A lesson in school building
Two companies, two projects, in two months: the Al Fara'a and Wates JV
For the last two-and-a-half years two big contractors have provided the latest chapter in the deep ties between the UAE and the UK.
The first company has been deep in the fabric of Abu Dhabi for more than 30 years for engineering, procurement and construction, and is part of the Al Fara’a Group that includes business lines in pre-cast concrete, property and steel among others.
The latter is one of the oldest contractors in the UK with a bursting portfolio of school, custodial and renovation projects under its belt which celebrates only its ninth month in its Abu Dhabi office.
Together, Al Fara’a General Contracting and Wates are combining their experience to capitalise on the huge opportunities in the UAE capital, and this summer the two-year association has flourished with two school projects.
Similarities between the companies existed from the outset, they point out, including the fact that they are both family-owned and family-run. This was influential in the decision for Wates - which had been researching the Gulf region - to establish a business entity with the local special grade company.
“The cement that ties the two companies together is at a highest level in the organisation,” says Michael Kennedy, Wates’ Middle East director. “The Wates family has been in construction for around 120 years and is in its fourth generation. The Al Fara’a Group has been family run for 30-plus years.”
Though Wates had kept an eye on the Gulf for many years, it was Al Fara’a that made the initial move “out of the blue”, as Kennedy remembers, setting up an initial meeting in the UK to get to know the Surrey-based firm.
Chimanlal Gangaramani, vice chairman of Al Fara’a Integrated Construction Group, sitting next to Kennedy in Al Fara’a’s office, explains that a number of government projects required companies to tender for projects as part of an international joint venture, spurring Al Fara’a to start its own research into like-minded foreign companies.
“During this process we came across Wates as a good prospect - we started the dialogue two-and-a-half years back and within 18 months we had ‘signed off’ the joint venture.”
The first contract win of the two school projects, in June, was worth AED65 million and mandated the companies to upgrade the British School in Al Khubairet in the heart of the city.
Building and demolition began a month later and the construction will be completed in two phases over two years. The second project, secured 8th July, was the construction of a 1,500-pupil secondary school for Aldar Academies at Al Bateen – an AED150 million contract.
The latter project presented a particular challenge. Aldar Academies is striving to create a different, less hierarchical structure for a school to allow more interaction between different areas.
This comprises a courtyard in the centre, capturing the sunlight, with all other departments feeding off it.
Kennedy calls it the “cutting edge” of modern design for world class academies. “It’s a very unusual design as there is a central circulation space with teaching wings coming from that. The design would challenge any company in the world.
There’s a lot of architectural interest which is inspiration for the students, and contains all the other things you’d expect: sports facilities, swimming pool, workshops.”
Wates has a significant experience in building schools, including higher education establishments such as work on John Moore’s University in Liverpool and East Surrey College.
Al Fara’a’s experience in the sector includes the Gulf Library Manuscript and Studies Centre. Sensitivity to education and understanding the influence of the building to the learning process was critical to their success in winning the contracts, the two men believe.
“Any child spends more than 70% of their time in a school so they have taken everything into consideration if you look at the architecture of the project,” says Gangaramani. “I would say it is really an engineering marvel.
“Aldar has placed a very special emphasis on this project. It’s an iconic job for the company and probably the cream of families in Abu Dhabi will be going to those schools.
So it’s a very important job and right at the top of management at Aldar it is very keen to keep up with progress on a monthly basis, and we are very fortunate that it has shown confidence in this joint venture.”
Kennedy adds: “I think one of the things Aldar valued from our joint venture is our empathy with the education process and our understanding of what the design is trying to achieve.”
With building planned and underway, further benefits to the joint venture presented themselves; in particular, the range of sub-contract work and materials within the Al Fara’a Group.
The company has separate business lines in steel, interiors and joinery, as well as the companies Belgium Aluminium & Glass, Unibeton Ready Mix and El Sabbah Electromechanical. Recruiting services from within the group quickens and simplifies the process, says Kennedy.
“All these divisions probably add an edge over others in regards to delivering the jobs on time - because you have all the contractors in-house and you can provide the right quality to clients,” he says, though both men add that although in-house companies will be employed more than external firms, the rigorous tendering process remains.
“The companies have to be competitive, and need to make sure we’re putting market-best value. You ask where the benefit comes in; well, the majority comes from removing overhead costs.
If you’re self-delivering you’ve got one set of costs and production; a sub-contractor would bring their own. That’s where the benefits come from.”
Wates was registered in Abu Dhabi in November, and it celebrated the opening of its first office in December. Why did it choose Abu Dhabi? Kennedy says the company visited a number of the emirates with at least one trip with the senior directors in attendance. Abu Dhabi, he said, is where the company saw the greatest potential.
“Remember, at that time, Dubai was in full flight in its frothy stage,” he says. “But we decided that market was not for us. Abu Dhabi had a structured view on its growth and what it wanted to achieve.”
The UAE capital has the financial back-up and aspiration in place, he adds, and there is “every evidence and indication” that it will succeed fruitfully with its 2030 Economic Vision.
