< PreviousLEADERS IN CONSTRUCTION SUMMIT KUWAIT 2019 30 CONSTRUCTION WEEK 26 OCTOBER - 8 NOVEMBER, 2019WWW.CONSTRUCTIONWEEKONLINE.COM Panellists explore triggers for disputes in Kuwait’s construction industry and remedies to overcome contractual issues Construction stakeholders and legal experts continue to cite concerns about risk allocation and the use of unsatisfactory contracts within the Middle East’s construction sector, and the topic was a key point of discussion at Leaders Kuwait 2019, held on 16 October in Kuwait City. Practical advice in relation to construction claims and disputes was offered during the Construction Conflicts – Dealing with Disputes discussion, moderated by BCLP managing director, Richard Davies, featuring HFW partner Michael Sergeant, KEO project director Osama Madokh, and Pinsent Masons partner Mark Raymont as panellists. With steady cash flow being critical for all stakeholders across the supply chain, the prospect of potentially lengthy and costly construction disputes remains a concern for the region, the panellists discussed. Tools to improve resolution have been put in place across the Middle East, but Madokh said that there was room for improvement in Kuwait, adding: “I have not seen many projects in Kuwait that emphasise on mechanisms such as mediation that would eliminate the disputes.” This view was echoed by Raymont, who said remedies for cash flow issues in the Middle East needed improvements: “As we know, cash is king in our day-to-day lives, and particularly for construction projects. People and labourers need to be paid, materials need to be bought. If you turn this tap off, then clearly it is going to lead to stresses. There are no mechanisms for issues around the payment flow and issues around variations.” Sergeant said remedies for improving adversarial issues would attract international contractors for megaprojects in Kuwait, adding: “Clearly, there are excellent capabilities in Kuwait, but on a megaproject, you need key specialisms which often you can only get from international contractors abroad. This is not a negative thing for Kuwait, but [international contractors] bring in very valuable specialisations. From a construction lawyer’s perspective, this is very important.” Raymont added that in order to minimise the risk of disputes in Kuwait, understanding and managing interfaces was important: “Problems [are] inevitable when you have complex interfaces and difficult working conditions. On a well-run project, most of these can be resolved in a satisfactory way and it’s about nipping problems early in the bud.” Madokh highlighted the need to involve senior officials at an earlier stage if a dispute arises: “One of the issues is escalation – team members [sometimes] don’t know how to escalate matters to their seniors.” Setting realistic expectations at the beginning of a project was also among the key topics addressed by Sergeant: “The first thing from the employer’s side, as much as the contractor’s side, is to be realistic about the budget and the planning. If you end up with a situation that the programme is too short, then effectively you are clearly building problems for the future. We need to have a realistic expectation of communication between the two parties.” Sergeant added that he often described a construction contract as a “marriage” when offering advice for resolving disputes: “With a marriage, the first thing is to not oversell yourself and pretend to be something that you are not. Honesty is big when entering into a contract, to make sure it is clear what you’re buying and getting. Communication is very important.” LEADERS IN CONSTRUCTION SUMMIT KUWAIT 2019 26 OCTOBER - 8 NOVEMBER, 2019 CONSTRUCTION WEEK 31WWW.CONSTRUCTIONWEEKONLINE.COM Dispute resolution was discussed at Leaders Kuwait 2019.Celebrating 15 years of recognising the most iconic projects, influential figures and ground breaking companies in the Middle East construction sector, the Construction Week Awards are the ultimate accolade for industry professionals in the region. Come to celebrate the success of the industry and visit www.constructionweekonline.com/awards today to find out how you can be involved in the event. SPONSORSHIP ENQUIRIES: Riad Raad Advertising Director Tel: +971 4 444 3319 Mob: +971 50 702 2970 Email: riad.raad@itp.com FOR NOMINATION ENQUIRIES: Neha Bhatia Editor Tel: +971 4 444 3447 Email: neha.bhatia@itp.com FOR EVENT ENQUIRIES: Teri Dunstan Events Manager Tel: +971 4 444 3227 E-mail: teri.dunstan@itp.com FOR TABLE BOOKING ENQUIRIES: Lacie Curtis Table Sales Executive Tel: +971 4 444 3223 Email: lacie.curtis@itp.com #CWAWARDS GOLD SPONSORS CATEGORY SPONSORS SILVER SPONSORS Moutaz Gadelhak Senior Sales Manager Tel: +971 4 444 3177 Mob: +971 58 287 6309 Email: moutaz.gadelhak@itp.com BOOK YOUR TABLES TODAY! PLATINUM SPONSOR WEDNESDAY 4TH DECEMBER 2019 ASSOCIATE SPONSOR Andrew Gathercole Sales Manager Tel: +971 4 444 3392 Mob: +971 56 685 4395 Email: andrew.gathercole@itp.com SUSTAINABILITY PARTNER