Let the bidding commence

It hasn’t been an easy 2009 for the construction industry. Speaking to some of the region’s big formwork players, however, certain attributes appear to be common among those who have survived and are bidding for new contracts. As Construction Week discovered, there’s plenty of good form out there.

It is difficult to choose a word that sums up the construction industry across the GCC. Predictions of a return to long-term sustainable growth vary from the fourth quarter of this year, to 2010, to 2011 and beyond. Therefore if a word had to be chosen, ‘unpredictable’ seems as good a choice as any.

Speaking to the region’s top formwork players, however, there remain consistent themes in the trends that many are seeing across the industry. Collecting payment throughout 2009 has been a problem for many.

Though work is, of course, scarcer for most than it was during the regional boom, all firms attest that there is still work available, jobs are ongoing, bids are in place for upcoming contracts, and bids are being prepared for pipeline jobs.

Most formwork firms, if they have not done so already, are looking to other GCC countries such as Qatar and, of course, Saudi Arabia to capitalise on the new boom-towns and spread the long-term risk of doing business.

But the burning issue across the industry today is that of payment. The dam that has been blocking the flow of liquidity through the industry has been causing problems since the start of this year. The hot topic, it appears, is to how to breach the dam.

Ulma Formworks general manager Andreas Gathmann does not mince his words. “Payment has been disastrous,” he says. “Everybody is delaying payment. It takes up an inordinate amount of time to collect.”

Despite this industry-wide situation, Ulma is one of the top three developers, manufacturers and providers of formwork, shoring and scaffolding systems in the world, and therefore has the depth and experience to cope with hard times. Gathmann says that new business leads are coming thick and fast.

“The bidding process is going very well,” he says. “We are bidding for new tenders and projects that have already been awarded. Surprisingly, there is no decline at all.” Gathmann says that the split between potential new contracts in Abu Dhabi and Dubai is around 65% to 35% respectively, indicating not only a raft of leads in Abu Dhabi, but a fair scene in Dubai as well.

RMD Kwikform managing director for the Middle East Paul Williams says that for the industry, payment has been “a major business challenge,” but, he adds, “I’m pleased to advise that record turnover levels year-to-date are mirrored by record collections. In some territories our position is actually far better than it was previously.”

Williams puts this down to being selective when choosing which projects to bid for and which contractors to work with, the importance the firm places on “exceeding customer expectations,” and the close relationship the firm maintains with many of its clients.

Public awareness

One trend that appears to be quite prevalent today, particularly in the UAE formwork industry, is the shift towards public sector projects as opposed to private sector. In Abu Dhabi in particular, government funded infrastructure projects appear to be cropping up by the day. Saadiyat Island, Yas Island, Masdar City, new works in Abu Dhabi City, and a wealth of new developments such as Capital District and the under-construction Khalifa City are spearheading government expansion plans, all of which spells opportunity for the formwork business.

“Our two biggest projects at present are Umm Al Quwain General Hospital and the Abu Dhabi Financial Centre, both of which are government-funded,” says German Formwork Technology general manager Adel Riahi. “We are getting more work within the public sector at present.”

The potential for new projects also remains buoyant at German Formwork Technology. The firm is in the race for a major project covering 1770m² being built by Pivot Engineering & General Contracting in Abu Dhabi, and a second Abu Dhabi-based project, funded by the government, that covers 3200m². “That’s the biggest job we are bidding for,” Riahi says.

Riahi adds that one result of the financial crisis has been a seismic shift in the nature of business from outright sales to rentals. “From 2005 through to 2008, 70% of formwork contracts were on a sales basis with the remaining 30% on rental,” he says, “but since the beginning of the crisis the figures have been around 80% on rental and 20% on sales.”

Staff retention

Despite the trying times and unpredictability that continues to plague the industry, Peri managing director Hans Joachim says it is vital to maintain a level of cohesiveness in business so that when the market does pick itself up and dust itself down, firms will be well positioned to move forward.

“We kept our personnel despite the slowdown because they are specialised,” he says. “It would be foolish to train people and then cut down in numbers because, after a year, you need them again. Our policy is to retain our staff so that we are ready for when business starts up again.”

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