Contractors look to revive stalled projects

Stalled projects a potential market for work-hungry contractors

The iconic Dubai skyline is being blighted by half-finished projects.
The iconic Dubai skyline is being blighted by half-finished projects.

Reviving stalled construction projects in Dubai could be a potentially lucrative market for contractors to top up their bottom lines in the downturn, said Al Tamimi regional head of construction Steven Hunt at a Dubai Corporate Counsel Group seminar at the Armani Hotel.

“I think in a buoyant construction market, it would be most unlikely that contractors would want to actually take on this work. There are simply too many risks involved. With the construction market as it is now, which is pretty flat, my suspicion is there are contractors out there probably keen to take on this work at the right price,” said Hunt.

Hunt said this was one way to deal with the legacy of the downturn, which had blighted the Dubai skyline with half-completed structures. “It only takes a look at the skyline of Dubai to realise the extent of the problems that lie ahead. There are a significant number of partially-completed buildings, on most of which where you see no obvious sign of construction activity.”

Hunt said these structures “are really a symbol of the misfortunes of Dubai of the last few years. Inevitably some of these skeletons that are blots on our landscape will never see completion.” However, developers will come under increasing pressure to complete stalled projects.

“It is a bit late for me to be recommending to developers to start thinking about protecting the structural integrity of their partially completed structures that have been exposed to climatic and subsurface conditions.

“For those who have not been diligent in protecting the structures, the construction risk associated with continuing and completing these projects is probably too great, and they might as well think about demolishing and starting from scratch.

“In other instances, it may be difficult to persuade contractors to come onboard and assume the legal risks associated with those projects,” said Hunt. Developers would also have to incur additional costs such as site inspections and any redesign work.”

There are two potential scenarios to re-engage contractors in such work: re-employing the original contractor, or bringing in a new contractor to complete the work. Hunt said there are various legal and technical issues to sort out before such work can be taken.

“In either scenario, a contractor remains duty-bound to deliver a product to the standard required by the contract, which effectively means a defects-free product. A contractor, however, will inevitably want to find ways in which he can avoid liability. Ideally, the parties will have to get together before construction is resumed to negotiate or to try to understand the damage that has been done to the structure, and to negotiate the price of remedying that.”

Hunt said a previous contractor would have to receive assurance that he has been relieved of any prior liability. “A new contractor, on the other hand, will only guarantee the works it is undertaking. The developer will have no recourse against a new contractor if any defects become obvious. He may go to the old contractor and try to recover any losses from him.

“But I suspect that with such projects that have suffered prolonged suspension, it will be very difficult to prove liability and enforce those warranties where projects have remained on hold for so long, and where there has been exposure to climatic and sub-surface conditions.”

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