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Wed 31 May 2017 09:42 AM

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Cash flow respite for UAE construction companies

Cash-rich clients are able to dictate terms, says Consolidated Contractors official

Cash flow respite for UAE construction companies
Cash flow concerns of UAE contractors are  easing, but the market is becoming increasingly competitive, according toConsolidated Contractors International Company

Cash flow concerns of UAE contractors are easing, but the market is becoming increasingly competitive, according to a top contractor.

In February, Colliers said the single biggest issue for UAE contractors and sub-contractors was cash flow due to sustained delays in payments which “negatively impacts the industry’s ability to deliver quality projects within budget and on time”.

Speaking to Arabian Business, Walid Salman, regional managing director of operations for the UAE and Palestine, Consolidated Contractors International Company, said contractors were facing cash flow issues, but admitted the situation has improved in the past three months.

“There was an issue of cash flow but there has been a big improvement. We see seeing progress from the client side,” he said.

“We are not facing any such issue so far in the projects that we handle in Abu Dhabi. We are handling the Midfield Terminal project in the capital and all I can say is that we have good cooperation with our client on the cash flow side.”

While the company only bids for medium- to large-sized projects, Salman said cash-rich clients have the upper hand in discussions and are able to dictate terms.

“Clients with cash can dictate whatever they want and they can get the best price. The competition in our business is too high and it becomes automatically risky when the client shortlists big and small companies. We hope clients will shortlist bidders to maintain certain standard and quality.”

In Abu Dhabi, the contractor is currently bidding for a mall expansion project on Al Maryah Island, and will participate in the tender for Miral’s new $3.27 billion (AED12bn) master development on Yas Island, as and when it is issued.

“There are a lot of projects coming up in Dubai but the number of projects in Abu Dhabi are limited. The recent launches are a big indication of the fact that the market has started moving positively,” Walid said.

The UAE-based construction firm has a workforce of 32,000 in the country, of which 20,000 have been assigned to Midfield Terminal project, he added.

In February, a BNC report said that 4,000 construction projects, worth $313 billion (AED1.15 trillion), were active in Dubai, with the construction sector having more than 3,200 active projects amounting to over $245 billion.

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