A construction industry think tank has recommended a set of strategic national initiatives needed to create a more productive and sustainable construction sector in the UAE.

The recommendations include the introduction of standard contracts, a Construction Contracts Act, and the formation of a national Construction Industry Development Board.

Launched on 15 September, the UAE Construction Think Tank White Paper outlines 15 recommendations that will support long-term continuous improvement in project delivery in the UAE, and which supports the objectives of the UAE’s Centennial 2071 strategic vision.

A core theme of the White Paper is need for greater collaboration between government, industry and academia in order to deliver change.

Industry challenges

The White Paper comes at a time of significant challenges for the construction sector across the GCC.

A downturn in project activity in the region since 2014 has resulted in severe contraction in the region’s construction industry that has exposed many deep-rooted problems.

The region-wide slowdown in project spending has resulted in an rise in cash flow concerns, an increase in contract disputes and a loss of skills.

Launched by MEED in partnership with Dubai-based Mashreq Bank, the UAE Construction Think Tank seeks to address these challenges by identifying steps that can be taken together by government, industry and academia that will facilitate a turnaround in the sector.

Construction under pressure

In its first White Paper, the Think Tank says that one of the biggest challenges facing the UAE construction sector is that weak finances and a lack of long-term planning have prevented investment in new technologies and skills, leaving the construction industry lagging behind almost every other sector.

“A productive and sustainable construction industry is absolutely vital to successful achievement of the UAE’s long-term plans,” says MEED editorial director richard Thompson.”Unfortunately, the construction industry today is characterised by short-term thinking as a result of chronic bad habits such as lowest-price-wins tendering. The result is a lack of investment in people, in innovation and in sustainable development.

“With this white paper, the UAE Construction Think Tank recommends 15 actions that will help to bring an end to some of these bad habits, and which will ensure that the construction sector can play an even more vital role in delivering the aims of UAE Centennial 2071.”

In addition to this, it says, an increasingly competitive contracting market has squeezed company profit margins and led to fears that legal disputes between contractors and their clients will rise.

“Construction has long remained one of the cornerstones of the UAE’s economy, and a key component of its diversification strategy,” says Mohammad Khader al-Shouli, managing director, head of contracting finance at Mashreq Bank. As we enter a new phase of economic and technological growth in the UAE, it is imperative for this sector to progress in parallel and be able to adapt and thrive in a digital-led era.

“The white paper offers clear and achievable actions for both government and private institutions to foster innovation and sustainable thinking within the industry through collaboration and a long-term approach. As one of the sector’s trusted strategic partners, Mashreq is committed to the continued growth of projects in the UAE, supporting the government mission in achieving the goals outlined by UAE Centennial 2071.

White Paper challenges

The White Paper includes 15 recommendations that will address four challenges facing the industry. These are:

  • Lack of industry collaboration
  • Attracting and retaining talent
  • Weak culture of innovation
  • Lack of industry representation
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Download your copy of the whitepaper here

UAE Construction Think Tank recommendations

Improving industry collaboration
  • Introduce and promote standard contracts to ensure risk is shared fairly by clients, consultants and contractors. Contracts should seek to share risk and offer pain/gain opportunities.
  • Enforce a Construction Contracts Act applying to UAE construction works, codifying payment timeframe, adjudication and certification terms. At present, clients are free to impose conditions due to the highly fragmented and bespoke nature of the industry.
  • Place restrictions on contractors with less experience or a negative track record by judging them on the basis of technical competence to ensure submitted bids focus on best practices and whole-life cost. The current lowest-price-wins model rewards a short-term approach to quality, safety and innovation.
  • Introduce a contractor accreditation scheme that grades contractors in terms of financial strength, and technical and practical capability.
Attracting and retaining talent
  • Grant permanent and semi-permanent visas for professionals on the basis of experience and professional attainment, not just academic qualification.
  • Provide a transparent pipeline of future projects, allowing contractors to counter the transient nature of construction contracts and better plan for their staff. Coordinate timing of government and government-related entity (GRE) projects to ensure countercyclical spending.
  • Establish professional development bodies for technical workers and a unified accreditation committee for built environment professionals. Work closely with renowned international bodies such as the UK’s Institution of Civil Engineers (ICE) and others.
  • Conduct graduate recruitment programmes in partnership with industry players to overcome the challenges of losing younger talent to more lucrative professions.
Stimulating innovation in construction
  • Introduce incentive schemes to reward companies that deploy new technology on their projects. This would ultimately boost the image of the country and support the development of local supply chains.
  • Establish regulations concerning emerging technologies such as robotics and artificial intelligence. Only then will companies be able to openly test them on sites.
  • Specify common standards and requirements for technology and data to harmonise processes across all sectors and authorities.
  • Institute a patent system for innovative methods employed by a contractor on a project. Offsite manufacturing can help a contractor retain full control over the design of its solution.
Giving construction a voice
  • Establish a Construction Industry Development Board to encourage continuous dialogue between the industry and authorities. This board could help set standards and regulations, while also addressing disputes and other legal matters. It could also monitor projects that generate a greater number of disputes and investigate the reasons for this.
  • Create relevant accreditation bodies to help guide workers on the training needed to secure job positions within the market. Engage with international organisations such as the UK’s Institution of Civil Engineers (ICE) for best practice in accreditation.
  • Establish a more active association that engages with government and project clients, and helps regulate industry and maintains standards. Enable the relevant statutory authorities to better monitor stakeholders
UAE Construction Think Tank Click to download the whitepaper: UAE Construction Think Tank whitepaper
About the UAE Construction Think Tank:

UAE Construction Think TankThe UAE Construction Think Tank was launched in 2019 by Mashreq Bank together with business intelligence service MEED. The objective of the think tank is to identify risks facing the UAE construction industry and to recommend actions to create a more productive and sustainable construction industry. It includes some of the biggest names in UAE construction and involves representatives from construction clients, contractors, consultants, technology companies and academia.

Download your copy of the whitepaper here
To learn more about the MEED Mashreq Construction partnership, log on to www.meedmashreqindustryinsight.com. You can also reach out to us on MEEDMashreqPartnership@meed.com