A Century of Consultancy
EC Harris has been a major player in the Middle East for over 30 years
It’s been 100 years since EC Harris was founded and, having spread its wings across a number of regions and markets, the built asset consultancy now regards the Middle East as one of its most valuable business hubs.
But like most other construction firms, the company was not so lucky that it managed to come away from the global economic recession unscathed.
After experiencing a substantial fall in new business, it was forced to make some difficult decisions and was compelled to diversify, both in terms of geography and sector. The result was a re-defined growth plan, being driven forward by the firm’s key executives today.
The man behind EC Harris Middle East, John Willams, is in some ways what you would expect of a regional managing director. Positive, knowledgeable and forward-thinking, while slightly cautious about giving away too much. On the other hand, he is rather surprising, almost shy and relaxed.
Hence why, when he is asked about how the company has fared during 2010, he gives what seems like a very honest answer.
“I think most people would agree that it’s been a really tough year, but there are some signs of recovery,” he says optimistically. “We’ve had a good couple of months in terms of new project wins, and we see the market picking up towards the end of 2010.”
For EC Harris, the downturn wasn’t as much about losing customers as it was about losing a market. According to Williams, the company’s focus had been on the commercial property market in the UAE – this being among the hardest hit by the declining financial situation.
“Previously, we were heavily orientated towards the commercial property sector because the market pulled us that way. It was difficult to focus on much else because that’s where the investment was. Then when the recession hit, consultancies like ours had to look at their client bases. The fact that projects were stopped in Dubai generally, obviously, affected everyone, and it influenced decision-making everywhere.”
Luckily, Williams explains, EC Harris had already begun to diversify its markets, putting it in a good position to make the quick changes that became critical to every business’ survival.
“I would say we probably weren’t hit quite as hard as other firms because we had diversified already in terms of sectors and geographies. So work in Saudi, for example, helped us, and fortunately we had invested in building some infrastructure in the oil and gas sector.
But we did have to make some changes very quickly and it wasn’t easy. We’re still operating very much in Dubai, but obviously the commercial market there has completely changed.”
As a result, he says, EC Harris Middle East has worked exceptionally hard as a branch for the last 18 months to build a strong client base while broadening its capabilities in education, health, oil and gas and transportation sectors, as well as remaining in touch with its commercial property business.
Evidently, most companies that previously had a focus in the UAE or commercial property market have a similar story. What separates them today, however, is how they perceive the evolution of the market, and ultimately, their level of commitment to the UAE as a business hub from 2011.
“EC Harris has been in Abu Dhabi for 30 years, although we’ve been working in the region for about 50 years. So we are very committed to the region, which I think is important at the moment. You do hear of some people that have been opportunist, who’ve packed up and left now and just saw this as somewhere to make hay.”
Certainly there are companies that don’t feel it is important to stay in the Middle East, or the UAE. So why is it so critical for EC Harris? According to Williams, there is a lot more to come from both.
“I’ve been on the same rollercoaster as many other people in the region. Whilst the market has undergone a big change, it is still the case that some of the world’s largest projects are in the Middle East, and some of the world’s most experienced capabilities continue to be needed here.
Dubai particularly is an international financial centre, so whilst it’s been through a difficult time, as an international financial centre it will continue to attract large investments in the future.”
Another advantage of staying put, he explains, is the fact that businesses are more attractive to both potential clients and employees if they have a long-term vision.
“If, when you talk to clients about their issues and needs, you can make clear that you’ll be here for the long term, I think it helps. I think people are attracted to a business that is talking about a sustainable future, and that recognises the Middle East as one of the regions of growth in the world.”
He continues: “There’s also a good employee proposition. Our projects are pushing us further, so we’re now working in a lot more new places and I think that gives a good employee message.
There are plenty of opportunities for people to work on a major project; for example, somewhere like Al Raha beach where we’ve had quite a large team.
“Inevitably, the people that work on the projects will take that experience with them, so it’s great for their CVs.”
Of course, Williams agrees that not every company in the UAE is in a position to commit to the GCC. Many firms have left due to financial difficulties, rather than out of choice. Perhaps being an international firm gives EC Harris a strong advantage.
“Yes, I would say the fact that we had an ability to diversify; and the fact that we had offices in other parts of the world which were supportive to the Middle East branch meant we were in a much better position than a lot of smaller companies.
Some of our people moved into other parts of the business elsewhere, and actually, being international meant we continued to get international clients in Dubai during the recession time-frame through our international connections,” he says, adding, “It must have been pretty tough for a lot of smaller companies.”
