Contractors will be dissatisfied with 2016

10 November 2015

The expectation is government spending will be cut back significantly

While farmers are known to complain that there is either too little rain or too much rain, contractors grumble that there is either too much construction work or not enough construction work.

The added frustration for construction companies this year is that it is difficult to know whether they are about inundated with new contracts or starving for work. Work secured over the past three years has kept companies busy this year, despite the sharp fall in commodity prices and the dampened economic outlook for emerging markets around the world.

Adding to the optimism, there also appears to be lots of work about to be awarded, as clients were busy tendering contracts during the first half of this year. The problem is that as 2015 has progressed, many of these tenders have been stuck languishing in protracted evaluation periods, and contractors are questioning whether many of these projects will be able to move forward.

As 2016 nears, these doubts are growing stronger. Government budgets are under pressure and project funding commitments are being reviewed or scaled back, and it is not clear how far the reaching the spending cuts will be.

Comments on GCC growth slowing to 2.7 per cent in 2016 and a $275bn drop in government revenues in 2015 from International Monetary Fund (IMF) managing director Christine Lagarde in early November suggest the economic pressures to rein in spending will significant and only essential projects will move ahead.

Overall, Qatar and Dubai should be the most robust markets as they develop the infrastructure needed for hosting football’s Fifa World Cup in 2022 and the Expo in 2020, while Bahrain, Oman and Saudi Arabia could be the most vulnerable.

Whatever happens, the one thing contractors can be sure of is they will not be complaining that the amount of work available in 2016 is “just about right”.

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