Face to Face: Akram Ogaily
Akram Ogaily of Hill International discusses Iraq's building potential
Akram Ogaily, Hill International (Middle East) senior vice president, talks to Construction Week’s Yamurai Zendera on why it is important to himself and the firm to be present in Iraq.
Hill International sees Iraq as one of the next Middle East markets that will experience a boom in the years to come.
As a result the construction management firm has formally been in the country since early 2011, with a good six months of planning undertaken prior to setting up.
Hill has around 40 people working in Iraq headed up by senior VP Akram Ogaily and a newly-appointed country manager.
Given that Iraq is Ogaily’s place of birth, he also has a vested interest in seeing the country build itself back up again and benefit from international standards of construction management it undoubtedly needs as a consequence of years of conflict.
Ogaily says: “One of my passions and motivations as an ex Iraqi architect is to bring to Iraq what Iraq and Iraqis need at this stage from proper and professional international standards of project processing.
All the stages starting from early studies of projects, procurements of design services and setting up standardizations for all the process documentation related to new procedures, policies, criteria, pre qualifications, contracts; and maintaining all these processes all the way through to control the quality, time and cost for all projects.”
Iraq is on the cusp of an economic boom, asserts Ogaily, making it advantageous for a global firm such as Hill to have operations there. “It is my personal belief that the next market boom in the Middle East will be Iraq. It will exceed what’s happening in Saudi and Qatar.”
Using the aforementioned coalescing factors Hill drew up its strategy for the country. Ogaily says it is naive for firms to think they can just turn up and immediately start doing business in Iraq.
He says the key is to set up a “mutual language” with local citizens about what it is you offer before you can start pitching your services to them.
Clearly it helps that he is Iraqi himself and that half of Hill’s workforce in the country is also of similar descent.
“To get a niche in the market we have to move fast and set up our project management knowledge to be shared with the locals before you get into providing your services,” says Ogaily.
“You need to set up some sort of mutual professional language that will make your mission to achieve what your client wants easier and also get across what Hill International wants to bring to the table. This was my plan six months before 2011 and that’s something which has been discussed.
“It’s my view that the approach has to be different from the way the company undertakes business development in other countries, which means you have to educate the locals about the services you are bringing into the table.”
Hill has been as good as its word in this regard. Through its staffs’ intrinsic knowledge of the country it has managed to establish key ties with three universities in Baghdad and the ministries of construction and housing; higher education and scientific research; and youth and sport.
It has set up workshops and seminars between the government and academic entities to share knowledge and discuss real life projects and issues.
“Hill is committed to Iraq,” says Ogaily. “We’ve started with getting into providing services, not necessarily full scope program management services, but we’ve started with supporting some of the authorities with their immediate needs that won’t necessarily take lots of input or big teams.
So the process is to give them example of what we offer, which leads us to other invitations and projects of a good size. This is a major constraint for other companies that go there taking their knowledge and know-how and thinking they can do business there.”
The strategy seems to be working with Hill having picked up five contracts to date. The major one is a 600-bed teaching hospital in Baghdad. Hill signed a three-year deal with the ministry of higher education and scientific research last May to provide design and management supervision.
Hill’s first contract in Iraq was on a 30,000-seater soccer stadium complete with hotel in Anbar where it is providing design, construction management and site supervision for the ministry of youth and sport.
Twelve staff are assigned to the project, which is due for completion at the end of next year, says Ogaily. Similarly, it is working on an identical scheme for the same client in Baghdad.
Elsewhere in the capital, Hill is carrying out site supervision and construction management on a sewage treatment plant for the Governorate of Baghdad, with the project now 50-60% complete.
While in Basra, it has been employed as resident engineer’s office (REO) on a social housing scheme. It is overseeing the building of 300 apartments along with infrastructure, and work is around 15% complete.
Ogaily says there is another potential social housing project in the pipeline in Baghdad however the contract is still to be signed.
He points out that Hill has northern Iraq on its radar as there are more private sector projects there but as yet nothing has been confirmed.
“The construction market in Iraq is huge, but it lacks the capacity. There is not enough technical expertise in managing, but it will get there,” says Ogaily confidently. “Hill International is very much committed to the longterm.”
Fourth quarter financial results (2012)
Total revenue for the fourth quarter of 2012 was $125.7m, an increase of 2.5% from $122.6m for the fourth quarter of 2011. Consulting fee revenue for the fourth quarter of 2012 was a record $110.8m, an increase of 11.2% from $99.6m for the fourth quarter of 2011.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the fourth quarter of 2012 were $2.2m, down 5.6% from $2.3m in the fourth quarter of 2011.
Operating loss for the fourth quarter was ($0.3m) compared to an operating loss of ($1.3m) in the year earlier quarter. Net loss in the fourth quarter of 2012 was ($22.5m), or ($0.58) per diluted share, compared to a net loss of ($0.6m) in the fourth quarter of 2011, or ($0.02) per diluted share.
During the fourth quarter of 2012, there were non-cash charges totaling $23.1m that adversely impacted Hill's financial results.
These charges included the following: $17.7m as a result of a reserve on the entire valuation of Hill's U.S. deferred tax asset; $4m as a result of a reserve taken in connection with contingent employment tax liability for certain foreign subsidiaries; $1m in connection with the termination of operations by the company's majority-owned subsidiary HillStone International, LLC; $0.2m as a result of the write-off of an investment in a terminated Middle East real estate development joint venture; and $0.2m as a result of a litigation settlement in connection with a terminated U.S. real estate development joint venture.
Excluding the impact of the above non-cash charges, for the fourth quarter of 2012 EBITDA would have been $6.4m, operating profit would have been $4.1m and net loss would have been ($1.7m), or ($0.04) per diluted share.
- 60,000 Seats in its two Iraq soccer stadiums
- 40 Hill's team working in Iraq
- $480.8m Hill's global revenue for 2012