R JW MARRIOTT MARQUIS DUBAI NEWS • ANALYSIS • INTELLIGENCE • PROJECTS • CONTRACTS • TENDERS JAN 15-21, 2011 • ISSUE 352 NEWS • ANALYSIS • INTELLIGENCE • PROJECTS • CONTRACTS • TENDERS JAN 15-21, 2011 • ISSUE 352 OCTOBER 2019 • ISSUE 752 A SPECIAL REPORT FROM CONSTRUCTION WEEK @CWMIDDLEEAST AN ITP MEDIA GROUP PUBLICATION CW EXPLORES HOW ASGC’S PIONEERING PROJECTS AND DIGITISATION EFFORTS ARE DRIVING THE UAE’S SOCIAL INFRASTRUCTURE SECTOR ALSO INSIDE: GCC DIVERSIFICATION DRIVE SPURS HOME-BUILDING P36 • 3D PRINTING HELPS SCALE UP SOCIAL INFRA EFFORTS P40THE LEADING DEDICATED PLATFORM FOR THE CONCRETE INDUSTRY IN THE REGION THE BUILDING BLOCKS OF CONSTRUCTION OVER 19,000 VISITO RS OV ER 30 0 EX HIB ITO RS 13 2 VI SI TI NG CO UN TR IE S PR IM E LO CA TI ON PLANT MACHINERY VEHICLES SUBSURFACE, QUARRYING & MINING PART OF:ORGANISED BY: THE LARGEST EXHIBITION DEDICATED TO THE INFRASTRUCTURE AND HEAVY CONSTRUCTION INDUSTRY IN THE MIDDLE EAST WHERE BUILDING BEGINS REGISTER FOR FREE ENTRY AND SAVE AED 200 | WWW.THEBIG5HEAVY.COM/REGISTER 25 - 28 NOVEMBER 2019 Dubai World Trade CentreWWW.CONSTRUCTIONWEEKONLINE.COM COMMENT 26 OCTOBER - 8 NOVEMBER, 2019 CONSTRUCTION WEEK 35 Al Ain’s $187m (AED687m) Al Hayer project, which was announced in October 2019, is one of many examples recently that show the positive direction that the UAE’s social development programmes are heading towards. Designed in line with the Emirati neighbourhood concept, the residential project comprises 300 residential villas and uses sustainable practices in its design. The development is part of the Abu Dhabi Housing Authority’s plans to develop more housing projects for Emirati people, and is based on Abu Dhabi Government strategy’s to implement the best international practices in the construction of government housing projects. As part of the project, areas for commercial and social purposes, in addition to a 2,700m2 mosque with a capacity to accommodate 1,071 people has also been constructed. Another major social infrastructure development taking shape in Abu Dhabi, aligned with government policies to provide world-class urban services, is Sheikh Shakhbout Medical City, which is being touted as the UAE’s largest hospital. The 30ha hospital will partially open to the public on 3 November 2019 and Phase 2 of the development will take place towards the end of the current year or beginning of the next year, UAE state news agency Wam reported. Sheikh Zayed Housing Programme (SZHP) is also an important organisation driving social infrastructure in the UAE. Established in 1999, the initiative will provide suitable housing for UAE nationals and their families. The programme aims to offer housing assistance services such as grants and loans, as well as options to build, purchase, maintain, or expand a house according to approved standards. SZHP has approved 522 housing assistance applications, including housing loans and grants, worth $111.6m (AED410m) for UAE citizens in Dubai, Ajman and Ras Al Khaimah. The UAE’s social infrastructure programmes are among the GCC’s most prominent such projects, and as ASGC – Knowledge Partner of this Special Report on Social Infrastructure – says, supporting these projects must be a priority for construction organisations. Vice president and executive director of ASGC, Abdulaziz Bin Shafar, tells Construction Week: “We are a key player in the UAE’s drive to develop the social infrastructure required to sustain a diversified nation that is as loyal to its proud heritage, as it is ambitious for the future.” (page 38) As the commitment to delivering high-quality social infrastructure deepens in the UAE and beyond, the region’s economic goals look set to be achieved. A new phase As we approach the business end of 2019, the UAE’s Vision 2021 is becoming more visible through social infrastructure projects driving the country’s economic development goals EDITOR’S INTRODUCTION ASHLEY WILLIAMS Ashley Williams is features writer at Construction Week. “As the commitment to delivering high-quality social infrastructure deepens in the UAE and beyond, the region’s economic goals look set to be achieved.”36 CONSTRUCTION WEEK 26 OCTOBER - 8 NOVEMBER, 2019WWW.CONSTRUCTIONWEEKONLINE.COM MARKET OVERVIEW As the GCC’s member states chart their diversification away from petrodollars, several economic development schemes have been rolled out in key construction markets such as Saudi Arabia and the UAE to spur the localisation of talent. GCC governments recognise that the success of their nationalisation goals relies, at least partially, on delivering a quality of life that is at par with international standards. Consequently, social infrastructure projects are gathering pace in the GCC, where numerous state-backed residences, hospitals, and schools are currently being built. Much of the social infrastructure activity witnessed in the GCC in 2019 has been found in the housing sector, notably in Saudi Arabia, which aims to raise home-ownership within its citizens over the next decade, in