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Leaders UAE 2019: Early involvement key to cost control

EXCLUSIVE: Top bosses from industry giants reveal how excessive costs can be controlled in the construction industry

Experts say involving contractors and consultants at an early stage is important.
© ITP Media Group
Experts say involving contractors and consultants at an early stage is important.

Construction Week: Leaders in Construction UAE Summit returned in its 10th year on 17 September 2019 at the Le Meridien Dubai Hotel & Conference Centre, and the summit’s first panel saw industry leaders share their views on Controlling Costs When Cash is King.

Moderated by Reed Smith’s managing partner, Sachin Kerur, the panel featured chief executive officer of Mag Lifestyle Development, Talal Moafaq Al Gaddah; CEO of Beaver Gulf, Rajesh Kumar Krishna; head of community management at Meraas, Walid Soliman; and head of customer success at Construction Computer Software (CCS), Fady Kobersy.

The panellists agreed that financial awareness was key to cutting costs and achieving optimal valuations for a project.

Contracting company Beaver Gulf’s Kumar said that with doing business had become tougher as clients became more cost-conscious. He added that while value engineering and optimisation was one aspect of cost control, it was important for clients to avoid negotiating down contract prices to “unrealistic levels”.

Kobersy said “proper estimation” and “cost control” were both key aspects of contracts, but pointed out that the latter was a misunderstood concept in the local industry. Instead, Kobersy explained, controlling costs begins at the pre-tender stage, and with estimations changing on an annual basis, it was important for clients to ensure they remain aware of evolving market conditions.

He added: “You have to use innovative and fit-for-purpose technology in order to get a live view of your project – that is how you can get proper cost control.”

Meraas’s Soliman agreed about the need for early involvement, adding: “It’s all about starting cost management at an early stage and involving the consultant [at the same time].”

Al Gaddah said Mag Lifestyle Development ran an in-house department to deliver planning and cost control consultancy services so as to centralise the company’s legacy, ongoing, and future project estimates. He said companies that wish to succeed in contemporary market conditions must “understand costs” and be able to “fix the budget for any project”.

Beaver Gulf’s Kumar agreed with this view, adding that optimal cost and timelines could only be achieved if consultants and contractors had been involved from the planning stage of the project. The onus to do so, he added, remained on the client.

Al Gaddah also agreed with the view that cost control could only be driven most successfully if implemented early. However, he explained that a decline in the number of active tenders could also influence contractors to reduce prices to win work

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