China State targets design-and-build contracts
The contractor is eyeing D&B contracts with its own stake in the projects, employees working at the City of Lights development told Construction Week
China State Construction Engineering Corporation (Middle East) (CSCEC ME) will target a greater number of design-and-build (D&B) contracts in the future, company officials told Construction Week.
CSCEC ME representatives working on Al Reem Island’s City of Lights project argued that the strategy would help to compensate for the Middle East’s increasingly price-conscious construction market.
The contractor added that is also looking to invest in more of the projects on which it works.
Commenting on how the Gulf’s construction sector has shifted since the financial crisis, Mohammed Faiz, CSCEC ME’s project manager at the City of Lights, told Construction Week: “[Nowadays] clients are more aware of the actual costs. In turn, contractors are more aware of cost savings and how to control budgets.
“These are positive trends. One thing that we noticed, however, was that some clients would try to delay payments to contractors. They were trying to reserve their funds. The problem is that now, even though the market is improving, they are behaving in the same way. In fact, this problem is not limited to contractors. Everybody – suppliers, subcontractors, consultants – is facing the same problem when it comes to late payment,” he explained.
With this in mind, the CSCEC ME project manager argued that it makes sense for contractors to increase their involvement with projects from the outset.
“I think the best option for contractors is to enter into deals with stakes in projects,” said Faiz. “Providing of course that the project in question is viable, D&B contracts – with some funding from the contractor’s side – make sense. You have more control over both the projects themselves and payments. In my opinion, this is the way we should move forward.”
Chen Zhonghua, the contractor’s deputy project director and chief representative, added: “This is the way we [CSCEC ME] are heading. We want to play a part in the financing of projects, and then act as the contractor also.
“The earlier we, the contractor, become involved in the design process, the more chance we get to look into the construction and cost efficiency of the building,” he concluded.