line with the goals of its Vision 2030 diversification mandate. The mandate’s housing programme aims to raise local content in the housing sector to 63.5% by 2020, increasing home-ownership rates among Saudi nationals to 60% in the same year. “Transformational initiatives” being implemented to achieve these goals are being driven by Saudi Arabia’s Ministry of Housing – which is backing initiatives such as Etmam, Wafi, Sakani, Mullak Union, and Ejar, among others – and other non-ministry entities such as Saudi Real Estate Refinance Company, Saudi Arabian Monetary Authority, and Real Estate Development Fund. The housing ministry’s Wafi initiative comprises ongoing projects worth more than $13.3bn (SAR50bn), Mullak Union has seen the FOLLOW CONSTRUCTION WEEK @CWMIDDLEEAST The GCC’s economic diversification mandates are driving the construction of citizen homes and generating work opportunities for contractors, Neha Bhatia reports establishment of 540 residential and commercial associations, and Etmam has approved projects spanning 44km2. Saudi Arabia’s residential construction push is also creating new job opportunities for contractors both in the kingdom as well as foreign organisations. This October, Saudi Arabia’s Ministry of Housing signed two agreements with Sinohydro Corporation and China Machinery Engineering Corporation Saudi Contracting Company to build 4,867 housing units in 15 cities and governorates across six regions in the kingdom. In May 2019, the ministry’s Housing Development Programme signed an agreement with American construction technology firm Katerra 26 OCTOBER - 8 NOVEMBER, 2019 CONSTRUCTION WEEK 37WWW.CONSTRUCTIONWEEKONLINE.COM MARKET OVERVIEW this October by the UAE’s Minister of Infrastructure and board chairman of SZHP, Dr Abdullah bin Mohammed Belhaif Al Nuaimi. Speaking to the UAE’s state news agency, Wam, on the sidelines of the third Arab Ministerial Forum of Housing and Urban Development, Al Nuaimi said 10,746 individual housing units worth $1.9bn (AED7bn) and residential projects valued at $735m (AED2.7bn), comprising 1,990 units, were being implemented by SZHP in 2019. He added that 12,736 housing projects worth $2.6bn (AED9.7bn) were in progress, and that 17,873 houses worth $4.7bn (AED17.3bn) were expected to be delivered between to construct 4,101 homes in the areas of Makkah, Madinah, Al Bahah, Al Jouf, and Qassim. This followed the ministry’s March 2019 launch of the ‘Benaa Housing’ website to facilitate investments from construction and contracting companies in Saudi Arabia for a 10,000-home project worth $910m (SAR3.5bn). The UAE is not far behind in terms of home development for its citizens, with Sheikh Zayed Housing Programme (SZHP) continuing to lead social housing investments in the Emirates. SZHP has delivered 62,000 worth $9.5bn (AED35bn) since its establishment in 1999, and has projects worth $2.6bn (AED9.7bn) under development in 2019, it was revealed 2019 and 2025 under future building projects. Another 3,391 houses that are part of residential projects worth $1.4bn (AED5bn) will also be delivered in the next few years, with SZHP’s future projects valued at $6.1bn (AED22.3bn). Similar social housing schemes are under way in Bahrain and Kuwait, which will both see more than 50,000 citizen homes added to the market over the next decade. Building these projects will not be devoid of the challenges that face the industry at present – such as tighter cash flows and a skills gap in the market – but contractors that are able to deliver these government priorities will undoubtedly note growth in the months to come. KNOWLEDGE PARTNER WWW.CONSTRUCTIONWEEKONLINE.COM38 CONSTRUCTION WEEK 26 OCTOBER - 8 NOVEMBER, 2019 The GCC’s commitment to improving its citizens’ quality of life is driving the construction of notable social and cultural projects, and in the UAE, contractor ASGC is facilitating many of these social infrastructure schemes. Vice president and executive director of ASGC, Abdulaziz Bin Shafar, tells Construction Week that the Emirati company is “deeply committed to supporting the UAE’s leadership achieve their aim to create a dynamic, thriving economy, and a cohesive, tolerant society”, adding: “We are a key player in the UAE’s drive to develop the social infrastructure required to sustain a diversified nation that is as loyal to its proud heritage, as it is ambitious for the future.” Shafar says ASGC ensures the timely and within-budget delivery of social infrastructure projects by “applying construction project management techniques and managing the cost control aspects of the projects at early stages”. ASGC’s repertoire of clientele and projects underscores the success of its strategy. Among the contractor’s ongoing projects is Mohammed Bin Rashid Library (MBR Library), which aims to support the national reading initiative and is set to become the largest library in the Arab World upon completion. The contractor is also working on Expo 2020 Dubai’s Sustainability Pavilion, which features embedded