Based on an interview conducted in June 2020

Q. What lessons can the construction industry take away from Covid-19?

We have seen that projects in which fairer, more flexible transactional arrangements exist between project parties deal far more easily not only with global events on the scale of a pandemic but also with more local risk events that happen during the lifecycle of many projects. 

A more even spread of risk, the use of collaborative contracts and fairer performance terms create value not just for the parties involved but also provide predictability of programme and cost, and hence more certain outcomes. 

This can also prevent the tendency to delay the resolution of problems and claims until near completion of the scheme – this creates a large risk area that will only be determined at a future date. That future date, in some instances, has coincided with Covid-19 and both parties have had less resources to conclude the issues. This has been a learning point.

This article is extracted from the report 'UAE Construction After Covid-19'

Q. What are the challenges facing consultancies in the current environment?

Cashflow for the service industry is always top of the list since the majority of the costs are personnel-related and cannot be held up while invoice payment is not always so timely. 

We understand it is not only the supply chain going through challenges during a global crisis, and the worst thing we can do is to stop engaging with our clients and talking through the difficulties – we believe there is a solution to everything. 

Cash, however, only deals with the immediate challenge and in the medium to longer term, new project flow will become critical in both the consultancy and contracting industry. We see good news in the shape of successful bond issuances by most countries in the Gulf and we will wait to see if this translates to material awards for new assets and services in the next two quarters.

The other key aspect is developing and retaining talent, and in particular we need to work to make the industry more attractive to the younger generation.

Q. What does the future of construction look like from the point that we are at now?

The world will emerge from the pandemic with an overall weaker consumer and higher government debt. We expect to see a reduction in construction work arising from those segments that rely on spend, such as lifestyle, tourism and leisure, in addition to non-critical public sector assets. 

During this period, the construction industry will need to re-gear for the new reality of potentially fewer projects, faster turnarounds and more innovative funding solutions. Major infrastructure schemes will still go ahead, but there will be increased scrutiny on demand assessments, value for money and also consideration of risk.

Risk will be an emerging headline in all schemes at inception. The pandemic has highlighted the vulnerability of the world economies to global risks and this will feed into programmes and major projects. Clients will demand more certainty and are likely to be open to the consideration of fairer, more balanced transactions in return for more resilience and predictability of outcome. 

Q. What are some of the trends that will shape UAE construction moving ahead?

We can no longer discuss the impact of technology as a broad trend in the industry since all innovations and most trends have a leading technology component in their DNA. We will, however, see the creation of new assets plus maintenance and operation being completed faster with more accuracy and potentially at a lower cost due to the use of technology across the entire work flow. 

During this period, the construction industry will need to re-gear for the new reality of potentially fewer projects, faster turnarounds and more innovative funding solutions.

The UAE has always been at the forefront of showcasing digital trends including 3D printing, use of robotics and so on, but it will take a market shift and also a client shift to fully embrace some of the developments that are available.

Sustainability is likely to be a key driver post the Covid-19 pandemic as evidence is showing the consumer is becoming more sensitive and aware of the fragility of the planet that we inhabit. This is likely to translate into more environmentally-focused designs and hence construction. Progress has been made pre-Covid 19 and we expect that this will now accelerate.

Q. What will the role of bodies such as the Royal Institution of Chartered Surveyors (RICS) be in a post-Covid-19 world for construction?

The role of professional institutions has always been to provide support for members, market guidance, intelligence and thought leadership. We don’t see this role change radically in the post-pandemic world.

Sustainability is likely to be a key driver post the Covid-19 pandemic as evidence is showing the consumer is becoming more sensitive and aware of the fragility of the planet that we inhabit.

We do, however, expect the influence of such bodies to increase as governments seek guidance and support or data from independent organisations, which are connected to the market by an active and expert professional network. 

The opportunity of the data capture from this network that can be turned into information and thus knowledge is considerable.

RICS will continue to develop and promote the use of standards in government to create a transparent, consistent and secure marketplace that will promote foreign investment and create a strong economy going forward.

This report is produced under the MEED Mashreq Construction Partnership.To learn more about the report or the partnership, log on to: www.meedmashreqindustryinsight.com