Argues contractors shouldn’t be using their own money to fund projects
Arabtec’s chief executive Hamish Tyrwhitt has told Zawya that the contractor has removed 6,000 salary workers from its balance sheet in the past year as it continues its turnaround programme to improve efficiency and productivity. Stipulating that the business is looking to add $2.45 billion worth of contracts onto its books each year, he also revealed to the news service that Arabtec is also continuing its arbitration proceedings with Meydan Racecourse.
Talking about the issues of payment within the construction industry – from clients to contractors – he said that the construction industry: “uses too much of its balance sheet to fund projects that we shouldn’t be funding – we’re not a bank.”
He added that the current practice of 90- to 120-day payment terms was further complicated by clients taking up to a month to certify that an invoice can be submitted for the work that has been carried out, Zawya reported.
“So it’s six months of revenue, and for Arabtec that’s 4.5 billion dirhams ($1.23 billion) that just sits there in this cycle.”
Tyrwhitt told Zawya that he believes that the recent introduction of value-added tax (VAT) will help speed payment processes up as clients will need to “certify payments quickly so the tax can be paid on time”.
He noted that last year’s launch of Arabtec’s 4-Gate Work Winning Process has helped ensure that the company is conducting greater due diligence on its clients before agreeing to work with them: “In the past, we were screening out maybe 2 % of opportunities that came to us. We’re now screening out almost 50%.”