CCC: Riding on the crest of a wave ithe Gulf

07 April 2006

The Arab world's biggest contractor has just got considerably bigger. After an unprecedented 2005, which saw its order intake more than double to $5,380 million and its total workforce grow by a fifth to 75,000, Athens-based Consolidated Contractors International Company (CCC) now has one thing on its mind. 'Our reputation has been built on delivering projects on time and to the highest standards,' says executive vice-president for operations Samer Khoury. 'And we now have to deliver on what we have committed to.'

CCC's ability to carry out large-scale construction projects in the Gulf oil and gas sector has been much in demand over the past 15 months. It won orders totalling more than $900 million on the Abu Hadriyah, Fadhili and Khursaniyah (AFK) oil fields development in Saudi Arabia. In Qatar, it picked up subcontract work, worth $1,130 million, on the Qatargas II and RasGas 3 liquefied natural gas (LNG) schemes. And in Abu Dhabi, it secured $950 million-worth of contracts for work on the onshore gas expansion programme. All were placed by the leading engineering, procurement and construction (EPC) contractors in the Gulf - Japanese heavyweights JGC Corporation and Chiyoda Corporation, Italy's Snamprogetti, Paris-based Technip and the US' Bechtel and Fluor Corporation.

Even for a contractor that has worked in the Gulf for more than 50 years, the scale and speed of the current boom has come as a surprise. 'We knew about the long-term aims of Qatar Petroleum and Saudi Aramco on the LNG and oil and gas fronts. But we didn't expect everything to happen so quickly: the six LNG trains [in Qatar] to be awarded in just 12 months; the Rabigh refinery upgrade and the AFK project to be followed so soon by the Shaybah expansion and Khurais,' says Khoury. 'I asked my father [CCC president and co-founder Said Khoury] whether he had seen anything like this before. And the only comparison he makes is with the situation in the mid-1970s.'

The surge in orders has required a significant increase in both equipment and manpower. CCC's fleet of equipment, which is handled by a 30-strong team in the corporate head office in Athens, comprised 7,840 units at the start of 2005; by the end of this year, it is projected to reach 12,800 pieces. Since January 2005, it has spent $240 million on new equipment, and it expects to spend a further $100 million by the end of the year.

Manpower is also on a steep upward curve. In January 2005, its total staffing stood at 61,000. By last December, it had risen to 74,700, a figure that is projected to reach 100,000 by the end of 2006.

Recruiting in such a buoyant market is becoming more challenging. While there remains a steady supply of unskilled and skilled labourers from the Indian subcontinent, Thailand and the Philippines, CCC is finding that new recruits are requiring more training. 'But the real problem on manpower is the level up,' says Khoury. 'Because the industry has grown so muchin such a short space of time, finding good supervisors is proving more and more difficult. We are increasingly working with vocational schools and colleges to get the type of supervisors we want and focusing on promoting our younger staff.'

CCC is having to make other changes too. It has strengthened its construction support division, based in Athens, through the recruitment of additional planners, procurers and engineers. It has also moved about 150 staff from Athens to its office in Abu Dhabi to provide support to its project teams across the region.

With the upsurge in project activity, the risk has increased for contractors, especially given rising costs for raw materials. 'Across the board, everything has gone up in price: wages, rentals, camps and, of course, raw materials. When we price a new job, we try and factor the increases in, as it is a risk clients won't assume. Contractors are being accused of taking advantage, but we are not,' says Khoury.

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