Douglas OHI boss warns of contracting price war in Oman
EXCLUSIVE: Aaron Hennessy says contracts in the sultanate are being priced lower than is necessary to deliver high quality work
Oman’s construction industry – which has a pipeline of projects worth $259.6bn (OMR99.8bn) – is facing a price war as contractors quote lower bid prices on tenders, with the aim of securing work as opportunities dry up, Douglas OHI's boss, Aaron Hennessy, said.
Hennessy, general manager of the local contractor – which was a two-time winner at the Construction Week Oman Awards 2019 – said some firms are in a race to the bottom and conceded a price war is ongoing in the sector at present.
“Nobody wins [in a price war],” he stressed. “The contractor who prices it incorrectly in order to secure work takes on a big risk.
“The client is also taking on a big risk. But the sector suffers as a result because you may end up with projects that are behind time, with shoddy workmanship – and it reflects on every contractor.”
On a positive note, Hennessy added that Douglas OHI had not faced any major liquidity problems of late.
“Because of [a] strategy that we embarked upon a number of years ago, we’re not suffering any liquidity issues and we are in a good place at the moment,” he said.
“There are other contractors out there who have chosen a different strategy and, yes, we hear they face difficulties.”
Douglas OHI recently won two contracts for work on the $7bn (OMR2.69bn) Duqm Refinery.
Joint venture Tecnicas Reuindas and Daewoo (TRD) awarded Douglas OHI a deal to deliver the building integrator package for the refinery's engineering, procurement, and construction (EPC) Package 1. Its scope includes construction and coordination of 23 buildings, covering a total area of 18,328m².
TRD also awarded Douglas OHI a civil works package for the process units at Duqm Refinery.
As part of the second contract, the contractor will carry out civil and underground piping works to support the installation of equipment, piperacks, and specialist structures and networks across Duqm Refinery’s EPC Packages 1 and 2.