The length and value of construction disputes in the region is significantly higher than the global average
Regulations should be introduced to offer fairer terms to contractors and a Construction Contracts Act passed to codify items such as payment and adjudication processes, according to a white paper from UAE Construction Think Tank.
The document, which was published on Sunday, makes 15 recommendations to improve the construction industry, including a proposal to vet contractors before they can bid for work, the issuing of permanent or semi-permanent visas to engineers based on experience, and the establishment of a construction industry ‘development board’ to help coordinate the industry’s work with authorities.
“One of the biggest problems that this industry has is a one-side contract,” Mohammad Khader Al Shouli, managing director and head of contracting finance at Mashreq Bank was quoted as saying by The National. “The risks are always passed on to the contractor and that executing supply chain.”
Additionally, Al Shouli said that, at the moment, procurement laws heavily favour the clients, particularly in the form of performance bonds that contractors provide as open-ended guarantees.
“It doesn’t become a collaborative process. It is a master-servant or slave type of relationship. In good times, when there is abundance of money or work, people are happy with it,” Al Shouli said. “But all of the problems in that type of relationship appear where there is distrust.”
“The owners have absolutely power that is unjustified sometimes,” he added.
Other recommendations listed in the report include the establishment of a professional development entity to help improve technical skills, regulations for emerging technologies and the coordination of project launches by government and government-related bodies.
A July report from Netherlands-based consultancy Arcadis found that the length and value of construction disputes in the Middle East was $56.7 million in 2018, compared to the global average of $33m.
In 2017, however, the regional average was $91m.