meed-logo

line1 line2 line3
SIGN IN / REGISTER

Neom to fix construction

25 April 2023

 

The global construction industry is in a parlous state. Construction companies typically operate with low single-digit margins if they are doing well, and one bad project could mean they join a growing list of bankruptcies. 

Developing the world’s largest project may seem like a step too far against this backdrop, but for David Heron, Neom’s director of industrialised design and construction, the scale of development at the $500bn Saudi gigaproject offers the scope and continuity required to solve the industry’s problems.

“There is a general recognition within the industry that it is broken. The challenge has been that individual companies are too small to have the required level of impact to change the industry,” says Heron. 

“Neom is a unique opportunity because of its scale, in terms of spending and the longevity of the project. It will be able to build up the evidence base that demonstrates that things can be done differently.”

Neom has grand ambitions as it sets about transforming the construction industry. “We want to achieve 30 per cent reductions in cost, speed and time, and we think we can go beyond that,” he adds.

World’s largest piling project shifts to The Line’s marina

Improving efficiency

The key to unlocking those efficiency improvements is integrating the design and the construction processes. “When we say design and construction, most people think construction, but we are constantly trying to shift the conversation back to design,” says Heron.

Before design work can start, the brief has to be clear. “The starting point is understanding what people want, and most construction projects today are too small to warrant that kind of investment.

“You need to do market research to really understand what you want, so what happens in most construction projects is that 40 per cent of the design spend goes on during the course of construction as people figure out what it is they actually wanted to build,” says Heron.

“If we understand more clearly what we are designing, we can deliver it more efficiently. We call that an end-to-end process, or industrialised design and construction, because we are industrialising both the design process and the delivery. 

“We would even love to not use the word construction because it is really much more about manufacturing and assembly. When you say construction, people think concrete blocks and mortar. We are trying to shift away from that.” 

The proposed shift requires moving construction activity off-site and rethinking how projects are delivered. “It is completely rethinking the whole process for understanding what we are trying to create, as an experience.

“The starting point for Neom is that we are the investor, so it is incumbent on us to be clearer about what we want,” he adds. 

“When we start thinking about the design process, we need to be clear. We will probably be much clearer than on many other projects about who the target population is and what the experiences are that we want to create for that population.”

Neom will build up the evidence base that demonstrates that things can be done differently
David Heron, Neom 

Manufacturing approach

Heron explains that manufacturing environments are far safer and provide higher-quality jobs with more diversity. 

Gender diversity has been easier to achieve in the manufacturing environment than on the construction site. Quality control is also easier in a manufacturing environment, as it can be monitored from both a process and product perspective. 

For a manufacturing approach to work, different processes must be adopted from the beginning of the architectural design process.

“Typically, it is the general contractor that starts to think about how the site is organised. If we are going down a prefabricated route, you start to think about it at the beginning. Logistics becomes an issue for architects because the access to the site influences the way we design buildings,” says Heron.

Innovation is essential to Neom’s vision of transforming the industry. “If we are going to transform the industry, the opportunity is absolutely massive. We are not talking about incremental innovation, we are talking about fundamentally transformative innovation, and we want that to be done here at Neom,” Heron says.

“Because of the scale of Neom, there is a massive economic return on investing in innovations that just do not exist outside of Neom,” he adds.

The benefits are not just financial. In the modern world, construction has come under pressure for its carbon emissions, and while it is developing large projects, Neom is reducing the impact on the environment. 

“Thirty-eight per cent of global carbon dioxide emissions come from building, and 40 per cent of what goes to landfill is construction and demolition waste. Something like 70 per cent of all the embodied carbon in a building is from the concrete. 

“We are building big buildings, so one of the very first things we did two years ago was to look at how we can significantly reduce emissions from concrete, and there is a whole host of levers that we are pulling,” says Heron.

“We are working closely with local industry. On the cement side, we are looking at different cement mixes, looking at using alternatives to clinker, looking at Neom-specific concrete mixes that maximise the use of locally available materials, and we have minimised the logistics. 

“We are also looking at design and challenging the engineers that are designing buildings. We see that as a massive opportunity. Everyone talks about construction, but really the opportunities lie in design.” 

https://image.digitalinsightresearch.in/uploads/NewsArticle/10786799/main.gif
Colin Foreman

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Sumitomo team submits Facility E bid

    25 July 2024

    A team led by Japan's Sumitomo Corporation submitted a bid for the contract to develop and operate Qatar’s Facility E independent water and power producer (IWPP) project.

