< PreviousTHE BIG 5 SAUDI 10 CONSTRUCTION WEEK AUGUST 2020 Construction Week’s deputy editor Anup Oommen shares all the top insights gathered from the chief project delivery officer at The Red Sea Project, Ian Williamson; the CEO of AMANA Group, Riad Bsaibes; and the director of innovation at MACE, Matt Gough, during the expert panel discussion held virtually by The Big 5 Saudi in collaboration with Sektor WWW.CONSTRUCTIONWEE WWW.CONSTRUCTIONWEEKONLINE.COM Time for the constructionTime for the construction sector to be "bold and brave"sector to be "bold and brave" Image: ShutterstockAUGUST 2020 CONSTRUCTION WEEK 11 THE BIG 5 SAUDI The COVID-19 pandemic, the fluctuations in oil prices, the liquidity crunch, and downward pressures on financing, supply chain, and materials has caused the construction sector to reconsider how to face the years to come. Yet, with the global population expected to grow from the current 7.5 billion to 10 billion by 2050, according to the United Nations, and the global economy expected to triple in size by 2050, the industry is preparing for a surge in demand for construction over the coming years. In the Middle East, the Kingdom of Saudi Arabia has taken the lead in terms of gigaprojects and megaprojects as part of its Vision 2030, which calls for industries – including construction – to boost the GDP and diversification of the Saudi economy, by creating thousands of jobs and enhancing localisation of the workforce. Commenting on the progress of construction within Saudi Arabia’s gigaprojects – during an expert online panel discussion organised by The Big 5 Saudi in partnership with Sektor – the chief project delivery officer at The Red Sea Project, Ian Williamson, said: “Despite the ongoing challenges, the gigaprojects are going ahead at full speed. They are all under stages of master-planning, design, procurement, and construction. “These gigaprojects are so massive that there are hundreds and thousands of projects that are all running in parallel, but are all at different stages. If I were to speak to The Red Sea Project, specifically, there’s been absolutely no let-up in the pace, despite the global pandemic that we’ve all been facing.” The Red Sea Development Company (TRSDC) – the master-developer behind the kingdom’s 28,000km2 The Red Sea Project – has already inked contracts and long-term commitments with a number of partners, including DuBox – an AMANA Group company; Saudi’s Al Majal Al Arabi; construction firm HUTA Hegerfield; Saudconsulting Services (Saudconsult); and KSA contractor Binyah, among others. Williamson added: “All of the contractors at TRSDC have stuck to the pace. We’ve seen a drop-off of only about 15% in productivity during Q2 2020, despite the difficulties in getting labour, equipment, and materials, to these remote sites.” Master-developers in the Middle East, who are working on long-term projects, have already begun future-proofing their projects, and raising the standards for the rest of the industry. Sharing his insights on the future of the construction industry, the CEO of AMANA Group, Riad Bsaibes, said: “It really takes a forward-thinking developer to think about future-proofing through technology, and do things that they have been unable to do in the past. Off-site construction does just that. “Off-site construction is the future of construction for many reasons. Firstly, it has been enabled by the presence of BIM – we’re able to put things together and model them ahead of time, lock in the design, and go ahead to production in a manufacturing environment, which allows us to be lean and efficient.” “Off-site construction also lowers the dependency on manpower. Today, we use 30% less people in DuBox than in traditional construction.” In addition, off-site construction also has minimum impact on a construction site. For instance, in a site such as The Red Sea Project – which includes more than 90 islands, mountain, canyons, dormant volcanoes, as well as cultural and heritage sites – it is of paramount importance that construction – WWW.CONSTRUCTIONWEEKONLINE.COM RUCTIONWEEKONLINE.COM through heavy equipment, on-site workers, and the material – have minimum impact on the natural environment. Bsaibes added: “For The Red Sea Project, we have minimal presence at the site. Approximately 80% of the work is done at the factory in Saudi Arabia. We put together everything that is pre-designed in the factory, and ship it to the site, where it is assembled.” “Because the factory has a manufacturing set up, which is different from a construction site, we have greater control over the manufacturing efficiencies, safety, quality, ability to deliver on time, and also the ability to train people better than on construction sites.” “However, off-site construction is still in its early