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ANALYSIS

Challenges of delivering mega projects

Beirut, May 13, 2013

With 2013 forecasted to be a year of optimism and opportunity for construction in the Middle East, all eyes are back on governments in the region and how they propose to manage their spending, according to a report.

In a region where there is an acute deficit in terms of infrastructure, the ingredients for capital projects could not be better, says the newly released annual report on the sector: “GCC Powers of Construction: Meeting the challenges of delivering mega projects” by Deloitte Middle East, a leading professional services firm.

The I&CP (Infrastructure & Capital Projects) market is growing rapidly with governments announcing projects across the Middle East region, utilizing trillions of petro-dollars over the coming years, added the  new Deloitte report, the fourth publication in its series and the only one of its kind amongst the Financial Services industry in the Middle East.

However, regional economies are facing different priorities from political stability to economic sustainability. Their treasury functions are under increasing pressure to save costs and increase revenue, whilst at the same time pushing an infrastructure agenda that doesn’t necessarily ‘pay back’. With everyone focused on the spending, it is now more relevant than before to balance the focus on costs, as per the Deloitte Report.

“With significant investment in major infrastructure programs increasing over the coming years across the GCC, contractors, consultants and clients alike need to rethink the way they engage each other if they are to truly realize the benefits each can bring to the process,” said Cynthia Corby, audit partner and leader of the Construction industry for the Middle East.

According to the Deloitte report, clients’ increasing need for transparency, predictability and sustainability of what they spend provides contractors with an opportunity to reflect on how they can meet this by better operational performance, improved procurement, schedule management and cost reporting, says the report.

“By leveraging best in class internal controls, contractors too can deliver ‘more for less’ whilst still retaining existing or improved profitability,” says Andrew Jeffrey, director, Corporate Finance, Deloitte Middle East. “Additionally by engaging more intelligently with clients, contractors should look at more innovative ways of sharing savings, risks and opportunities to the benefit of all,” he added.

The Deloitte GCC Powers of Construction Report is produced based on data gathered from surveys and data, supported by interviews with some of the most prominent industry leaders from the region.
In addition to articles and interviews examining key industry trends, the Deloitte GCC Powers of Construction report includes a country by country analysis of statistics, key projects, and a SWOT analysis. Highlights of this section include:

UAE

In terms of contract awards, the UAE replaced Saudi Arabia as the GCC’s largest construction market in 2012 with $16.2 billion, 4 per cent more than the $15.6 billion of contracts awarded in Saudi Arabia. This is the first time since 2008 that Saudi Arabia has not recorded the largest value of construction awards in the region.

Saudi Arabia

The largest construction deal awarded in Saudi Arabia in 2012 was the deal awarded to expand the Masjid al-Haram in Medina. This will increase the capacity of the mosque from 600,000 to 1 million worshippers at an estimated cost of $1.5 billion.

Qatar

Qatar was the third most active GCC construction market in 2012, with $10.4 billion worth of contracts awarded. Transport infrastructure dominated Qatar’s construction sector, with four of the five biggest contracts awarded for major transport projects.

Hosting the FIFA 2022 World Cup should yield considerable contracts across the construction and infrastructure sectors. Ahead of the 2022 FIFA World Cup, and in line with the country's 2030 Vision, Qatar's infrastructure spend is expected to reach $150 billion. The 2013 Powers of Construction report includes an interview with engineer Yasir Al Jamal, Technical Director Qatar 2022 Supreme Committee, on the progress made to date, plans for the future and what the world can expect from Qatar 2022.

Kuwait

Kuwait was the fourth most active construction market in 2012, with $ 8 billion worth of deals awarded. The largest of these was the long-awaited $ 2.6 billion deal to build the Subiya Causeway, which had been in the pipeline for almost a decade. Transport construction accounts for 76 per cent of total construction spend in the country. – TradeArabia News Service




Tags: UAE | Construction | GCC | Deloitte | Government spending | mega projects |

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