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Tue 15 Feb 2011 12:00 AM

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Due diligence

Ramboll sustainability and renewables director Heath Andersen on the impact of increased due diligence on consultants and contractors.

Due diligence
The region is on an upward curve, says Andersen.

Andersen says “the award was a fantastic win. We were very pleased with that. It points to the fact we are doing something right, and people obviously appreciate that. It does give some validation to our direction and strategy. Part of that has been energy efficiency and sustainability, but equally importantly, it has been delivering quality service. It does not matter what services we are delivering here, it is all about the quality at the end of the day. We are designers, and what we deliver on is our reputation. It is probably our main driver, and the key performance indicator of the business.”

Towards the end of last year, Rambol announced it had clinched a slew of project work across the region. The first project was the new 200,000m2 Taj Halab development in Syria’s northern historic city of Aleppo, which Andersen says is expected to go out to tender early this year. Ramboll has provided full building design services for the four-star 150-room Key Novotel and three-star 129-room Key Ibis, in addition to a convention centre that will inter-connect the two hotels.

The second project was the design of the new 285-room, five-star Hilton Hotel on Jordan’s east coast, overlooking the Dead Sea. The resort will feature seven restaurants, a spa and one of the largest convention centres in the region. Ramboll has completed the design, and this project is also due to go out to tender, says Andersen.

Closer to home, the third project was a five-storey, 220-bed military hospital in Sharjah, comprising two residential buildings for medical staff, a mosque, emergency helipad, air-con ambulance garage, armoury, chemical storage facility and security gatehouse. The total built-up area is 75,000m2, with capacity for 3,000 visitors, staff and patients. The fourth project was the 300-bed, 95,000m2 Al Maktoum Accident and Emergency Hospital in Dubai.

Commenting on the challenges of working in markets as diverse as the UAE, Syria and Jordan, Andersen says: “Most of these places have their respective challenges. It is like going into any market. Whether it is Syria, London or Africa, you have got to appreciate the local conditions, and you either work with them or you do not work at all.” Ramboll does not have offices in most of these areas, but instead “if we have a good client with a project there, we will go over with them, and resource such projects out of this [the Dubai] office.” Piggybacking with clients in this fashion “makes for a good team at the end of the day that is focused and skilled.

“Of course, we want to build new relationships, but it is the existing relationships we value the most, as we have worked with these clients in the past, we know what they are after and we have delivered. Our client base is the company’s most important asset. Existing relationships will become a key theme of the year ahead. It is a definite focus that is paying off in terms of continued work,” says Andersen.

Returning to the company’s diverse spread of work, Andersen says this is more of an underlying principle of the company than a conscious strategy in the wake of the downturn. “Dubai has never been our exclusive focus,” he says. “That has helped us through the lean times in a big way, as it is all about key clients and going wherever they want to go, if it is the right solution. I do see us carrying out more projects outside of the UAE this year than last year,” says Andersen.

In terms of business going forward into 2011, Andersen notes: “It was surprisingly busy bid-proposal wise in the first two weeks of the new year. It was quite active even over the Christmas and holiday period. I think a lot of this was people getting out of the gate early in terms of Qatar’s successful 2022 FIFA World Cup bid. Some of it was speculative retail stuff, which was interesting to see. Our outlook for 2011 is probably similar to 2010. It is still going to be a tough year, I think, but with a bit of growth, during which we will concentrate on our core services and then look to develop elsewhere in the region,” says Andersen.

The current market is significantly different to the ‘business as usual’ of the past. “If you could get it done, they were prepared to pay whatever and whoever, whereas now there is so much more due diligence in the process, and you work at it really hard. In a lot of ways it is really good to see that. It is tough; we are not going to say it is easy. But it is good to see that, because I think we are very strong at analysing a bid and then going on to deliver projects. We enjoy working with other architects and clients who like that as well, because for one it provides an even playing field, one where we can show that we can compete and deliver.

Looking at Dubai in particular, Andersen says this particular segment of the UAE market “is definitely quite flat. Construction-wise we have still a few projects going at a moderate pace. There are definitely some more interesting sectors. This is for very specific projects, not speculative office or residential, but buildings built for a purpose. They have got a client and a user base, and they are the ones we are seeing in the market right now. In a lot of ways that is probably Dubai maturing and moving onto the next phase of its construction life, which is what all cities do. It is interesting to see it in Dubai. Construction-wise it has made it a lot smaller market at the moment, which is fair enough, as this is probably where it needs to be,” says Andersen.

