On 11 April, Dubai Civil Engineering (DCE) signed an AED194m ($53m) contract with local developer Nakheel to build the Palma Residences on the Palm Jumeirah.
The award was the culmination of months of work for the Dubai-based contractor, which saw it compete against 34 other firms hoping to secure the contract. The tender was not unique. Contracts across the region now attract a large number of competitors, which means the chances of winning are now slimmer than they have been for more than a decade.
The solution for contractors is to participate in more tenders. The basic logic is, the more you compete, the more chance you have of winning. While the rationale is fundamentally sound, the problem is many companies do not have the resources to chase all the tenders that come out. This means estimating teams have been stretched and some firms are now declining to participate in tenders because they simply do not have the resources to take part.
Some firms are suffering because they cut their overheads too aggressively in 2009 as the region’s construction market collapsed.
If contractors are going to secure more work, they will need the resources to tender more often and more aggressively. Clients are already aware that firms like DCE, who before 2009 could charge a premium for their services, are prepared to compete and win. Others will have to follow their example if they are going to survive.