During the first three quarters of this year, Al Shirawi Electrical and Mechanical Engineering has booked over AED500m ($136.1m) says general manager Medha Sukthankar.
“The first half of 2016 has been extremely successful and we anticipate further construction as we see a rising number of new enquiries in our tender department,” she says.
“The UAE has a very visionary and dynamic leadership and with the nearing of Expo 2020, we expect projects in the design stage to kick off and start construction in the near future.”
Projected revenue for the 2016 financial year (June 2016 to July 2017) is AED600m ($163.3m). Sukthankar says that she is particularly excited about more hospitality projects coming on stream as a result of the six-month exhibition which will be held in Jebel Ali.
“During talks with various consultants and clients, we feel that there will be new projects more in hospitality and residential industry to cater to the needs of Expo 2020,” she says. “There are also significant opportunities that will arise in the MEP infrastructure space as a result of the Expo 2020.”
The MEP contractor has completed a number of significant Dubai-based projects this year already. These include The Arcadia Preparatory School in Jumeirah Village Triangle, DAR Wasl Residential Development and Emirates Engine Maintenance Centre. The team is presently working on the Atria Towers in Business Bay, the Palm development for Al Shafar Contracting as well as a number of other projects across Dubai.
“We are aggressive but not reckless,” says Sukthankar. “Our main objectives for the year are to continue to have sustainable growth, be regarded as one of the most reputed MEP contractors, enhance customer satisfaction and maximise stakeholders’ values through sustained profitability.”
Over the past 12 months, Sukthankar has initiated a number of changes to improve the company’s performance. An engineering and planning department for design as well as a beefed up procurement department incorporating new processes for purchase of material required for the projects have been created.
She adds: “We also have a comprehensive training programme for our employees and several new HR policies for employee welfare.”
Despite Al Shirawi’s impressive performance so far this year, Sukthankar acknowledges that the MEP industry faces a number of challenges which has led to the erosion of margins”.
“During the tendering process, we typically go in with single digit margins and hope for a few percentage points improvement as the project goes through execution. This does not always happen and hence the margins remain subdued,” says Sukthankar.
“We may see changes only if clients are made to understand the importance of contractor classification and green building concepts which will see a change in the quality of construction as well as an increase in the budget for projects leading to better margins for contractors.”
She warns that MEP contractors must make changes in order to remain competitive. “Contractors need to implement cost control techniques, use software such as BIM to avoid abortive works at the site, improve sourcing and procurement, ensure training for labour and staff to improve productivity and maintain positive cash flows.”
Al Shirawi has started integrating BIM software in some of its larger projects. “As with any large project, the MEP systems are complex and there are tight space constraints and coordination issues which must be taken into consideration to avoid abortive works,” says Sukthankar.
“The architectural and structural models were used to make LOD 300 drawings and shop drawings resolving all clashes and coordination challenges along the way.”
Some MEP contractors are suffering from late payments for a number of reasons and Sukthankar agrees that this is a climate Al Shirawi had had to get accustomed to. “We try to mitigate the risk associated with such delays by working with clients with a relatively low risk profile and we insist on advance payments in order to maintain a positive cash flow through the project.”
She adds “We have recovered all our overdue payments from the 2008 global financial downturn and believe that we are one of the few MEP contractors with a strong balance sheet coming out of that crisis.”
The issue of contractor classification is something that Sukthankar feels strongly about. Dubai currently has no contractor classification on projects whereas Abu Dhabi does. She believes that the former situation is another reason why contractors’ margins are being eroded.
She says: “We may see changes only if clients are made to understand the importance of contractor classification and green building concepts which will see a change in the quality of construction as well as an increase in the budget for projects, leading to better margins for contractors.”