Getting paid top concern for CW readers, says poll
More than 43% prioritise securing fees as cash flow remains tough
Nearly half of ConstructionWeek’s online readers say getting paid is their top priority in the new year, showing that cash flow problems remain despite the Gulf’s re-growth after the financial downturn.
A total of 45.1% of readers who participated in the online survey said securing their fees for projects was their biggest concern right now. This is almost double those who prioritised winning contracts – 23.5% of readers – planning for the year (almost 13.7%), company longevity (11.8%) and finishing projects (5.9%).
The dominant percentage of those putting payday first has been increasing all week.
Executives at some of the region’s biggest construction companies and suppliers emphasised the challenge of securing payment in the narrow channel of capital from project financiers to developers, consultants, main contractors and on to materials and service providers.
Peyman Mohajer, managing director at Ramboll Middle East, a broad-service design consultancy, said much time and energy has been used up in the process of chasing fees despite the “light at the end of the tunnel” of projects coming to full realisation.
Andre Tufenkjian, partner at Dubai-based JCB Engineering & Consulting, also said there had been the occasional slowdown in payment, encouraging the market to be persistent in the face of delays.
Paul Grundy, owner of S&B, the temporary hoarding and fencing manufacturer, told CW in November that construction firms needed to address outstanding payments, and that there had been a marginal improvement in collecting fees in 2010 compared with 2009.
“We are able to cherry-pick the clients that we know have cash and we’re going to get paid,” he said in November.
Some heavy machinery suppliers have also suffered a drought in timely payments, even if customers have reverted to the more flexible option of renting rather than purchasing new equipment.
“If a company which has purchased large amounts of equipment decides that a project must be put on hold, the financial damage incurred can be a major blow,” Phil Burns, managing director at Aggreko, a provider of generators and chiller, told PMV Middle East, a sister title. “Ultimately, renting equipment means that because ownership lies with Aggreko, so do all the risks.”
But the head of GTCC, a civil engineering subsidiary of Drake & Scull International, said the company overall had not encountered payment problems, and the key was to establish clarity between contractor and client at the outset.
"If [a client] says, 'this is what I am able to do and that is my cash flow and I want to base your price, your cost, your preliminaries according to my cash flow', then there shouldn't be any issue," said Saleh Muradweij, executive director.
To add your priority for 2011, see the website's homepage.