In the next twenty years, $1 trillion in construction projects in the Middle East
The GCC region will commit almost two thirds of construction spend between 2013 and 2016 - with a peak of $144 billion in construction in 2016. (Image credit: Shutterstock)
As many as 117 major construction projects, with an estimated total costs of more than $1 trillion are planned for completion over the next two decades across the Middle East, GCC, said EC Harris in its latest study titled “Middle East major construction programs – Mitigating the risk”. The GCC countries alone have projects planned for completion valued at more than $1 billion, it added.
However, the completion of these development plans come with a number of risks that could result in program failure for some, it warned according to the Saudi Gazette.
The study outlined a number of solutions to help mitigate such risks, focusing on the forecast for construction between 2014 and 2019 in the UAE, Qatar, Saudi Arabia, Oman, Kuwait and Iraq.
Alistair Kirk, head of infrastructure, industry and utilities, Middle East at EC Harris, said: “The Middle East is experiencing unparalleled economic and social development due to the large volume of mega projects planned and underway. These programs, particularly the more ambitious mega cities, are at the forefront of these enormous infrastructure developments which will bring diversification, foreign and domestic investment and job creation on a large scale.
“However, with demand currently outstripping supply for human capital and material resources, there is risk of inflationary rises to secure resources in a very competitive and intense market. But with joined-up, collective thinking, governments, developers and contractors can ensure all major programs in the region can be delivered on time, on budget and to the required quality.”
From 2014, during the GCC development peak, there will be mass importation of key construction materials which may lead to heavily loaded distribution routes and bottlenecks in the supply chain, the study pointed out.
To achieve the required balance among construction vehicles, general traffic and a steady port capacity for a successful supply chain, the study urged prioritizing of transport programs and coordinating the network to meet the logistical challenges of importing.
Playing host to global events such as the FIFA World Cup 2022 in Qatar, will see the GCC region committing almost two thirds of construction spend between 2013 and 2016 - with a peak of $144 billion in construction in 2016. In order to accommodate such mass development, a supporting infrastructure must be in place prior to commencement, said the study.
“Setting up a portfolio management office (PMO) can have a positive impact through enabling the team to address the initial strategic, technical and delivery priorities faced when delivering a major program. Adopting this portfolio management approach through a PMO helps to ensure improved efficiency, certainty, speed and control of the overall support required by a client,” Kirk noted.
The major risk and pressure are on human resource requirements including demand for labor and labor challenges; capability; capacity and supply chain challenges; materials; and contracts and procurement.
Each country has its own resource challenges but throughout the GCC region contractors and the supply chain will need to source and process visa arrangements to accommodate 1.2 million construction workers during the peak development period of 2014 to 2019 alone, the study noted.
Some local contractors are not experienced at delivering the scale of the projects proposed and so combining the skills of local and international companies will be key to addressing such potential barriers, EC Harris said in the study.
Another consideration outlined in the report is to develop training and skills academies to support the growth in labor and attract the best expats and migrant labor.
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