    Qatar state utility General Electricity & Water Corporation (Kahramaa) previously extended the tender closing date for the contract in response to developers’ requests, as MEED reported.

    Kahramaa received the single bid on 25 July.

    Sumitomo is understood to have submitted a proposal for the contract along with fellow Japanese utility developer Shikoku Electric, and Seoul-headquartered Korea Overseas Infrastructure & Urban Development Corporation and Korea Southern Power Company.

    The developer consortium's engineering, procurement and consortium (EPC) partner is South Korea's Samsung C&T, according to sources close to the project.   

    The Facility E IWPP scheme will have a power generation capacity of 2,300MW and a water desalination capacity of 100 million imperial gallons a day (MIGD).

    The contract to develop the Facility E IWPP was first tendered in 2019. The three teams that submitted bids for the contract in August 2020 were:   

    • Engie (France) / Mitsui (Japan) / Yonden (Shikoku Electric, Japan)
    • Sumitomo / Kansai Electric (Japan)
    • Marubeni / Kyushu Electric (Japan)

    The original plan was for Facility E IWPP to have a power generation capacity of about 2,300MW and a desalination component of 100MIGD once fully operational.

    However, Kahramaa revised the power plant’s design capacity to 2,600MW and sought alternative prices from bidders. 

    Kahramaa eventually cancelled and reissued the tender in September 2023. The current tender entails a power generation plant with the same capacity as initially tendered in 2019.

    MEED understands that the new target commercial operation date for the Facility E IWPP project has been moved to 2027. 

    The state utility’s transaction advisory team includes UK-headquartered PwC and Clyde & Co as financial and legal advisers, respectively, led by Belgrade-headquartered Energoprojekt as technical adviser.

    Facility E is Qatar’s fifth IWPP scheme. Completed and operational IWPPs include three projects in Ras Laffan – known as Facilities A, B and C – and Facility D in Umm Al-Houl.

    Awarded in 2015 and completed in 2018, Facility D was developed by a Japanese consortium of Mitsubishi Corporation and Tokyo Electric Power Company (Tepco). South Korea's Samsung C&T was the engineering, procurement and construction contractor.  

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12220438/main.gif
    Jennifer Aguinaldo
  • Iraq drives Gulf projects market growth

    25 July 2024

     

    The Gulf Projects Index rose by 0.7% from 7 June to 12 July, spurred by value gain in the Iraq projects market and, to a lesser extent, the UAE projects market, while the Saudi projects market experienced a slight contraction.

    The rise in the index represents the 16th consecutive month of upward trending value in the regional projects market, dating back to March 2023.

    Iraq rail plans

    The Iraqi projects market gained $26.3bn in value, or 7%, due to the reactivation of plans for a national network of high-speed rail connections across the country, from north to south as well as east to west. The costs of these Iraq rail schemes, which have been under study in various forms for several decades, are relatively indeterminate, but run into the tens of billions of dollars. The rail network is now in the design phase.

    In another major development for the country, the $27bn Gas Growth Integrated Project (GGIP) being undertaken by the National Oil Company and Basra Oil Company, in partnership with TotalEnergies and QatarEnergy, has also passed from study into front-end engineering and design.

    Elsewhere in the region, the UAE projects markets increased in value by $10.6bn, or 1.3%, while Saudi Arabia’s projects market shrank by a comparable $13.9bn, though lesser 0.7%, reducing its value to around about the value it held
    in mid-May.

    The other countries in the GCC and wider Gulf saw comparatively minor changes, with Qatar’s projects market adding $3.9bn or 1.7%, Bahrain’s projects market adding $2bn or 2.9%, Iran’s projects market adding $1.4bn or 0.5%, and Oman’s projects market adding a marginal $0.2bn or 0.1%. Kuwait’s project market value slipped by $0.7bn or 0.4%.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12219885/main.gif
    John Bambridge
  • Abu Dhabi tenders 400MW battery storage contract

    25 July 2024

    State offtaker Emirates Water & Electricity Company (Ewec) has invited prequalified companies to submit their proposals for a contract to develop and operate an independent 400MW battery energy storage system (bess) power project in Abu Dhabi.

    Ewec expects to receive bids by the fourth quarter of 2024.

    The planned facility is expected to provide up to 800 megawatt-hours (MWh) of storage capacity.

