Qatar is a seller’s market. That was the sentiment of a panel discussion on construction costs at MEED’s Qatar Projects conference.

Dani Kabbani, managing partner Qatar at law firm Eversheds, said at a macro-economic level, high oil prices have pushed up the number of hydrocarbons projects, leading to more demand.

There is also competition from Dubai, which is building trophy projects as it prepares for Expo in 2020.

Kabbani said that in many countries the high and low bids would be discounted during a tendering process; Qatari clients tend to take the low bid, then bid them down further. This means that there is a higher risk of projects coming in over-budget. He said that worldwide, 18 per cent of projects come in over-budget.

Sami Pierre Dick, deputy CEO at Al Khayyat Contracting & Trading, added the general economic situation of Qatar into this mix. A high cost of living in the richest country in the world pushes up salaries and wage bills. The terrain in Qatar can be challenging from a design point of view, and attracts the best engineers. “Qatar attracts the best of the international contractors,” said Dick. “They want to work here despite the difficulties.”

There are often delays preventing projects from starting on time, said Zain Mumtaz, responsible for contractor financing at Mashreq Bank. Design changes mean projects are delayed, but still have running costs. And the subsequent acceleration to complete on time means they incur even more costs. “Usually it’s common,” he said. “But here there’s higher risk.”

He added, “We are facing what Dubai faced in the early stages of the boom.”

Dick said the end of projects are often the costliest stages. Variation late on needs to be fixed as quickly as possible, often at high cost.

“The contractor wants out, the client wants the project to start making money.” So the client has to pay. This is in the contractor’s favour, as the client has little choice but to pay.