Pay problems still blight Gulf construction firms

Nearly half of Gulf-based construction firms and contractors have said getting paid remains their chief problem in 2011, a sign the credit problems plaguing the sector are showing little sign of letting up.

More than 43 percent of respondents to a survey by ArabianBusiness.com’s sister website, Construction Week, said pinning down payment for projects was their biggest fear – significantly more than the 25 percent who said securing new work was their top concern.

Around 14 percent said planning for the year ahead was top of their agenda, while 10.4 percent prioritised company longevity and 6.2 percent project completion.

Some of the region’s largest construction players said securing payment amid tight credit lines remains a challenge, despite signs of recovery in the sector. 

Peyman Mohajer, managing director at Ramboll Middle East, a broad-service design consultancy, said much time and energy has been used up chasing unpaid fees - despite projects nearing completion.

Andre Tufenkjian, partner at Dubai-based JCB Engineering & Consulting, also said the company has seen some slowdowns in payment.

Paul Grundy, owner of S&B, the temporary hoarding and fencing manufacturer, said there had been a marginal improvement in collecting fees in 2010 compared with 2009.

“We are able to cherry-pick the clients that we know have cash and we’re going to get paid,” he said in November.

But the head of GTCC, a civil engineering subsidiary of Drake & Scull International, said the company had not encountered payment problems, and the key was to establish clarity between contractor and client at the outset.

"If [a client] says, 'this is what I am able to do and that is my cash flow and I want to base your price, your cost, your preliminaries according to my cash flow', then there shouldn't be any issue," said Saleh Muradweij, executive director.