    Called Bess 1, the project will closely follow the model of Ewec's independent power project (IPP) programme, in which developers enter into a long-term energy storage agreement (ESA) with Ewec as the sole procurer.

    The first plant will be in Al-Bihouth, approximately 45 kilometres (km) southwest of Abu Dhabi, and the second plant will be in Madinat Zayed, about 160km southwest of the city.  

    According to Ewec, the request for proposals is being issued to 27 prequalified companies and consortiums, out of the 93 companies that submitted an expression of interest to bid for the contract in April this year.

    It did not specify the prequalified companies.

     MEED previously reported that the companies that submitted SOQs to bid for the contract include:

    • Acwa Power (Saudi Arabia)
    • EDF (France)
    • GE (US)
    • Jera (Japan)
    • Korea Electric Power Corporation (Kepco, South Korea)
    • Marubeni Corporation (Japan)
    • Samsung C&T (South Korea)

    Sources also cited that "several Chinese Bess manufacturers and suppliers" have applied to prequalify as investors in the project.

    The ESA will be for 15 years, commencing on the project's commercial operation date, which falls in the third quarter of 2026. 

    According to Ewec, the Bess project will provide additional flexibility to the system and ancillary services such as frequency response and voltage regulation.

    "Ewec is deploying BESS to enhance the flexibility and stability of Abu Dhabi’s energy network, allowing for the effective management of peak demand and integration of increasing amounts of renewable energy," the utility said in a media statement on 25 July.

    It added: "BESS technology will also provide crucial ancillary services such as frequency response and voltage regulation, further reinforcing the security of supply and supporting Ewec to increase its solar photovoltaic (PV) capacity to 7.5 gigawatts (GW) by 2030.

    "This accelerated growth in renewables will significantly reduce the carbon dioxide intensity of Ewec's power supply, from 330 kilograms per megawatt hour (kg/MWh) in 2019 to an estimated 190 kg/MWh by 2030."

    Global BESS market

    The overall capacity of deployed Bess globally is expected to reach 127GW by 2027, up from an estimated cumulative deployment of 36.7GW at the end of 2023, according to a recent GlobalData report.

    The report cited Chinese companies BYD and CATL and South Korean companies LG Energy Solutions and Samsung SDI among the top battery technology providers globally.

    Related read: Abu Dhabi tenders 2.5GW Taweelah C contract

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12219884/main.gif
    Jennifer Aguinaldo
  • Transforming Riyadh into a world-class city

    25 July 2024

     

    Riyadh is changing fast. As the Saudi capital, it is not only located in the country’s geographical centre, but also at the heart of Vision 2030 and the kingdom’s economic transformation, with a wide range of ambitious development projects.

    The city wants to be one of the best in the world. “The strategic vision for Riyadh focuses on transforming it into a world-class city that is sustainable, innovative and culturally rich,” says Fahad AlSolaie, deputy mayor for digital transformation and smart cities at Riyadh Region Municipality. 

    “The vision includes improving quality of life for residents, diversifying the economy away from oil dependence, and promoting green and smart urban development.”

    Riyadh’s ambitions are driven by population growth and people visiting the city for major global events. “Riyadh is expected to experience significant population growth in the coming years, driven by its economic expansion and global events hosted by the kingdom, such as Expo 2030 and major sports events,” says AlSolaie.

    “Additionally, the presence of large-scale unique projects like the King Abdullah Global Gardens, the development of Wadi Al-Sulay, King Salman Park and others contribute to the city’s attractiveness and livability, further boosting population growth. It is targeted for the population of Riyadh to reach 10 million residents, reflecting its rising prominence as a business and cultural hub. This growth will enhance Riyadh’s status as a dynamic urban centre, equipped to meet the evolving needs of its expanding population.”

    The vision includes improving quality of life, diversifying the economy, and promoting green and smart urban development
    Fahad AlSolaie, Riyadh Region Municipality

    Infrastructure projects

    Riyadh Region Municipality is playing a key role in the city’s development. “Riyadh municipality is responsible for a wide array of infrastructure projects that are crucial for the city’s development and sustainability. These include paving, asphalting and road stabilisation projects, which are essential for maintaining and improving the city’s road networks,” says AlSolaie.

