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Payments and contracts can be tough in Qatar

Industry professionals working in Qatar agree about its drawbacks

Qatar is investing in many new projects, particularly in Doha, but contractors should enter the market with caution.
Qatar is investing in many new projects, particularly in Doha, but contractors should enter the market with caution.

Contractors, consultants and architects working in Qatar have cited payment problems and tough contract conditions as some of the main disadvantages of working in the country.

Though they admit that opportunities are rife, Qatar having one of the most robust economies in the Middle East, construction professionals working the region advise newcomers to read contracts carefully and select clients cautiously.

Among the main company gripes are difficulties collecting receivables on time, problems meeting client-biased contract terms and high competition for work.

This is irrespective of the country’s reputation for being cash-rich, with one of the highest GDP growth rates in the world and a huge pot of funds allocated for construction projects by the government.

“We have had problems with payments on one of our projects,” admits Arabtec Holding’s Qatar branch manager, Ayman Al Barqawi.

To date, Arabtec has been contracted for work on three projects at a combined value of QR 4 billion.

“It was partially resolved in October, and it is being resolved completely before the end of this month.”

Likwise, Atkins’ country director for Qatar, Gordon Jack, suggested payment problems and contracts were among some of the biggest risks for firms looking at expanding into the country.

“Payment is a risk,” he said. “Contract conditions also tend to be quite challenging. Companies will come across unusual bond requirements and penalty requirements on projects, so managing that can be quite difficult sometimes.

“The penalties for failure to deliver are quite harsh, and the way contracts are written is very much on the clients’ side.”

Other firms, such as New York-based architectural firm Kohn Pedersen Fox Associates PC, and international consultancy EC Harris, also agree.

KPF principal Anthony Mosellie said: “The biggest risks of working in Qatar appear to be commercial in nature. Many clients prefer performance bonds that are difficult to obtain after the financial crisis.”

According to EC Harris’ location leader and partner in Qatar Terry Tommason, it is not unusual to find onerous terms and conditions in the country, not to mention lengthier payment periods.

Asked how they would advise firms thinking about setting up shop in Qatar, all companies suggest firms approach new business opportunities with caution.

“Qatar is like other places when it comes to payments. You need to treat every project on its own merits,” says Al Barqawi.

“Sometimes you have problems and sometimes you don’t. Which is why one of the things you should consider when you tender for a project is the portfolio of the client or the agency.”

On the plus side, it appears that like many other places, construction costs have fallen in Qatar. Al Barqawi speculates at around 20-25%, whilst Jack simply refers to a considerable decline.

“Construction costs have come down considerably in the last year,” he says. “When there was a boom, all commodities were at an absolute premium, steel was going through the roof, concrete was going through the roof. Now this has all changed.”

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Construction Week - Issue 764
May 31, 2020