Ahmad Matar, head of the electromechanical subsidiary of contracting giant Al Arrab Contracting, talks to Ben Roberts about the company's moves into Qatar and Saudi Arabia and the importance of top quality internal systems.
Any company that launched in Dubai in 2006 would have since experienced something of an exciting start, given the market fluctuations between then and now. But in June of that year KSA-based Al Arrab Contracting Company launched its electromechanical business, Al Arrab Electromechanical Engineering (AEME) in the UAE, to capture the market opportunities for electrical, mechanical and telecommunication systems.
AEME is a good example of Al Arrab Contracting Company's strategy, in which new subsidiaries are quickly set up where there is sufficient business to create a pocket of expertise and compete with specialist rivals. At the helm is Ahmad Matar, chief executive, who is into his fourth year at the company and his 13th in Dubai.
"We do everything electromechanical," says Matar, "including lighting, power supply, standby generators, evacuation systems, lightning protection systems, as well as drainage, water supply, air conditioning, plumbing, heating and ventilation."
Market conditions have not been the only change for AEME and Matar. In the last quarter of 2007 the company already established an office in Qatar - a move which now seems astute given the shift in big business toward the gas-rich state.
By the middle of 2010, the company has a substantial business line in the country, most notably seven of the Porto Arabia Towers in the nascent Pearl Qatar development, located offshore from Doha's West Bay area. The contract for the construction of the first three towers had been won by the parent company in November 2006. Two of the seven have been handed over, so far.
The Pearl Qatar is a familiar concept to any who followed the development of Dubai's Palm Jumeirah, though with elements of unique design and layout. The island, developed by United Development Company, will house 35,000 people and will contain three large bays, ten precincts as well as shops, schools and restaurants.
The differences between the projects go further however. To an extent the latter project has learnt from the former, which was built in the haste of an overheating property boom. It is a question of a better process, Matar explains, and central to this, is the timing in which different companies are brought in to do their portion of the work.
"The two projects have a similar philosophy as ‘island' projects," he says. "Perhaps the first suffered technically as they started the infrastructure at the same time as the compaction and backfilling.
"In Qatar, it's more organised and scheduled, as there is the finishing, the backfilling, then the infrastructure, then the building. The project has learned from the experience of Palm Jumeirah, and in doing so it has added value."
He adds that when he visited the site to start construction, the compaction and backfilling had been finished - "so it was a lot less of a headache for us."
For AEME's specific line of work there are a number of intricate details in the towers, in particular a fire alarm system that includes a voice evacuation system, heat detectors, speakers, sounders and an emergency light system with a central battery.
Launching in Qatar was not without its initial challenges, however, and Matar's experience shows just how varied the maturity of the different Gulf states had been just a few years ago - and also how swiftly they can develop to level the playing field.
"When we started in Qatar in 2007 there was a big problem with sourcing materials," he says.
"Most had to be bought through Dubai. Three years ago about 50% of materials came from local sources. In 2008 that was up to 70%.
"At the time this caused delays, along with problems of the availability and also you need to meet the delivery period.
"But now the situation is improving. Now the materials are at a very competitive price, with flexibility in payments. Qatar is just now investing a huge amount in infrastructure, and the government support for construction is very strong."
Today, copper and steel - two of the most volatile and scrutinized metals - make up most of the company's material costs.
The company's UAE-based projects are progressing and are spread across a number of the emirates. This includes the Bel Rashid Tower in Sharjah, a 32-storey residential building that requires a chilled water system of five chillers, six chilled water pumps and a grey water treatment system. On the electrical side it will feature six transformers and six low-voltage panels, along with CCTV, a TV system and intercom. It is also fitting out the Gulf Pearl Tower in that emirate for client M/s Al Watan Properties Development.
The company also works on factories. In Ras Al Khaimah it is providing MEP, testing and commissioning for the production hub of UNIPODS, a bathroom pod manufacturer which expanded into the country a few years ago.
The owners of the factories can be particularly efficient customers, Matar comments, as unlike residential developers that can make money in advance of a project's completion through pre-sales, only a finished building can produce a return.
"A factory may take around 12-15 months for us to do the work. It is not like working on a residential project as it is typically the owner of the factory who is employing you - they will want 100% finish and then it will be looking to recoup money."
But Dubai has been central to AEME's business in the country since the company's inception, and the company dug out a competitive market share when new towers were being planned every week. Prime Tower, Regal Tower 1 and Silver Tower in the nascent Business Bay, the Al Jawza Building in International City, and the Imperial Residence Tower are all developments currently being transformed from the inside by AEME. Its completed projects include labour accommodation and warehouses in Umm Al Quwain and the 132-apartment Tawhidi Building in Sharjah.
But it's worth reiterating that this flurry of projects was from what now seems like a different economic age for Dubai.
"In the UAE you can say there is the majority of our work, though now we are focusing on Abu Dhabi," he says, where the company is currently providing MEP work for Time Tower, a part-commercial, part-residential twin structure joined by two floors, located at the Najmat Abu Dhabi on Reem Island. "In 2010 there have been very few tenders in Dubai - in a way it is a harder year than 2009. So we wanted to set up early in Qatar, while the market in Dubai still needs time to recover."
AEME has, in recent years, also been recruited by its parent. It recently won a contract for more than two years' work fitting out the Kingdom's Ministry of Defense & Aviation land forces headquarters in Riyadh, a 108,000 metre2 area to be completed in two phases.
Matar sees many opportunities in Saudi Arabia - noting in particular the 10 university projects that form part of the country's recent drive - and will stay close to the development of Al Arrab Contracting Company, to see where it might secure further work. AEME has been in the market since the middle of 2009.
He reminds CW that Al Arrab Contracting won the US $6 billion contract for the first phase of the Haramain rail system in Saudi Arabia, and added that if the contractor won the project for the development of one of the five stations - which comprise of Madinah, King Abdullah Economic City in Rabigh, King Abdulaziz International Airport, Jeddah and Makkah - then Al Arrab Electromechanical would be keen to work on the project too.
Repeat business from a handful of clients and partners has been the key to steady progress beyond survival, as markets slowed for many companies. AEME has achieved this, and despite the clamour for a shrinking amount of contracts, Matar says you still need to scrutinize your counterparties. "Today the approach to projects is different. Now you have to think two, three or four times about a project, in the private sector. You have to think about who you will be working with, especially if they are new to you. Most of our work is repeat business, such as with Tameer, with which we have worked with for four projects."
DAMAC Properties, Atkins and Salam International are among the companies it has worked with.
Steady progress and a gradual expansion have allowed Matar to think about new lines of service that can be offered, particularly in the finishing of buildings.
"There's an opportunity for offering facilities management services," he says. "Originally, when a building is constructed, there would be a one-year maintenance period. But if, in future, the market remains quiet, then there is a chance that we might bid for a facilities management contract."
That said, Matar concludes the interview by returning to AEME's core business. It's a business, he says, where there has been a marked increase in awareness among clients regarding the cost and energy savings that can be achieved with smart engineering.
"For the last two years we have seen clients focus more on the electromechanical side. The best electromechanical work adds to the maintenance of the building to produce less trouble in the systems.
"It's easy to complete a tower, but if your contracted company is not qualified, the lifetime of the building is definitely shorter. It doesn't matter if a building has the best of materials."For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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