After nearly 30 years of service with Al Naboodah Construction Group (ANCG), it was announced in June this year that Steve Lever, the long-serving CEO of the Dubai-based construction giant, would finally step down from his post. Lever’s three-decade contribution to ANCG has seen the company become one of the most influential and successful construction firms in Dubai. He has overseen the expansion of the company into new markets, grown the workforce to more than 13,000 employees and encouraged the development of in-house facilities.
These achievements under Lever’s watch have significantly increased ANCG’s ability to deliver on key projects, allowing it to establish a reputation for delivering prestigious, high-profile and complex projects. These include the construction and expansion of Dubai International Airport and Dubai World Central, along with many other vital transport infrastructure projects.
Having successfully delivered so many projects, the company is now poised to move forward in its evolution, with Lever moving into a transitional role within ANCG where he will oversee work in Qatar, while also continuing to manage key clients in the UAE.
While the news of Steve Lever’s retirement may have come as a surprise to some in the industry, canny observers knew that the company had been preparing for this announcement for quite some time. This is perhaps best illustrated by the ANCG statement confirming that Colin Timmons, the group’s chief operating officer, would step into Lever’s shoes as CEO.
“Colin’s transition to the CEO role comes after joining Al Naboodah Construction as COO earlier this year in terms of our proactive succession planning. He has held a number of senior roles with major UK-based construction companies, and for the last five years has been general manager in Abu Dhabi for Al Faraa General Contracting Co,” says Paul O’Flaherty, group CEO at Al Naboodah Group Enterprises, the holding company of ANCG.
This is clearly an exciting time for Al Naboodah Construction, and in order to gain a clear idea of the plans afoot for this local giant, Big Project ME was granted an exclusive interview with Colin Timmons ahead of his taking over the reins on July 1.
“There was always an underlying plan to take over as CEO from Steve Lever, who really has been the inspiration and leader at Al Naboodah for the best part of 30 years. He’s taken the business through from the very start to where we are now,” says Timmons, speaking at the company’s new headquarters in Al Awir.
“His plan was to retire at an appropriate time and that I be bedded into the business. So when I was planning to join, the period of how long it would take for me to transition [from COO to CEO] wasn’t defined, because it was all about how well I settled into the business and how well the synergies came together,” he explains.
Although he only joined in March 2016, Timmons wasted little time in getting to grips with the business. He says that one of his first priorities was to get involved and acquainted with the company’s ongoing projects and live construction jobs, so that he could really understand what the business was about.
“To be honest, I think the shareholders were happy that I took this view towards understanding it, rather than having some sort of presidential view that had to do with strategy and planning, but not getting involved. They quickly understood that I’m a builder at heart and that I’m the right choice for this position.”
Despite having come in to take over from Steve Lever, Timmons is adamant that he isn’t going to come in and shake things up. In fact, he’s quick to pay tribute to the work Lever has done over the last three decades, and says that it’s his responsibility to make sure things continue along the same upward trajectory.
“Steve’s had a major impact. He built this business from a relatively small company to what it is today. He’s driven the business forward with a very hands-on approach, and that’s my style as well. I think that’s possibly something they liked about me as well.
“At the end of the day, we build things. That’s how we make our living, and the minute you take your eye of the ball in construction, you lose money. Steve has been very hands-on, he’s developed the company and put the staff, systems and processes in place. For me, it’s a case of consolidating what he’s done and making sure that it is business as usual, and then looking to make some slight adjustments and improvements as we go along.”
“People tell me, ‘Oh, you’re taking over from him,’ but it’s not that way for me. He’s done his part and it’s up to me to take the baton from him. It’s like a relay race. I’m not here to fill his boots. Steve’s done things the way he’s done them and it’s worked out very well, but what I need to do is keep that momentum, keep that direction and focus on moving the business forwards,’ Timmons asserts.
In order to move the business forward he must first understand it, and as part of the process Timmons says that he has been spending three days of every month with his project teams, and will continue to. For 12 hours each day, he sits with teams from various sections of the business to go over their projects in minute detail, so that he can gain a better appreciation of the challenges on-site.
“The way you learn and the way you improve is by looking at the jobs. One of the things I’ve instigated is a project review for each project, each month. So for three days a month, I’m locked in a conference room for 12 hours with the building teams, then the civil engineering teams and finally the MEP teams, and we review each job.