solar panels and rotating solar trees that will produce 4GWh of electricity each year. Excess power will be fed into the national power grid, and the pavilion is expected to exceed LEED Platinum standards. ASGC is also carrying out improvement works at Dubai International Airport (DXB), upgrading and improving the airport’s facilities, halls, duty free areas, concourses, stands, baggage handling system, airfield, and MEP systems. These ongoing projects follow ASGC’s solid track record in the social infrastructure sector, which is noting growth in the Emirates backed by mandates such as UAE Vision 2021, Abu Dhabi Economic Vision 2030, Tourism Vision 2020, and Expo 2020 Dubai, all of which are focused on developing high- quality infrastructure in the country. “Over the last few years, ASGC’s involvement in social infrastructure sector has increased threefold,” Shafar tells Construction Week. “The successful completion of the projects like Coca-Cola Arena, Etihad Museum, Enterprise Control and Command Centre, and Mediclinic Parkview Hospital, and ongoing works on MBR Library, Sustainability Pavilion, Dubai Harbour Cruise Terminal, and Dubai Mall Expansion have made ASGC a partner of choice in building country’s top important iconic projects.” Technology is a critical aspect of project delivery at ASGC, which continues “disrupting the classical way of construction by introducing a digital transformation to the entire group”. Shafar explains: “The effective adaption of technologies under one umbrella automates the core business processes across all ASGC and supply chain operations. All enterprise processes are digitised and connected. We started with a building information modelling (BIM) and 5D-based enterprise resource planning (ERP) system that automates tendering/estimation, procurement, cost control, project budgeting, financials and human resources processes. “This automation, tied to strong business processes, allows us to correlate data in real-time and create digital dashboards depicting ASGC and supply chain [operations], and project success indicators. With that in place, we can connect core information to operational systems and digital innovations.” According to the ASGC expert, the use of 5D BIM is “becoming the norm” to set Abdulaziz Bin Shafar, ASGC. KNOWLEDGE PARTNER WWW.CONSTRUCTIONWEEKONLINE.COM 26 OCTOBER - 8 NOVEMBER, 2019 CONSTRUCTION WEEK 39 congested development area within Dubai Creek Harbour and the high number of ongoing projects in the area,” he adds. Staff training is also a priority for ASGC, and Shafar says the contractor has established a training academy that, since its launch in mid-2018, has trained 3,500 workers and delivered 27,000 training hours across various trades. Shafar explains: “At ASGC, we firmly believe safety leadership is key to a successful project delivery and that this leadership must start right at the top of our organisation. All ASGC executives – including the chief executive officer and operations management team members – are required to attend mandated internationally recognised HSE training provided by International Occupational Safety and Health. “The success story of ASGC lies in delivering the uncompromised quality,” Shafar says. 2017. Today all the ongoing projects have the drones in place, except those falling in ‘no-fly’ zone. “Using a drone to take measurements and carry out surveys on these challenging projects is enabling ASGC to reduce the risk of accidents and save time. “Currently, we are saving what is equivalent to around 15-20 hours per week of site visits and walks by client and ASGC’s top and project management teams, resulting in more efficient and focused meetings. For the MBR Library and Coca-Cola Arena projects, using drones helped plan site logistics regularly, which minimised the double-handling of big materials and provided better access for upcoming activities on site. “For the Harbour Views project, drones have been used for site masterplan surveying for better understanding and planning of the obstacles that may be faced during execution, such as the the foundation for the success of projects such as Coca-Cola Arena. He explains that for the “best pre-build preparation”, the contractor connects BIM data to augmented reality (AR) systems through internet of things (IoT) capabilities. AR access allows ASGC to streamline project processes and provide detailed views prior to implementation. During construction, smart drones fitted with high-definition cameras are used to conduct visual inspections, and the units not only help identify defects, but also check for safety gaps and compare actual and planned progress based on the pre-formed BIM schedule. In sequence, ASGC’s ERP calculates and updates the 5D BIM cost status. Drones are a particularly important tool within ASGC’s construction technology portfolio, as Shafar explains: “ASGC has started deploying in-house drone technology on its construction sites in MBR Library is one of ASGC’s social infra projects.Next >