A long Road Ahead
The overall mood at the CWQ Infrastructure Summit was a positive one
The overall mood at the Construction Week Qatar Infrastructure Summit was a positive one, but there is much to do if the country is to meet its 2022 and 2030 goals
It’s likely that when the World Cup is over and the National Vision of Qatar comes to pass, 2013 will be considered the year that he infrastructure programme really got moving. There has been no avalanche of deals, but contracts have begun to trickle down from Ashghal, with many of the country’s key projects underway.
Key to making Qatar a better place to live and work is the infrastructure programme; with the advancement of Doha’s transport system essential to attracting top professionals from abroad to work and wealthy tourists to visit. The importance of the projects to improve Qatar’s transport network was not lost on delegates and speakers at the conference.
Asked to name what they felt was the most important of the country’s infrastructure projects, there was an eye-catching split.
The project that garnered the largest share of votes was the Doha New Port, with 37.5% of delegates deeming it to be the most important piece of work, while the Highways were voted as the most important project by 28%. The Doha Metro accounted for 22%, with the new Hamad International Airport drawing the vote of 12.5% of attendees.
The topic of transport infrastructure was the first on the agenda at the summit, with the keynote speaker, Rod Stewart, managing director of Atkins Qatar, joined on stage by Asif Shafi, vice president of Parsons, and Calvin Jungquist, with the discussion moderated by Anthony Holmes, the co-founder and chairman for the Institute for Infrastructure Studies, and the chairman of British Consulting Studies.
Shafi kicked off proceedings by praising Qatar for learning past lessons in the region. “A lot of work is going on the transport side of things and typically you’d have different agencies looking after the various modes like rail, roads and so on.
It becomes important that these modes are integrated for the end user, so that the experience is seamless, which is a challenge.
“But I think Qatar has taken on lessons from other countries, some of which are in the Middle East, and a lot has been done to make sure the experience is a good one. Time has been taken in the planning phase, so where you have an international visitor arriving at the airport, they will be able to be connected to the Doha Metro.
In addition, the metro itself is being connected with the different communities that are being built around the city, so people can easily use the services.”
With Qatar having already secured football’s showpiece event, the country is looking to hold more events, the Men’s Handball World `championships in 2015 a good example of the country’s ambition to become a preferred location for top sporting events. But such a target will weigh heavily on the country’s infrastructure system, Jungquist told attendees.
“Qatar is bringing in world class sporting events, so you have a big demand on the airport, as people will be coming from all over the world to see the events. If Qatar keeps expanding and putting on these world-class events, the infrastructure has to be in place for that and that puts pressure on the airports,” he said.
The conversation was punctuated with thoughts on countries in the GCC taking a collaborative approach to their transport infrastructure, making travel across the region easier and strengthening ties between the member states.
“All of the GCC countries have made a commitment to deliver their part by a certain date and a lot of progress is being made,” said Shafi.
“There are a number of options about how Qatar can be involved in that. Eventually there will be a rail network that will allow people to travel between the capital cities in the GCC quite easily, and there will be work to make customs an easier progress. There is potential for a GCC wide visa that would certainly make the GCC a more attractive place to live and work in.”
Picking up the theme, Stewart said: “I think there are parallels with the European Union and the transport links in the 1980s. The GCC has the potential to become another federation of countries that has common transport links and, maybe one day, a common currency.”
With the first panel discussion wrapped up, attention turned to the subject of tendering – a topic which split delegates almost down the middle, according to Construction Week Qatar’s poll at the conference. Asked whether they thought ‘Ashghal has handled the infrastructure tendering system well in 2013’, 54% said yes and 46% said no.
With Holmes once again overseeing proceedings, Salim Jarrar, general manager of Al Khayyat Contracting and Trading and Enrico Grino, head of structured and product finance at Qatar National Bank were the expert speakers. “The lowest bidder is the most expensive in the end and I think we need to change the strategy that is currently in place,” said Jarrar.
“If I was working on the General Tender Committee I would not give the lowest price a winning tender.
“I think that a large percentage of contractors do not know how to properly work out their costs.”
Grino said his work with the Middle East’s largest bank had led him to find the same thing. “We do see that people are not considering risk when tendering. In risk assessment, we look into the bidding terms, and we actively analyse and break down proposals from customers who want to borrow, and we’ve found that one of the key risks is underbidding to win the contracts.”