stages; there’s a long future for it, and there are different models to do it.” Concerns have been raised about how off-site construction and pre-fabricated technologies may not cater to a region such as the Middle East, where bespoke construction is the norm; where developers and contractors like to focus on the uniqueness of design and architectural marvels. k "Despite the ongoing challenges, the gigaprojects are going ahead at full speed," says Ian Williamson Image: TRSDC THE BIG 5 SAUDI 12 CONSTRUCTION WEEK AUGUST 2020 so have the other gigaprojects – and we’ve shared notes. We’ve canvased the capability of the off-site manufacturing market, and it is still in its early days. “It is still simulating what happens on the construction site. In off-site construction, we can achieve results with less labour and in a more controlled manner, but the whole process still lacks automation. As owners, we reserve the right to have completely bespoke, unique products every time we construct a building.” Yet, the benefits of off-site construction in specific phases of construction is undeniable. “It is critical for Saudi gigaprojects,” Williamson added. “When we’ve got islands in an archipelago, developing 40km off- shore, that man hasn’t touched and nature’s got a strong hold, we can’t afford thousands of labourers and boots landing on those islands during construction. “That would destroy the very purpose of building on those islands. We have to off-site manufacture. “We need 80% at least of those products off-site manufactured. Historically in hospitality, 20% to 30% has been off-site manufactured, but we’ve got much higher ambitions than that. “Clearly, we have to build jetties, and sub-structure, but if we choose monocoque structures in place of them, we don’t always "When we've got islands in an archipelago, developing 40km off-shore that man hasn't touched and nature's got a strong hold, we can't afford thousands of labourers and boots landing on those islands during construction. That would destroy the very purpose of building on those islands. We have to off-site manufacture." Ian Williamson Chief Delivery Offi cer, TRSDC have to build using pre-finished volumetric construction. We could find clever ways of bringing them to site, with low labour requirements on site. “So, while it is indeed very early days for this modern form of construction, it is indeed the way the industry needs to move forward.” The one lesson that COVID-19 has taught the industry is that we need to stop attempting to predict what’s going to happen in 10 years, because we can’t predict what’s going to happen in the few months ahead. Instead, the time has come to implement the technological and work-culture changes that should have been incorporated years ago. Gough said: “The world’s just been shown that change can happen in an instant. Change has been coming for a while, and the pace of change is only going to get faster. So, we need to be in a state where we’re prepared for any change.” “Also, instead of wondering ‘when we’re going get back to normal’, we need to ask ourselves, ‘was normal any good?’ “For the construction industry, which constantly beats itself up about how productivity is bad, and how the quality is bad, we know that normal was not good. “Let’s take time to reimagine the industry, and understand that now is the time to be bold and brave,” he concludes. WWW.CONSTRUCTIONWEEKONLINE.COM Bsaibes explained: “We’ve done many projects with DuBox, and if you put them all on the same screen, they don’t all look alike. While it may be true that some of the atoms – the concrete box-shaped container – may look alike, we need to understand that when we put different atoms together, we get different-looking molecules. Therefore, it comes down to creativity. It is the ability to use BIM creatively that matters, in order to have different designs of atoms, and achieve uniquely-designed molecules – or projects.” The director of innovation at MACE, Matt Gough, added: “Here at MACE, we talk a lot about moving from construction to production. "While on one hand, we are trying to industrialise the products – we are trying to standardise construction so that it is more repeatable, faster, better, and cheaper; but we are also trying to industrialise the process – designing differently, curing differently, and manufacturing differently. “There are methods of industrialising construction or moving to modern methods of construction without giving up on aesthetic quality or performance.” The future of construction could well be technology-driven and could rely heavily on off-site manufacturing, but at the moment, the industry just isn’t there yet. Williamson said: “We’ve gone around the world over the past nine months – and 21 MARCH - 17 APRIL, 2020 CONSTRUCTION