Face to face: Vedat Koca, STFA Oman
Vedat Koca says in order to succeed in Oman you have to think like a local
STFA Oman country manager Vedat Koca tells Yamurai Zendera that thriving in Oman is about adapting ways of thinking to reflect the local environment
Establishing a construction firm in a foreign country is one thing. But making a success of it is another thing entirely. Vedat Koca, however, seems to be making a decent fist of things at STFA Oman – a subsidiary of Turkish parent company STFA Group, which has been operating in the Sultanate since 2000.
Koca, who is country manager for the firm, is not one to give away too many secrets, but some of the challenges to building a business in Oman are fairly well-known – a long-winded registration process, a lowest-bid-beats-all culture based on competitive tenders, severe lag times between project awards and start dates, embracing Omanisation and dealing with corruption issues (although the government has made serious strides in the last year to curb this, with a series of high-profile convictions and signing up to the UN Convention against Corruption).
However, it would seem STFA has, to an extent, been able to navigate this minefield and keep winning work – especially in the marine and infrastructure sectors.
For Koca, the key to operating in the Sultanate is simple. You have to think like a local. There is no point going in and trying to superimpose your own philosophy. You have to adapt to your surroundings.
“If you want to be here, then you should think locally,” he says. “You should think of the market conditions, the country conditions. Then you should give a price.
“If your pricing level is not competitive with the market, then why are you here? Don’t come.”
Koca elaborates further, saying that SFTA Oman is not merely a branch office but a fully-fledged Oman-registered company which announced itself 14 years ago with the expansion of the Port of Sohar. The strategic value of being firmly entrenched in Oman is fully supported by the company’s hierarchy back in Turkey.
“This is our strategic place. Maybe more strategic than Turkey because Oman is near to Pakistan, India and Africa. We can mobilise easily from here and still we are competitive in Oman,” he says. “Oman has a lot of projects and we should be in the country.”
Koca, in many ways, is the embodiment of SFTA’s studied approach to Oman. Take his office in Muscat, for instance. On one of the walls hangs a whiteboard containing all the projects for which it is either bidding, has recently won, or lost.
To the untrained eye, it appears as a multi-coloured morass of words, numbers, tables, ticks and crosses. To Koca, however, it makes perfect sense and he could not do without it. He points to one particular mark on the board – a tender it has missed out on. It needs crossing out.
“Everything in construction is a risk. Even if you are dealing with infrastructure, it’s two times more maybe because you are fighting with nature,” he says. “We are calculating our tenders and also putting risk and opportunity in another table.”
You almost get the impression Koca runs his office like the nerve-centre of some military operation – he being the arch-strategist, probing for opportunities, making sure to sidestep potential pitfalls. Perhaps that’s another one of his secrets for success?
He has one particular tender document spread across his desk, for the construction of a flood protection dam at Wadi Ghumdah in Wilayat Bukha, Musandam. He explains his interest is piqued as it ties in neatly with one of its ongoing road projects in nearby Tibat.
“The biggest opportunity in this project is that we have a camp in Tibat. We have mobilisation there. Therefore, we have an opportunity. I’m interested,” he says. “If I see some more opportunities when I’m checking all the documents properly, then I will propose to the head office in Turkey to go or not to go. They will evaluate my proposal and they will agree or they will not agree with me.”
Other tenders scribbled on the whiteboard that it has bid for include the 300km Duqm gas pipeline with Fernas, Duqm Fishery Harbour with Consolidated Contractors Company, Salalah Outflow and the prequalification stage of the $1bn Diba-Lima-Khasab road project with Habtoor Leighton Group (HLG).
Under preparation are tender bids for Batinah Expressway (packages 7&8 with Yuksel and packages 9&10 alone) and enabling works at Mirbat Naval Base. On the Oman Royal Police Hospital project in Muscat, which was on the board, Koca cites having “seen risks” as the reason for aborting a joint bid with Polimek; while its parent company’s joint bid with OHL and Bahwan Construction Company on the $15bn, 2,235km-long national railway project failed to pass prequalification.
He leans back in his chair when asked to sum up the year. One can only surmise from this reflex action that it hasn’t been without its moments.
“First of all, forget about our goals. We have a commitment with our clients. We should deliver on our commitments,” he says earnestly.
“Secondly, we had some targets for this year to take new jobs and increase our backlog. However, for this year we couldn’t reach the level we had targeted because you give one offer and then someone is lower than you and they take the job – that’s the reason.”
Koca is not panicking, though. He maintains that next year’s revenues will increase, in part as a result of delayed projects from this year appearing in next year’s order book, as well as new project wins. The delayed projects in question are the $108.8mn Khasab-Tibat Road in Mussandam, which he is thinking about leveraging for the flood protection dam tender, and Mussanah Fishery Harbour.
At the former, the letter of award (LoA) from the Ministry of Transport and Communications (MoTC) was received in January. However, due to a technicality, the commencement letter only arrived in September. Koca says he used the intervening period to start the approvals process for the quarry and to set up the site office. A risk in the sense that the commencement letter hadn’t arrived, but a calculated one given that it allowed the project to get off to a fast start once the paperwork was sorted.
“There is no loss from our side or from the client’s side but obviously the people (road users) have been suffering bad conditions for this period,” says Koca.
The scope of work involves additions and improvements to the coastal road. The project comprises the construction of a single carriageway road, with additional maintenance work along the route, which is susceptible to rockfalls along certain stretches. SFTA expects to have around 600 staff deployed at the project peak, with a completion date scheduled for Q4 2015. Around 50 staff are currently present during this mobilisation stage.
Meanwhile, at the $33.5n Mussanah Fishery Harbour project, the commencement letter is still to arrive despite the contract being signed in December last year. Koca says he has made allowances for this.
“We are taking into consideration all of these conditions when we are making the strategic decisions of our company,” he says. “For example, in the 2015 STFA Oman budget I have included Mussanah. I have planned for us to start in March.”
The Ministry of Agriculture and Fisheries project is similar in nature to the $34.5mn fishery harbour the builder is constructing for it in Taqah, which is due to complete in February. Also in Mussanah, STFA alongside SMC Infra is designing and building a $20.5mn sewerage treatment plant with associated network and infrastructure for the Ministry of Regional Municipalities and Water Resources. The project started in July and completes in January.
Repair work to three bridges in Fanja, Thumayd and Al Amqat for the MoTC is its smallest ongoing project ($3.3mn) and Koca says it is being undertaken by subcontractors.
Its biggest ongoing commitment is Bidbid-Sur Road Section 1B with HLG, which has had its original target end date of the end of this year pushed back to March 2016 because of a variation from the MoTC.
The joint venture will add a third lane in either direction to the 75km stretch, for which it will receive an extra $59.7mn payment, bringing the total project cost to around $346mn.
“It’s not so big because when we did the foundation it was done as a 3x3 carriageway,” says Koca. “Therefore it’s just asphalt widening. It’s not a design change.”
Around 2,000 workers including subcontractors are currently deployed and work has reached the halfway stage.
The project includes a major bypass where the road alignment deviates from that of the existing road to avoid the populated urban area of Ibra with a second minor bypass of 6km to improve the road alignment. Koca says the Ibra bypass will be ready by the end of this year.