GCC construction can rewrite the meaning of procurement

The GCC's multitrillion-dollar megaprojects need revamped contract procurement strategies

Procurement is an important process for construction organisations, and its meaning must evolve in the GCC's building industry [representational image].
Procurement is an important process for construction organisations, and its meaning must evolve in the GCC's building industry [representational image].

The GCC construction industry’s definition of ‘procurement’ is in need of a thorough revamp, Construction Week’s interactions with top companies and chief executive officers have indicated in 2018. This exercise, challenging though it may seem, could result in greater productivity and cost savings, both of which are highly sought-after by regional construction leaders. More importantly, redefining the meaning of procurement could also help the Gulf’s vital contracting sector avoid payment delays and construction disputes.

ALEC’s Kez Taylor, China State Construction Engineering Corporation Middle East’s Yu Tao, and Laing O’Rourke Middle East’s Mark Andrews are some of the many contractors, consultants, and analysts that have outlined the importance of contract formulation in discussions with Construction Week during the course of this year.

READ: Construction leaders optimistic despite payment delays in Q3 2018

These are prominent industry veterans calling for an essential industry-wide change, but they are not the only supporters of this positive disruption. Lawyers and legal experts, in their interactions at the Construction Week: Dispute Resolution Question Time seminars in Dubai (March 2018) and Abu Dhabi (October 2018) have also highlighted the need for better-drafted contracts to boost efficiencies (page 92).

Market experts that Construction Week has interacted with in 2018 agree that the onus to improve contracts lies with clients. Their suggestions for developers include revisiting the language of a typical construction contract, ensuring that it is fair to the contractor, and unifying the document’s guidelines – regardless of whether it is led by the regionally popular Fidic, or equally ubiquitous global formats such as Riba, New Engineering Contract, and Joint Contracts Tribunal.

At the heart of these ideas is the understanding that employer tendering processes must improve. Tenders must be realistic in terms of their costs and timelines, and developers must foster a bidding environment that curbs undercutting and price wars, contracting and legal professionals have told Construction Week.

The regional construction sector is already familiar with e-procurement processes and their benefits, such as greater transparency and business clarity. Digitisation is rapidly making strides in the local construction sector, and some real estate giants in the Gulf, such as Dubai-listed Damac and Sharjah’s Shurooq, are using e-tendering construction platforms like ProTenders to streamline their procurement operations.

The creation of an ideal procurement environment will require a shift in mindset from all industry professionals, and may take some time to be achieved. However, the Gulf’s clients, contractors, and consultants have a healthy track record of innovating and adapting to change, so the wait may well be a short one.

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Construction Week - Issue 765
Jun 29, 2020