Face to face: Patrick McKinney, BAM International
BAM International’s Patrick McKinney tells Paromita Dey that tight deadlines, price fluctuations, and human resource shortages make selectivity crucial for contractors bidding on projects in the Middle East
“Looking back at the past 20 years, 2015 has been our best year so far, owing to the number of good contracts that we have won across the GCC,” begins Patrick McKinney, area manager for BAM International’s Middle East operations.
The Middle Eastern arm of Royal BAM Group earned $270m (AED1bn) in revenues in the first half of 2015. The company has also been awarded contracts from across the GCC during this period.
McKinney believes that the year will only get better for the Dutch contracting firm, which is tipped to win more contracts in 2015.
Established in 1958, BAM International works in all major global markets. Much of the company’s growth can be attributed to its diverse portfolio of projects, ranging from high-rise buildings and football stadiums, to fishery harbours and LNG terminals.
“We look for niches in the market,” McKinney tells Construction Week.
“We like to bid for [construction] projects that are complicated, require a lot of engineering, and are well managed. So projects like football stadiums, hospitals, and jetties always interest us,” he adds.
With a focus on “delivering quality”, the contractor has built a solid reputation in the GCC; for this reason, BAM International can afford to be selective about the number of contracts for which it bids, says McKinney.
“Reputation is extremely important, so we are careful about the number of projects we are going to bid for,” he explains. “This year, we have bid for as few as 11 projects in the Gulf, which is extremely low as per the market standards.”
Labelling the company a “selective bidder”, he adds: “We only bid for [projects that] we believe we can add value to.”
In the UAE, BAM International is currently working on: Phase 1 of Terminal 4 at DP World’s Jebel Ali Port; Phase 2 of Al Ain’s Hazza bin Zayed Stadium; and a $90m (AED330.58m) project for Abu Dhabi Company for Onshore Oil Operations (ADCO), the onshore division of Abu Dhabi National Oil Company (ADNOC). In addition, the firm has secured a different DP World project at Sharjah’s Hamriya Port.
Most recently, BAM International delivered Jordan’s liquefied natural gas (LNG) terminal near the city of Aqaba, two months ahead of schedule. McKinney is keen to work in Jordan again.
“We are looking at other projects in Jordan. In fact there is a port extension project [we could work on], and we believe the documents will be out in a couple of months,” he adds.
BAM International has submitted a bid for the EmiratesLNG project in Fujairah, in a joint venture (JV) with Samsung C&T. McKinney expects the contract to be awarded by the end of this year.
McKinney reveals that the contractor is also in pre-qualifying stages for several Omani developments, including a project at Port Salalah and another in Sohar’s Duqm Special Economic Zone.
Meanwhile, the firm is eyeing Qatar’s Saoud bin Abdulrahman Stadium, which it is hoping to tackle in a JV with local firm, Urbacon Contracting. The project award is expected between the end of 2015 and early 2016.
McKinney goes on to say that regional challenges excite him.
“The complexity of the projects, the speed at which they need to be completed, and the associated challenges; there are not many places in the world that can offer such challenging circumstances.”
But business isn’t always easy in the GCC, McKinney adds. For one, he says that clients still prefer to award contracts based on pricing: “The [sophisticated] clients are moving away from it and tend to look at your technical ability, quality, and safety [offering]. But still, there is a great deal of pressure on the industry to award the lowest bidder, which makes it extremely difficult for contracting companies like us.”
With fluctuations in oil and commodity prices, governments are also looking to cut expenditure on construction projects, which could dry up opportunities available to contractors, McKinney adds.
“The oil and the commodity prices definitely underpin all the confidence in the market. It would be a cause of worry if the downfall continues and the governments spend less on infrastructure.”
Human resources, a topic hotly discussed of late in the GCC, also play a crucial role in the effectiveness of a contracting firm’s operations. Procuring talent is a challenge, McKinney admits.
“Finding skilled labour is always a challenge in the Middle East. It’s always in demand,” he explains.
“When things get busy, getting the right labour is a struggle. The strengths of the company lie in its people, so we tend to retain staff who have been with us for a very long time.”
But BAM International has seen its fair share of labour challenges, most prominently during the financial crisis of 2008 when it had to make lay-offs.
“But we maintain a database in our office; we can track everyone who has left,” McKinney points out. “So when things improve, we take those men back again.
“The wages are compatible with everyone in the market, as also are our accommodation and safety standards. So people are always keen to come back.”
Looking ahead, BAM International is keen to strengthen its presence in Asia by bidding for projects in markets like India. In the GCC, the contractor is looking to find the “right project” in both Kuwait and Bahrain, and has also set up an office in Saudi Arabia – though it is yet to bag suitable projects in the Kingdom.
McKinney says tough trading conditions in the Eurozone have driven BAM International to continue growing overseas, and the Middle East will continue to reap rewards for the firm.
“Owing to tight margins [in Europe], our parent company has decided to lay huge emphasis on the overseas markets – particularly the Middle East – which currently show great prospects,” he concludes.