    “The municipality develops public parks, ensuring that the necessary infrastructure is in place to provide recreational spaces. Bridge and tunnel construction and ongoing enhancements are also a significant focus, aimed at improving traffic flow and connectivity across the city. Furthermore, Riyadh is committed to extensive lighting projects and the maintenance of these systems, with the city one of the largest globally in terms of the number of streetlight poles.” 

    A key responsibility of the municipality is to maintain the city’s cleanliness and environmental health, adds AlSolaie. “This involves regular street cleaning, waste management and pollution control measures to keep the city clean and environmentally sustainable. These efforts are integral to quality of life, contributing to the vision of making Riyadh a more livable and accessible urban environment.”

    Signature schemes

    The municipality is also involved in the delivery of a series of signature projects in and around Riyadh. “The King Abdullah Global Gardens project aims to create a vast green space that combines natural landscapes with high-tech interactive exhibits, promoting environmental education and sustainability,” says AlSolaie. 

    The Wadi Al-Sulay development, meanwhile, is focused on transforming Wadi Al-Sulay into a recreational and cultural destination, featuring amenities that encourage outdoor activities and community gatherings.

    The municipality collaborates extensively with other government agencies and private sector partners to ensure cohesive and integrated development. This includes coordinating efforts on large-scale projects, urban planning and infrastructure improvements to support the city’s growth.

    “The municipality ensures alignment with master developers and major projects through regulatory frameworks, strategic planning sessions and collaborative platforms that facilitate integration of infrastructure projects and urban development efforts across the city,” says AlSolaie.

    With aspirations to become one of the world’s most advanced cities, digital transformation is helping Riyadh achieve its goals. “Digital transformation is vital for Riyadh Municipality for several compelling reasons. Firstly, it enhances service efficiency by adopting digital technologies, streamlining operations, reducing manual processes, minimising errors and speeding up response times. This not only improves service delivery, but also cuts operational costs, allowing for better resource allocation. 

    “Secondly, it improves citizen engagement through digital platforms that enable interactive and responsive communication. Citizens can easily access information, request services and provide feedback, enhancing transparency and building trust.

    “Thirdly, digital transformation fosters innovation in urban management using technologies such as the Internet of Things , artificial intelligence and big data analytics to optimise urban functionalities like smart waste monitor manholes and public safety. 

    “Additionally, it supports economic diversification by modernising infrastructure and services, thus attracting new businesses, especially in the technology sector, aligning with Saudi Arabia’s Vision 2030,” says AlSolaie.

    Online services

    Riyadh Region Municipality is moving its services online as part of the digital transformation. “Riyadh municipality is progressively digitising its services by offering e-services platforms where residents can access various municipal services such as mobile applications, geoportal web application and service requests online, thus increasing accessibility and convenience,” says AlSolaie. 

    The drive to digitise will enable Riyadh to become a smart city. “By implementing advanced technologies such as the Internet of Things, artificial intelligence and geographic information systems, Riyadh Municipality is optimising key city functions such as reducing and monitoring visual pollution, enhancing public safety and conducting environmental monitoring,” he says. 

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12219710/main.gif
    Colin Foreman
  • WTTCO tenders water pipeline and reservoir packages

    25 July 2024

    State-owned Saudi water transmission and storage operator Water Transmission & Technologies Company (WTTCO) has issued two tenders involving a contract to build a water transmission pipeline in Dammam City and an engineering design services contract for water reservoir stations.

    The first contract is for the supply and installation of a water transmission system for the Second Industrial City in Dammam.

    WTTCO expects to receive proposals for this contract by 1 August.

    The second request for proposals involves a contract to provide engineering and design services for phases 2 and 3 of WTTCO’s strategic water reservoir station projects.

    The two phases cover reservoir stations in 150 locations and about 750 kilometres of water transmission pipeline.

    WTTCO expects to receive proposals from engineering consultancy firms for this contract by 4 August.

    The company has embarked on one of the world’s largest water conveyance and storage programmes as it seeks to increase potable water supply capacity across the kingdom.

    The expenditure programme, which WTTCO estimates is worth up to SR140bn ($38bn) by 2030, covers 396 individual projects, MEED reported in May.

    WTTCO’s objectives by 2027 are to have a total network size of 15,000km, 9.5 million cubic-metres-a-day transmission capacity, 118 pumping stations and more than 900 storage tanks.

    The capital expenditure programme was outlined in a WTTCO presentation at the Future Projects Forum in Riyadh on 20 May.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12219515/main.jpg
    Jennifer Aguinaldo