The complaint is a common one; firms keen to secure a piece of the market or get their foot in the door in Doha can do so by making lowball offers, with the risk then being passed onto sub-contractors and suppliers further down the chain. It is a situation that is favouring clients, said Jarrar, with the penalty/reward terms something of a one-way street, although there is hope that the model could soon change.
“It should also be said that the contracts are very one sided and in the favour of the clients. For example, if there are penalties for finishing late then there should be incentives for finishing ahead of time, but there is no such thing.
“I think the change away from fixed pricing is coming. I signed a contract last week where the client understood the incentive and wants the project finished in eight months. So the same percentage that we would have subtracted for an overrun will be added should we finish early. Things must change if the vision for 2030 is to be achieved.”
The prospect of change was also on the agenda when the talk turned to labour – a subject that has seen Qatar on the receiving end of predominantly negative worldwide headlines. But aside from conditions, many industry professionals are fearful that a labour shortage could stunt the infrastructure programme – a prospect made all the more real by Dubai’s 2020 Expo win, which will see a significant influx of workers.
Asked whether companies will be able to keep up with labour demands at the height of the market in Qatar, 73% of delegates responded negatively, with just over a quarter (27%) saying they thought firms would be able to keep pace with demand.
Joining Homes on stage for the discussion on managing labour was Steven Miller, senior vice president of Shapoorji Pallonji and Dawood Ozair, senior managing director of Al Futtaim Engineering, with Jarrar on the panel once more.
The spectre of working conditions was soon addressed, with Miller telling attendees: “The improvements in living conditions started in Dubai before the crash where the labour accommodation was becoming better and that is continuing.
In the UAE, New York University joined up with Abu Dhabi to build a campus for 20,000 students and they wrote into a tender document that the workers had to live a certain way, so that took it up a level.
“Somebody in the region is taking notice of labour conditions and accommodations, and you have some countries are dropping exit visa requirements. You can train somebody and they can leave, so you have to ensure these workers are living well.
"We need to get real about it, we can’t expect to build a labour facility for x amount, it’s going to cost more, but it will still be much cheaper than the equivalent in Europe, America or Australia.”
Ozair added that the sponsorship system means that companies are duty bound to provide a consistent level of care, training and attention for their workers.
“What we do is make sure we have a good selection policy and we do not just dump people on the site on day one. We bring them to the country; we train and monitor their performance. We have to make them comfortable, ensuring they are well managed and well trained, as sometimes they may not even speak the language,” he commented.
The prospect of shortages and subsequently a rise in cost of materials was also a hot topic with attendees and delegates alike, with demand set to increase significantly in the coming years.
In the final set-piece discussion of the day, Regard Yakou, president of Hill International, Marek Suchocki, business development manager for Autodesk, Saleh Al Tayeb Mubarak, associate professor at Qatar University, and Steven Humphrey, director of cost consultancy at AECOM sat down to discuss the issue.
Addressing the problem, Humphrey said companies all the way down the chain would be impacted. “Going forward, we are going to see greater pressure and greater risk with labour and material supply and availability, and it will affect everybody from consultants to contractors,” he commented.
“Because Qatar relies on importing so much, if it becomes difficult to bring them in, suppliers elsewhere will deliver to other markets as it will be quicker for them to do so.
Over the last two or three years, we’ve not seen projects delayed because of issues surrounding labour and materials, but I think that going that will be something which happens.”
Suchocki said that the issue could well see prices of materials rise markedly, meaning projects could grind to a halt, putting real pressure on Qatar’s infrastructure deadlines.
“There will be a limit as to how much clients and contractors will be prepared to pay. If the contractor has a fixed price, they won’t be able to pay three times as much. There comes a point where they will decide that they can’t build and they’ll just walk away.”
The panel also covered the problem of project delays. “Most projects in the GCC have delays and these are not minor delays, they are major delays,” said Humphrey.
“The problem is that in the West, all money is borrowed, so every minute counts as interest rates get higher, so the main emphasis is to get a project completed on time.
The other reason I think that we have problems here is that we have the tools in the US to get projects complete done time. For example, the previous panels spoke about leverage and labour, and in in the West we have got past those problems.”