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With tighter fiscal spending and narrowing liquidity in the GCC, projects market is under increasing pressure to optimise resources and drive more efficiency in the delivery model.

The biggest opportunity to increase project value is to transform the way that projects in the region are procured in order to reduce time and cost overruns.

“We understand that the traditional methods of procuring and delivering projects has not been working as optimally as it should be,” says Raymond Hector, Director – Commercial Contracts, Procurement at Abu Dhabi-based Aldar Properties.

Speaking at the Collaborative Contracting webinar hosted by SNC-Lavalin in partnership with MEED, Hector says that the scale of projects in the region often makes them susceptible to design changes during the construction process.

As well as increasing the potential for delays, these late-stage changes in design can also result in disputes over who is responsible for any additional costs incurred.

Such disputes highlight the typical lack of alignment of objectives among companies involved on a project that leaves little room for a collaboration.

 “There a number of reasons, and it’s easy to blame one single party, but the three main stakeholders – developer, consultant and contractor, are all equally responsible,” says Hector, adding that the primary thing in any partnership is trust.

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But there are signs that change is underway.

One of the biggest and most ambitious projects in the region is the Red Sea Project, a vast scheme to develop a long stretch of Saudi Arabia’s Red Sea coastline into a luxury tourist destination.    

In addition to the scale of the project, its remote and ecologically sensitive location raises a host of project delivery challenges. To meet the challenges, project developer, The Red Sea Development Company (TRSDC), has sought to innovate the project management models on the development.

“One of the main challenges for us has been the maturity of the market,” says Faisal Butt, TRSDC Director of Project Delivery. “To [successfully] deliver projects within our [target] timescale, quality and aspirations, we have to think outside the box with regards to how we construct our delivery models, how we put the contracts together and how we collaborate with the market.”

Ensuring effective deign management on such a large and complex scheme was a priority, as was securing early involvement of the construction contractors.

To achieve these goals, TRSDC implemented an integrated delivery model to mitigate all risks and to ensure highest quality standards.

“Over the last couple of years, we have demonstrated our collaboration with the construction market, and we are now seeing the benefits of it,” says Butt.

One example of this approach is highlighted by the work of Amana Contracting Group and its subsidiary, Dubox, who were contracted by TRSDC to design and build a management hotel at the project site based on their offsite and prefabrication capabilities.

With over 200 in-house designers working with design teams around the world, cloud-based project collaboration platforms such as Autodesk’s BIM 360 have been essential to ensuring that the design, construction and other teams were coordinated.

“It has also helped us set up incentivisation within our contracts for our stakeholders,” says Butt. “Allowing them to measure their milestones more accurately.”

Contractor engagement

The ‘early engagement’ of contractors in the design of a project is an element that has been missing from projects in this region for a long time, says Sean McQue, Operations Director of Dubai-based contractor Alec.

“As contractors, we feel that we do have a lot of value to add,” says McQue. “Especially since we do end up becoming a major stakeholder on a project.”

Challenges around cashflow and payments have battered contractors and their downstream supply chain in the recent years, and McQue adds that ‘difficult tenders’ and tougher contract conditions launched by one-off and mid-tier developers has not helped the situation.

“We need to ask to ourselves what is the reason for the issues that we’re facing,” he says. “We’ve had very successful projects under traditional contractual framework, and we’ve had failures when we tried alternative frameworks.”

“A lot of the issues sit within behaviours,” he says. “Organisations need to take responsibility – often collaboration is just a mindset and not necessarily words written in a contract.”

McQue says that there needs to be more trust between project parties, and that this trust has to be earned through better behaviours.

“It is important to prioritise the project over organisational agendas,” he says. “We need to create the right environment for everybody to operate in and have continuous involvement from the employer.”

Fostering collaboration

A vital ingredient that is needed to foster greater collaboration on projects is to ensure that from the early stage, the client’s advisors, organisation members and any necessary ministries, work together to optimise requirements and identify major risks, says Paul Abbosh, Managing Director for the GCC – except for the UAE & KSA, at Atkins, a member of the SNC-Lavalin Group.

Abbosh says that it is important that contractors and other stakeholders are given early access to the design in order to optimise delivery. He also says that the client’s goals should be communicated clearly to allow stakeholders to align their activities.

Abbosh calls for greater use of incentives in contracts.

“In my early days of working with Atkins UK, we carried out a study on why projects fail,” says Abbosh. “Interestingly, we found that majority of projects fail because they just have not been set up properly in a way that reflects the client’s objectives, requirements and a procurement sequence that avoids gaps and overlaps.”

Abbosh says that the approach needs to be centred on trust and motivating people to work outside of their contractual siloes. 

“Industry thought leaders need to be converted to this type of approach,” he says. “And these leaders can get together with like-minded stakeholders in the supply chain and create a culture of collaboration.”

Watch the on-demand webinar here

The SNC-Lavalin Group in the Middle East launched a white paper entitled “New Alliances: collaborative contracting in the GCC projects market” that provides a strategic framework to enhancing project delivery and efficiency in the GCC.

The framework combines the company’s market knowledge with its end-to-end services broadly including consulting, advisory, design, engineering, procurement, project & construction management, and operations & maintenance expertise under the SNC-Lavalin, Atkins, Atkins Acuity, and Faithful+Gould brands. Read and download the white paper here.