Special Report contents:
- Affordable housing must be developed on massive scale
- Construction market to get worse before it gets better
- GCC construction prospects for 2016
- Affordability becomes Dubais real estate priority
- Egypt struggles to deliver on housing promises
- Egypts housing problem deepens
- Finding success in the Egyptian market
- Contractors will be dissatified with 2016
In late September, Netherlands-headquartered Arcadis unveiled a new global brand identity and said it would phase out legacy UK brands Hyder Consulting and EC Harris.
By coming together under the Arcadis brand, they create one of the largest consultancy firms operating in the region, with more than 2,300 employees working across a variety of sectors and disciplines.
In total, the region accounts for about 10 per cent of the global Arcadis business, which over the past four years has grown from 2bn ($2.15bn) in revenue to 3.5bn this year.
In terms of resources, it has grown from 15,000 to 28,000 people. The company is able to take on larger projects, giving revenues a boost and more than offsetting any cost-cutting and headcount reductions from the consolidation of the two brands.
The company is also able to offer a broader suite of client services at the very earliest stage of projects, when programme managers and other advisory services are hired.
We have had some cost synergy in enabling functions where there was cross over. That was quite minimal. There have been more synergies on revenue where we have won work based on our combined capabilities, says Wael Allan, CEO Middle East, Arcadis.
[That] has been really great for Arcadis, with the two companies coming together. We have been hiring a lot more, especially in programme management, which we see as a growth focus for the region, and we continue to grow that stream.
An immediate example of the benefits of this combined ability came when bidding for work on the Doha metro scheme.
Prior to combining, we [Arcadis] decided not to bid for the Gold Line of Doha Metro and so had Hyder. But when we closed the deal [Hyder acquisition in 2014] we realised we have the combined capability that the client is looking for. So we decided to bid jointly and we won that work, and that is 20m of design engineering and architecture, says Neil McArthur, CEO, Arcadis.
For the future, Arcadis is confident it will secure projects work despite scaling back activity this year.
The region is in wait-and-see mode, we are in good position to capture the must wins, the key projects for the region. In times of slowing down, it is time for working with clients more deeply and becoming more efficient, says Allan. We should also remember, out of all emerging markets, the Middle East fares the best compared to others because of the reserves built up in recent years,
Allan also expects the private sector to play an increasing role in the delivery of projects.
We have recently heard more noises about PPP [public-private partnerships] and governments doing projects with the private sector. That would be great for the industry and people of the Middle East as projects would be delivered more efficiently, he says.
Bringing the public and private sector together creates efficiency, the private sector delivers services to the public efficiently. There is a lot of money in the region and the private sector can do a lot more than just the building sector.
More emphasis on the full lifecycle of built asset suits Arcadis business model.
We see four phases. The planning phase with business advisory, urban planning and masterplanning; then there is the creation phase, which is everything to do with architectural design, detailed engineering design, project management and cost management; then there is the operating phase, which is helping clients get more out of their assets; and then finally there is the reinvention phase, says McArthur.
We are the world leader in environmental consultancy and remediation, where we can help clean up legacy issues of the past soil remediation and then urban planning of what you can do with that [rejuvenated] land.
The consolidation under the Arcadis brand also gives the firm more local access in regions such as the Middle East, while at the same time broadening its worldwide expertise.
What is driving our strategy and operating model is clients, and 80 per cent of what we do is local offices dealing with local clients, whether they be large multinationals, national governments, or local governments and local businesses. And what they are demanding is world-best capability, they dont care if comes from the US, UK, or Asia, they want the best, says McArthur.
For example, we are doing PM [project management] for the worlds tallest building, the Kingdom tower in Jeddah. We won that job because we brought project management expertise for high-rises from the US, project and programme management services from EC Harris and we delivered that through our joint venture in Saudi Arabia.
With clients increasingly demanding a broad range of services from their consultants the trend for consolidation is expected to continue.
Consolidation will continue, says McArthur. We have roughly 1.5 per cent market share, if you look at all other professional service sectors [such as] audit, that is consolidated into a limited number of international players, some regional players and local niche players.
Exactly the same thing in IT consultancy, exactly same thing in the legal profession. There is exactly the same thing in the strategy space and operation consultancy, and technical professional service. There is still a long way to go when you consider we are [number] five or six in the rankings worldwide and we have a 1.5 per cent market share.