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Wed 15 Oct 2008 04:00 AM

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Airport contracting

At the new airport site in Jebel Ali, one firm has elected to buy new equipment rather than hiring.

At the new airport site in Jebel Ali, one firm has elected to buy new equipment rather than hiring.

Setting up a contracting firm in the Emirates isn't easy. Sure there is an abundance of work, but spiralling cost in the supply chain means firms have to watch what they are spending in order to keep the accounting books balanced.

Kamco General Contracting are one such outfit. While the brand has been active in Saudi Arabia for more than thirty years it is only in the last two that the firm has been active in the UAE.

However, the company soon picked up a large contract to build several oversized cooling plants at the new Jebel Ali airport. A large amount of machines were required, as senior projects manager Farah Karam explained; "We were looking for brand new equipment, not used equipment, which in our experience is useless - especially generators." This belief lead the firm to experiment with renting all equipment, but there was a serious problem with making sure it turned up on time - if at all.

Buying new

Deputy general manager Hannad Abi Haydar explained; "We found we could save lots of money if we do it ourselves. Originally, we thought we'd rent but we tried three or four suppliers (of rented equipment) and none of them delivered on time." He added that one supplier tried to deliver equipment some thirteen days late - he wasn't allowed on site.

"As we faced a lot of problems with the suppliers of equipment, although we are a new company, we elected to buy, because once you buy a machine you can be sure that you have it on your side. You can be sure that the operator will work today - unless he's really sick. And you can ensure that if you transfer the equipment to another site it will be there.

"It's not easy to finance all of these materials, from scaffolding to everything - we buy, we don't rent it. We use the minimum rental possible. We found we could save lots of time and money if we do it ourselves. So we started buying everything. Busses, excavators, JCBs, Bobcats, wheel loaders - everything."

As a number of brand new machines were required, the equipment that Kamco believed would give the best return on investment were selected, although the firm didn't see any need to source all from the same manufacturer. One unit of the venerable JCB 3CX was selected for it's all around versatility while the Bobcat S170 skid-steer was also picked for it's manoeuvrability on a tight job site.

During our visit, the 3CX was making itself useful by shifting timber and gypsum in its bucket, while the S170 was also working hard, scraping up shards of rebar and other loose debris.

Chinese

While the small loaders are well-known brands, for the tower cranes, large wheel loaders and excavators Kamco decided to explore a different route - Chinese equipment.Explaining the decision, Haydar said; "There are good savings to be made, but it is not only cost savings. There is good availability and there is a shorter lead time. after sales service which we are getting."

Of course savings and back up are no good if the machine falls apart every five minutes, but Hadar insists the quality is good.  "The quality isn't what it used to be five or six years ago.

"Buying Chinese means you are paying less for the royalty of the name. In terms of quality and performance they are the same." With a smile he added "In seven or eight years... well, we'll see, but so far so good. So far it has been a good decision" On our visit two six-month old LiuGong 856 loaders were on site.

One was working as an ad-hoc rebar carrier, while the other was about to go on shift in the more traditional loader role of shovelling sand and dirt. These machines were assisted by some excavators of the same make being used on the site.

Farah Karam said: "You look at the equipment quality verses the price and you see it is not arrow straight." adding that the budget equipment would perform all of the tasks that Kamco required, and that they had been perfectly happy with the service from Dynatrade, the local dealer.

Apart from one Liebherr, the tower cranes also hail from China. These are from a little known brand named Sym, part of Sanyo Heavy Industries and built in Shenyang, Liaoning province. This firm are best known for producing 3-tonne luffing jib machines. Again, Kamco plan to keep them for as long as possible and so far the machines have been working very well.

Operators

Of course any machine is only as good as its operator, and as we all know, getting operators is a challenge. "Operators, there are not enough." Farah Karam said.  "Qualified people take time, because you have to train them before you put them on site. Its time we haven't got as our project is short time."

He went further "You always need the three items, manpower, materials and equipment. Materials and equipment without manpower is useless."

However, Hannad Haydar pointed out; "Operators are easier to get than qualified engineers. We have strategies to keep our own people and to lure new people,  besides advertising in the newspapers or going to a recruitment agency."

He pointed out the growth in the company. "Eighteen months ago we had two people in this company (in Dubai) and now we have over 700." Values

Budget kit is not known for particularly good trade in values - even in the machine-starved Emirates. However, this is of little concern to Kamco, as Hannad Haydar explained; "No, we don't care much about the resale value because we intend to keep them working with proper maintenance. We have a good team, so we will take care of the maintenance, but that is why after sales service is so important."

While the decision to buy instead of renting is sound, there are occasions where hiring is all but unavoidable. "Mobile cranes, we don't buy as we use it once in a blue moon - perhaps twice a month."

Hannad Haydar said. Indeed, we spotted one rather battered truck crane, which appeared to be a 20-tonne Kato on a Mitsubishi Fuso base. Motor graders are also hired as it rarely efficient for anybody other than road building contractors to own any of these machines. On occasions when they are needed, Cat machines are brought in - in fact you would be hard pushed to find any other brand of grader around the Emirates.

Diesel

The cost of diesel is a concern for anybody thinking of starting a construction project in Dubai. Unlike petrol, which is sold at a set price across the Emirates, the price of derv can vary over the seven city-states. In fact, Dubai diesel is currently around double of what it is in neighbouring Sharjah. This is of great ire to most contractors, not least Hannad Haydar who feels the difference cannot be reconciled. "The price rises in the UAE of steel, cement, concrete, rock can be substantiated."

"But the price of diesel cannot be. It is an agent of this catastrophe. I think it is ten times cheaper (in Saudi Arabia)." He punched some numbers into his calculator, concluding; "Yes - eleven times cheaper!" Obviously, this cost is a serious factor, which needs to be worked into any estimate.

Roughly five per-cent of any contract is diesel fuel, though rising costs have forced some machine owners to call for ‘escalation clauses' in fixed price contracts, in order to take care of unforeseen rises.

Price rises or not, the scores of contractors at the new Al Maktoum airport are likely to stay in work for a long time yet. The six-runway colossus will keep every machine running day and night before its scheduled completion in 2017.

The new airport

The new airport will be one of the largest in the world and in terms of passenger numbers and cargo carried, it may well be the busiest.  With six runways, the new hub will be able to handle four aircraft simultaneously, day and night. It has been designed with craft like the A380 in mind, with maintenance facilities fitted to perform A, B and C checks.

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