Construction industry needs partnerships

31 July 2008
Clients and contractors are sharing the risk of rising prices and delays more evenly than before, and improving fractious relationships.

One of the first things visitors to Abu Dhabi see when they leave the airport is dozens of tower cranes at the nearby $14.7bn Al-Raha Beach project.

It is the sort of development that Abu Dhabi has waited patiently for. For five years it has seen Dubai speed ahead with projects such as Dubai Marina and Jumeirah Lake Towers while its own market has moved far more slowly.

But the project is not just significant for Abu Dhabi, it is vitally important for the entire region’s construction industry as it is one of the first times that a partnering agreement has been used.

This model involves clients and contractors sharing the risk of rising prices and delays more evenly than before, improving the sometimes fractious relationship between them.

To deliver the project, Aldar Properties has formed a joint venture with the UK’s Laing O’Rourke using the latest form of the New Engineering Contract, known as NEC 3, to manage its sub-contracts.

Aldar’s decision to form the joint venture was greeted with scepticism when it was announced in 2006, but the project is now beginning to deliver visible results. Work is well advanced on the interchanges on the Dubai-Abu Dhabi highway, and Aldar’s headquarters building is set to open in 2009. If all goes to plan, it will be the first building in the Gulf completed under a partnering contract.

This is exactly what the industry needs. The partnering model is being used on a few other projects, but without a successfully finished project, progress across the rest of the industry has been slow and many clients and contractors are adopting a wait-and-see approach.

As more buildings are completed using partnering, the sceptics will have less room for doubt and partnering should catch on with the rest of the industry.

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