LIKE other sectors, the construction industry in Abu Dhabi is restructuring to become more efficient and competitive in a fast changing market. With only a few big ticket projects around, companies are focusing on more specialised work in oil and gas, petrochemicals and the utilities, which require expertise that only a handful of bigger contractors can claim.

The market is moving to project management contracts, with international firms monitoring execution in line with international standards. Design and build is also taking root and local contractors are forming more joint ventures with foreign partners. This process may squeeze some small contractors out of the market altogether.

'There is no more room for Mickey Mouse contractors and bad quality. Only specialised jobs which require specialised contractors will be up for grabs in the coming years,' says an official at the Abu Dhabi Municipality. 'There are around 1,500 construction companies registered in Abu Dhabi. We will see this number decreasing dramatically in the near future. In the short term it may seem painful but it will bring many benefits over a period of time.' The municipality is already tightening its rules to be more consistent with international practices.

Industry insiders say many of the small-to-medium-sized construction companies that sprang up over the last five years are at risk. Contracts in the AED 10 million-20 million ($2.7 million-5.4 million) range are drying up and the Khalifa Committee, which builds and leases commercial and residential buildings to nationals who collect the rental income, has put the brakes on spending.

The committee has built hundreds of new buildings in Abu Dhabi city, many of them now lying vacant. Around 200 new and replacement buildings were approved in October 1998 but construction plans are understood to have been shelved due to oversupply and budgetary restraints.

There are not enough tenants for some of the bigger developments on prime sites. 'For rent' and 'to let' signs can even be seen on the Abu Dhabi corniche, where apartments and offices were previously fully let before completion.

'There is definitely a downturn in the market, especially in the number of new commercial buildings,' says Wassim Merhebi, manager of Arabian Construction Company (ACC). 'We see the industry moving towards consolidation that will come through the execution of quality projects for bigger clients who are increasingly putting a lot of emphasis on even the minutest of details.'

The money and the projects are with clients such as Abu Dhabi National Oil Company (ADNOC), Emirates Telecommunications Corporation (Etisalat), the newly-established Borouge and in the power sector at Taweelah-A2, the UAE's first independent water and power (IWPP) project. Some other projects, such as new headquarters for the Abu Dhabi Investment Authority (ADIA) and National Bank of Abu Dhabi, and the Marina Mall, are also on the cards.

The most talked about project in the capital is the planned Corniche Commercial Development, the brainchild of six members of the ruling Al- Nahyan family, expected to be issued for tender by the end of 1999. The estimated AED 1,600 million ($435.8 million) project will involve the construction of five towers next to the Zadco/Gasco headquarters on the corniche, housing offices, apartments, shopping areas, a hotel and recreation facilities (see UAE).

Established contractors contend that joint ventures will become the norm, favouring project management and design and build rather than the conventional, costly and time consuming practice of hiring an architect, a consultant and then tendering the project. 'Design and build gives a huge advantage. You get the job done in a shorter period of time, the lines of communication between the contractor, consultant and the client are smoother and the quality is much better,' says Ausama Zubaidi, marketing and development manager at Al-Hamed Development & Construction.

Construction companies will have to broaden their capabilities if they are to take on buildings and infrastructure at the same time, rather than specialising in one area. The requirements of ISO-9001 for consultants, ISO-9002 for contractors and ISO-1nvironmental work will also force them to raise standards. ISO-2000, which will incorporate the three existing ISOs, is also likely to be introduced in 2000.

Infrastructure contractors should benefit from projects planned outside Abu Dhabi island by the Public Works Department, Abu Dhabi Municipality and Al-Ain Municipality, as well as industrial areas masterminded by the General Industry Corporation (GIC) and the Saadiyat Free Zone development. '[The] Abu Dhabi government is now focusing on developing the mainland as there is very little room for further developments on the island,' says Kamal Doss, contracts manager at Al-Jaber.

Urban development schemes - at Rahba, Shawamik and Ghantoot, on the Abu Dhabi-Dubai highway; Sila, Bayah, Mirfa and Bida Zayed, in the western region; and Tawaya, Sulaimat, Al-Khitm and Al-Quraya, in Al-Ain - should also keep contractors busy. The GIC industrial areas in Mirfa, Bida Zayed and Al-Ain will offer substantial contracts. Another area will be the development of sewerage works, which are still lacking in much of the western region.

'We see a lot of opportunities in all these planned developments. We are currently developing our expertise in building hospitals, and civil works for the oil and gas and the petrochemicals industry,' says Doss. 'The market is becoming more realistic and safety conscious and stressing quality which means that in future only big companies will survive and they will have to compete at a different level.'