Expansion around the GCC appears to be something of a game of chess for the chairman of the Al Fara'a Group. Adel Saleh has many different pieces to move in the form of a general contracting company and eight construction-related companies across materials, manufacturing and property within the group. All the companies are seeking to be the leaders in their fields, and all, it seems, have a competitive offering to Saudi Arabia's construction market that will replicate the kind of strategy that has made the group a dominant force in the UAE.
As Al Fara'a General Contracting gains final approval as a certified contractor in the kingdom, Unibeton Ready Mix, one of Al Fara'a Group's crown jewels, has already mobilised to start claiming a stake in the booming market. And it is not doing things by halves.
"Unibeton has started production one week back," Saleh told CW in April, sitting in the company's Al Ain office. "It is the largest batch plant in Saudi, and our production is 400m3 per hour. We also have a branch for construction, Al Fara'a General Contracting, and the aluminium and the electromechanical division," he adds.
The Al Fara'a Group has one of the strongest sets of construction companies under its banner. The general contracting company and Unibeton Ready Mix is also joined by Al Fara'a Properties, Belgium Aluminium & Glass Industries, Al Sabbagh Electromechanical and further lines in precast concrete, steel structure and interiors and joinery. The contracting arm and a number of the material companies have won industry awards, most recently the Dubai Quality Award for Unibeton Ready Mix, which is the first company to introduce self-compacting concrete to the UAE.
Al Fara'a's ability to compete across the construction chain is one of the company's growth drivers. The contracting arm is classified as an ‘unlimited' company in Dubai, meaning it can work on projects of any size and height, and a ‘special' contractor in Abu Dhabi.
Today, Al Fara'a General Contracting has to be patient in its entry into the Gulf's biggest construction market, says Saleh, noting that it takes time not only to register, but to gain special classification that will allow it to bid for government projects. Even the big companies have to start from the beginning.
"We have had to move step by step [in Saudi]. It will not be at ‘one time'. It takes a maximum of two years to establish there. For one year now we have been working on it. We have to keep in mind the bureaucratic elements; it is a bit complicated. The process is easier in the UAE compared to Saudi," says Saleh.
"We have appointed a country manager, a qualified engineer. He has started pricing the jobs with the private sector. [In terms of the] government sector, we are waiting for the classification department, and then we can go ahead with government jobs. For private sector jobs you can work to any amount, any project. With the government, it is not allowed: you need the classification."
Saleh explains that he instructed the business development team in 2009 to undertake a major market survey of the kingdom and other countries to see where the chess pieces of its companies can take advantage of opportunities. The results led to the establishment of an office in Qatar for its contracting and concrete divisions.
Saudi Arabia represents a wealth of opportunities, he explains - not just for the number of projects under design or construction, but that it gives the company a chance to raise the standards and boost cost-efficiency.
"There is no quality in all Saudi," he says with finality. "We felt we can add value for the country through our experience through construction and cement, materials, finishing, tiles. That is why we consult with the customer with every single step. We give suggestions; for example, if budget is ‘this much' and we tell them ‘okay, in this budget it is better to go in a different direction and save money'. So we are improving the quality all the time."
The Al Fara'a Group was founded in 1980 by Saleh and J.R. Gangaramani, president and executive chairman of Al Fara'a Integrated Construction Group, with the aim of providing a full range of construction services and material manufacture to the nascent building market in the UAE, along with a property arm. Saleh explains that, although certain activities are centralised, such as purchasing, each business unit is given autonomy to plan and grow.
"One of the main, core values is to empower people," he says. "There is a division head for each unit, and they are all empowered to take a free hand to run their operation, and are also part of the board of directors, which meets quarterly."
However, the subsidiaries and the main contracting arm are closely intertwined, with the material divisions often recruited by the main contracting team to execute projects. Indeed, Saleh adds that the material companies' first role is to serve its contractor, and then provide to the market.
Procuring materials in-house cuts much of the challenge of finding the right quality and business approach from the huge range and number of construction material companies competing to supply to projects around the GCC.
