A word of advice

Qatar presents opportunities for infrastructure advisory services

Ian Kennedy
Ian Kennedy

The level of infrastructure spending makes the GCC an attractive place to be providing our infrastructure advisory services and, within the region, Qatar stands out for both the scale and concentration of its infrastructure programme, which is somewhere in the region of $250bn over the next five years.

Whilst Qatar has a development plan reaching out to 2030, a large proportion of its infrastructure must be built in time to service the FIFA World Cup in 2022. Such a volume of infrastructure development in such a geographically small area makes it a sensible place to locate an advisory business.

The level of infrastructure investment being implemented in Qatar is significant and as a result many international firms see opportunities here. The types of infrastructure projects being delivered necessitate sourcing of specialist skills in infrastructure financing and delivery, and will therefore require the involvement of firms that can provide that.

Whilst many capabilities will be provided by Qatari firms, there will be a requirement to procure services internationally from companies with deep experience in these types of projects, particularly from the large engineering, construction and design companies but also from small niche advisory firms like ours who operate within a specific field of relevance.

But there are challenges; internationally, infrastructure projects continue to have significant problems being delivered on time and on budget and the Qatar investment programme will be no different.

Given the immovable date for the World Cup, there is no scope for delays so the Qatar government is going to have to work exceptionally hard to ensure these assets are completed on time. Indeed, the government should be asking itself what it is doing differently from other governments in order to ensure timely delivery.

Secondly, the sheer levels of infrastructure investment planned over the next decade will undoubtedly lead to demand-side inflation for both services and raw materials. It will be imperative for the Government to take action to ensure continuity of supply for both of these resources.

In addition, Qatar also has its fair share of regulatory pressures, not least of which is the difficulty of obtaining work visas for international staff. Streamlining of this activity will be needed to smooth the flow of construction services to the country.

Lastly, the majority of project failures are due to poorly constructed commercial models and in particular to highly punitive contract structures that penalise non-performance rather than incentivising good performance. Current practice in the region is heavily skewed towards the former.

This will need to change as complex infrastructure projects like rail and airport developments are particularity susceptible to problems that can only be resolved using collaboration between project parties.

Qatar would do well to look at adopting some of the more collaborative commercial structures that are now in use in the UK, as these have been proven to reduce risk and deliver more effectively.

Globally, the future is looking positive and there is a significant upturn in planned infrastructure development over the short and medium term. In the GCC, many countries are finally starting to tender in earnest and the amount of projects coming to market is going to increase sharply.

There have been some delays in Qatar on the procurement front but with the airport almost complete, the GCC rail project finally getting underway and of course the major stadia developments, we feel the market is progressing nicely.

Ian Kennedy is co-founder of the Institute for Infrastructure Studies

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