< Previous10 CONSTRUCTION WEEK 26 OCTOBER - 8 NOVEMBER, 2019 WWW.CONSTRUCTIONWEEKONLINE.COMWWW.CONSTRUCTIONWEEKONLINE.COM CONFERENCE Construction Week’s second annual Dispute Resolution Question Time: Abu Dhabi confer-ence was held at the Sofitel Abu Dhabi Corniche hotel, and saw the UAE’s foremost legal ex-perts convene to discuss the key issues facing the construction sector in Abu Dhabi and be-yond. The panel discussion was moderated by partner at Pinsent Masons, Jed Savager, and fea-tured panellists such as BSA Ahmad Bin Hezeem & Associates’ partner, and head of arbitra-tion and dispute resolution, Antonios Dimitracopolous; HKA director, Julian Haslam-Jones; and HFW partner, James Harbridge. The event hosted more than 60 delegates from the development, contracting, sub- contracting, and consulting communities to debate topics such as late-payment resolu- tions, contract claims, arbitration options, and alternative resolution mechanisms. Full coverage from the Abu Dhabi conference will be published in Construction Week #753 (9 November 2019), and on www.constructionweekonline.com. Those interested in speaking at Dispute Resolution Question Time: Dubai 2020 conference may email their participation enquiries at cwcontact@itp.com. To discover more about the partnership opportunities available at the event, please email Riad Raad at riad.raad@itp.com. Construction Week’s Dispute Resolution Question Time: Abu Dhabi helps understand the causes of disputes and explores the best mechanisms to resolve contractual disagreements26 OCTOBER - 8 NOVEMBER, 2019 CONSTRUCTION WEEK 11WWW.CONSTRUCTIONWEEKONLINE.COM CONFERENCE For a comprehensive list of upcoming industry conferences and events, visit constructionweekonline.com. Alternatively, if you would like to explore the various commercial opportunities that our brand has to offer, please contact the advertising director at Construction Week, Riad Raad, at riad.raad@itp.com. CONFERENCEOPINION 12 CONSTRUCTION WEEK 26 OCTOBER - 8 NOVEMBER, 2019WWW.CONSTRUCTIONWEEKONLINE.COM of investment represents a key driver to not only achieving economic diversification, but also planting the pillars of a healthy economy that can adapt to change and grow long into the future. Giga-projects such as The Red Sea, Neom and Qiddiya are set to not only transform the socioeconomic framework of Saudi Arabia but also set new standards for the future of global construction. This presents huge potential appeal and opportunity for hundreds of capable contractors bidding for their piece of the pie. For contractors, projects of this scale bring the need for effective cost control into greater focus than A s parts of the GCC embark on some of the most ambitious giga-projects ($10bn +) in history, the need for effective project cost control is undoubtedly a hot topic - perhaps more so than ever. Tough and competitive market conditions mean margins are often razor thin, and such controls can literally mean the difference between profit and loss. Take Saudi Arabia for example. Under the patronage and leadership of HRH the Crown Prince Mohammed Bin Salman, Saudi Arabia’s Vision 2030 has six giga-project streams created under their Public Investment Fund (PIF). This stream Construction Computer Software Gulf LLC’s (CCS) General Manager, Rob Matheson, discusses why ‘real’ project cost control must start right at the beginning by utilising purpose-built and best of breed estimation and planning tools ever. If deep, accurate estimates and budgets are not created – with actual costs subsequently recorded against them in real-time, the risks are enormous. Sadly, the industry has historically seen major players fall down as a result. I am a rm believer that traditional, more rudimentary methods of producing estimates (and conducting cost management in general) – such as the use of spreadsheets - is fast becoming outdated and simply isn’t up to the task. The starting point must be activity and resource-based rst principle estimates – to generate accurate budgets and allowables. Subsequently, by sharing these 26 OCTOBER - 8 NOVEMBER, 2019 CONSTRUCTION WEEK 13 OPINION WWW.CONSTRUCTIONWEEKONLINE.COM intrinsically linked to the quality of our planning and management of risk. I’ve no doubt the use of project- speci c cost management software will become mainstream over the coming years. The benefits are enormous and contractors are simply no longer willing to make critical decisions based on elements of guesswork and outdated information. In this context, it’s great to see the construction industry - one of the most traditional and least digitized globally – continually maturing and adopting fit-for- purpose technologies. Likewise, it’s also extremely rewarding to see customers who have gone through the transformation and gone back into battle with vastly improved project control in place. With the scale of regional projects in the pipeline, those who best produce and utilise accurate cost and construction data will reduce their risks, increase their profits and ultimately come out on top. And this all starts at the beginning with your estimation and planning - get the basics right initially to set you on the right course. Data is certainly the ‘new oil’, the new power. Construction