Mall delay highlights overheating market

15 August 2008
Emaar Properties postpones Dubai Mall opening until late September as a series of projects over-run.

The decision by Dubai-based developer Emaar Properties to postpone the opening of Dubai Mall once again is the latest sign that contractors and clients are finding it difficult to deliver projects on time in a market that is overheating.

Emaar was due to complete the project by the end of August, but now says the mall will open in late September. The delay is to ensure the project is completed to a high standard. Previous delays have been due to changes to the project made by the client.

While the postponement may have come as a surprise to the region’s shoppers, for the construction industry it is just the latest in a series of costly delays.

Emaar announced earlier this year that the opening of the Burj Dubai, which is being built on a site adjacent to Dubai Mall and has already been pushed back, is now not expected until August or September 2009 rather than the end of 2008.

The latest delay is to accommodate changes to the design of the building’s interior. An earlier delay was caused by the cladding supplier, Switzerland’s Schmidlin, going out of business.

“I am sure contractors will be blamed for most of these delays, but clients should also take some responsibility,” says one contractor working on the Burj Dubai site. “Designs change, variation orders are issued and these things take time to implement, so we naturally have to request more time to complete the project.”

Other major mall projects have experienced similar delays to Dubai Mall. In 2005, the opening of Mall of the Emirates was pushed back by Dubai-based Majid al-Futtaim to give contractors more time to complete work.

Nakheel also experienced setbacks at Ibn Battuta Mall after it changed the designs to make it a high-end shopping centre.

“Delays are caused by a mixture of things,” says one UK-based consultant. “Most programmes that are put out to tender are too tight. If we receive half a dozen bids for a job, one or two will commit to the schedule; the others will want more time.

“The problem is that the contractors that say they can do the job in the given timeframe probably have not looked at it properly, and as a result run into problems when they start on site.

“The issue is then compounded by clients making changes and the consultant not having enough resources to manage it properly.Then you have external factors like materials shortages and not enough subcontractors available.”

Another international contractor working in Dubai says the majority of the delays are caused by the late release of design information. “Most of our delays on site are created by clients’ consultants that do not give us design information quickly enough,” he says. “This means we cannot work because we don’t know what we are supposed to build. Design and build is different because we are responsible for the design. That is why it is a faster way to build.”

Although design-and-build arrangements give the contractor more control, they do not solve all the scheduling issues.

The contracting consortium working on the Dubai Metro signed a design-and-build contract but warned the Roads & Transport Authority in 2007 that the project may not finish on time because of changes to the scope that were introduced by the client.

As a result, the project’s original budget of AED15.5bn ($4.2bn) may be exceeded by up to 15 per cent to ensure the scheme is ready in time for its scheduled opening date of 9 September 2009.

Construction delays in an overheated market such as Dubai are seen as inevitable by some industry insiders. However, as contractors become used to operating in such a busy market, some are learning from their mistakes.

“Contractors were hungry for work and were prepared to commit to deadlines that were unrealistic,” says another contractor.

“The situation today is different. You can negotiate with clients for more time.”

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