Interview with the executive director of Akar Technical Services
In February 2016, Oman-based MEP contractor Akar Technical Services announced that it had completed two major projects in its portfolio – Meydan Heights Villas in Dubai and the Khasab Hotel in Musandam, Oman. The delivery of these projects was indicative of the continued growth of the sub-contractor, a subsidiary of the Al Ansari Trading Group, following a period of sustained investment and effort by its senior management team.
Established in 1994, Akar primarily operates in the MEP and landscaping sectors, delivering projects in both Oman and the UAE. With a number of major projects in the pipeline for 2016, Adnan Nalwala, executive director of Akar, sat down with Big Project ME to discuss the company’s remarkable run over the last few years.
“We’re a 20-year-old company, and we have two primary activities that operate under the Akar name – landscaping and MEP. The business was started by my father, and it is part of the Al Ansari Group, which was formed in 1975,” he recaps.
“Akar has been growing steadily for the last 20 years, but in the last five years we’ve really changed gears. We used to be a company of around 300 people. Today we’re 900 plus, closer to 1,000. Also, in the last year we’ve become an integrated management systems company. That’s kind of like an ISO certification, but it’s not just ISO – we look after the environment, health and safety, and also all the processes within the company.”
Nalwala puts the surge in the company’s growth over the last five years down to a number of factors, but identifies some key project completions as game-changers. “Some of the projects that we’ve completed [over the last three years] are of size and they are quite high-profile. One of them was the Khasab project in Musandam, Oman. We completed that last year, and it was one of our landmark projects, it was the first hotel project that we have done.”
“It required a lot of intense project management skills, as there were a lot of challenges. It’s in a remote place, so shifting materials and maximising worker output [were key]. Also, the engineering specifications were of a higher quality as it’s a hotel and you have to have best practices over there,” he says, adding that the completion of a project like this, for a high-profile client like Omran, really put Akar on the construction industry map.
“Last year was satisfactory for us, because we completed the projects we wanted to. We also bagged two projects that were of size. In that way, everything is a function of scale and size. The kind of projects we take on, if we get two or three projects a year, then that’s more than enough for our capacity in turnover.”
Another major reason for the company’s success was its care in choosing the right partners and clients, Nalwala says, pointing out that a number of contractors have run into problems when their payments don’t come in on time.
“That creates a lot of pressure for contractors, because they’ve got to make payments to suppliers and they have to pay out salaries and all that. There’s a lot of outflow commitments, so if you don’t have good clients, then it’s pretty much a disaster!
“In the current environment, banks are also becoming a lot more stringent about project financing, based on who your clients are. So it’s very important, in fact it’s imperative, that you choose your clients intelligently.”
Another factor in the growth of the company has been a change in perceptions and attitudes in the market, Nalwala adds. Traditionally, clients would give the MEP packages to the main contractor, especially in Oman, which remains a fairly conservative market. However, the last few years have seen contractors gain a greater understanding of the value of MEP on a project, and they have been taking a more active role in nominating MEP subcontractors.
“Clients have now understood that MEP is a large part of the value of the contract, and they have been directly subcontracting or nominating the MEP contractors,” says Nalwala. “When you get directly involved with the client, and when you provide value engineering propositions to the client, when you save money and they save money, then they get very happy.”
“I feel that being a nominated subcontractor has changed the way contracting is done, because it now allows the MEP contractor to suggest to the client where they can save money, and it really can save a lot of money on a project.”
This was evident in the recently completed Meydan Heights project, where the MEP contract was given directly to Akar, despite there being a main contractor already on the project. “This gave us a chance to open dialogue and talk to the client, where we can tell them, ‘Look, money can be saved here.’ Otherwise, if you’re in the main contractor’s fold, they may not have that dialogue with the client.”
Despite being reluctant to talk about financial figures and market share due to shareholder confidentiality agreements, Nalwala says that Akar is one of very few nominated MEP contractors, asserting that the company appears in most tier-one client registration lists, which means that it is qualified to execute large jobs. This is borne out by a client list that includes the likes of Omran, Aldar, Emaar, Nakheel, the Ministry of Public Works and the RTA.