projects create millions of interwoven data points. In my opinion the ability to capture this data and use it to produce meaningful, informed insights and decisions - is probably the key driving force behind the future of construction. with the post-tender QS and project control teams, the data is then continually utilised and benchmarked against, compounding its value as a result. Additionally, quality estimates and budgets can also be re-used later for digital benchmarking and use on other jobs. The ability to record actual project costs against allowable and produce real-time cost reports is critical. It allows data-driven decisions to be made. Think how important this is in the context of tens or hundreds of critical decisions being made every day. The use of spreadsheets has largely dominated the project cost control toolbox until now. Using such tools, however, often means cost reports take days or weeks to produce for senior management, by which time they are outdated and of lesser value. As powerful as spreadsheets can be, they’re often very complex and masterminded only by their individual creators. Human error – as to be expected – is unfortunately common. Additionally, spreadsheets are not construction- specific by design and can never achieve the granularity and depth of purpose-built tools. CCS has been producing world leading project estimating, planning and control software for over 35 years, and we see the continued future market uptake potential as enormous. I believe the same principle in life applies equally to construction projects: outcomes are Rob Matheson, CCS. Image supplied by CCS14 CONSTRUCTION WEEK 26 OCTOBER - 8 NOVEMBER, 2019WWW.CONSTRUCTIONWEEKONLINE.COM RESEARCH Amid a global slowdown in sales of new equipment, used machinery is seeing greater demand with the emergence of multichannel trading platforms, Dennis Daniel reports Globally, heavy equipment manufacturers are continuing to face a decline in sales of new equipment due to the impacts of sluggish global growth. According to the International Monetary Fund’s World Economic Outlook report in July 2019, the slowdown in global manufacturing activity, which began in early 2018, has continued, reflecting weak business spending on machinery and equipment and consumer purchases of durable goods such as cars. The economic slowdown in China and India and the US-China trade war has reduced demand for new equipment in both the markets. The ramifications of weakening activity in these large economies extend to other markets in Southeast Asia – for example, a decline in coal exports to China and India has affected the mining industry in Indonesia, which has reduced the country’s demand for mining trucks. However, this trend does not reflect the state of the global mining industry. There is sustained demand for heavy equipment in Australia, New Zealand, and certain parts of Africa, where the mining industries remain robust. One of the reasons why the used equipment market shouldn’t be seen from the perspective of macroeconomic factors alone is that irrespective of an upswing or slowdown in global economies, the sector is likely to remain resilient provided the growing inventory of machines that needs to be disposed is visible to interested buyers worldwide. While the slowdown in China, India, and the Middle East has increased the supply of used equipment in these markets, it is being matched by growing demand from markets in Africa, South America,and other parts of the world. Ritchie Bros’ president of international, Karl Werner, explains: “Generally, a slowdown affects sales of new machines and increases demand for used machines. Ongoing utility and infrastructure projects in the world will need a steady supply of heavy equipment, and during economic uncertainty, customers will opt for used machines that they can employ for short-term projects and then sell them back via our auctions and expect to get close to their purchase prices. The global used equipment market is stable because it shows little variation between periods of economic boom and slowdown.” Demand for quality new and used construction equipment across the Middle East is starting to see slow resurgence, following the global economic downturn in the late 2000s, according to Euro Auctions. During the last 12 months, there has been a significant shift in the commercial buying processes with large equipment users becoming more financially aware of the ownership, operational cost and disposal values of their inventory. General manager of Euro Auctions, Derek Bleakley, says: “Auctions are the real barometer as to who is buying, who is selling, what is trending and what the ‘must have’ brands are across the region. It is evident that buyers are streaming back to the market, and in general, used equipment prices in the Middle East have remained relatively stable over the past year.” The majority of used equipment sold by Ritchie Bros at its Dubai auctions is absorbed within the Middle East, mainly in the UAE and Saudi Arabia. A large quantity of equipment is also exported to 26 OCTOBER - 8 NOVEMBER, 2019 CONSTRUCTION WEEK 15WWW.CONSTRUCTIONWEEKONLINE.COM RESEARCH Euro Auctions is noting steady demand for used equipment [PMV Middle