Dubai Properties approaches firms for framework agreement

19 October 2017
Change in procurement strategy highlights the growing risks that developers face when engaging with the supply chain

Local developer Dubai Properties has invited selected consultants and contractors to submit proposals for framework agreements that will cover construction work on its upcoming projects.

Firms have been given a late October deadline for proposals to work on a wide range of projects that vary in scale and include apartment buildings, villas, hotels, and infrastructure. Companies have to select the type of projects they are qualified to work on.

Once a pool of firms has been selected Dubai Properties will then select companies to work on individual projects when needed.

According to regional projects tracker MEED Projects, Dubai Properties has $730m of projects in the pre-execution phase together with $1.8bn of projects that are on hold and could be revived. The developer has $4.3bn of projects in the execution phase. Major projects Dubai Properties has developed in the past include Business Bay, Culture Village, and Jumeirah Beach Residence.

The move to establish a framework agreement with contractors is a departure from the traditional method of tendering used by most developers in Dubai and highlights the growing risks that developers face when procuring construction services.

The supply chain has struggled with severe cash flow constraints due to late payment and certification in recent years and some firms are now unable to deliver projects.

The local/Australian HLG Contracting recently stopped working on the AED619m ($169m) contract to build two sections of the Expo Village residential development at the Expo 2020 site in Dubai. According to sources close to the project, HLG could not provide a performance bond.

Subcontractors and suppliers have also been affected with main contractors saying that on average two to four companies working on major projects are now effectively go bust – UAE laws make it difficult for firms to declare bankruptcy.

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