Construction in Saudi Arabia is becoming an international affair. One of the issues repeatedly raised by contractors and consultants at MEED’s Arabian World Construction Summit 2010 (AWCS) was the importance of building alliances.
Contractors talked at length about how fierce competition from both local and international companies has turned one-time industry enemies into allies.
A senior official at one of Saudi Arabia’s biggest contracting companies said he did not think local companies could continue to succeed in the kingdom without international partnerships.
Likewise, an official from one of Dubai’s biggest contracting companies affirmed that his company could not have succeeded in the kingdom without the alliance it made with a local firm. And, a large Chinese contractor recently admitted that without the help of its local partner, it would never have attained the 18,000 visas necessary for its labour force.
Contractors, consultants and project managers all agreed that choosing a partner in Saudi Arabia is one of the earliest and most crucial decisions construction companies will make. Choose wisely, and some of the most lucrative markets in the industry open up for business. Choose poorly, and myriad legal and financial troubles arise.
There has never been a more important time to focus on building a long-term alliance. Saudi Arabia approved a 2010 development budget of $146bn – the kingdom’s largest-ever such budget – and predictions for the future are steadily rising.
But, Saudi Arabia is not the only market in which choosing the right partner is key to success. Libya is looking to invest $500bn in construction projects over the next ten years, but careful partnerships top the list of recommendations coming from project managers already working there.
Earlier this year, Iraq announced intentions to spend $150bn on infrastructure by 2020 and partnership with the national and municipal investment commissions is the only way to bid for work there.
Put simply, the Middle East’s most potentially lucrative markets are also three of its most mysterious. Although freehold licenses exist all of these markets, local partnerships are the key to navigating the maze of bureaucracy that befalls them.