Back to basics
The future of Middle East construction relies on clients and contractors working together to improve contract tendering and pricing practices, as CSCEC ME’s YuTao explains
Yu Tao, president and chief executive officer of China State Construction Engineering Corporation Middle East (CSCEC ME), refuses to slow down in Q4 2018, despite the growth his team has recorded this year. Tao, who was ranked in second place in the 2018 Construction Week Power 100 list, led the Chinese contracting giant to new contracts worth $1.6bn ( AED6bn) in the first half of 2018, achieving much of the firm’s order book target for the year.
With 2017 revenues of $750m (AED2.8bn), the company has been engaged in projects such as the 150,000m ² Silicon Park, a smart city project at Dubai Silicon Oasis; the steel works at Abu Dhabi International Airport’s Midfield Terminal Building; the new headquarters for the National Bank of Kuwait, located in Kuwait City’s central business district; and the UAE’s iconic Dubai Water Canal, which opened in 2016.
Tao tells Construction Week that while his team is “a bit relaxed” thanks to its billion- dollar order book for the year, the Chinese government- owned company will continue to be selective about – and committed to – the work it delivers, in 2018 and beyond. On the side- lines of the Leaders in Construction Summit UAE 2017, Tao told Construction Week that the industry lacks “synergy”, and that stakeholders are so focused on their own interests that they end up disregarding what is best for the projects they are working on. Almost a year later, Tao says that the industry “is still very challenging”, adding that his firm still faces “great difficulty on certain projects”.
He continues: “For some reason, the payments are very slow. Often, clients create variations, and it takes a long time to conclude and get paid for the variation. In between, we may already have spent the money, so the whole supply chain – including the main contractor, sub- contractors, and suppliers – will all suffer. I think we need a change, and we have to understand the project is not only the ‘ baby’ of the main contractor – it also belongs to the client and the consultant.”
This year, the issue of variations and payment delays in the Middle East has been a focus for the entire construction sector. For instance, ALEC’s Kez Taylor – ranked number one in the 2018 Construction Week Power 100 – also voiced his concerns regarding these market challenges, and explained that greater collaboration is required to resolve the problems.
With two of the Middle East’s most influential construction leaders expressing their concern about payment delays, what can be done to improve the situation? Let engineers be engineers, Tao recommends.
“Sometimes, I [feel] I am no longer a contractor, because a lot of my time is spent resolving disputes and getting money back,” he explains. “At the end of the day, I do not think the client will save money, contractors will maintain quality, or the project will be delivered on time – it is the completely wrong approach,” Tao says.
“[ Clients] get all the profit margins they can out of you, give you all the risk, and still want you to perform as a top- class contractor. How is that possible?”
34 24 - 30 NOVEMBER, 2018 WWW.CONSTRUCTIONWEEKONLINE.ONLINE.COM