In focus: the growing role of GCC cost consultants
Although demand for cost consultancy services is rising in the GCC, experts tell Jochebed Menon that raising awareness is still of the utmost importance
Progress on some GCC projects may have stalled during the past couple of years, owing to the low oil price, but the region’s retail, hospitality, and tourism sectors have continued to grow. As countries like the UAE and Qatar move ever closer to deadlines connected to events like Expo 2020 and the 2022 FIFA World Cup, construction outfits are witnessing the emergence of fresh opportunities.
According to the UK-based construction and property consultant, Thomas & Adamson, there are currently $350bn (AED1.28tn) worth of active construction projects in the UAE. Industry experts say that the cost consultancy market is currently growing at a good pace, in tandem with region’s construction industry.
Donal O’Leary, commercial services director of Faithful+Gould, feels that while public sector spending has reduced across the region due to low oil prices, the private sector’s need for cost consultancy has increased.
He says: “Private sector opportunities have actually risen in some areas, whereas bidding options have remained consistent. However, the current liquidity issues have hampered or delayed project appointments and delivery.”
For Zander Muego, director at Thomas & Adamson, the firm has not seen any direct correlation between the price of oil and demand for its services.
He says: “The UAE, fortunately, has the most diversified economy in the GCC. An active construction market, an expanding manufacturing base, and a thriving services sector are further helping the UAE diversify its economy.
“At the start of 2016, the marketplace, in general, was more subdued; this was partially driven by low oil prices and other macro-economic factors,” he adds. “Through 2016, we have seen an upturn in demand; this has been driven by an increase in new construction projects having commenced as opposed to a specific change in demand for cost consultancy services.”
As the market becomes more educated, developers in the region are realising the need to cut costs and find the most efficient ways to complete projects. For Clive de Villiers, managing director of C-Quest, “the demand for reliable cost advice has increased, as clients become more conscious of budgets and the need for controlling costs”.
Tech-savvy developers are realising the benefits cost consultants bring to the table, and this understanding is boosting the industry. Demand for independent cost consultants is on the rise as regional construction activity grows.
Muego adds: “We expect to see a general trend of increasing activity in the construction sector. If supported by the ongoing education of the market and recognition of the benefits that independently appointed cost consultants bring to cost-savvy developers, it will lead to a steady increase in cost consultancy service provisions. Having said that, the barriers for entry in our sector are relatively low and we expect to see increased competition from start-up entities, as we have seen over the past few years.”
While the market embarks on the path to increasingly acquire cost consultancy services, experts see a high demand from the residential, retail, and hospitality sectors.
O’Leary says: “Retail and hospitality are currently the busiest sectors for us with five regional and super-regional malls at various stages of design or construction, and numerous hospitality projects across the region.”
Muego has also witnessed high demand from the hospitality sector, and says that cost consultancy in the GCC is more client-driven than sector-driven. “As the UAE market matures, the experienced clients are recognising the benefits of having independently appointed cost consultants. Accordingly, we are also seeing strong demand with experienced private developers.”
He continues: “Some clients will incorporate what is often a relatively basic scope of cost consultancy services within the overall design and engineering packages, or as part of a wider project management consultancy role.”
O’Leary adds that, during the next five years, water, electricity, and renewable energy sectors will grow at a quick pace. He says: “Power [and] water will be prominent across the region – especially in Egypt, Saudi Arabia, and Oman – with the rise of independent water and power producers (IWPPs).
“Renewable energy and affordable housing will also be gaining traction. Government procurement trends towards project management offices (PMOs) in certain countries will drive integrated service provision, which allows our profession to demonstrate the reason we are integral to successful project delivery.”
Cost consultancy has evolved over the years, with consultants now questioning the principles of design, approach, and methods of procurement; the use of pre-fabrication; and providing a greater level of precision, including estimation of escalation.
De Villiers says: “[There is] demand for a greater level of accuracy, including projection of escalation. In most sectors, clients now require substantiated bench-marking from executed contracts."
For Muego, cost consultancy is now more than just material selection. He claims: “There is a growing expectation that cost consultants add value, not through the quality of the documentation they produce, which is now expected as a given, but through professional advice and collaboration with the design team to identify the most cost-effective way to achieve the project brief.”
O’Leary points out that the industry continues to evolve “to meet ongoing challenges, embracing building information modelling (BIM), and tailoring software development to clients’ requirements”.
In the future, experts expect to see higher demand for value engineering and a greater influence of technology. Muego explains: “We see technology impacting our industry in the form of BIM, which will result in significant changes to the way traditional measurement roles of a cost consultant’s scope are carried out.
“This means that the software currently being used for measurement will evolve, and new platforms with more efficient processes will enter the market, both of which are happening already.”
De Villiers also points out that there will be a greater need for value engineering services across the board. He says: “[We see a] higher demand for value engineering services in all sectors. Also, budgets will be required to cover not only construction, but also full development costs, including facilities management projections.”
A subsidiary of KEO International Consultants, C-Quest is supporting a number of projects in the region. De Villiers says: [We are providing] value engineering on the 80,000-seat Lusail stadium, where the [2022 FIFA World Cup] final will be played, having been successfully awarded the design and build (D&B) contract.”
The firm is also working on detailed master-planning for a number of projects, including the 1,400ha Yiti and Yenket site in Muscat; a 230ha sector of Lusail, Qatar; a 700ha Wedyan site in Riyadh, Saudi Arabia; the interior design, including furniture, fixtures, and equipment (ID/FFE), for Al Shaya’s new corporate headquarters in Kuwait; and the proposed Ozo hotel in Dubai.
Thomas & Adamson is also working on a number of projects in the UAE. Muego elaborates: “We are currently supporting Emaar in the Emaar South development of Dubai South. This development is primarily residential, but also comprises retail, schools, hotels, and a golf course. The infrastructure works are currently, with [Phase 1] of [the] residential development up for tender.”
He continues: “We also have the privilege of supporting a number of Abu Dhabi government entities on a project that will create a high-profile destination for both tourists and residents, once complete.”
Faithful+Gould’s project portfolio, meanwhile, includes Gulf Related’s Al Maryah Central and Saadiyat Rotana projects in Abu Dhabi; Deyaar’s Midtown residential development in Dubai; an executive jet terminal in Dubai South; Aldara Hospital and two large malls in Riyadh; and Festival City in Doha.
Despite high levels of activity, one of the biggest challenges currently facing cost consultants is talent attraction. Muego explains: “The main challenge this sector faces is attracting the best global talent. A good cost consultant needs strong analytical and numerical skills, a sound knowledge and understanding of construction contracts and related legal matters, in addition to fully understanding the construction process.
“Beyond this, we need individuals with strong interpersonal and presentational skills, which are imperative to ensuring that commercial matters are clearly articulated to clients and other consultants. Attracting individuals with this blend of skills to the construction sector is extremely difficult, but is absolutely key to the continued growth and progression of the industry.”
O’Leary concludes: “Retention of talent in the industry remains a challenge, which we are tackling through investment in our graduate and management development programmes. Within the region, a lot needs to be done to change client perceptions of cost consultancy, from a commodity to a value proposition.”