British engineering consultancies upbeat on Middle East despite Carillion collapse
Surge in Saudi Arabia infrastructure spending attracts major UK firms
The collapse of British builder Carillion, which had also run into trouble on some of its regional contracts, has also cast a pall over the industry.
But with global growth picking up and the ambitious Saudi National Transformation Program 2020 taking shape, some of the larger UK advisory firms see brighter prospects for their businesses in the region.
“I think it’s an improving picture,” said Chris Seymour, Middle East managing director of UK-based engineering consultancy Mott MacDonald, which employs 1,300 people in the region and has five offices including Abu Dhabi, Dubai and Jeddah.
He describes the market for engineering consultancy services in the Middle East as competitive but stable and said it has adjusted to an oil price in the $40-60 range as a “new norm.”
The recently released Saudi budget with its heavy emphasis on infrastructure spending is a particularly positive sign for a sector that was hit hard by the sharp decline of oil prices in 2014.
“They will need more technical advice and it should mean good opportunities as the plans materialize and we should see an increase in business,” he said.
His firm is now in the early stages of working on public private partnerships which may result in more work later this year.
MacDonald is looking at schemes in the energy, health care, water and transport sectors in Saudi Arabia.
Atkins, the UK-based consultancy which also operates worldwide, last week pointed to increasing activity in the Saudi Arabian market when it appointed Lee Morris as its new head of architecture in its Middle East and Africa region. The firm, which is now part of Montreal-based SNC-Lavalin, sees its international design and architectural offering as “more important than ever.”
Simon Moon, Atkins’ CEO for the Middle East and Africa, said: “During this time of change in the region, fresh and innovative approaches to design are essential.”
Atkins employs around 2,000 staff in the Gulf with offices in Saudi Arabia, the UAE, Qatar, Bahrain, Kuwait and Oman and has masterplanned the King Abdul Aziz Road development in the Kingdom over the past eight years.
Last summer, Atkins was selected by the US Army Corps of Engineers Middle East District to support infrastructure improvement programs for the Gulf Cooperation Council coalition of countries. In September, Atkins also won an advisory services contract from the state-owned National Water Company as part of a consortium to provide sustainable sanitation services in Saudi Arabia.
One source of encouragement for consultancy firms seeking work in the region was the appointment early last year of the US contractor Bechtel Corp. to run a new oversight office to help the Saudi government set up and run its new National Project Management Organization.
The firm has worked on mega-projects in the Kingdom for 70 years and is currently developing two of six lines on the $20 billion (SR74.9 billion) Riyadh Metro project.
Nelson Ogunshakin, CEO of the UK industry body the Association for Consultancy & Engineering, said his members have seen some pick-up in the market over the past year.
“There is more interest but people are cautiously optimistic,” he said. “We say please look but tread carefully and make sure you address some concerns — on areas such as procurement transparency, health and safety and payment terms — in your due diligence.”
Saudi Arabia’s ambitious plans for new cities, universities and hospitals as it seeks to reduce its dependency on petroleum revenue make it the most promising market for UK firms.
LONDON: UK consulting engineering firms have faced leaner times in the Middle East in recent years as the lower oil price has squeezed the funds available to governments for new development in the region.
British construction consultancies are encouraged by the increase in major infrastructure projects in the Kingdom such as the Riyadh Metro. (Reuters)