Special Features
UAE major construction spend to peak at US$40bn in 2016
The UAE is due to spend US$329 billion on delivering major construction programmes by 2030 according to EC Harris’s latest study: ’Middle East major construction programmes - mitigating the risk’. These construction programmes, defined as programmes costing more than US$1billion and being delivered over a relatively short period of time, are due to peak in the UAE in 2016 with US$40.4bn due to be delivered. With other Middle East countries undertaking their own programmes, the report highlights the potential squeeze on labour and material resources which could impact delivery.Across the Middle East, the report found that in excess of 117 major programmes are planned for completion by 2030 costing more than US$1 trillion. The programmes incorporate major infrastructure, energy, property and transportation projects.
Of the six countries covered in the report, the UAE is due to spend the most on major programmes (US$329.4bn) followed by Saudi Arabia (US$255bn), Qatar (US$156.8bn), Kuwait (US$130.3bn), Iraq (US$123.3bn) and Oman (US$21.8bn).
Alistair Kirk, Head of Infrastructure, Industry and Utilities, Middle East at EC Harris, commented: "The Middle East is experiencing unparalleled economic and social development due to the large volume of mega projects planned and underway. These programmes, particularly the more ambitious mega cities, are at the forefront of these enormous infrastructure developments which will bring diversification, foreign and domestic investment and job creation on an unparalleled scale.
However, with demand currently outstripping supply for human capital and material resources, there is risk of inflationary rises to secure resources in a very competitive and intense market. But with joined-up, collective thinking, governments, developers and contractors can ensure all major programmes in the region can be delivered on time, on budget and to the required quality."
From 2014, there will be an exponential growth in demand for plant, materials and equipment hire during the Middle East’s development peak, estimated at nearly a trillion dollars. This will result in mass importation of construction materials which may lead to heavily loaded distribution routes and bottlenecks in the supply chain. The report highlights that by prioritising transport programmes and coordinating the network to meet the logistical challenges of importation, countries will achieve the required balance between construction vehicles, general traffic and a steady port capacity for a successful supply chain.
Playing host to global events such as the FIFA World Cup 2022™ will see the Middle East committing almost two thirds of construction spend between 2013 and 2016 - with a peak of US$144 billion in construction in 2016. In order to accommodate such mass development, a supporting infrastructure must be in place prior to commencement. From housing, to accommodate the influx of labour, physical infrastructure such as roads, airport and rail links, to employee facilities including housing, school and health facilities - a solid supporting infrastructure is vital to the success of any major development. The EC Harris report highlights that countries that are proactive in the provision of enabling infrastructure that will stretch over a long period are at much less risk of programme slippage than countries with little supporting infrastructure.
Alistair Kirk continued: "Setting up a Portfolio Management Office, or PMO, can have a positive impact through enabling the team to address the initial strategic, technical and delivery priorities faced when delivering a major programme. Adopting this portfolio management approach through a PMO helps to ensure improved efficiency, certainty, speed and control of the overall support required by a Client."
