Gulf construction industry now valued at $1.9 trillionJune 10th, 2008 - 9:01 pm ICT by IANS
Dubai, June 10 (IANS) Saudi Arabia leads the construction industry in the Gulf where the value of projects has now touched $1.9 trillion. The Gulf’s biggest nation now accounts for 25 percent of all construction projects in the Gulf Cooperation Council (GCC) countries, according to MEED, the region’s premier business intelligence service.
By the end of May, the value of projects across the region touched $1.9 trillion, a 35 percent increase from the same period last year.
Apart from Saudi Arabia, the United Arab Emirates, Bahrain, Oman Kuwait and Qatar comprise the six-member GCC.
Because of this massive construction boom in Saudi Arabia, there is tremendous pressure on basic resources like building materials, equipment and labour, MEED said in a statement.
As a result, there has been a sharp increase in construction costs, which local analysts have noted is costing contractors in Saudi Arabia an average of a 20 percent loss in revenue on their projects.
“The onus is really on the contractors of mega projects to partner with capable suppliers who are able to provide effective and reliable solutions as they continuously face pressure to deliver on their huge fast-track projects,” Fadi Mujahed, marketing and business development director at Saudi Readymix, a leading producer and supplier of ready-mixed concrete and related products, said.
“Specifically, they are looking for suppliers who would share, if not eliminate, the burden of ordering and receiving the required quantities of resources on time,” he added.
He gave ready-mixed concrete a prime example of this saying it cannot be ordered all at once and stored like other building materials such as steel, wood and blocks.
“Thus, securing the required quantities is a daily issue for project managers,” he said.
Mohammed Al-Ramahi, general construction manager with Consolidated Contractors Company (CCC) also stressed on the importance of trusting suppliers.
“When we sign a contract and establish the timeline and the deliverables, we agree to strict delivery schedules,” he said.
“If a deadline passes us by without us having met the stated deliverables, we can face liquidated damages of up to 10 percent of the total value of the project! And with the size and cost of the projects today, the incentive to deliver on time every time is definitely there,” he added.
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