Construction

Builders cut prices to win contracts

Dubai builders chasing contracts in Abu Dhabi are being forced to cut their prices to stay afloat as competition intensifies.

Dubai builders chasing contracts in Abu Dhabi are being forced to cut their prices to stay afloat as
competition intensifies, according to a report in The National newspaper.

Many international contractors and consultants have shifted focus to the United Arab Emirates
capital as the financial crisis brought work to a standstill on building sites across Dubai.
But while more projects are being tendered in Abu Dhabi, particularly for roads and social
infrastructure, contracts are difficult to win and slow to be awarded, the contractors say.
The situation has encouraged some firms to “buy work”, meaning bidding for contracts on a zeroprofit
basis to maintain turnover.

Al Shafar General Contracting chief executive Bishoy Azmy told The National newspaper that his
company faced competition from as many as 40 rival contractors on some public-sector tenders in
the emirate of Abu Dhabi.

“Even if you price low and with low margins, you might not get the project,” said Azmy, whose
company built hundreds of apartments on Dubai’s Palm Jumeirah development. “Onerous contract conditions are also returning, such as unreasonable price expectations from some clients. Some contractors are willing to accept these conditions just to remain, if only in name.”

Other companies have placed dozens of bids, but are yet to win any work in Abu Dhabi. “The feedback is always ‘your price is too high’ and they ask us to reduce it. Nothing has materialised,” said Simon Kok, regional business development manager at the engineering company UEC Middle East.

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