The need for project management services in the GCC is growing as governments and developers push on with ambitious infrastructure plans. As projects become more complex, so does the scope and role of the project manager.

“The size of projects in the Middle East is growing, they really are megaprojects,” says Raouf Ghali, president of project management operations at US consultant Hill International. “A lot of infrastructure schemes are going ahead, such as rail, for example, which require a lot of different components to come together. It is a complex situation to coordinate.”

In the case of the $10bn Doha metro scheme, for example, project managers look after the separate lines and the major stations, while US consultant Parsons Brinckerhoff coordinates Qatar’s entire railway portfolio at a strategic level as the programme manager.

Big picture

“The programme manager is the entity sitting on top, looking at the big picture,” says Ghali. “How are all these lines progressing? When do they need to have signalisation? When do they need to have different stations? When does the rolling stock have to be ready? When does the maintenance facility have to be ready?” Hill International is project manager for the 18-kilometre Green Line of the Doha Metro.

The programme manager is the entity sitting on top, looking at the big picture

Raouf Ghali, Hill International

The engagement of a programme manager can take a variety of structures. Some clients, particularly those in the oil and gas sector, are comfortable with undertaking the role internally or seeking consultancy support to increase the number of staff. Conversely, some developers and infrastructure delivery bodies seek to outsource alsmost all management activities.

“Typically, the programme manager role is recognised globally as a standalone service provider and the first person to get involved with the scheme,” says Tom Hasker, head of project management at Faithful+Gould, owned by the UK’s Atkins. “Previously, architects and engineers had fulfilled this role, but more recently it has become a specialised service.”

For megaprojects, it is common to see separate companies provide programme management services to those providing project management, as is the case with the Doha Metro. However, for other schemes, the programme manager may be asked to manage the projects as well.

“We have a client in the UAE with 22 high-rise schemes,” says Hasker. “To manage this, we have a core team of three who are the custodians of the programme management systems and that enables us to operate a project management resource of, at the most, two people, or more commonly one person for each tower.”

Hasker says the centralisation of services such as commercial and programme management provides tools for project managers to create efficiency and reduce costs. This is welcome news for clients that are concerned that introducing a programme manager alongside project management will inflate costs. Consultants argue the cost of using a programme manager can be negated by the savings created.

“The cost of the programme manager in comparison with the cost of investment is very small, but if you get this [management] wrong, the overall cost of your investment can get out of control,” says Tim Evans, Middle East development director at UK consultant Mott MacDonald. “The cost of using a programme manager is often dramatically outweighed by the savings created.”  

Cost savings

Cost was certainly a consideration for Abu Dhabi Sewerage Services Company (ADSSC), which was one of the first infrastructure clients in the region to use the programme management approach on its 41km Strategic Tunnel Enhancement Project, known as STEP. The AED6bn ($1.6bn) scheme involves three major tunnelling contracts, a pumping station and two packages for the 43km of connecting pipework needed to transfer flows into the new tunnel.

“One of the challenges we had was convincing people this was not an extra cost, that what it would bring to the contract would save us money,” says Alan Thomson, managing director at ADSSC. “We brought the first two contracts in under budget, which is a sign in itself that the programme management function was very successful for us.”

ADSSC opted to use a cost-reimbursable form of contract to pay its programme manager, CH2M Hill of the US, and Thomson says this helped to build trust between the parties. “At times, we had very interesting discussions where we got money from them because we felt they hadn’t contributed the way they should have and equally we have paid them back where there has been underpayment, and that has built up an enormous amount of trust and respect between the parties, despite the initial difficulties,” says Thomson.

Neil Reynolds, CH2M Hill’s regional managing director, says the firm likes this type of arrangement, where the consultant is incentivised to meet key performance indicators (KPIs). “A number of our programmes have KPIs where we actually put some of our money at risk,” he says. “So unless we achieve that KPI, we won’t get paid that additional fee for meeting our objectives. We are prepared to do that as a company, having belief in ourselves that we can deliver the performance required.”