East]. Africa. Recently, prominent buyers have also emerged from Southeast Asia and Eastern Europe. Werner explains: “The majority of buyers at the Dubai auction is dealers and brokers who export the machines to Africa. During the last two years, we’ve seen a decline in import of equipment from China to the Middle East, although Africa remains the biggest importer of used equipment from China. “Buyers from the Middle East are finding good deals in Southeast Asia and Europe. French-speaking markets in Africa tend to buy a lot of equipment from France, and our auctions in Moerdijk, Netherlands, regularly attract buyers from the Middle East.” As the visibility of used equipment worldwide improves, asset disposition becomes less dependent on geographical boundaries. This trend is reflected at used equipment auctions that have created multichannel bidding and buying channels, giving customers the flexibility to plan, bid and purchase equipment in any market and from any location in the world. Consequently, an onsite auction in Dubai or Moerdijk is no longer limited to bidders and buyers from the Middle East or Europe alone. Ritchie Bros’ Dubai auctions also attract buyers from as far as South America and Australia, who may choose to travel to Dubai or designate a local representative to inspect equipment at the auction, and in some cases, rely only on online information to close a deal. The ease of trading is facilitated by the three main buying and selling channels offered by Ritchie Bros – live onsite unreserved auctions combined with online bidding; IronPlanet, an online auction held monthly; and Marketplace-E, an online marketplace offering multiple price and timing options. For example, 10 mining trucks worth $14.5m from India were purchased by a buyer from Brazil through Ritchie Bros – the bidding and buying process was entirely conducted online, without the need for equipment to be displayed or inspected at an onsite auction. 16 CONSTRUCTION WEEK 26 OCTOBER - 8 NOVEMBER, 2019WWW.CONSTRUCTIONWEEKONLINE.COM RESEARCH that has gone out of favour, according to Bleakley. In some instances, prices at the Dubai auctions are lower than those commanded in parts of Europe and the Far East, which attracts new buyers looking to acquire equipment for export. He adds: “We always find buyers waiting to invest in large equipment such as telehandlers, dozers, excavators, cranes, and access equipment, as well as smaller equipment such as mini-diggers, generators, and compressors. The models sold in the region tend to be focused more towards functionality rather than incorporating additional gadgets, making them easier to maintain. “What cannot be repurposed within the region or command a premium in Europe or the Far East will typically be shipped to Africa, where there is an ever increasing demand for low-cost, functional equipment, and where their age or condition is often irrelevant.” In the past, new equipment was typically purchased for a project and then disposed of upon completion. This approach has shifted somewhat as many big local construction firms, and the leasing companies that support them, seek to extract more value out of their projects. In some instances, almost- new, well-maintained, and ‘low-hours’ equipment of all types will return to the market within a couple of years of purchase as they command premium prices and are in high demand. Some construction firms are also opting to hold onto equipment for between four and eight years, choosing instead to invest in comprehensive maintenance. When these lots come onto the market, they are in high demand because despite their age, they have full service histories and still have several productive years ahead. Prospective buyers of such equipment tend to be tier- 2 companies seeking quality equipment to take on smaller building schemes. Bleakley says: “While the market is adjusting with the high level of equipment exports over the past number of years, a gap in the market for quality used and unused equipment is opening up which is predominantly driven by the equipment rental market as large construction companies seek to step away from the traditional owner-operated model to reduce the upfront investment.” Prior to an auction, Ritchie Bros tracks buyer demand by monitoring its web activity, particularly keyword searches, in the month leading up to the event. Data analytics allow the company to identify and target buyers based on their search activity, geography, and preferences, as well as intent to buy. “Every month, we get an average of five million unique visitors on our websites and track the search and browsing patterns and locations,” Werner explains. “This helps us make decisions about where to move items around to maximise returns. For example, if we find that searches for generators are high from Australia or Europe, we’ll transport more generators to those markets. Such data is valuable not only for us to optimise our business internally but also for our customers to be more informed to sell their equipment in the best way possible.” Online bidding and buying at Euro Auctions Dubai have increased year- on-year by approximately 11% per annum, and the total number of vendors registered over the last 12 months has increased