Middle East contractors feel the heat

31 May 2020
Middle East contractors are facing the damaging combination of already falling project activity and significant exposure to projects markets that are highly vulnerable to low oil prices

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The Covid-19 Contractor Impact Index is a measure of how exposed the Global 500 contractors* are to the downturn in construction activity stemming from the coronavirus outbreak.

• The objective of the index is to provide a comparative measure for all contractors that reflects the estimated impact on their operations relative to the base pre-Covid-19 case.

• The index comprises both a country impact element and a sector impact element

The country impact element is calculated as the weighted average change in construction output growth prospects in 2020 across all the countries in which the contractor had executed contract awards in 2019. For example, if a contractor secured all executed contract awards in a single country, then the country impact element would reflect only the projected change in that country’s growth prospects. If a contractor had all awards equally shared across two countries, then the country impact would be an average of the projected change in growth in both countries.

The sector impact element reflects the sector diversification for all contractors. GlobalData’s analysts provide a risk score for each key sector based on the projected impact of Covid-19 on that sector, and the sector element is the weighted average of the contractor’s spread across all sectors. For example, if a contractor secured all executed contract awards in the oil and gas sector, then the sector element would solely reflect the risk score attributed to that sector. If the contractor had all awards equally shared across two sectors, then the sector impact would be an average of the risk score given to these two sectors.

• The overall impact is presented as a negative value ranging from 0 (no impact) to 100 (maximum impact)

• The index score is not intended to predict changes in a contractor’s expected awards in 2020 or changes in its revenue. However, the index could be interpreted as a proxy for the potential change in a contractor’s revenue given its exposure to affected countries and sectors

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