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Expert: Cash constraints challenging UAE MEP contractors

The cash-driven nature of MEP businesses is posing hurdles for local outfits, a senior real estate development official told Construction Week

The UAE's MEP contractors are facing challenges due to cash constraints, an expert said [representational image].
The UAE's MEP contractors are facing challenges due to cash constraints, an expert said [representational image].

The lack of high-quality mechanical, electrical, and plumbing (MEP) contractors is being felt by project developers in the UAE, an expert told Construction Week.

Cash constraints amid low market fluidity are driving down the number of MEP contractors in the UAE's construction sector. 

Niall McLoughlin, senior vice president at Damac Properties, said the number of MEP contractors in the market is lower than main contractors.

He added: "MEP is a heavily cash-driven business, [and is especially] driven by advance [payment]. 

READ: MEP Conference 2017 – highlighting the biggest industry concerns

"MEP contractors have to invest in equipment, send it to site, and start work – only then might they receive some income from the main contractor."

Typically, this arrangement would require MEP contractors to be financially comfortable so as to deliver projects "on proper terms", McLoughlin continued. 

"Most MEP contractors have been through a very difficult time between 2009 and 2013," he explained.

"It came with financial burdens, which is why you’ll find that some MEP contractors [ended] their operations locally."

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In such testing market conditions, the relationship between a project's main and MEP contractors is crucial, "because if the former is facing financial challenges, then that [trickles down] to all contractors, including MEP", McLoughlin added.

The Damac official was speaking to Construction Week on the sidelines of a tour to the construction site of Damac Maison de Ville Artesia. 

An in-depth study of Artesia's construction site and programme will be included in issue 662 of Construction Week, which will be published on Saturday, 15 July, 2017.

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