Two decades ago, outsourcing the management of major projects to specialist contractors was unheard of outside the oil and gas sector in Saudi Arabia, Kuwait and the UAE.
Today, the scene has changed considerably. While oil and gas continues to provide the core business for PMs, a boom in major building and infrastructure projects in the UAE, particularly Dubai, has opened up a new market for contractors.
The sheer scale of some of these projects makes them ideal for PMs. Where client organisations seldom have the expertise needed to deal with the challenges presented by massive civil construction projects, giant American contractors such as Bechtel and Parsons Brinckerhoff International have become masters of the art.
In delivering huge construction projects around the world, these contractors have unrivalled experience in co-ordinating the complex interactions of multiple contractors and suppliers on a single project.
‘The client’s lack of experience and resources are key factors,’ says a Parsons Brinckerhoff official.
A willingness to innovate is a major factor behind the phenomenal growth of Dubai’s civil construction sector.
Current projects include the $150 million Lost City of Dubai, which requires the construction of a subterranean five-star hotel, about seven metres below the ground, and four artificial rainforests. Bids are currently being evaluated for the scheme.
Tenders are also set to be called for by the third quarter of 2003 for a contract to build the $300 million Souq al-Nakheel winter sports resort, which includes a major ski facility.
But the major job already under way is the $3,000 million Palm islands project that involves construction of two islands off Dubai’s Jumeirah beach that will increase the emirate’s shoreline by 120 kilometres. The project calls for extensive dredging and reclamation of about 100 million cubic metres of sand and rock. Each island will take about two years to rise from the sea.
‘This is one of the most challenging projects for us,’ says Hill International vice-president of business development Said Mneimne.
It is exactly the sort of specialist project PMs seek. However, some clientsremain to be convinced that the spread of the project manager is entirely down to their added value.
‘Appointment of a PM is in vogue [for the buildings sector] and Dubai does not want to be left out,’ says a senior official of a Dubai-based international contracting firm. ‘The main role of a construction manager in the oil and gas industry is assisting in early procurement. They do not do that in Dubai’s construction sector.’
Bechtel was the first PM to be appointed for a Dubai civil works project, when it was employed to project manage the first-phase expansion of the emirate’s international airport in 1988.
The American contractor followed this up by being appointed as PM for the Emirates Telecommunications Corporation (Etisalat) new headquarters projects in Dubai and Abu Dhabi.
In 1995, PMs were used on the construction of the Jumeirah beach hotel and Emirates Towers. The list continues to expand.
However the gradual emergence of this new intermediary role in the middle of the traditional client/main contractor relationship has not been without its problems. And it is requiring a cultural revolution from clients and contractors. ‘Ours is not a tangible role,’ says Mneimne. ‘Clients have been hesitant to use the services of a PM, but that is changing.’
As well as managing the huge risks of a major construction scheme, PMs claim they can add significant value to a project by helping the client to define its objectives on a proposed project; by preparing a feasibility study; by identifying the terms of reference for related services; and by managing the scope of works and budget.
‘We add value to the implementation of a project,’ the Hill International official says.
Perhaps unsurprisingly given its origins, project management in Dubai’s construction sector is dominated by PMs from the US over UK firms offering similar services.
‘There has been a tradition of [appointing] a PM in the US. The UK has adopted a design and construction supervision model,’ says the Parsons official.
However, competition between US and UK PMs is set to intensify as more projects are planned in the region. But it is not in the UAE alone that PMs have established themselves.
Australia’s GHD has been appointed to project manage the construction of over $2,000 million of facilities for the Asian games in Qatar.
Saudi Arabia has also picked up the system, with PMs to be used on two major schemes – the Jeddah airport expansion and a $60 million major housing complex to be constructed at Khafji in the Neutral Zone.
International PMs are also waiting in the wings for several private sector projects planned in Kuwait – the first of which is for the estimated $64 million Messilah beach hotel redevelopment project. The same firms also have their sights set on proposed civil sector projects in Oman and Bahrain.
Slightly further ahead, PMs will play a key role in the development of the Gulf’s surface and air transportation sector.
Selection of a new PM to run the construction of the long-delayed Doha International Airport expansion is already overdue. And further challenges lie in neighbouring GCC states. A major railway grid is planned for Saudi Arabia to link the east and west coasts of the kingdom, while a light railway system is under study in Dubai.
However, some are already saying the PM route is already out of date and it is time to find an alternative approach.
‘They leave the main headaches of procurement and several related issues with the main contractors,’ says a senior contractor. ‘They do not wish to share any risks.’
Dimitrios Antzulis, vice-president and UAE area manager for Turner International, disagrees: ‘We do not act as a post office box delivering tender documents and sealed envelopes [with bid prices] from the contractors to the client. Our role is pro-active and one that assists both parties. Our intention is to be part of a team and oversee that the contract is carried out on time.’
Mneimne explains further: ‘We do not wish to be in a position to direct contractors. We are a monitoring agency and our prime role is to manage the different entities of a project. The ultimate responsibility of [sharing] risk lies with the designer.’