“I bring in the project and commercial manager on the job and they give you a report – Are you on programme? Are you making money? Where are the problems? And so on. That’s where you learn where the issues are, what you need to resolve. Is labour as productive as we’d like it to be? That picture would only come across from a number of jobs. If there’s an issue, then we’ll need to look at labour productivity and output.”
To date, the group consists of Al Naboodah Contracting, Al Naboodah National Contracting Group, Trans Gulf Electromechanical, National Plant and Equipment, Al Naboodah Specialist Services, Al Naboodah Ready Mix Concrete (ARCON) and Al Naboodah Engineering; and that’s just in the UAE. The company also has operations in Oman (Al Naboodah Contracting), Saudi Arabia (Al Naboodah International Construction Company) and Qatar (Al Naboodah Contracting and Trans Gulf International Electromechanical).
Keeping on top of all these different divisions is a crucial part of Timmon’s day-to-day business, and he’s keen to look at ways to integrate the various facets of the business, so as to offer more to clients.
“Traditionally, the businesses work in silos, with each business being a financial centre with a general manager, a PNL and so on. But what I want to do is bring them together and integrate them. Think of each business as a circle. I want to make them like the Olympic rings – bring them together and integrate them, and look at where they overlap.
“That’s where we’ll become stronger in the market and better than our competitors. It’ll take a bit of doing because they’re separate businesses and everyone’s got their own PNL at heart.”
Despite acknowledging the challenges this integration will face, Timmons is adamant that this is the way forward for Al Naboodah Contracting Group, explaining that both he and the owners agree that integrating the various businesses will strengthen the group’s position in an increasingly competitive market.
“We’ve got to shape and change the way businesses are here. The halcyon days are over, where contractors made 10% or 15% or 20% [profit] from 10 or 15 years ago. Those days are gone and it’s doubtful they’ll come back.
“So now we’re working on slimmer margins and we have to become more efficient and better at our job. We have to offer something different, because everybody [in the market] can build. Anyone can come to a meeting and sell the USP that they can deliver on time and on budget. That’s a given. You have to be able to give something else.
“This is really what I want to embrace, to bring the businesses together and integrate the strengths of the business. We’ve got building, we’ve got civil engineering, we’ve got MEP, we’ve got a ductwork factor, we’ve got concrete and asphalt plants. Not all contractors can offer the sort of service offering that we can,” he insists.
Looking at the wider economic situation in the UAE and the Gulf, Timmons says he scents an opportunity for ANCG to flourish in conditions in which their competitors struggle, precisely because of the many services they offer.
“I think that there’s a lot of business out there and our competitors may not be in the right financial place at the moment. When you look at the competition in the market and you narrow down the contractors in the UAE that you’d want to tender for a significantly sized project, then we’re one of the first names that goes on the list. It’s competitive and we have to offer something different. There are still a lot of problems in the market with liquidity, and on some of these larger projects, clients are really thinking hard about who they want to partner with.
“That’s another side of our business, offering more of a partnership approach, more of a negotiated offering. We’re still pricing in a competitive market, but I think what a lot of people like about us is our ability to perform, that we’re financially sound and that we can be relied upon.”
By offering clients integrated services in this economy, Timmons believes that Al Naboodah Construction will stand out because they can offer contracting and subcontracting services from the same group, while also being able to provide some suppliers.
“When times are hard, you bring the business together and get the commercial benefit,” he says. “That commercial benefit will be passed onto the client because we’re not adding mark-up upon mark-up like you would do in a traditional situation. If you go out and get a domestic subcontractor to quote you for an MEP job, he’ll have a mark-up. Then you’ll have a mark-up and the supplier will have a mark-up. So if we cut all of that out, it should make us more competitive.”
“Now, clients may not want that at all. They may be sensitive about it and say that they want their own fit-out or MEP contractor. So it’s a fine balance between ramming it down their throat and making them understand that it’s commercially viable,” he concedes.
“Ultimately, I think it’s about getting closer to your client and understanding what they want, and then matching it up with what you can offer. That is key.”
While the heart of the business will remain in the UAE, Timmons says the company is keeping an eye out for international opportunities, with the likes of Qatar, eastern Africa and other neighbouring countries of particular interest.
“The UAE is where the majority of our turnover comes from, but we need to be flexible and open. We’re looking at opportunities on the eastern seaboard of Africa. We’ve looked at pricing a few jobs there and now we’re looking at recruiting some new staff to set up a business there.