by 20%, over a 10% uplift in 2018. New bidder accounts over the last two years have increased by 65% YoY. Furthermore, first time registrations with Euro Auctions increased, by 75% in 2017–18 and by 99% in 2018–19. Bleakley says: “The Euro Auctions October 2019 sale in Dubai showed that while the number of lots at each sale fluctuate and the final hammer price moves up, the interesting trends come from who is buying and how they are buying. Buyers still like to attend the sale or the inspection days; however, an increase in online activity is evident on our bidding platforms. “The top two buying countries either online or visiting the auction to bid are predictable. [The rest is equally] interesting, proving again that used plant and machinery are truly global commodities and the world is getting smaller.” In general, all types of equipment, particularly if it is well maintained and in good condition, will attract buyers and there isn’t any one type of machine Speakers during the Leaders in Construction KSA Roundtable 2019 discussion, held in Riyadh on 30 September. 26 OCTOBER - 8 NOVEMBER, 2019 CONSTRUCTION WEEK 17 SUPPLIER FOCUS WWW.CONSTRUCTIONWEEKONLINE.COM Journey to innovation By its nature, the cable industry has little room to innovate with speci cations and standards that are applied globally. It’s rare to nd a utility company that wants to request an entirely new speci cation from what’s currently available in the market, especially when it comes to electrical solutions. Trust is placed in tried, tested and certi ed cables that have proven reliability over years, even decades. This leaves little wiggle-room for changing designs and speci cations, but, as Ducab has proven several times over, that doesn’t mean it isn’t possible to innovate. We’ve learnt to be innovative by looking at new industries for opportunities to meet their needs. The clean energy sector is an ideal example of this. The best place for the energy cable industry to develop modern solutions is to try other sectors, such as clean, renewable energy (including nuclear), and smart city applications. Markets such as power and transmission have a large number of players, intense competition, and ever-diminishing margins. When you want to be seen as an innovator, you need to approach the market in a new way. This is why our strategic plan over the next 10-15 years is to invest in new technology, backward integration, and continued expansion into new sectors. Our NuBICC cables are the ideal example of exploring new avenues. When the UAE announced its intentions to develop nuclear energy, we considered it to be our duty to develop a line of cables that would enable the project to use ‘Made in the UAE’ cables in its construction and consequent delivery of power to communities. NuBICC was developed based on market need and drawing on 40 years of our cable-making experience. New build nuclear power plants require 60++ years of operating life, safe and reliable cables to generate the cleanest and most ef cient form of electrical energy. We needed to combine this necessity with our existing expertise – resulting in the creation of the world’s rst certi ed 60++ year sustainable halogen free Non Class 1E nuclear grade cables. The Ducab NuBICC range was designed with an extended operating life, with high-, medium-, and low-voltage cables that can perform 24x7, 365 days of the year, and that are dependable during emergency situations. They are suitable for the harshest environments and can withstand heat and humidity such as y its nature, the cable industry has little room to innovate with speci cations and standards Ashish Chaturvedy, head of marketing at Ducab, one of the UAE’s largest manufacturing businesses, explains how the company is driving innovation in the cabling sector we experience in the Middle East, and they have successfully passed various standards tests, including Long Term Thermal aging, exposure to radiation, and IEEE 1202 Vertical Tray Flame Test. As a result of expertise and innovation, we were able to create a custom range of cables for the UAE’s edgling nuclear industry, enabling the use of locally-made products and thereby reducing import fees while channelling revenues into the nation’s industrial sector. This isn’t the rst time we’ve developed cables to meet the needs of speci c sectors, and it won’t be the last – but it just goes to show that even in an industry such as ours, in which there is little room for change, innovation can still happen. Ashish Chaturvedy, head of marketing at Ducab, outlines the company’s strategy to drive innovation.18 CONSTRUCTION WEEK 26 OCTOBER - 8 NOVEMBER, 2019WWW.CONSTRUCTIONWEEKONLINE.COM THE BIG PICTURE FOLLOW CONSTRUCTION WEEK @CWMIDDLEEASTDURATION OF EXPO 2020 DUBAI, WHICH WILL BEGIN ON 20 OCTOBER 2020 173 26 OCTOBER - 8 NOVEMBER, 2019 CONSTRUCTION WEEK 19 WWW.CONSTRUCTIONWEEKONLINE.COM THE BIG PICTURE The ‘One Year to Go’ countdown for Expo 2020 Dubai was held on 20 October 2019, with events held in all seven emirates marking the milestone. At 2020hrs (8.20pm), Burj Khalifa hosted an LED and reworks show that launched the 12-month countdown to 20 October 2020. Visit constructionweekonline.com for full coverage of the expo. [Image: Dany Eid]Next >