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Sat 23 Feb 2008 04:00 AM

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Contract inflexibility ‘is causing problems’

With so many new mega projects being announced in the region and a lack of contractors, Conrad Egbert finds out why piling and foundations company, Al Habtoor STFA Soil Group (HSSG), thinks a speedy change in the construction market is essential.

With so many new mega projects being announced in the region and a lack of contractors, Conrad Egbert finds out why piling and foundations company, Al Habtoor STFA Soil Group (HSSG), thinks a speedy change in the construction market is essential.

The problem of a lack of good contractors and subcontractors in the construction industry is becoming very serious as costs and inflation continue to rise.

One of the problems we had with some of these projects was structural design changes and modifications that we had to make at the beginning of the job.

More and more contractors are now insisting on contracts that include an escalation clause.

Berk Pasinler, marketing manager, Al Habtoor STFA Soil Group (HSSG) said that lump- sum contracts were one of the biggest problems that piling companies in the region face.

"Fixed-price contracts, especially these days where reinforcement costs have increased by 35% in last two months, are one of the biggest hurdles," Pasinler said. "Also, ‘copy and paste' contracts and the time involved in obtaining approvals from the relevant authorities cause a problem.

"Usually the clients and developers are in a hurry to start construction work, which then results in work beginning without a contract in place. In some cases the work is even completed without signing a contract. Often, work usually starts even without finalising the designs of the superstructure. So during the construction phase designs are revised several times, resulting in disputes and claims between the parties.

Our recommendation is that construction work should commence once the design is finalised and a proper contract is formed and signed."

HSSG is part of the bigger Al Habtoor Group and its work involves everything from bored piling, shoring and diaphragm wall construction to anchoring, sheet piling and soil improvement.

The company is currently working on eleven projects spread across Dubai and Abu Dhabi for clients that include Sama Dubai, Damac, Galadari Investment Office, Omniyat Properties, MAG, Abu Dhabi National Exhibition Centre, Tamouh and The Onyx.

Some of the major projects HSSG has completed include Abu Dhabi Grand Mosque, sectors four and six of Jumeirah Beach Residence, sectors one and three of the Shoreline Apartments on Palm Jumeirah, 11 Towers in Business Bay, U-Bora tower in Business Bay, the Gate District on Reem Island and First Abu Dhabi Shams.

Apart from outdated contract formats being used in the regional construction industry, Pasinler also said that another problem the company had while working on these projects was the client's decision to make changes to design after work had started on the project.

"One of the problems we had with some of these projects was structural design changes and modifications that we had to make at the beginning of the job. These changes then caused our costs to go up because we then had to pull in more resources that we didn't plan for."

Other problems that are no stranger to piling companies are the shortage of machinery and extended delivery times and a lack of adequate human resources.

"We try to reserve equipment for urgent requirements for our existing clients and we also try not to book all our equipment out to the market.

"In terms of our workforce, we recruit from overseas and we also have a training academy in-house.

"But the labour problems go beyond just a shortage in supply. It is hard to find qualified labour in the market and we have to train all newcomers on site. This is the only solution - to train and assist them under experienced foremen and technicians. Poaching within the piling industry is a big problem as well.

An untrained and inexperienced workforce could also impact health and safety, but HSSG believes its health and safety systems are very good.

"We have a corporate safety manager with more than 30 years of experience and all of our sites have a safety officer for each shift. There are daily toolbox meetings, weekly training and monthly internal audits to keep safety standards common for every site. We also have safety procedures in place, which are updated regularly based on new regulations and requirements.

Like in any organisation, training is essential if a company is to develop. So piling contractors in the region have to constantly update their techniques as well.

"The most efficient technique, which is also a general practice in the UAE, is the use of ‘cast in situ' reinforced concrete piles, whereas stone columns or driven piles are not preferred in this region. We believe that the techniques used here are suitable for the region.

"But in terms of new technology, we are currently working on green pile technologies or zero-carbon emulsion pile production, which we believe will be used in some projects across the region in the near future.

"But with rapid construction, high liquidity and strict authority regulations here it is not easy to bring in new techniques or ideas in piling for the time being.

"We are following the latest techniques in design and testing and we are also using O'Cell tests and instrumented pile tests to understand more about ground behaviour in order to be able to adopt economical solutions for our clients needs.

Pasinler also said that competition among piling contractors was quite tough but due to a lack of good ones in the market and the amount of projects being announced, finding work hasn't been difficult. In fact, the company has often been in a position of turning jobs down.

"There is too much work and competition, but not too many top quality piling contractors.

"Therefore we don't face any problem with getting projects in our market segment, which is the high quality and timely completion part. In fact, we have had to turn down several jobs due to too much work and a lack of resources.

Pasinler added that if current investments continue at the same pace, the situation in the near future would only get worse.

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