"It is very hard to maintain quality with external contractors, as well as timelines and safety. So the best thing is to control everything with turnkey solutions," says Saleh. "They give service to our contracting [division]."
But selecting an Al Fara'a Group supplier is not automatic for the contracting arm. Saleh maintains that the subsidiary companies still have to provide the best value for money and tender like any other supplier would have to.
"If they are not competitive in [the context of the] market, we will not entertain using them," he says. "We are pushing them because we are part of management. For some projects, Al Sabbagh Electromechanical was pricing higher than the market, so we gave the work to another sub-contractor."
Al Fara'a's contracting arm has worked on projects across the emirates. These includes numerous commercial and residential towers for the Department of Social Services and Commercial Buildings, cultural buildings such as the Gulf Library Manuscripts and Studies Centre, an extension to Al-Mafraq Hospital, the Al Mahda Residential Complex in Al Ain and Dubai's Floating Bridge.
Saleh emphasises that his vision for expansion is not due to the common assumption made of UAE contractors in the last two years, that there is little work available in its home country.
"We want to go international, not because there is no work, but because the direction is to have different fields," he says, pointing out specifically the company's project in the Habsham region on behalf of Gasco.
"We have not stopped working in Dubai; we were running our own projects, and now we have three or four. And we are still tendering, [that is to say] if there is financial support, if it is granted, then we start."
Indeed, oil and gas has become a big area of focus for the group. In April it established Al Fara'a Infrastructure, a new entity that will target the energy sector specifically.
Saleh points out that the company has been adept at working with other contractors for big projects, including those from Canada, Korea and the UK. The Kier Group, for example, has been its partner for a number of years for infrastructure projects, while EllisDon and Al Futtaim Carillion have been key counterparts on healthcare projects.
Last year saw Al Fara'a General Contracting win two school projects with Wates Construction, including the construction of one of the Aldar Academies for Aldar Properties, which is due for completion this month. Al Fara'a had first approached the Surrey-based company more than three years ago on the back of a requirement that certain government projects required a JV with a foreign contractor.
Perhaps even more unusually for a UAE-based contractor and materials supplier, Saleh adds that the company has never received a late payment: "Not in 30 years," he states resolutely. Furthermore, the company's finances are overseen with what seems like several pairs of eagle eyes to maintain operations and clarify's the company's cash position at all times.
"In our accounts, the balance sheet is viewed on a monthly basis, as we want to know where we stand - not yearly, monthly. The cash flow, that is very important: when to issue cheques, when to hold. In the meantime, we do not raise money from the banks; we reinvest it into the companies."
This monetary diligence makes the company one of very few that is sought by banks for loans, rather than the other way around.
"Bankers are running after us," exclaims Saleh. "We are dealing with 20 banks; Arab Bank is the biggest. They came from Jordan and wanted to have a meeting with us, and I called them and said, ‘I do not want to officiate this'. They were astonished: ‘How?' Other [construction firms] are running behind the banks; the banks are running behind us."
With solid foundations, the company is able to take its time and mobilise around the GCC, or even further afield, as the opportunities unfold.
Qatar is one such market, and Unibeton trucks have been rolling through the capital for some time. Saleh is excited by the enormous construction plans from all the infrastructure and buildings needed to host the FIFA 2022 Football World Cup, but he remains reserved at this early stage.
"They have to start from now," he says. "The budget is around $44billion within ten years. Qatar has potential. India is also a booming market; we have two offices," he adds. Al Fara'a Group has three companies in India, namely Al Fara'a Constructions, Al Fara'a Ready-mix and a real-estate firm.
With a wide network of companies to oversee, stretching across an increasingly diverse Gulf region, Saleh maintains that his biggest challenge revolves around people and their part in the future of Al Fara'a.
"The big challenge is resourcing the proper, qualified candidates who can run the subsidiaries.
"At the same time, we have the partnership strategy, whereby you share success and correct development. People have to be happy; they come from different countries and cultures, and they have to learn about the local culture. The employees are like partners, and they can share in the profits to make it more attractive to [other] qualified candidates," concludes Saleh.