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Tue 5 Jan 2010 04:00 AM

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In pursuit of excellence

MEP Middle East speaks to Hyder Consulting Middle East regional MD Wael Allan about the changing market, his passion for Saudi Arabia, and his preference for pursuing operational excellence over diversification.

In pursuit of excellence
In pursuit of excellence

MEP Middle East speaks to Hyder Consulting Middle East regional MD Wael Allan about the changing market, his passion for Saudi Arabia, and his preference for pursuing operational excellence over diversification.

Allan joined Hyder as recently as April 2009, which he admits “was an interesting time to start when things were slowing down and the whole world economy was in doubt.” But he is no stranger to a challenge. A chartered scientist and engineer with more than 20 years’ experience – in fields as diverse as pharmaceuticals, biotechnology and pro-cess engineering – his main background is in multinational business management.

“I have worked in a number of countries, starting with the UK and Europe, especially Germany and Switzerland. I moved to the Far East for a while, working in China and Japan, and then I ended up in the US for ten years. Being an Arabic speaker, I was always very keen to come to the region and actually work here, and Hyder offered me a golden opportunity to do so. I have to say that so far I have enjoyed bringing a different perspective to the region and understanding the cultural drives of businesses from both sides,” says Allan.

Allan lived in Saudi Arabia at the age of four, which he says instilled an appreciation of the country from this early age, culminating in a deep understanding of “the way business is done there.” Even though he is not in favour of diversification or regionalisation as a business strategy to cope with the downturn, he is clear about the inherent potential of this vast country. “Most companies operating in the region are anxious of going into Saudi Arabia. To them it is an unknown. However, I believe it is core to our strategy to be in Saudi Arabia. It is the largest country in the GCC, offering the most attractive opportunities for multinational companies in design and consulting.

“To be honest, I believe we should have been there much earlier, but it is never too late. Saudi Arabia is spending a huge amount on infrastructure, and also on the private sector as well, so it offers both public and private sector opportunities,” says Allan.

So what strategy did he have in mind upon joining Hyder? Allan points out that “the economic landscape in Dubai had changed drastically in terms of business.” This called for a particular approach. “The best strategy is a simple strategy. It is about having a sustainable business. I guess during the boom we tended to do things differently, where we designed things simply for the sake of design. I think with the boom people tended to forget some of the basics of client care,” he says.

“A key strategy for us was to restructure based on market sectors. This brings with it a heavy focus on clients and their needs, and certainly the needs have changed drastically in the Middle East.” The restructuring was based on three sectors, namely property, transport and infrastructure and water and environment. “That really helped us break the barriers between different offices, and look at the whole Middle East business as one. So that was part of the key strategy. During the recession, resources become scarce, and there are obvious issues created by the credit crunch, such as cash issues. For us, diversification – geographically and product-wise – is not a strategy. Our strategy is to focus on our core competency, enhance that through operational effectiveness, and concentrate on what we know well,” says Allan.

Has this strategy borne any fruit to date? “I would say definitely, especially in terms of transport and infrastructure. We have strengthened our offering significantly, and it became a core focus for us as a business. The same applied to water and environment, and we have seen a significant growth in the number of projects in those areas. The fact that property has slowed down, combined with our decision to be sector-driven, means we have got a better balance of the business than just being profitability-driven by the property sector.

“Currently in Saudi Arabia we are working with a partner, and some work we are doing directly with specific clients. We are involved significantly with NWC (National Water Company) in a PPP-type engagement. We are bringing great value to Saudi Arabia; this project is on a national basis from Jeddah, Mecca and Taif in the Western region, to the central and eastern parts, looking at Dammam and Riyadh with regard to water. We have also won, in conjunction with our partner, the tallest building in Saudi, which we are just nearing completion of that design, namely the Capital Markets Authority (CMA) Tower in Riyadh,” says Allan.