Indeed, one of the reasons the company wins some of the work it does in the region, according to Williams, is simply because it is international.
“I think people do look for the covenant of a large company, but I think the bigger advantage of being international in the Middle East is the knowledge we get from the rest of our business.
If we’re building a major stadium here, for example, or a major residential scheme or a major hospital, we have data from all around the world as to what the efficiency of all those buildings should look like.”
Even for international firms, Williams makes clear that some of the recession’s demons were still unavoidable. Developers for example, did not discriminate between small and large, local or global companies when it came to payment problems, and EC Harris was among a number of other large consultants and contractors, on the receiving end. This year, however, he maintains that things are looking up in that department.
“In some cases we have been paid, in some cases there are ongoing discussions. But generally the positive message coming from each situation we’re in is that we’re discussing things with people in a positive way to resolve things. The dialogue is progressing and there is movement. I think that’s been a major change in this area over the last six to nine months.”
In the interests of looking ahead, Williams is particularly keen to stress how EC Harris is focusing on further diversification, in terms of geography and sector, services and offerings.
According to the MD, this is due to a significant change in the way the industry is operating, including a new approach to development. “In today’s market, developers and investors are realising that they can get value from their portfolios.
Usually in a development market, developers just build buildings and sell them, but in a market like the one we’re in today, developers have to keep their options open, because they may not be able to sell their assets at the end of construction.
Leasing is therefore becoming more and more critical in providing a source of income, and all of a sudden, through that market change, we’re seeing people modify their whole business model to become asset owners.”
In response to this new demand, he explains that EC Harris’ core business today involves advising clients on how to make the most of their built assets, though he maintains that the company still does a substantial amount of work in what it is famous for, namely project management, risk management, commercial management and general consultancy services.
“What we’re trying to do is look at how we can get stakeholders better results by helping them deliver projects quicker, cheaper, faster and better. We’ve been quite bold in this built asset consultancy statement, because we can see the value of the service.”
He goes on to explain how, in addition to changes in developer priorities, the cost of construction post-recession has also had a significant impact on EC Harris’ ability to provide these services.
“The price of construction has come right down, and whilst there is an opportunity for clients to take advantage of that, it becomes a real challenge to buy the best contract in a market which is quite cut-throat, and then to get the best performance on it.
The client has to make sure that the way that they’re procuring a property, the way they’re selecting the contractor, the way the project is defined, briefed and delivered is in a very certain way.
Because if someone is charging a low price, there is more chance they’re going to try and recover money somewhere later on. In this sense, we expect the market for construction claims to rise.”
Interestingly, this new ability within the firm also presents business opportunities as developers look to resume construction on delayed or abandoned projects.
Only recently, industry experts came together to discuss the commercial viability of restarting construction on a ‘ghost building’ or ‘skeleton structure’ as more and more developers and contractors look to finish them.
Bearing in mind EC Harris’ ability to advise clients on maximising the value of their built assets, executives are confident the company’s services can be of use.
“We are actually talking to a lot of people who are making investment decisions like that at the moment, because it’s a very real issue,” says Williams. He explains how, from a commercial point of view, restarting an old project is far less straightforward than it appears.
Not only are developers faced with the challenge of trying to get potentially unpaid contractors back on board to carry out work on the project, but in some cases, the structures themselves may be extremely inefficient.
“This market is looking at getting as much value as it can out of its assets, which means looking at the commercial viability of the product today – so, if there is a market for the building as it was originally designed and intended – as well as the cost to complete, the outstanding contractor debts, the quality of the structure, the fabric of the building and the cost of any remedial works required.”
“In a nutshell, we can help companies with the risk management process when they’re taking over a project, and our view is that we will really start to see some movement in this market towards the end of this year.”
In truth, Williams says, it is opportunities such as these which have made the post-recession market so valuable to his company.
He believes there is room for more facilities management consultancy work at the very beginning of a project, again in response to a growing trend of long-term asset-owning, rather than simply building and selling.
He is additionally confident that, hand in hand with these new business models, there will be a renewed focus on quality, and inevitably, a new role for contractors.
“In order to make the most of your built assets you need to be working with the contractors as a team, and there’s huge value in companies like EC Harris getting involved with the people who build the buildings as well as the clients and developers, to make sure that we produce something together that’s a success,” he says.
“So I absolutely see collaborative working with contractors as a progression within the industry which we want to be part of. I can see that contractors are going to become strategically important in the future as more and more models for delivery will have them at the helm.”