Market forces trigger construction rethink
31 January 2024
Commentary
Colin Foreman
Editor
Read the February 2024 edition of MEED Business Review
It is a good time to be in construction in the Gulf. After years of spending cuts and projects being put on hold, the region is in full-blown expansionary mode with new project launches.
Companies that spent half a decade scouring the market for work and slashing markets are now confronted with more opportunities than they could possibly bid for.
Most encouragingly, after years in the planning stages, Saudi Arabia’s gigaprojects are producing major contract awards. The most recent came in early January when Italian contractor WeBuild signed a $4.7bn deal to construct three dams at Neom’s Trojena mountain resort in Saudi Arabia.
More are expected. According to regional projects tracker MEED Projects, there are $87bn of contracts at the tender stage in the GCC for the construction sector alone. The number grows to $307bn if all sectors are included.
The scale of the opportunity is forcing change. Development companies are rethinking how they engage with contractors and suppliers to secure resources so that relationships are more collaborative. Technology is also being used to make projects more efficient and easier to deliver.
Away from the dynamics of the regional market, global trends are also driving change. The construction sector was one of the industries singled out for reform at Cop28 in Dubai last year. With the built environment responsible for 40 per cent of CO2 emissions, there is a clear need to rethink how projects are planned, designed and delivered.
After years of clamouring for change, the construction sector finally has the opportunity to overhaul how it operates. Whether this opportunity is capitalised on will depend on whether companies are prepared to adapt.
Experience from the past has shown that periods of enthusiasm can quickly give way to recalcitrance. Those who have lived through previous cycles may adopt a cautious approach and prefer to protect their position tomorrow rather than embrace the opportunity for change today.
The February issue's Agenda includes:
> Rethinking how Saudi projects are delivered
> Constructing a sustainable future
> Sustainable design is key to cutting carbon emissions
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