WEEK 33 THE BIG 5 SAUDI WWW.CONSTRUCTIONWEEKONLINE.COM "The world's just been shown that change can happen in an instant. Change has been coming for a while, and the pace of change is only going to get faster. So, we need to be in a state where we're prepared for any change. Also instead of wondering 'when we're going to get back to normal', we need to ask ourselves, 'was normal any good? For the construction industry, which constantly beats itself up about how productivity is bad, and how the quality is bad, we know that normal was not good." Matt Gough, Director of Innovation MACE Off-site construction is being touted as the future of the construction industry Image: ShutterstockKSA REPORT 14 CONSTRUCTION WEEK AUGUST 2020 Ranju Warrier highlights key points from the US-Saudi Arabian Business Council’s (USSABC) Contract Awards Index (CAI) for Q1 2020, including the impact of COVID-19 on construction projects in the kingdom, and its recovery for the second half of the year The Kingdom of Saudi Arabia is home to multi-billion-dollar gigaprojects, which are collectively contributing to help the Gulf nation diversify its oil-reliant economy in line with the Vision 2030. From the 336km2 ‘entertainment, sports, and arts destination’ Qiddiya to the 24,000km2 The Red Sea Project to AMAALA — an ultraluxury resort destination, NEOM, Diriyah Gate as well as Riyadh Metro, King Salman Park, and King Abdullah Financial WWW.CONSTRUCTIONWEE WWW.CONSTRUCTIONWEEKONLINE.COM KSA's oil and gas sector "continues momentum" Photo courtesy: CW archives District (KAFD), all these projects and more are shaping Saudi Arabia’s future. However, Q1 2020 had been a time of slowdown, due to the outbreak of COVID- 19, which not only invited strict safety and social distancing measures, but witnessed complete lockdown in many countries. Saudi Arabia was no exception. This, naturally, affected various sectors, further witnessing a significant drop in the value of contract awards in the first quarter of 2020. According to the US-Saudi Arabian Business Council (USSABC) Contract Awards Index (CAI), the value of contracts awarded in the kingdom in Q1 2020 glided by 8% y-o-y to reach $12bn (SAR45.2bn), despite increasing 28% compared to Q4 2019. The drop was mainly due to the “downturn in the number of projects for the remainder of 2020 resulting from COVID-AUGUST 2020 CONSTRUCTION WEEK 15 KSA REPORT equivalent to 37% of the total contracts awarded in Q1 2020. Riyadh was dominated by the military sector, with other contributing sectors being real estate, healthcare, and transportation. Furthermore, the Madinah region recorded $752m (SAR 2.8bn) worth of contracts, with one of the major contracts being $700m (SAR 2.6bn). While the Makkah region contributed $533m (SAR 2bn), equivalent to 5% and was led by the education and power sectors. The oil and gas sector registered the second highest value of awarded contracts during Q1 2020 with $3bn (SAR 11.2bn). On a y-o-y basis, the oil and gas sector remained WWW.CONSTRUCTIONWEEKONLINE.COM RUCTIONWEEKONLINE.COM relatively stable, as it declined by only 4% during Q1 2020. Meanwhile, the sector grew by 46% q-o-q as the pace of the contracts slowed at the end of 2019. Saudi Aramco awarded Samsung Engineering C&T a contract worth $800m (SAR 3bn) in February, where the contractor will be responsible for the development of the Marjan cogeneration independent steam and power project (ISPP). The scope of the project includes the construction of a 700 to 900MW power plant, construction of substations, a 20,000m2 desalination plant, a seawater intake system, installation of three heat recovery steam generators, along with Qiddiya is among the gigaprojects shaping Saudi Arabia's future Photo courtesy: Qiddiya 19 and the reduction in global oil prices”. By the end of Q1 2020, USSABC’s Contract Awards Index climbed to 216.6 points, despite having “briefly dipped” below the 200 point mark in January for the first time since May 2019. The CAI briefly fell to 196.98 points in January before climbing up to 212.9 in February, and ending at 216.60 in March. Yet, the CAI in Q1’20 grew by 28% y-o-y reflecting on the spike witnessed throughout the rest of 2019, and into the first quarter of 2020. The value of contract awards was led by the military sector, which secured 33% of the contracts valued at $4bn (SAR 15bn), followed by oil & gas with 25% worth $3bn (SAR 11.2bn); and petrochemicals with 18% corresponding to $2.2bn (SAR 8.3bn), together these sectors accounted for approximately 76% of the total value of contracts. According to the USSABC report, the military sector was led by two megaprojects including the construction of the King Salman airbase and of the King Faisal air academy, with each of the projects being valued at $2bn (SAR 