling contractors would ever receive payment, and in turn, what would happen to these delayed and abandoned projects, some positive steps towards resolving the payment issues began to occur towards the end of the second quarter of 2010.
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