What is the Middle East construction CEO's new job description?

As the construction sector faces ‘historic turbulence’ in some parts of the world, must regional CEOs reinvent themselves?

Construction CEOs in the Middle East now have new technology-related challenges to contend with, in addition to traditional problems such as payment and salary delays, and contract disputes [representational image].
Construction CEOs in the Middle East now have new technology-related challenges to contend with, in addition to traditional problems such as payment and salary delays, and contract disputes [representational image].

The construction executive’s job is becoming more challenging by the day, not just in the Middle East, but around the world. From low liquidity and payment delays to the breakneck speed at which technology is changing business models, construction bosses have a lot to worry about. 

In the UK, contracting heavyweight Laing O’Rourke is contending with “historic turbulence” in the construction sector, with companies such as Carillion having collapsed this year. Chief executive Ray O’Rourke said in October that his team was “disappointed to have been defeated by the process”, with company liquidations having affected “the approach of banks, insurers, regulators, and auditors”.

Meanwhile, India’s Ruia family, which owns Essar Steel, faces an uphill legal battle as it seeks to retain its ownership of the firm. Arcelor Mittal, the world’s largest producer of steel has made a $57bn bid to take over the cash-hit firm. The transaction is likely to complete despite management efforts to avoid Essar’s sale to Arcelor Mittal, a Luxembourg-headquartered firm formed by the takeover and merger of Arcelor by Indian-owned Mittal Steel.   

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The business challenges faced by chief executive officers closer to home are different, however, and reflect the emerging trends that will shape the future of Middle East construction. Advances in technology are at the heart of these trends, having wide-ranging impact on the construction space and other business sectors. 

For example, some industry CEOs in Oman and the UAE are unable to match global technology adoption efforts. A survey by KPMG for its 2018 CEO Outlook report found that 54% of the surveyed CEOs from firms in the two countries are “struggling to keep pace with innovation”, and 88% say “lead times for transformation often seem overwhelming”. 

Meanwhile, CEOs whose firms have reached an advanced level of technology adoption also have to worry about cybersecurity. KPMG’s report found that 56% of the UAE and Oman CEOs surveyed believe a cyberattack is now “a case of ‘when’, not ‘if’”. 

Aluminium Bahrain’s CEO, Tim Murray, said in the report that cyber risk is a major issue because “as technology changes, it opens up more loopholes”. 

“We have manufacturing systems that control things, so if they were hacked or frozen or locked-up, it could obviously have a major impact on us,” he added. 

Last month, enterprise security firm Esentire revealed the findings of data it had collected from more than 2,000 proprietary network and host-based detection sensors in multiple industries from around the world. Its Q2 2018 Quarterly Threat Report found that construction faced the greatest number of phishing attacks during the period. Docusign, a system that allows the electronic exchange of contracts and signed documents, was detected as the platform most commonly deployed to ‘lure’ users into a scam. 

The global industry’s challenges show no sign of abating, and it is hard to predict whether business will get any easier for the Middle East’s construction CEOs next year – issues related to payment delays and project disputes are unlikely to be resolved in the short term, for instance. However, the multibillion-dollar market opportunities on offer in the region should drive the Middle East’s building sector bosses to devise creative strategies for success in 2019.  

READ: Contract type, payment terms key for contractors eyeing Saudi

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