7.5bn). The kingdom’s oil & gas sector, on the other hand, continued its momentum from 2019. Saudi Aramco continued to award contracts for the development of the Marjan oil field as well as Safaniya and South Ghawar in the Eastern Province. Meanwhile, Q1 also saw a notable pickup in the value of petrochemicals contracts, as Saudi Arabia continued to develop its downstream oil & gas capabilities in line with Vision 2030. Water, power, and real estate contracts accounted for 18% of the total value of the awarded contracts, while 6% were in other sectors. Provincial breakdown According to the USSABC report, the Eastern Province recorded the majority of contract awards covering 48% of the total contracts in Q1 2020. This figure is equivalent to $5.8bn (SAR 21.8bn). All of the contracts in the oil & gas and petrochemicals sector were awarded in the Eastern Province, which accounted for $5.2bn (SAR 19.5bn). The power, real estate, and transportation sectors also contributed to the contracts awarded in the Eastern Province. In Riyadh, on the other hand, contracts awards stood at $4.4bn (SAR 16.6bn), KSA REPORT 16 CONSTRUCTION WEEK AUGUST 2020 subsidiary Advanced Global Investment Company (AGIC) and SK Gas formed a joint venture (JV), Advanced Polyolefins Company, which will work on the plants. Together the plants will have a nameplate capacity to manufacture 843,000 tonnes per year, as well as 764,756.7 tonnes of propylene and 800,000 tonnes per year of polypropylene. Construction on the plants is expected to begin in 2021, and is expected to be completed by Q4 2024. Within the water sector, Saudi Water Partnership Company (SWPC) picked a consortium comprising ACWA Power, Gulf Investment Corporation (GIC), and Al Bawani Water & Power Company as the preferred bidder for the Jubail 3A independent water project (IWP). Once operational, it will have a capacity to produce 600,000m3 per day. Located in the South of Jubail City, the plant will serve Riyadh, Wassim, and Eastern provinces by providing potable water. The project also includes storage tanks of one day production as well as in-house solar power to reduce the power consumption from the network. “The kingdom had spent approximately 4% less on capital expenditures year-on-year. Another positive development was an 81% year-on- year increase in the infrastructure and transportation sector, which also represented 22% of the annual budget. The next two quarters of 2020 will reveal the extent to which the pandemic has affected the construction sector in the kingdom." Jubail 3A is a part of Jubail Phase 3 IWP that also includes Jubail BB with 570,000m3 potable water capacity per day. Contract awards outlook Despite the slowdown caused by the COVID-19 pandemic, the government’s capital expenditure spending during Q1 2020 further strengthened the construction sector. According to the report, the kingdom had spent approximately 4% less on its capital expenditures y-o-y. Another positive development was an 81% y-o-y increase in the infrastructure and transportation sector, which also represented 22% of the annual budget. In order to address the negative effects of the pandemic, Saudi Arabia put in place stringent fiscal measures, which has amounted to more than $72bn (SAR 270bn) worth of budgetary cuts and stimulus plans. According to USSABC, the next two quarters of 2020 will reveal the extent to which the pandemic has affected the construction sector in the kingdom. WWW.CONSTRUCTIONWEEKONLINE.COM associated works. The project is expected to be completed by Q1 2023. In the petrochemicals sector, two large contracts were awarded in Q1 2020. Saudi Arabian Stock Market-listed Advanced Petrochemical Company signed a deal with South Korea’s SK Gas to construct and operate a propane dehydrogenation (PDH) and polypropylene (PP) plants in the kingdom’s Jubail Industrial City, with the project value being $1.8bn (SAR 6.8bn). Advanced Petrochemical Company’s AUGUST 2020 CONSTRUCTION WEEK 17 INTERVIEW WWW.CONSTRUCTIONWEEKONLINE.COM The oil and gas sector registered the second highest value of awarded contracts during Q1 2020 with $3bn (SAR 11.2bn) Photo courtesy: CW archives18 CONSTRUCTION WEEK AUGUST 2020WWW.CONSTRUCTIONWEEKONLINE.COM THE BIG PICTURE FOLLOW CONSTRUCTION WEEK @CWMIDDLEEASTTHE AREA OF THE AIRPORT CITY MASTERPLAN BEING DEVELOPED BY CHAPMAN TAYLOR IN JEDDAH 1.91 MILLION M2 AUGUST 2020 CONSTRUCTION WEEK 19 WWW.CONSTRUCTIONWEEKONLINE.COM THE BIG PICTURE Chapman Taylor is set to develop the transport-orientated ‘Airport City’ masterplan adjacent to King Abdulaziz International Airport in Jeddah. The Airport City development is described by Chapman Taylor as the “new hub gateway” to Jeddah featuring business hotels, residential elements and offi ce and retail spaces. [Image: Chapman Taylor]Next >