“Abu Dhabi is still moving along nicely, which is good. It is probably more government-driven, as there are not so many of private investors. We still see quite a few projects coming out of there.” In terms of Ramboll’s regional spread, Andersen says “we have a good feeling for 2011 once you tally up Qatar, Saudi and Oman. I think overall as a region it is looking good. We serve the region out of the Dubai office, and it will keep us busy, I think.”

Another interesting market that Ramboll is attempting to crack is Libya, where it has a project office. “This is a difficult market, dominated by Chinese, Korean and Turkish companies. A lot of getting Libya right has meant working with a local partner effectively, making sure we have a good relationship in place and building on that. They can help us out with local authorities and other issues, and we can help them with the world-class technical skills. We have a good partner there so it has been working well for us. But there are lots of challenges, that is for sure,” says Andersen.

In terms of current challenges, Andersen says that payments and liquidity have eased quite a lot due to the banks lending again. “It is more focused now on the clients who have the confidence to go ahead with a project and are serious about it. There probably were a few more speculative projects a few years ago. We are now carrying out due diligence as much as the client is before we take on a project so as to ensure it is the right project for us and the client.” Andersen says clients are also becoming more sophisticated and demanding. “A consultant is probably 1% to 2% of the total cost. If you give him a little bit extra, they will come up with designs which that will impact on 40% to 50% of the total cost. If you give them a little extra time and incentive, they are bound to deliver a better product. Clients are slowly starting to realise and appreciate that, he says.

“Probably one of the better things about the bigger, government-type organisations is they do have a long-term strategy. They understand the operational costs over the lifetime of a building, and are more keen to explore those through lifecycle assessments and various other techniques to prove that the project’s options will pay for themselves or will be of value over the entire life of the project. It is good to see more and more clients doing that. As for niche markets for consultants, I still think there are opportunities to show those skills around energy efficiency and sustainability.”

These issues are becoming more and more important as clients evolve. Andersen adds that Abu Dhabi’s “Estidama [rating system] has been a great initiative. It is a tool for the new decade. It is the evolution of the sustainability tools, and it is great to see the Urban Planning Council pushing that through, so let us see where that goes.” Commenting on Abu Dhabi’s new building code, Andersen applauds the unification. “We have designed to British and US standards, and mixes of both which people require, but it is good to see them consolidated into one consistent code. I think this is not just good for the industry, but for the end client as well. In many ways this should deliver a more efficient design process, because you go in knowing exactly what the codes are, rather than having to have discussion and analysis beforehand. This clarity it provides the designer will give even better direction, so he can focus on delivering a quality project for the client. I think it is a great step forward.

“I know Dubai has been working on its own green standards as well. I do know the emirates get together and discuss these things. I personally would like to see them have the same standards throughout the UAE. Again it would save the clients and the government money, if it is consistent across the board, and I am sure they are driving towards that. The sooner it comes into play the better it will be for the industry and the end user,” says Andersen. “It takes some of the vagueness out of the process, and it ensures the client gets a building that does what they want it to – and that is what they are after in the end. Building that deliver the needs they have been designed to fulfill.”

In terms of latest developments, Andersen says the licence for the new Saudi office “is in process. We are putting some enquiries out through different avenues; a lot of our projects will go through together with an architect. We have also been doing our own direct marketing, to build awareness among clients. Of course, Saudi Arabia is an important focus for the company. It is a big market with a lot of potential and desire to grow, so we see that as a key part of our strategy in the years going forward.”

Andersen says that staffing levels have not yet been finalised. “We are doing a few small projects here and there, but once we get some real traction, then we will make some decisions. There are obvious HR issues we have to deal with, such as visas, which is tough. I can see it being a project management office where we staff it with project managers and do a lot of the design work in our Dubai office, which is similar to us doing some work out of Europe, depending on the project. We have already been doing a couple of projects where the specific skills needed, for example, are in Sweden, and then we have project managers on the ground delivering it.”

Looking at the job market, Andersen says “I think it is still probably an employers’ market, though salaries are not going down and have definitely stabilised for a while, but it would not take much to turn to an employees’ market. A lot of companies are also looking at different business models for this part of the world, which changes where these resources are required.

“There are always some tweaks going on in any business. It is a constant challenge to ensure we are maintaining the business constantly, as being a consultancy, our prime resources is our staff.

“Making sure we have the right skills and they are in the right frame of mind is a large part of delivering a quality product. It is tough in a tight market as well,” says Andersen.

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