UAE construction sector lacks synergy, says CEO of a state-owned Chinese company

BE2C2 Report — Construction industry stakeholders in UAE need to work together to ensure smooth and timely delivery of projects, according to the president and chief executive officer of China State Construction Engineering Corp Middle East which recently signed a deal with emirate’s Union Properties (UPP) to develop a new $2bn master plan for its flagship Motorcity community.

The gigantic project is scheduled to break ground in January 2018, with the overall project to be completed by 2021.

Speaking to ConstructionWeek during a seminar on “Leaders in Construction Summit 2017” in Dubai, CEO Yu Tao of CSEC said that the industry lacks “synergy” and that stakeholders are so focused on their own interests that they end up disregarding what’s best for the projects they’re working on.

And contractors tend to get the short end of the stick, he noted, revealing that they often enter into project negotiations “tense and nervous”.

“During the project negotiation, clients, most of the time, are very aggressive,” he said. “They squeeze [the costs to boost] their profit margins. They [identify] a lot of risk factors, and assume that everything will go smoothly.”

This assumption is off the mark, added Tao, stating: “The reality is we face a lot of challenges.”

Elaborating on what those challenges are, Tao said that in cases where there are variations or changes to the project, contractors typically have to deal with “judgment from consultants” and uninformed client decisions, leading to complications.

Tao noted that while he understands that those stakeholders are merely trying to protect their companies’ interests, he thinks their approach rarely produces successful results, project-wise.

He explained: “I believe that to make a project successful, there needs to be a great relationship between the client, consultant, and contractor. Without this relationship, the interest is not going to be aligned.”

Continuing on his point about client decision-making, he said that there are instances when clients would give their approval on variations without confirming how those would affect project costs.

“Contractors need clear answers, so that they [in turn] can give clarity to sub-contractors and sub-players, because the whole supply chain gets affected,” he said. “It is in the benefit of the client to improve [the decision-making] process, so contractors will spend less time arguing with them and, instead, focus on the actual construction.”

Tao was one of the panelists at Construction Week: Leaders in Construction Summit 2017, which was held on 19 September, 2017, in Dubai, UAE.

It featured representatives from Aecom, ALEC Engineering and Contracting, Arada, Beaver Gulf, Bentley Systems, China State Construction Engineering Corporation Middle East (CSCEC ME), ECC, Faithful+Gould, Laing O’Rourke, Mott MacDonald, Parsons, Pinsent Masons, the Royal Institution of Chartered Surveyors (RICS), Select Group, Taylor Sterling Associates, and Woods Bagot.

The event saw more than 200 construction professionals gather where contemporary trends, challenges, and opportunities within the region’s construction sector were discussed.

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