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Sat 18 Dec 2010 12:00 AM

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Rewarding contractors

The MEP Awards celebrate the tenacity of MEP contractors.

Rewarding contractors

Speaking on the sidelines of the MEP Awards last week, a
contractor told me drily that he really only got to meet other contractors when
they were either competitively tendering, or were called in to clean up the
messes (or mistakes) of their rivals. And yet here they all were, sitting
cheek-to-jowl with other contractors, egging each other on and applauding the
nominees.

Back at the office the following morning, the ConstructionWeekOnline
team had arrived a few hours early to upload all the news and photographs from
the event, a laborious task. My telephone rang at about 07:30, and a perplexed
gentleman told me he could not find any news about the awards on the website. I
told him (rather blearily) that it would all go live shortly. Okay, he said.
“So who won best contractor?” he then asked.

I think it is fair to say that the MEP Awards gala dinner is
the highlight of the year for this important sector of the construction industry.
Only one has to attend the event and imbibe the spirit of camaraderie and
enthusiasm. The same contractor told me that, as everyone basically knew
everyone else, it was like a big celebratory family gathering.

Indeed, 2010 was a difficult year as the MEP sector and the
larger construction industry took stock after the precipitous downturn. One
person told me the Dubai market was still
“flat”; another described the UAE as “stagnant”, and added that the Abu Dhabi market, often
heralded as the saving grace of the faltering UAE, was “becoming
oversubscribed.”

Everyone I spoke to was enthusiastic about Saudi Arabia,
the next frontier. MEP people, however, are eminently practical, and many I
spoke to talked about the difficulties associated with doing business in Saudi Arabia,
such as logistics, procurement and the difficulty in obtaining visas. Another
problem is seconding engineering staff to far-flung corners of the region, as a
lot of companies have scaled back, and even now remain reluctant to over-commit
in terms of recruitment.

Still, the general sentiment seems to be that, if you have
survived to date: jolly well done, mate. If you just hang in there a bit
longer, it will get better (which, of course, is what everybody said at the
same time last year). A lot of contractors were looking to 2010 for green
shoots, but it is now clear that the inertia of the current situation will only
begin to be transformed into forward momentum in mid-2011.

Everyone I spoke to welcomed FIFA’s decision to award the
2022 World Cup to neighbouring Qatar,
and said this would be a long-term catalyst to promote regional growth and
development. Just as the 2010 World Cup spurred South
Africa’s flagging infrastructure drive, there is no
question that Qatar 2022 will be of major benefit to the entire Middle East –
and a key motivator to ensure tourism and cultural hubs like Saadiyat Island
and Central Market are ready to welcome the world.

The difference with Qatar is the availability of ready
funding, and the lack of red tape in transforming vision into reality. Of
course, MEP people are practical when it comes to money, and have not been
seduced by the exorbitant sums being quoted to make Qatar World Cup-ready.

The biggest problem still dogging the market is the issue of
non-payment and cash-flow constraints. I heard about a medium-sized contractor
being owed AED90 million by a major developer, and the protracted struggle for
survival that this contractor is now engaged in. The industry is like a food
chain: if the guys at the top do not get to eat, everyone else starves too.

Even though the contractor has lots of work, he does not
have the money to pay his own suppliers or staff. There are many such small
dramas being played out at present. Many livelihoods depend on these, as does
the future health of the industry.

The MEP sector responded to yet another difficult year by
submitting a record number of entries for the 2010 Awards. The judges were
particularly impressed by the participation of contractors in the best project
and sustainable project categories. Clearly MEP contractors have refused to be
subdued by the downturn, and have demonstrated remarkable tenacity and staying
power.

Gerhard Hope is the editor of MEP Middle East.

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