With news that one of its largest joint venture projects has restarted in Dubai and new work in Qatar, Belhasa International Company managing director, Majed Belhasa, tells Melanie Mingas about managing growth and breaking out beyond Dubai
“The biggest lesson we learned was not to keep all the eggs in one basket,” reflects Majed Belhasa, managing director for Belhasa International Company, when explaining why the company is now looking for work beyond Dubai.
Belhasa Engineering and Contracting Company (BECC) was established in 1977 as part of the wider Belhasa Holdings PJSC, and today has four construction companies: Belhasa Six Construct, a joint venture with the Belgian firm Six Construct known as Besix; Belhasa Projects, specialising in sports surfaces; Belhasa Engineering and Al Tatweer Contracting LLC.
When the Besix venture began in 1986, the mission was to “redefine the skyline of Dubai” and the resulting projects have included everything from Emirates Towers hotel complex to Burj Khalifa.
As the construction boom snowballed last decade, there was so much work in Dubai Belhasa didn’t even need to expand to Abu Dhabi and the construction operations within the entire group of companies generated “more than 50%” of its total worth.
“Belhasa Projects has a lot of diversity so it survived the downturn without a problem, but Belhasa Engineering depends on large projects so if you’re operating in a single economy or sector, when that dies, you risk dying with it.
“Now we are thinking of expanding these operations to other countries to diversify the income from different sources and we don’t want to stop there. We want to expand further because also we have to look at regions, and not just countries. So we have to look at every possibility,” he continues.
Following a US college education, which saw Majed studying civil engineering at Colorado School of Mines, he joined the company in 1996 and is today managing director of construction and technology.
“I ask where were the companies I am managing now before I started, and where are they today? I don’t look at individual projects I look at the size of the company, what it was doing and where it was heading,” he says, drawing example from Belhasa Projects, which has diversified from swimming pools to sports stadium surfacing and facilities management and waste water treatment.
Similarly, Belhasa Engineering has grown from a medium sized company with “certain limitations” regarding the size of projects it could once execute, to a company with expertise in skyscraper construction and knowledge that can be exported.
“It is re-structuring and management that drives the business. Now we can handle large projects and diverse projects,” he comments explaining the investments made in accounting systems and engineering equipment that enabled Belhasa Engineering to execute larger projects.
Worst case scenario
Seeing trouble on the horizon, Belhasa began planning for a downturn mid-decade, predicting the worst case scenario would hit in seven years. In reality it took only three.
“It was a little bit faster than expected, but it was expected and we managed to knock down a lot of the overheads for the company. Had we not done that we would have labour camps right now that are very costly, equipments which would have cost hundreds of millions,” he says, adding that labour camps are written off in five years, rather than 20 and tower cranes in five years as opposed to “seven or eight”.
“The second strategy was to re-structure the company and redistribute the work to actively scale it down and maintain the delivery of the projects without expensive overheads.”
Looking ahead, Majed says there is enough growth and projects in the region for the company to regain its “heavy position” by next year, based on the opening of new offices in Saudi Arabia and last month Qatar, where he predicts the private sector will lead the market.
Today, the greatest challenges facing the industry are regulations. A topic Majed has publically shared his views on in the past, he says that while regulations are positive and necessary, the time given to contractors to implement them is unrealistic.
“We would work on a two year project and all sorts of government offices, such as labour, would release a law that comes into effect after one or two months and increases the costs for the contractor or put restraints on the contractor that makes it difficult to do the work.
“That’s where we are having problems,” he states, continuing: “If we’re on the tenth floor there are still 40 floors ahead and the price of labour is going up beyond the 10% a year it used to; these things are what hurt us most.
“Immigration changes, the municipality or police introducing regulations, this sort of stuff comes like a lightning bolt and you still have to work. The changes are coming too fast for the contractors,” he adds, while also urging such bodies to create a dialogue with the industry while developing such legislation.
Back in business
Now Dubai Marina’s Al Sufouh tram project has officially restarted, following a period of “almost green lights” and financial struggles, Besix equipment is back on site and a new completion date of 2014 has been confirmed.
In addition, two projects have been “okayed for the Burj Khalifa area”, and “several” new hotel projects are tendering.
“Tourism is going well and there is demand so people are moving back into that field and we are seeing the infrastructure for tourism and its related services, shopping areas, super markets,” Majed observes.
“Some of the big projects here in Dubai, we expect within the next couple of years, but there is some good potential in Abu Dhabi. And of course there are always projects in infrastructure; it is still an active market in the UAE in general.”