By Elizabeth Broomhall
The Gulf’s multibillion-dollar road projects offer rich pickings to hungry contractors
CW takes a look at the region’s biggest road projects and why they are increasing, as well as what it takes to be in the running.
Monopolising a large proportion of today’s booming infrastructure developments, road projects in the GCC have become an important focus for hungry contractors. From highways and interchanges, to bridges and underpasses, there is frequently a road-building tender looming, with road expansion and improvement at the top of the agenda for regional governments.
Signs of investment in this market have been clear since January this year, when a Kuwaiti official was reported as stating that GCC countries would be ploughing US $55bn into road projects over the next decade. The roading is needed to increase capacity for travel and cater for rising demand. Unsurprisingly, the market has continued to flourish since then, with some of the biggest projects in the region valued at hundreds of millions of dollars.
Thus, some of the main questions being asked by contractors are: why are governments investing so much in roads? What are the big projects? What does it take to win a road contract and what are the advantages of getting involved?
“There are a lot of road projects going on from Saudi Arabia to Abu Dhabi,” says Kannan Chandrasekaran, manager for Kanoo Machinery, a dealer for Hitachi Construction Machinery Company. “This includes various internal and smaller roads, not just highways.”
This opinion is also shared by the COO of a Dubai-based contractor currently bidding for road projects, who asked not to be named. “If you’re expanding and building more housing, you need infrastructure, roads and bridges to allow people to get to places and to their homes – both things go hand in hand.
“In the GCC region particularly, there is a huge need for connectivity and you need roads to achieve this,” he said. “And there are now more vehicles on the roads and people travelling further distances.”
Amro Thersan of road builder Ascon Road Contracting Company, part of the Ascon Group, agrees, adding that there is also a strong desire among governments to improve the lifestyles of GCC residents and enhance the economies of individual countries. “For an economy to be successful you need to have the infrastructure,” he explains. “That’s why we have the edge here in Dubai, because we have plenty of roads, bridges, underpasses, sewage networks, water and communication networks. Nowadays many other countries are building roads as part of a wider plan to boost their image, improve the welfare of their people, become hubs for tourism and improve their business environments.
“In Qatar for example, where there are quite a few road projects, they’re going to need to have infrastructure if they get to host the 2022 FIFA World Cup. Without this they won’t be considered.”
As it happens, one of the region’s biggest projects at the moment is the US $438million Doha Expressway. Currently under construction, the project is currently scheduled for completion in Q2 of 2013.
But Qatar isn’t the only country with high value developments. In the UAE, the 25-year package to upgrade, operate and maintain the 327km Mafraq-Ghweifat Highway, valued at US $2.7 billion, is yet to be awarded. Also in the UAE, the Salam Street and Mina Road Development, worth US $1.4 billion and due to be finished this year, will increase the road’s capacity to more than 6000 cars per hour in each direction. Meanwhile, Saudi Arabia is also investing heavily in the sector. As well as allocating US $3.17 billion in its 2010 budget for the construction of 6400 km worth of roads, last year, the country put aside US $3.06 billion for road construction. One project currently underway is the King Abdullah Highway Development, due for completion in 2012 and valued at US $375million.
According to industry experts, what is interesting about road projects is that even the smaller countries are jumping on the road development band-wagon. In Oman, big projects include phase 1 of the US $712 million 241 km Batinah Coastal Road project and the Nizwa-Ibri Dual Carriageway project, while in Kuwait and Bahrain, the most renowned road projects include the US $1 billion Al Jahra Road upgrade, and the development of a 260m North Manama Causeway, respectively.
What sets road projects apart from other developments is the degree of experience, specialist skills and heavy equipment required of contractors. “The biggest difference between road projects and other projects is that they require an investment in heavy equipment and machinery,” explains Wade Adams’ group business development manager Panicos Euripibes. “They also tend to be sizeable projects that require a huge amount of earth work, unlike buildings, which are more detailed and rely more on architecture. Another thing, with buildings you can start on small buildings and work your way up. With roads, you have to begin at a much higher level in terms of construction sophistication.”
Thersan is more specific. “For a road project, you need a lot of heavy equipment and a lot of people. You need everyone involved, from structural engineers, road engineers and infrastructure engineers, to material engineers and good quantity surveyors. The other thing about road projects is that they are not confined to a small area. In a building you’re working roughly in a space of about 30 by 30 metres, that’s it, that’s your site. With roads your site can be 20-30km long, so it needs lots of vehicles and your engineers have to be mobile. There is also a large amount of specialist work involved, such as surveying and laboratory testing.”
Thankfully, it seems that the advantages generated by road projects outweigh the heavy demands. According to Euripibes, one of the main perks is that the projects last for a long time, guaranteeing work often for as long as two years, which is particularly beneficial during or after a recession. In addition, he explains how they tend to have a predictable outcome when compared with buildings, increasing the likelihood of their being delivered on time and to budget.For all the latest construction news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.