There have been times in the past when Qatar has struggled to attract the consultants and contractors needed to deliver its construction projects.
Firms had a tendency to dip in and out of the market without establishing long-term operations. This frustrated clients, who wanted to rely on their project partners for future schemes. For their part, contractors expressed annoyance with long lead times on projects and slow payment terms. The size of the market made them question whether establishing operations in Qatar would pay off.
The bid book timescale has to be reviewed in detail so that the market is in a stable position to deliver
Axel Bienhaus, AS&P
In a bid to secure much needed projects experience, Qatar’s state investment vehicle Qatari Diar Real Estate Investment Company began to explore the possibility of joint ventures with the world’s biggest construction firms. In April 2007, it signed a joint venture agreement with France’s Vinci Construction Grands Projets to establish Qatari Diar Vinci Construction (QDVC).
Qatar’s key construction partnerships
QDVC is involved in many of the country’s biggest schemes, including the Qatar-Bahrain causeway, Lusail city light rail, the Lusail car parks, Doha North pumping station and the Sheraton Park project. The agreement is understood to generate more than $320m a year for Vinci.
In April 2010, Qatar extended its ties with Vinci by taking a 5.78 per cent stake in the company in exchange for the French firm taking over electrical engineering and information systems group Cegelec.
The joint venture model worked well for the Qatari government and it has continued to form new partnerships. In March 2010, it established QD-SBG with Saudi Binladen Group. This partnership brings a construction group and an industrial services group to the country.
Projects planned or under way ($m)
22 March 2010: 223,398
23 March 2011: 231, 852
Source: MEED Projects
The industrial services group will see Saudi’s Construction Products Company (CPC) set up an industrial business park in Qatar. It will have eight production facilities for materials such as ready-mix, precast concrete, steel, aluminium, glass, marble and granite, timber and formwork. Local firms Barwa Real Estate Company and First Investor Company are also shareholders in the venture. QD-CPC opened its Doha office in March 2011.
Such tie-ups are a sensible strategy by the government. In the past, projects in Qatar have suffered when domestic production of materials, such as cement and steel, could not meet demand and port constraints delayed imports. Joint venture agreements with international firms ensure certainty of delivery. Meeting demand for materials is particularly important in order to deliver Qatar’s World Cup projects on time.
Winning the bid to host 2022 World Cup has made Qatar more attractive to construction firms. Projects such as the metro, Qatar-Bahrain causeway, the stadiums and new hotels are now guaranteed to be constructed.
“When Qatar was announced as the World Cup hosts on the 2 December, the next day companies approached us [to work on projects]. There is huge interest from many different companies,” says Axel Bienhaus, a partner at German consultant Albert Speer & Partners (AS&P).
World Cup infrastructure
AS&P worked with fellow German consultants Proprojekt and Serviceplan on the 750-page Qatari bid book, which was submitted to football’s governing body Fifa in May 2010. AS&P has also undertaken the architectural designs for eight of the 12 stadiums along with structural designer, Arup of the UK.
The designs for the 12 World Cup stadiums (nine are new and three are upgrades) have already received international praise. However, there remains some concern over how the arenas will be cooled. Detailed designs for the stadiums, which will include the solar powered cooling systems, will be developed soon.
“We designed the stadiums to fit the Fifa requirements or even to exceed them,” says Bienhaus.
“We now have to bring in the requirements of the local football clubs because after the World Cup, all the stadiums will be used by the local clubs. It will not change the plans for the key infrastructure and the overall technical concepts, but it will be kind of a review. Then we will go into detailed design very fast. The Qataris want to start with the stadium construction very soon.”
“There is also the parallel development of the transportation infrastructure, the train, the metro system, and of course, other non-World Cup-related projects at the same time. One of the main aspects of the masterplanning will be to align all these projects with the capacities of the building sector to keep the prices reasonable and to safeguard building logistics,” says Bienhaus.
Hiring a project manager for the construction programme is top of the to do list for Qatar. It is currently forming a steering committee, which will in turn appoint a programme manager. Coordination is critical considering the scale of the challenge facing Qatar. “It is a very good idea to start with a schedule for all the projects. The bid book timescale has to be reviewed in detail so that the market is in a stable position to deliver,” says Bienhaus.
German construction expertise
Many firms familiar with the market are also involved. This includes German construction major Hochtief, which is another of Qatari Diar’s construction partners, having entered into an agreement with the organisation in June 2008. Its relationship has evolved since it signed a joint venture with Qatari Diar subsidiary Lusail Real Estate Development Company to work on the massive 35 square kilometre Lusail City scheme. In December 2010, Qatar Holding, the owner of Qatari Diar, took a 9.1 per cent stake in the company.
The Qatari-German links are very apparent in the construction sector. German railway expert Deutsche Bahn is planning the country’s $25bn rail network. Bienhaus suggests this could come down to reputation.
“When it comes to reliability, quality, high-end engineering and sustainability, these are the strengths of German companies. For prestigious projects, Qataris only want high-level engineers and consultants. They accept that higher quality means higher fees,” says Bienhaus.
Prior to Qatar’s World Cup bid win, Qatar Public Works Authority (Ashgal) awarded several contracts for its $20bn road building programme, including one of the biggest awards of 2010, the $437m seventh phase of the $4bn Doha Expressway project. The package covers the upgrade of the 6.8km highway and four new interchanges. This was awarded to local contractor Midmac with Turkey’s Yuksel Construction Company in June 2010.
The scheme pushed 2010 total contract awards in Qatar up to $8.4bn from $7.4bn in 2009. Investment in road infrastructure is set to continue in 2011.
An enormous pipeline of $232bn-worth of projects is planned or under construction in Qatar. Winning the right to host the World Cup has provided the catalyst that was needed to push some projects ahead.
Unlike in days gone by, Qatar is set to be spoilt for choice when it comes to selecting the right firms to deliver the schemes. For now, all eyes are on the appointment of a project manager to coordinate the massive infrastructure delivery.