UAE construction continues to face cash flow issues

The UAE construction market is becoming increasingly competitive as cash flow issues remain a concern, a top contractor has revealed

Construction professionals feel cash flow is an issue in the UAE market.
Construction professionals feel cash flow is an issue in the UAE market.

The UAE construction market is becoming increasingly competitive as cash flow issues remain a concern, a top contractor has revealed.

Walid Salman, regional managing director of operations for the UAE and Palestine, Consolidated Contractors International Company, said contractors were facing cash flow issues, but admitted the situation has improved in the past three months, Arabian Business reported. 

According to The Colliers Abu Dhabi and Dubai Construction Cost Benchmarking report in February, the single biggest issue facing UAE contractors and sub-contractors was cash flow due to sustained delays in payments, which they said negatively impacts the quality of projects, budgets, and time.

Salman added that in the current market, clients with bigger budgets have the upper hand in discussions and are able to dictate terms, though he has seen a big improvement in cash flow and progress from the client side.

He said: “Clients with cash can dictate whatever they want and they can get the best price. The competition in our business is too high and it becomes automatically risky when the client shortlists big and small companies.

“We hope clients will shortlist bidders to maintain certain standard and quality.”

The Colliers report also noted that weakening global construction commodity pricing over the past two years has given a much needed buffer to the industry, but that commodities including crude oil, aluminium, iron ore and copper are predicted to gradually rise.

"This combined with fuel/subsidy cuts and the introduction of VAT in January 2018, will put upward pressure on construction costs for the next two years," Colliers added.

 

 

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