“I think the prospects are very good,” adds Gangaramani, “in every area of every place. The Tourism Development and Investment Company and the Urban Planning Council are looking to make this a big city, with Saadiyat Island, Sir Baniyas… TDIC is developing it and it’s [in fact] bigger than Saadiyat. We’ve got two jobs for that as Al Fara’a.”
Kennedy points out that the opportunities to be involved in the social infrastructure of both the city and its offshore projects are plentiful.
Any real estate developer knows that to maintain value on a piece of land the social infrastructure needs to be in place, he says: families living in villas will demand local schools, hospitals and other necessities.
It means the joint venture will keep its options open in terms of the projects it goes for, both men say, though it is early days.
However, Kennedy reports that, on the back of the two school projects already won, their joint venture has made them a lot more visible in the local market.
“Whether it’s Saadiyat, or a local authority government- backed school, we have line of sight. It’s very important to monitor every scheme, and see how these markets develop.”
In addition, Kennedy says the joint venture has benefited from Al Fara’a’s local knowledge and experience.
Joint ventures, as the term suggests, can double the experience, skills and good ideas brought to a project. But how exactly do companies operate together when work begins? Kennedy says the practicalities of working together were fleshed out in the early stages of the venture.
“Wates brings a certain amount of systems and operating procedures on site, as well as management skills,” he says.
“It relies heavily on Al Fara’a’s skills in managing the workforce directly and the specific skilled trades. So it’s a combination. With regards safety management, we are working to put in place world-class safety procedures onto the site.”
He adds that although the regional office has only 12 people, they are backed-up by thousands of colleagues in the UK where the company has specialist teams for anything “you’d expect a large contractor to have”: design, temporary works and procurement among them.
The joint venture is equally funded with a mutual account, making use of Al Fara’s long-standing banking relationships and local knowledge.
The joint venture has a board, too, comprised of executives from the two firms, says Gangaramani, which meets every week and follows the progress of the projects.
Aldar keeps a close eye too, although the two say the construction progress is not based on any set of ‘milestones’: build to a certain level, receive a payment.
Kennedy explains that the construction stages monitored by all concerned are based more around periods of time. “For the contracts we’re on we get paid at the valuation stage, a very traditional method,” he says, adding that a ‘milestone’ structure more typically helps for employing an incoming sub-contractor for a specific area.
The joint venture is currently in talks with a number of potential counterparties for upcoming projects. Gangaramani says this runs the “full spectrum” of education projects, from kindergartens to universities.
But something stands out about the joint venture’s current discussions that may translate into contract wins.
Kennedy reveals that developers have held pre-tender discussions with the two firms about elements of upcoming projects, including design, materials and the most efficient approach to the construction.
Getting their foot in the door before a public notice may be a vital X-factor for success: not every available contractor can be included in such meetings.
“We can see line of sight in some great opportunities for about the end of the year and the early part of next year,” he says.
Early-stage talks about design bring the two men to identify another important trend. The last year in particular has seen contracts awarded that include both design and construction, essentially expanding the demands on the contractor as well as the skill base.
Kez Taylor, managing director of contractor ALEC, recently identified to Construction Week the benefits of including contractors in the architectural stage, to benefit the integration of services needed to build the project and the eventual maintenance needed.
“Special clients are looking for contractors that are both design and construction,” says Kennedy.
“It’s not a conventional contracting job, but he can understand the logistics of the job, he can price it together during the design stage and communicate with the client, giving the best value engineering a product they are looking for at an early stage.”
This is opposed, he adds, to a consultant providing the design and the eventual budgets can be higher. As with the benefits of using the Al Fara’a Group’s other businesses, the savings from one design-and-build contract with a single counterparty can be substantial.
With options available internally, the joint venture is looking at a breadth of opportunities externally.
This includes looking beyond education-linked projects, as well as early discussions about where the two firms might next operate. But Kennedy, who described his first year in the country as “a roller coaster of emotion and effort” and “nothing as I expected”, says it is still early days.
Wates has a long history in the UK, with more than 80% of its work coming from existing clients. John Moore’s university in Liverpool and Langley Academy in Slough are just two of the education-linked projects, as well as renovation work on St Paul’s Cathedral in London.
Matthew Kennedy has turned his skills to a range of construction issues such as health and safety and environmental challenges.
Previous projects include work on a four-year AED500 million education and local government building programme for Birmingham City Council; and a primary and secondary school new build and renovation for Coventry City Education, an AED410 million contract.
Al Fara’a Integrated Construction Group comprises ten business units that span property, construction and industrial ventures in the United Arab Emirates and India.
Chimanlal Gangaramani holds a degree in electronic engineering from Mumbai University in 1994. After two years in computer systems culminating in one year’s entrepreneurial experience, Gangaramani joined Al Sabbah Electro-Mechanical on a ten-month development programme, later promoted to general manager.
After another six months, Gangaramani underwent a further development programme in Al Fara’a General Contracting, while still responsible for the general management of Al Sabbah.
A year later, he was promoted to acting general manager of Al Fara’a General Contracting, which was confirmed after six months. His responsibilities were expanded to include the management of Unibeton Ready Mix and Belgium Aluminium and Glass.
In 2002, Mr Gangaramani was promoted to Group general manager, and then in early 2008 to the position of vice chairman of the group.