A Call For Caution : Local Contractors
Big Project ME’s Gavin Davids looks at the concerns local contractors in Dubai share in the wake of the Expo 2020 announcement.
In the wake of the World Expo 2020 being awarded to Dubai, expectations amongst the local construction industry have risen in anticipation of new tenders and project announcements. While it’s likely that the major players in the construction market will dominate the flagship projects, there remains tremendous opportunities for local contractors, especially those in the ‘medium to large’ bracket, experts say.
Dr Imad Al Jamal, Contracts and Development consultant expert, mediator and arbitrator at the UAE Contractors’ Association, agrees with this assessment. “With the upcoming Expo 2020, of course the contracting market is ready and serious (about taking advantage of the opportunities available). They’re serious about getting into the business available, but it’s not going to be soon. It’ll be at least a year or two before we see the start of business for 2020.”
The call for government intervention is one that is echoed by Milind Deshmukh, managing director at SAM Contracting. The head of a local contractor that has operated in Dubai since 2006, Deshmukh has seen both the extreme highs and lows that have swept Dubai’s construction market.
“There is no government regulation for prequalifying contractors. You can start a contracting company tomorrow and take on a $130 million job just because your price is good. In this market, the government hasn’t put any standards as to who should do what. It’s a very serious problem.”
However, as Dr Al Jamal points out, there has been significant improvement in the way local contractors are now conducting their busines. “I think the best thing they’ve learned from the lesson (of 2008) is to be very fair and balanced in their pricing, in their cost controls and planning. It’s no more (so easy), especially with the medium and big sized companies,” he says.
Deshmukh points out an interesting market trend. “The competition is growing, because of the regional situation. There are more expats coming and setting up business here. This is driving the prices down and the bottom line is completely eroded, making the market unstable.”
Despite this, Dr Al Jamal says that he’s convinced that lessons have been learnt. “Things are moving in the right direction, but we just have to be a little bit patient. So let’s wait and see,” he says optimistically.
The feature was first published in our January 2014 issue. Read the full story on pages #26-#27 here – http://www.bigprojectme.com/magazine/january-2014/
