Multiplex Constructions: Team spirit

25 October 2002

Sport infrastructure has been the watchword for Multiplex Constructions since it scored a $600 million contract on its home turf for the 110,000-seat Stadium Australia. After completing the stadium in time for the Sydney 2000 Olympics, the construction firm started to look for away fixtures, finally securing this summer the $750 million contract for the long-awaited upgrade and reconstruction of the UK's Wembley Stadium.

The company's particular field of experience puts it in the running for some of the largest projects planned in the Gulf. The biggest opportunity in the region probably lies in Qatar, which is scheduled to host the Asian Games in 2006. Another obvious destination is Kuwait, where the company is bidding for the $113 million Sheikh Jaber al-Ahmed International stadium. Although the Formula 1 track in Bahrain recently went to a competitor, Multiplex is keeping an eye on Dubai, which has its own ambitions for a multi-purpose racetrack.

The Australian firm has been a force to be reckoned with in the Dubai construction market since its dramatic arrival in 1997, when it won the main contract for the office block on the Emirates Towers project - the ninth tallest building in the world, at 355 metres. Pitted against strong international contenders, the award came as a surprise to many. Dubai's construction industry was at the time dominated by UK and European contractors and Multiplex was considered a rank outsider for the prestigious contract.

However, a precedent had been set three years before, when the local/South African joint venture of Al-Habtoor Engineering Enterprises and Murray & Roberts Contractors (Middle East) was awarded the structure contract for the landmark Burj al-Arab hotel.

'We came to the Gulf because of the emerging opportunities,' says John Ferguson, director and area manager for Multiplex. 'Our initial reaction was of excitement and exhilaration at the magnitude and quality of projects.we were amazed at the ambition of the rulers.'

The estimated $147 million Emirates Towers office block, retail space and podium contract has proved a stepping stone for Nasa Multiplex, the 51:49 partnership set up between Dubai-based Nasser Abdullah Hussain Lootah and Multiplex Constructions to bid for projects in the UAE. The team has gone on to win a raft of projects worth an estimated $875 million in total over the past five years (see table).

Nasa Multiplex has carried out significant residential and commercial projects in Dubai, with the most recent award being an estimated $63 million contract for the Sheikh Ahmed tower near Dubai Marina. Major work has also come from local property developer Emaar Properties, which awarded two contracts for six apartment towers, townhouses and related facilities to Nasa Multiplex along with the local/UK team of Al-Futtaim Tarmac on the first phase of its ambitious $6,000 million Dubai Marina project.

As its recent string of successes highlights, Multiplex feels very much at home in Dubai. 'It [Dubai] is a modern city and many clients realise the values of innovative and faster delivery systems,' says Graeme Robson, commercial director of Nasa Multiplex.

It has also proved that it can compete in one of the region's most competitive markets. 'Our contracts [in the construction of residential and commercial towers] in Asia, along with 40 years' experience in the industry, have helped us,' says Ferguson. However, the local/Australian team is gearing up for the major challenges that the sector poses in the short term.

'The Dubai market has changed dramatically in the past five years,' says Ferguson. 'We have seen prices tightening up, several new local and international contractors have made their entry and a range of innovative projects have been rolled out.' Along with new projects - Palm islands, Madinat Jumeirah, Dubai International Financial Centre and Dubai Festival City, to name a few - a major concern for Nasa Multiplex and its major rivals has emerged: the lack of discrimination by some clients on high-quality projects. This has resulted in five-star contractors being pitted against their three-star counterparts, leading to severe undercutting on already extremely tight prices.

Cut-throat pricing, coupled with the strong growth in the Dubai construction sector, has thrown up other issues, particularly for international contractors operating in the region. 'A major issue is adapting to the changing marketplace. The economies of the Middle East states have changed and some of the new projects being talked about bring with them new challenges,' says Ferguson. 'We are at a turning point. Cost of materials, staff and labour is on the rise and while we do not see it as a major deterrent in the short term, it will be a problem if growth continues.'

Having created a strong base in Dubai, Multiplex is now looking to expand from its regional base in the emirate. However, it recognises that it needs to be selective. The key strategy will be to work with blue-chip clients. 'We may not be able to compete with local companies on some conventional design systems, but our main drive will be in offering a faster delivery solution, based on new technology, and higher quality of end products', says Robson. 'We want to achieve a gradual and consolidated growth in Dubai and continue to provide our clients with quality and satisfaction. We are firmly entrenched in Dubai and want to grow into other Gulf states.'

Ashok Dutta

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