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Mon 9 Jan 2012 04:43 PM

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Keys to the Kingdom

Hill International has a massive $7.7bn order book in Saudi Arabia. Managing director Mohammed Al Rais explains why the Gulf's largest construction market comes with a large number of challenges

Keys to the Kingdom

About fifteen to eighteen months ago, Hill International had two projects in the kingdom; “Today we have over eleven.” Mohammed Al Rais expects that figure of $7.7bn worth of work to “double” if, as anticipated, it bags a further three to four projects in Saudi Arabia by June 2012. As a sign of its continued growth, its number of employees in the kingdom has grown from 40 about fifteen months ago to 140 at present. “Saudi Arabia is the fastest-growing market. The government’s implementation of projects on hold has actually given a huge boost to the market.

“However, one of the biggest issues for us is that project management, a year and a half ago, was not really understood. Project management was something that people would think ten times about before they would even talk to us. It was a luxury they thought they could do without. Having said that, the market is changing,” says Al Rais.

“I think our biggest potential clients now are government and semi-government entities, whom we have been talking to consistently for the past year. There is a lot of will to actually organise, systemise and modernise whatever systems exist. We are now almost at the stage of actually setting up project management offices within the ministries, and setting up training on project control systems and approaches.” The training aspect is crucial, says Al Rais.

“Hill International’s strategy, in short, is not to come in and carry out project management, make the money and walk out. Where is your added value to the locality, to the ministries, to the local people? This is now being pushed heavily by Hill International in the form of offering these services to the local entities,” says Al Rais.

One of the government entities the company is in discussions with to establish a project management office has 2,000 to 4,000 projects it manages, for example. “Saudi Arabia’s need is enormous. The need for critical project management services is critical. We believe that market is basically going to explode.”

Hill International has its origins in the US, and today has 90 global offices and 3,200 personnel. It encompasses project and construction management, representing 80 percent of its total global business, and claims management services, representing 20 percent of its total global business.

In Dubai it has a regional project management office, two further offices in Abu Dhabi, and regional representation as far afield as Jeddah and Riyadh in Saudi Arabia, Bahrain, Qatar, Kuwait, Jordan, Lebanon and Baghdad in Iraq. “We have just started up in Oman. We went to Yemen for a while, and then we pulled out. We have an office in Syria, but stopped all operations when the problems started.

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“Egypt and Libya fall under North Africa. Again when the events happened in Cairo we had to pull everyone out within 24 hours. They were back there within seven days. Libya actually was a disaster because we had to pull out about 195 professionals within 48 hours, with their families, so that was a huge exercise. And of course they are not back yet. Our office is still operating. We are still hoping to get back there, hoping for stabilisation. We reckon there are a few months to go, but already there is a lot of talks with the up-and-coming government. I think the situation is resolving itself.”

Al Rais says Hill International was managing major projects in Libya prior to the crisis, including 25 university campuses being managed under a design-and-build contract from its London office. “We have an office in Morocco, we have a presence in Algeria, and very soon in Tunis. Out of this office we are also doing a major infrastructure project in the Comoros Islands. That is the only thing in Africa we are doing from here. For Hill International the Middle East is “anything south of Turkey and east of Egypt,” excluding Iran. The company has 738 personnel in the region at present.

“I believe we were one of the few companies actually hiring in 2009-2010; we added about 170 people in that time. Today we are looking at hiring about 95 people just for Saudi Arabia. We are waiting for two more contracts that should add another 80 to Saudi Arabia alone.

“In the rest of the region we are looking today at hiring another 42. This is happening at a time when a lot of the big boys are actually letting people go by the hundreds, in fact.”

However, Al Rais says finding suitably skilled or experienced personnel remains problematic. “What we are noticing is a difference in actual packages, which have dissipated somewhat. The issue of trying to find good, qualified people has always been the biggest concern of ours. We are very lucky to have the depth of international talent so we can always pull expertise in. Anybody new coming in we need to train in our own systems and procedures. We do a lot of master classes.”

Al Rais has been working and travelling to the Middle East since the late 1970s, including nearly four years in Bahrain before moving to the UAE. He has also worked in Canada and the UK. Asked if this international experience has stood him in good stead in the region, he adroitly turns the question on its head. “The way I see it, it is the other way around. I would say there is nothing like the Middle East, let us put it that way. It is a pot of cultures and experiences from all over the world — whether from the US, Europe, Australia, South Africa, the Philippines or India — that comes together here. We are talking about construction experience, we are talking about construction approach, we are talking about understanding mentalities.

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“What we used to say is that everybody who can manage to work in this area can basically manage to work anywhere around the world, because he would have his homegrown experience in addition to bringing back different approaches, ideas and formats, whether management or technical. All the codes and standards in the world are being implemented here now. What helped was the Dubai boom from the early to mid-2000s, all the way to 2009, when an unparalleled amount of construction and innovation took place, and what you might call raising the bar for architects to be able to dream whatever they wanted to put up. This is what Dubai gave the world. In the UK we have a couple of buildings that are really iconic, but there is nothing like what there is here.”

Al Rais acknowledges that the boom had its inevitable downside, but points out that it had resulted in the entire region attempting to emulate the UAE’s success. “This has had its own problems, as with the infrastructure always having to catch up, and the lack of regulations and bankruptcy laws, which has caused a lot of problems for investors here. Now we are seeing it slowly but surely coming back.

“This is why our regional office was kept here. We did not want to move out of the UAE market; we have about 300 people in Abu Dhabi. We are confident of this market, and it will definitely come up again. Personally I reckon it is stabilising. We see a lot of good things starting up again in Dubai. On a personal level, I have my home in Montreal in Canada, but this is like home to us as well. All my kids were born in the UK, but they were educated over here.”

Looking at other regional markets, Al Rais says that while Qatar appears to be slow off the mark in the World Cup build-up, “we anticipate this is going to start very soon.” Apart from the World Cup project pipeline, Hill International is involved with public works authority Ashghal and “has already bid on major programmes, and hopefully we will hear from them shortly. The World Cup work is still to come. I think it is still at the planning and preparation stage.”

Abu Dhabi is another market where significant projects have been delayed, such as the Midfield Terminal Complex at Abu Dhabi International Airport. “We bid over a year-and-a-half ago. We were one of the five qualified worldwide. It is coming up. All we can say at the moment is that it is going to revive itself because Abu Dhabi needs the airport expansion. The push in Abu Dhabi is definite and systematic and well-studied. The only issue sometimes is delays in actually moving the process forward for whatever reasons, but we believe the airport is one of the projects that will definitely go ahead. We are geared up with our partners to move on that, and hopefully that comes up shortly.”

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Iraq is another major market with huge potential, says Al Rais, where Hill International’s involvement includes a project for a million houses.

“We made an agreement whereby we came in as Hill Stone, a company that provides systems for construction of affordable housing. We had signed with a Korean company to put up 100,000 units in Basrah.” Al Rais says Iraq is keen on instituting a similar project management set-up to what Hill International is contemplating for Saudi Arabia.

“In the meantime what we have done is we have been in touch with all the ministries, as again the issue is the lack of knowledge of project management services. Once we sit down with them and explain what project management services are, the first thing we are told is: ‘when can you come in and start?’

“This was a year ago. What we have done now is we have established entities there. We are in constant contact with several of the ministries and other entities like the Baghdad Council, whereby we are basically offering to set up even the simplest issues related to RFPs and proper tender evaluations and prequalifications,” says Al Rais.

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