Confirmation recently that the Burj Dubai will be delayed by several months is the latest reminder of how tight construction schedules are in the Gulf.
Real estate developers are desperate to get their products to the market. They often try to make up for time lost in the planning and financing stages during the construction phase, or move onto site before designs are complete and make changes after work has started.
The issue is a serious one for contractors. If they take on a job they can’t complete on time then they will incur fines and probably fail to make a profit.
But contractors have sometimes added to the difficulties. As Samer Khoury of Consolidated Contractors International Company (CCC) admits, firms have in the past taken on work they knew they could not complete on time.
In markets where work is hard to come by, risks such as this have to be taken in order to secure contracts and cash flows. But in the Gulf market, such practices are not necessary.
Most construction firms have managed to raise prices and margins over the past three years, and those looking to safeguard their reputations and profits are now negotiating for extra time. If the client won’t budge they are prepared to walk away and find work elsewhere.
The danger is that project timetables could slow too much, although that is unlikely in the Gulf where speed-to-market continues to be a sought-after commodity.
Instead, with a more equal balance between clients and contractors when it comes to negotiating new contracts, projects are likely to have a more realistic timeframe. Clients might not like it, but it is better than a project running late and failing to make a profit.
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