“Knowing that a lot of funding for these projects is from the World Bank, and indeed coming from the UAE, we know that there might be projects there that might suit us. There’s a guarantee of funding and it’s low-risk. We’re looking at breaking into new markets that way.
“It’s not like we go and establish an office somewhere for the sake of it. It’s about pricing a project that we think we can win, and where we can mobilise our own resources – our concrete trucks, our asphalt plants and so on, where we can use local labour and then build on that project. It’s a learning game and we’re getting better at it.
“The shareholders’ view is that they’d like that [international operations] to be 25% of the business moving forwards, in future years. It’s not going to be this year, it’s not going be next year, but there’s a plan and a budget in place, and there are resources being allocated to it.”
For now though, the focus remains firmly on the UAE and the GCC, and Timmons points out that things are changing rapidly in terms of the construction landscape, with public-private partnerships (PPP) becoming increasingly popular.
“PPP has been a tool for the delivery of projects in the East for some time, and I think that it’s coming here as well,” he says. “A few years ago, people talked about projects being delivered under a PPP mechanism and there was the view that Arab countries didn’t really like the idea of delivering projects where a contractor or a consortium are putting finance into the project. It wasn’t the way we did business here.”
“But in the last year, it’s changed significantly. You’re going to see a lot of PPP projects coming out. We hear that two banks are likely to merge – NBAD and First Gulf – and form one of the largest banks in the Gulf region. How are they going to make money? By offering their services to the market.”
“I think we’ve got to understand that the halcyon days are over. It’s a changing market and the contractors that are lean, efficient, organised and reliable are the ones that will get work, and that’s the model I’m trying to develop.”
Looking towards the near future, Timmons says that Expo 2020 and the World Cup in Qatar will continue to influence the construction market, with key projects associated with these events likely to offer the best opportunities for contractors. However, he stresses that construction firms have to exercise caution and discretion when chasing projects and contracts.
“There’s still a lot of work being tendered, but what’s happening is that the conversion rate is relatively low. That harks back to the price of oil being low and budgets being under pressure. There are key projects that will go ahead for sure.
“I keep saying to our guys, don’t go chasing rainbows. Let’s look at the clients that we know have money to spend and that’s where we want to be pricing. The market is probably flat at the moment, but Expo 2020 is coming and we’re starting to see enquiries come in. The work is around, prices for sure are a bit tighter, and we’re going to have to work harder to convert potential jobs into successful ones for the business.
“But ultimately, I’m not seeing a downturn as such. I think it’s flat at the moment, but it’s going to climb up slowly towards 2020.”
Despite his optimism, he does offer a note of caution, which also explains why he’s keen to make sure that Al Naboodah Construction Group is one of the most highly-regarded firms in the region.
“We’ve had the committee from Expo 2020 come and visit our offices and our labour accommodation, doing inspections. They’re setting out the credentials now and the requirements for contractors that they want building on this project. They’re setting very high standards and not every contractor will be able to adhere to these requirements,” he warns.
Bringing the interview back full circle, Timmons explains that steering Al Naboodah Construction Group through choppy economic waters will be his biggest challenge. However, he insists that he couldn’t have picked a better company with which to undertake this journey.
“If I can mirror the growth and success of the business that Steve Lever achieved over the last 30 years, then I’d be very happy. But at the moment we have a five-year business plan, a strategic plan. My focus is on delivering this plan with the team. It’s fairly well laid out, and we’re only in year one of five, so as you can imagine, it picks up the turnover for the business moving forwards and it picks up international growth.
“What I’ve found over the years is that where any business plan fails is in implementation. Anyone can say that business today is $1 billion, it’ll be $5 billion in five years. But how do you achieve that?
“That comes back to having a hands-on approach to delivering our objectives in a sensible way. I’ve got it laid out in my mind and on paper, how we want to improve and where we want to improve. We just have to pick these targets off bit by bit, in a strategic way, to make the business leaner and fitter. I’m confident, I think we’ve got a fantastic base to work from and I couldn’t have come into a better company.
“It’s a bit like waking the giant up almost. It’s such a powerful business and it’s done very well. There’s an opportunity here to keep that going [and growing], and if there’s one thing I could do, it would be to make the business clients’ first choice, so that when you want a contractor, only one comes to mind.”