Lump-sum fee

Of course, some clients prefer a straight lump-sum arrangement, which can be attractive if the scope of work is clearly defined. The challenge is that this is not always the case. “Some clients want services under a lump-sum for a fixed price before a lot of the key decisions are made about how the project is procured and how long it might take,” says Mott MacDonald’s Evans.

What is more, that tender is sent out to a large number of bidders making for a highly competitive environment based on the acceptance of risk by the management company.

Firms say the resurgence in the market over the past 12-18 months has seen an increase in this type of procurement. “There is a layer of developer that has been insisting on lump-sum in the past 12 months,” says Hasker. “We haven’t seen any of those schemes through their life-cycles to see how the clients treat programme blow-outs. The worst-case scenario is if it extends considerably beyond their control, how will that play out?”

Ordinarily, time variations see the fee increase accordingly. This is certainly the case for cost-reimbursable arrangements where firms are paid according to a pre-arranged schedule of rates within an agreed organisational structure.

Whatever the contract mechanism, companies report that the market is becoming increasingly competitive, with consolidation being a major feature of the sector. Atkins acquired Singapore-based project management specialist Confluence in October 2013, which has now been integrated into Faithful+Gould.

Previously a cost management specialist, the firm is now repositioning as a total project management provider. At the same time, the US’ Aecom has purchased the UK’s Davis Langdon, Netherlands-based Arcadis has bought the UK’s EC Harris and CH2M Hill has acquired Halcrow, also of the UK. This particular acquisition had an interesting impact on the STEP scheme. Halcrow was the designer for Brazil’s Odebrecht on the pumping station package. “So we had a conflict of interest that was not anticipated and we had to manage that by appointing new engineers [Mott MacDonald] for the pumping station,” says Thomson.

The cost of the programme manager in comparison with the cost of investment is very small

Tim Evans, Mott MacDonald

Despite this, Thomson is very positive about the benefits that came from employing a programme manager. “What was better than anticipated was the learning by osmosis by our own team,” he says, explaining that young engineers and middle managers were working alongside some very experienced people in CH2M Hill. “There has been a real exchange of knowledge and an excellent learning opportunity for people in ADSSC, and while we anticipated this would be the case, what we perhaps didn’t anticipate was that our senior managers involved in the steering committee have also learned a lot.”

STEP programme manager Robert Marshall says this is an important aspect of the job. “One of our functions is capacity-building through passive and active training so that, in the future, clients will be able to manage this kind of work in-house,” he says.

Other benefits that Thomson points to include CH2M Hill’s research contacts in universities, which enabled ADSSC to create physical models of the project to verify that the STEP would work and to ensure the (soon-to-be-tendered) odour control systems were state of the art. “We were using Iowa University [in the US] to do the modelling and they have one of the biggest hydraulic laboratories in the world, so it was an enlightening and interesting experience for everyone involved,” he says.

Portfolio management

From a systems perspective, consultants tell MEED the most commonly used management tool is US-based Oracle’s Primavera system for project portfolio management, which offers a suite of tools depending on the user’s needs. “An executive user, for example, looks at a dashboard analytics view to see how their strategic projects are going,” says Yasser Mahmud, vice-president, product and industry strategy at Primavera. “At a level below, you have project managers who do the brunt of the management, and the last group of people are those out in the field getting the work done, updating statuses and collaborating with co-workers.”

Mahmud says the way clients use their systems has evolved with the growing maturity of the users. They are “making infrastructure more productive” by managing their long-term operations and maintenance more efficiently, he says. This makes the region a key growth area for Oracle. US-based research and advisory firm Gartner predicts regional information technology spend will hit $211bn in 2014, representing growth of 8 per cent year-on-year.

Consultants agree that the project and programme management fields have matured and clients are embracing the role rather than just using management companies as a front to satisfy financing requirements. With a host of projects currently seeking support and many more to come, the future looks bright for the region’s specialists.