The question that next arises is: where does the company go from here? While he admits that the current market situation makes predicting the future something of a lottery, Nalwala insists that the foundations laid over the last few years will bear fruit, as Akar’s relationships with UAE and Omani clients continue to develop and strengthen.
“The way this contracting business works is that you are, at the end of the day, driven by price. Clients look at L1 most of the time, but what has happened is that because of the relationships we’ve built with consultants, and the scale of the projects we’ve done, we’re allowed to go and talk to clients, even if we’re L2 or L3. It’s not all the time, but a good 50% or 60% of the time, the client does give us a second hearing, and if we’ve matched the price, they sometimes give it to us.
“The point I’m trying to make is that we have been growing, and because they see our resources, because they see a financially steady company, they also feel that we can deliver. Now that we’ve done projects of different sizes, scale and nature – we’ve done towers, villas and hotels – they know that the experience this team will bring will be a lot better.
“That’s how we’re positioning ourselves – by being able to talk to the client and consultant directly, by telling them not to be driven only by price, but by telling them that we have the resources and experience to execute their projects [better than others]. That’s the way I’m trying to drive the business,” Nalwala outlines.
It is because of this approach that he says there are no immediate plans to grow Akar beyond the UAE and Oman, especially since he believes there’s plenty of room for growth, given the continued investment and focus on the hospitality industry in both countries. “Now that we’ve done the Khasab hotel, we’re also an approved contractor for hotels, and it’s something we’ll try and do more projects of.”
Furthermore, with Oman and Dubai following different pathways to development, Nalwala points out that there are plenty of opportunities for Akar to expand its expertise and work on different types of projects.
“There are two major differences between the two markets. Dubai has gone through a lot more property development, where they want external people to invest. That’s why MEP and landscaping requirements have been much higher. That’s not been the case in Oman, which hasn’t had as much property development for investment going on.
“The second difference is that Dubai has gone down the skyscrapers and towers route, whereas Oman doesn’t have that. That reduces the MEP load in a building. It’s a function also of what the governments and countries are spending on.
“But the flip side is that there’s a lot being spent on infrastructure work in Oman. They’re building huge roads, water networks and so on, so yes, MEP needs in Oman have been a lot less and a lot simpler, because they don’t have towers and they don’t have as many property developments where FDI happens,” he concludes.
The Khasab Challenge
Located in the picturesque Musandam peninsula, the Khasab hotel is a four-star property in line with Oman’s drive for eco-friendly tourism. Constructed in compliance with LEED requirements, the project achieved a silver rating for the quality of build. Akar carried out the complete MEP works, complying with stringent LEED requirements, Adnan Nalwala says.
Another major challenge was the remote location of the project, which meant the MEP team faced very particular challenges.
“To go to Khasab, you have to go through three borders. So right from the time of planning the materials, we needed to also plan the procurement a lot earlier than usual. We needed to have a lot of paperwork done ahead of time so that the materials could land in time for the project to go ahead as planned. In terms of logistics, planning and supply chain management, that was one big issue we had.
“The second challenge was the kind of output we were getting from the workers over there. It’s a very sandy and windy place, so we had to take special care with all the HSE requirements, and we had to put in some extra safety engineers and precautions to ensure that no accidents took place.
“Finally, the third challenge was that a lot of the materials, because it’s a special kind of hotel, were specified from Dubai. So that meant that we had to get those products into Oman from Dubai. That involved a lot of paperwork and even the clients had to get involved, from both parties, at the Oman and UAE border. It may not seem like a big deal, but there was a lot of planning behind the project that was needed for it to be done on time,” he explains.
Akar’s other MEP Projects for 2016
• Three residential buildings for Meraas Development LLC
• A tower project in Al Barsha for Lahej and Sultan Group
• Three buildings in IMPZ for RS Realty FZ LLC