Talking transport

Oman's infrastructure program is opportunity to deliver major projects

ANALYSIS, Business, Oman, Transport

One thing that you can guarantee from conferences in Oman is that you will always get an honest debate. Why exactly, it’s hard to say. Maybe it has something to do with Omanis’ fabled easy-going and welcoming manner that makes everyone more open.

At Construction Week’s second Leaders in Construction Oman summit in Muscat, moderator Sachin Kerur, head of Gulf at law firm Pinsent Masons, touched on this point in his opening address when he told delegates: “I have to say coming to Oman to do conferences, indeed last year’s in particular, you do get the best level of debate, controversy [and] outrage probably than anywhere else in the region.”

Indeed, there was a full house, which is always a good sign that people have come to engage in serious debate rather than simply enjoy a few hours out of the office.

Several of the local newspapers on the day of the conference led with a story about work on a public transport masterplan (PTMP) for the capital city, Muscat, stating that it would be completed by the end of this year.

Once ratified, it will lead to the creation of a better bus network and at later stages can be integrated with bus rapid transit (BRT) and light rail transit (LRT) systems. The plan is a response to a rapid population growth and traffic congestion in certain areas of the city.

Clearly, transport and infrastructure is a big issue in Muscat and the rest of the Sultanate, whose current five-year spending plan ends in 2015. By the same token, it was also a big deal on the day for delegates.

While no-one believed that Oman’s spending on transport was unwise, there were fears expressed that it would run into increasing competition for resources from regional neighbours who are also upgrading their civil infrastructure.

“Oman has got a big programme, especially for rail and roads,” said Melvyn Ford, senior contracts and commercial manager at Hill International, whose firm is project manager on Muscat and Salalah Airports. “So, within the region they are in competition with all these countries for resources

“Oman tends to do things the more balanced way. It doesn’t jump in and build things for the sake of prestige. It tends to look a bit more strategically.

“The railway project was a great example, picking up the ports in Salalah and Sohar to avoid going through the Strait of Hormuz and the Arabian Gulf – the idea being that you can connect to a federal railway system which will run the whole region. That should be very good for the country.”

Improving infrastructure is seen by Port of Sohar officials as going hand-in-hand with its own expansion plans. Mahdi Al Lawatia, manager of assets development at Sohar Port and Freezone, said that a soon-to-be-completed OR8.5mn ($22mn), 142km road (Ibri-Tanum-RamlatKhiela) connecting Oman to Saudi Arabia from Sohar that is 500km shorter than the existing route is vital to the organisation.

“Primarily it is for the transport of goods and containers to Saudi Arabia instead of going through Dubai and Qatar,” said Al Lawatia. “Now, we can cross through Ibri and then on to the Saudi Arabian border. That’s a project which we have initiated long back to government – but they hand over to design it and float a tender for consultants and then to construct it – and then it got really delayed in awarding the project (it was awarded in early 2012).

“Moreover, from here we are pushing politically to get Saudi Arabia to have their connecting road to the border of Oman completed. However, this is again delayed from their side. But at least at the end of this year it should be completed from our side and from June next year it should be completed from the Saudi Arabian side.”

Al Lawatia said the initial plan was to have the road open before Sultan Qaboos Port closed in August given that its commercial activities have now switched to the Port of Sohar.

“That’s a very good link road for all our logistics and even our end users down here,” he said.

“And again all these ships would prefer if there is a direct link – if it would be a train that would be perfect – from us to Jeddah or to Riyadh instead of ships having to sail on the Red Sea to Jeddah and hand over their containers down there.”

Meanwhile, Ahmed Elhassan, senior director at Omran, the Oman government’s tourism development arm, said that the infrastructure is currently being developed for its Oman Convention and Exhibition Centre project in Muscat. He said it was part of a masterplan to ensure the development was connected to Muscat International Airport by a series of interchanges off the Muscat Expressway.

“The municipality is finalising the interchanges around us. One has been completed and the interchange that will take you directly into the new terminals at the airport will be completed in about three months,” said Elhassan. “That direct link to the airport is very important to us. Traffic management around the site is paramount.”

But Ford said Oman could end up with a more costly bill for its new infrastructure projects if it doesn’t look at different methods of procurement, pointing to approaches pioneered by the UK such as alliancing and collaborative management.

“This national railway line is such a major strategic tender, if you do it the traditional way as it’s been done before I can foresee that if they have a 10-year programme, they’re going to take 15-20 years to do it and it’s going to cost them three or four times more,” he said.

“I’m talking more to do with your standard contracts,” he said.

He argued that the Arabic version of Oman’s standard contracts was revised in 1999 but contracts written in English have been around for a long time (since 1981) and have had so many revisions that they are full of loopholes, stating that “you can drive a bus through them”.

“I think it’s more to do with mentality. There are new techniques like collaborative management where people work as teams and work together from day one.”

Simon Chambers, a partner at Godwin Austen Johnson, said that from an architect’s point of view there is a tendency in the region for contracts to be onerous.

“There’s a lot of responsibility and risk put back on the consultants. That’s a combination of various people having different inputs in projects and trying to cover themselves so much that they become complicated,” he said.
“We have got several projects where we are working on a letter of intent and we’ve almost completed scheme design, which is the second stage, and we haven’t got the contract signed. And deliverables can be very onerous as well – that’s not just here, that’s in the whole Middle East.

“At concept you don’t want too many deliverables, because ultimately the project is in flux and the client is looking at different options and designs. And if you have a lengthy list of deliverables, you end up doing too much and then projects change and you have to do it all over again. But quite often if you can sit down with the client and talk them through the process and let them understand better how you work then those things can be tweaked and changed.”

Local contractor Al Ansari Trading Enterprises also agreed that Oman can do much more to improve contractual issues if it is to deliver these massive infrastructure projects successfully.

“I understand that the Ministry of Labour is revising contract laws and that’s my understanding because our managing director is also vice-chairman of the Oman Society of Contractors,” said Deepak Seru, general manager (civil projects) at Al Ansari.

Al Lawatia said the Port of Sohar had managed to convince the government to allow it to use different forms of procurement based on FIDIC rather than Oman’s standard construction contracts.

“Here at the Port of Sohar we base all our contracts on FIDIC. We tailor it through our lawyers and we put a part of the contract, the amended clauses, in the tender documents. So during the tender, bidders can verify, they can qualify if they are happy or unhappy with it,” said Al Lawatia. “We can do that because we have got our own major tender committee.”

Perhaps Oman does face issues surrounding the delivery of its key infrastructure, but if a more honest and open debate is starting to form about how it can overcome these from all of the stakeholders involved, then surely there is no reason why it cannot overcome them.

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