Judges quizzed ahead of the CW Oman Awards 2016
The Construction Week Oman Awards 2016 are almost upon us, but before the winners are revealed, this year’s judges and sponsors offer their expert perspectives of the Sultanate’s construction landscape
The most exciting night in the Sultanate's construction calendar is almost upon us: the Construction Week Oman Awards 2016.
Now in their fifth year, the 2016 awards, will see more than 50 shortlisted nominations go head to head across 13 industry categories. For each category, one winner will be selected by an independent panel of judges. But before this year's victors are announced, Construction Week has quizzed its judges and sponsors to gauge their perspectives of the Sultanate's contemporary construction landscape.
Despite the high quality of nominations submitted for this year's awards, there's no getting away from the fact that these are challenging times for construction firms in Oman – and indeed, the wider Middle East.
Adam Murray, country lead in Oman for Hill International and one of two judges put forward by the company, elaborates: "The sustained drop in oil prices is posing obvious challenges to new investment across the industry. New projects are being proritised and consolidated. However, we are beginning to see the implementation of government strategies to help alleviate these constraints, such as incentivising private sector investment, the utilisation of alternate project financing models, and sovereign debt restructuring."
CW Oman Awards judge Andrew Bowler, associate director at Hill, agrees with his colleague's assessment, but warns: "As companies are facing tough times, I expect that some will have no choice but to take more disputes to arbitration to obtain resolutions."
Simon Ward, CW Oman Awards judge and partner at Curtis, Mallet-Prevost, Colt & Mosle, also expects the difficult construction climate in Oman to persist.
"The sector is slowing and facing challenges due to the decrease in oil prices and reduction in big-ticket projects," he explains. "There are still many opportunities, but [there is also] increased competition and a need for flexibility due to the stop-start nature of works awarded pursuant to smaller tenders.
"In 2016, I predict uncertainty for some projects, such as rail; a shift towards public private partnerships (PPP) in power and wastewater infrastructure; prioritisation of essential and high-revenue projects; and fewer foreign companies establishing factories," Ward adds.
Encouragingly, such challenges have not pervaded all sections of Omani construction. On the contrary, Danny Holtkamp, marketing manager at CW Oman Awards' official aluminium extruder, National Aluminium Products Company (NAPCO), says that 2015 was an excellent year for his employer.
"It was the biggest year in NAPCO's 30-year history," he tells Construction Week. "We grew 45% in volume, and our revenue increased 30%. Our expansion is at its final stages, and we now house four extrusion presses with a capacity of up to 42,000 tonnes per year. Our vertical powder coating unit is also now operational, and we are able to accommodate lengths of up to 8m, which very few extruders are capable of. Along with our horizontal unit, our powder coating capacity is now 27,000 tonnes per year.
"NAPCO plans to be very competitive in 2016, and increase its market share in Oman and the rest of the GCC," he notes.
Ahmed Elhassan, CW Oman Awards judge and senior director at Oman Tourism Development Company (Omran) agrees that – challenges aside – the Sultanate is replete with opportunities, as developers seek to "take advantage of low commodities pricing and contractors' eagerness to land more work".
Elhassan continues: "During 2016, I expect to see more focus on sustainability in general, and energy efficiency in particular. I also [predict] that contractors will strive to reduce their overheads in order to remain competitive in current market conditions."
But as Omran's senior director suggests, opportunities are relative to one's position in the supply chain. CW Oman Awards judge Alan Johnston, project director at KEO International Consultants and representative of the Chartered Institute of Building (CIOB), foresees a slowdown over the next 12 months.
"The construction industry in Oman is reasonably busy at present, but the outlook for next year is not looking so good," he says. "Indications are that tendering will be very competitive towards the end of 2016.
"I expect to see a general slowdown towards the end of the year. CIOB has recently met all the main contractors and most are desperately looking for new work for 2017. There are definitely going to be major lay-offs in terms of labour supplies as a result," Johnston laments.
Speaking from a contractor's perspective, CW Oman Awards judge David Skinner, director of Al Turki Enterprises' (ATE) Civil Construction Division, says that an improved payment culture would help matters.
"There is an overcapacity in the market at present," he notes. "Margins are tightening and the settling of final accounts often takes too long, especially when there have been a lot of changes. But [ATE] will be positive, strive to be the best, and come out the other side in a more efficient condition."
Aecom, meanwhile, a Gold Sponsor of the CW Oman Awards, has adopted a long-term strategy in the Sultanate, identifying a selection of segments with potential for growth.
"Aecom is focused on prospects that support the Oman Vision 2040; namely, to diversify its economy and primary infrastructure," explains CW Oman Awards judge David Hutton, project director at the consultancy. "Our focus, therefore, has been on healthcare, tourism, food security, power, water, and logistics. We are also offering our services to review and value engineer major infrastructure projects due to be tendered or awarded. More recently, we have been sharing our global experience and lessons learned with regards alternative methods of procurement, particularly public and private partnership opportunities."
Sachin Kerur, CW Oman Awards judge and head of Pinsent Masons' Middle East region, concurs, noting that innovative funding models could encourage further development.
"Undeniably, with economic austerity and the new oil-price environment, we can expect a greater push for PPP, and consequently, a greater role for private participation in the sector," he notes.
"In parallel, the government's anti-bribery and anti-corruption campaign makes the business environment in Oman more welcoming to foreign investors generally. We can also expect that trend to be reflected in the construction industry," Kerur adds.
Nikolaus Knebel, professor of architectural and urban design at the German University of Technology in Oman (GUtech Oman), says that a holistic approach to development would significantly benefit the Sultanate.
"The [contracting sector] is only one part of the overall building culture, which also includes cities, communities, consultants, clients, craftsmen, climate [specialists], and the like," he explains. "When these elements interact, a balanced building culture can be achieved for the benefit of all stakeholders.
"Hard times can be good times, because financial constraints can lead to a healthy focus on sufficiency and efficiency – both of which are important categories in the discourse of sustainable buildings and urban design."
Nevertheless, Aecom's Hutton warns: "There needs to be more focus placed on quality contractors that deliver quality services, and place health and safety at the forefront of everything they do. Whilst the industry tends to have a viewpoint of the lowest fee wins, [price] should not be the only driver.
"Another problem is a lack of clarity with regards which infrastructure projects will proceed – and when. Consequently, clients may not be receiving the best efforts or prices from contractors," he adds.
Though Oman's construction landscape may be challenging, steps that are being taken to mitigate current difficulties could significantly benefit the country in the longer term, as Pinsent Masons' Kerur observes.
"Whilst [Oman's] government is sensibly planning for greater austerity, real estate and construction should be relatively spared," he says. "[This is because] the government has agreed to continue with a number of capital projects that are essential to Oman achieving a more diversified economy.
"In this light, I would suggest that there is still significant opportunity within the Omani construction market," Kerur concludes.
Meet the judges
Adam Murray, Country Lead – Oman, Hill International
Ahmed Elhassan, Senior Director, Omran
Alan Johnston, Representative, Chartered Institute of Building (CIOB)
Andrew Bowler, Associate Director, Hill International
David Hutton, Project Director – UAE, Oman, Aecom
David Skinner, Director – Civil Construction Division, Al Turki Enterprises
Nikolaus Knebel, Professor of Architecture, GUtech Oman
Sachin Kerur, Head of Middle East Region, Pinsent Masons
Simon Ward, Partner, Curtis, Mallet-Prevost, Colt & Mosle