In this first part of an exclusive interview with AESG's managing director, Saeed Al Abbar shares his thoughts on the state of the industry.
If consultants and contractors working across the industry don’t wake up to the self-perpetuated issues in the market they’ll drive the brightest talents out of the sector.
As one such talent, Saeed Al Abbar is well placed to deliver such a frank and honest assessment of where the construction industry is heading, not just in the Middle East, but globally.
As AESG managing director, he has overseen expansion into the GCC from an original Dubai base, opening branches in Abu Dhabi and Saudi Arabia alongside a London connection that places the specialist consultancy and commissioning company firmly on the global stage.
It is an evolution that has seen the firm provide services for projects such as ICD Brookfield, the King Abdullah Financial District project in Riyadh, and the Yas Island masterplan.
From malls to Expo 2020 pavilions, medical facilities to museums – specifically Louvre Abu Dhabi – there is a growing list of projects that have AESG’s fingerprints all over them.
But the rise under Al Abbar’s leadership is in contrast to many other firms fighting to stay afloat in current choppy waters.
Uncertainty is paradoxically one of the few certainties for those working in construction at present.
But Al Abbar is unequivocal in his belief that if measures are not introduced to promote better, more sustainable ways of working, then the current tide will sweep potential future wavemakers over the horizon and out of sight.
He said: “Unfortunately, as an industry, construction is globally not in a good place and it is really up to the industry to resolve it.
“I feel at the moment that it is the industry itself that is at the root cause of the issues.
“Low efficiency and productivity, predatory pricing, and poor management of risk have all contributed to the global challenge being faced by the sector.
“Until the industry wakes up and collectively addresses these issues then disputes and insolvency are not going to go away, unfortunately, and I am worried that we may consequently lose some of the best firms and talent in the industry.”
Results of the 2019 Arcadis Global Construction Disputes Report make for interesting – and in many cases polarising – discussion.
In one respect data shows that Middle East suppliers are $34.3million better off than they were 12 months ago, with total monies owed plummeting from $91m to $56.7m between 2017 and 2018.
But that is only half the story as they are also being made to wait longer – much longer; 20 months on average – for remuneration, placing incredible pressure on firms without deep pockets, and those who do.
Twenty months is a long time to be adrift in an ocean of legislation, and in that time firms are capsizing under the weight of cash flow crises.
Party-to-party negotiations are the preferred method of resolving disputes, but Al Abbar says treating the symptoms of poor practice does little to address the root cause of the problem.
He says it is time for the industry to start taking responsibility for the situation it finds itself in, and implement methods to avoid financial pain.
“I would like to see the industry itself take more ownership as opposed to blaming others for the predicament.
"We are seeing those that are investing in innovation and seeking new and better ways of doing things are emerging as the strongest in the current climate.”
Touching on how AESG’s own policies have ensured growth in both revenue and reputation, Al Abbar said he was amazed by the absence of basic best practice in some organisations.
“From my perspective we always ensure we provide timely payment to our supply chain and honour contracts and agreements we have in place.
“I really struggle to see how anybody can run a business any other way.
“Going up the chain we are selective on whom we work with and, put simply, if clients do not pay or do not provide fair and reasonable administration of contracts, we would not work with them.
“This sounds quite simple but it is amazing how many firms do not follow this ethos, which in turn has resulted in self-perpetuated issues in the market.”