“I think the other thing in the region in terms of expansion is we are seeing more projects that are design-build, and also the delivery mechanism through PPP is gaining ground, certainly in Abu Dhabi and Saudi Arabia. We are establishing strong links with people who finance projects, and also construction companies who normally get involved heavily in the PPP model.” So what impact has the downturn had on both growth and prospects? “My view is that the slowdown in property was predictable. I think people just did not want to recognise that fact generally.“With regard to Hyder specifically, the only slowdown we have experienced has been in property. Only less than 18% of our business is Dubai-based; the rest of the business is diversified enough. The fact when we went sector-driven has helped cushion the problem, as we are now looking at it as a total market rather than offices or geography. We are looking at it as a water business, a transport business or a property business, and then try and streamline between the areas for the maximum benefit of our clients and our shareholders,” explains Allan.

“I think whenever there is a crisis in the economy it brings maturity to the market. Expectations from clients become a lot higher because now they are questioning why they need something much more, and why do they need to spend a certain amount of money. Therefore I believe only competent companies that bring operational effectiveness to bear will survive in the region. In the past, there was so much work I think clients were looking for anyone who was willing to do it; now it is going to be a lot more focused on the value proposition.

Operational effectiveness

“So I believe operational effectiveness is absolutely key, and that is what we are trying to do in all our sectors: to improve performance, to do things better with less cost and shorter time, and obviously then you have got to balance those parameters depending on the client needs. I think another thing that has really changed in terms of ensuring growth in the future is that we as professionals tend to define excellence from our own perspective, when excellence really has to be defined by what the clients think excellence is. Some clients may want quality at any cost; other clients may require a specific level of quality for a certain cost; we have to customise our offering to suit client needs, rather than what we define as their needs,” says Allan.

Being a multinational is an added advantage as well. “That is a great differentiator,” concurs Allan. “We can bring to the table state-of-the-art techniques and knowledge and know-how with the ability to deliver locally; unlike local companies, which may have the local knowledge but not the multinational expertise. I think that is a transformation bound to happen: only multinationals, in my view, will survive in the long run, because they have the ability to bring in knowledge and know-how from everywhere – especially in the Middle East, where expectations are becoming higher, and certain nations are becoming wealthier, and with that comes a much higher expectation of the end product.”

Hyder is also actively pursuing global design solutions, with a global design centre in Manilla in the Philippines dealing with property, transport and infrastructure, and one in Bangalore in India dealing with water and specific elements such as rail. “Standardised design is absolutely key,” says Allan. “If some items are off-the-shelf, you are not reinventing the wheel every day and can focus on what is important to the client.” Just how important is the Middle East to Hyder in the bigger picture? “Almost 68% of Hyder’s revenue is international, with about 34% generated in the Middle East. The Middle East is a very significant part of our business. We have experienced growth in the Middle East during 2008-9. Going forward, in terms of the focus for 2010, we will sustain growth, and probably improve on it slightly, because now the focus is not on the top line and more on the bottom line as a business,” says Allan.

“We really do not see the Middle East as very different to any other market. Each market generally has its distinctive local flavour, but as a multinational we are familiar with dealing with different types of projects in different environments. We have been in the Middle East for over 45 years, so we have the experience and know-how of the local issues. We will always remain committed to the Dubai market, but I think with a much more controlled growth. We do not anticipate the kind of growth experienced in the last three to five years, at least for the foreseeable future definitely. I think 2010 will be a tough year. A lot of the backlog of companies has been exhausted, so they are looking for new work. And I think companies that have reacted properly to the slowdown will survive and do well.”

Challenging year

Allan says he has just returned from a visit to the US, where the majority consensus is that 2010 will be a “challenging” year. But a welcome caveat is that “if there is any region to be in during a recession, I would say the Middle East offers the best opportunity, compared to much more developed economies like the US and the UK.” Allan says the construction industry has made great strides in Dubai in a very short space of time. “I would say they have done a very reasonable job considering the time scale and where Dubai was and where Dubai is now.

“I think though value now has got to be brought in through optimum solutions for clients. At Hyder we are looking at the lifecycle model of an asset – that asset being a building or a piece of machinery. Buying the cheapest is not necessarily the best – that is a challenge for us as a multinational, faced with clients saying you are more expensive than a local, what value do you bring? We will work with clients so they can recognise the value proposition we bring to the table. That value is through an optimum asset selection rather than through what is the cheapest capital expenditure. It is really looking at capex versus opex, and how we deal with this on behalf of our clients,” concludes Allan.

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