IN­TER­VIEW

Nathan Hanns, gen­eral man­ager at ALEMCO, says his firm pri­mar­ily fo­cusses on a few projects that re­quire tech­ni­cal pro­fi­ciency and how cater­ing to a niche sec­tor has helped main­tain turnover

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ALEMCO, the MEP arm of ALEC, fo­cuses mostly on projects that only a few MEP con­trac­tors would dare to take on. The firm’s mantra has been to work with a few se­lec­tive and picky clients. “We work with clients who want projects to be driven on a timescale and not al­ways nec­es­sar­ily on a bud­get. bit of tech­ni­cal pro­fi­ciency should be needed in de­liv­er­ing such projects. We are a com­pany that is tech­ni­cally pro­fi­cient and we de­liver on a de­sired timescale,” says Nathan Hanns, gen­eral man­ager of ALEMCO, proudly.

Hanns ex­plains that it’s all about hav­ing the right clients and work­ing for the right projects. He says: It’s a price-driven mar­ket, so you are not go­ing to get any­thing by be­ing the most ex­pen­sive. If your clients have an un­der­stand­ing of what you are bring­ing to their projects, and you have an un­der­stand­ing of what the projects want from a de­liv­ery process, it’s not nec­es­sary that the bud­get is the key driver.”

By be­ing tech­ni­cally pro­fi­cient, Hanns means that his firm likes to take on chal­leng­ing projects that re­quire work­ing on a live en­vi­ron­ment. He says: “The re­fur­bish­ment mar­ket is grow­ing and it is a good mar­ket to be in. The time scale of such projects is quite dif­fi­cult. We have got some key clients that we go back to ev­ery year and help fast tract re­fur­bish­ments.

“We like to fo­cus on live re­fur­bish­ment where in­ter­rup­tion of ho­tels can­not hap­pen. So be­ing able to do that and the tech­ni­cal pro­fi­ciency is what they look for. And that’s where

we can dif­fer­en­ti­ate from a nor­mal con­trac­tor. There are very few MEP com­pa­nies in the mar­ket that of­fer this.”

Last year, Engie joined forces with ALEC by in­vest­ing a “sig­nif­i­cant stake” in Dubaibased in­de­pen­dent en­ergy ser­vices com­pany (ESCO) Smart4Power.

Ac­cord­ing to a state­ment, the French global en­ergy and ser­vices group ac­quired the stake un­der an agree­ment signed with Smart4Power’s new cap­i­tal struc­ture now fea­tur­ing Engie and ALEC as its ma­jor share­hold­ers.

Smart4Power was one of the first com­pa­nies ac­cred­ited as an ESCO in the mar­ket, and pro­vides en­ergy sav­ings per­for­mance con­tracts for re­gional build­ings in the pub­lic and pri­vate sec­tors.

ALEMCO’s cur­rent port­fo­lio of work in­cludes One Za’abeel and Ma­rina Gate 1 projects, both in Dubai, and Liwa Plas­tics In­dus­tries in Oman, which is an EPC con­tract.

He says: “The Ma­rina Gate 1 project is com­pleted. Gate 2 will be done early 2019 and Gate 3 will be done next year. We did the re­fur­bish­ment of Spring Cin­e­mas in Dubai.”

Mar­ket

Hanns does ad­mit that de­spite ALEMCO be­ing se­lec­tive in its projects, the mar­ket has been dif­fi­cult. He says: “I think we have had some good projects to keep us bust. We have man­aged to main­tain our turnovers. The last two years have been chal­leng­ing. It is more dif­fi­cult to ex­e­cute and de­liver on time and there are a num­ber of fac­tors in­volved in it. The ten­der­ing mar­ket is very dif­fi­cult at the mo­ment. It is mainly price-driven.”

The firm’s cur­rent fo­cus is on the turnover that it has se­cured and in car­ry­ing out the ma­jor de­liv­er­ies within ALEC. “WE are quite a con­ser­va­tive com­pany. We don’t like to take too much risks. Our fo­cus is mainly to help ALEC in the de­liv­ery of its projects,” Hanns says.

ALEMCO has been around for 11 years, which started as a turnkey in­house sec­tion of ALEC. In the be­gin­ning, the firm was called ALEC MEP and then it de­vel­oped into a fully fledged sub­con­tract­ing firm with a sep­a­rate li­cense.

Hanns says that the firm’s key re­gional fo­cus are in the UAE and Oman. “The value of the projects that we work on is very di­verse. Any­where from a mil­lion dirhams to up to 400500 mil­lion dirhams. The ap­petite for large jobs is viewed on a dif­fer­ent scale. We check if we have the tech­ni­cal re­sources to de­liver th­ese projects and that’s how we ba­si­cally view our turnover,” Hanns adds.

The firm has a to­tal staff of around 360, in both UAE and Oman, with an in­ter­nal re-

source of around 1,800.

Talk­ing about the work­ing re­la­tion­ship with ALEC, Hanns says: “ALEMCO is a sep­a­rate en­tity, but 70% to 80% of our work is in sup­port of ALEC. So our work­ing re­la­tion­ship with ALEC is key. We do other projects out­side of ALEC but only with key clients with whom we have re­la­tion­ships with. Our work­ing re­la­tion­ship [with ALEC] is good but we can only han­dle about 50% of their work­load.

“It’s all about com­mu­ni­ca­tion and re­la­tion­ships as long as every­body has a mu­tual re­spect for what they are do­ing; then your out­comes are good.”

Chal­lenges

Price and ten­der­ing in the mar­ket are very dif­fi­cult, says Hanns. “Cash flow and liq­uid­ity re­main a prob­lem. Main­tain­ing good turnover with prof­itabil­ity is a chal­lenge,” he elab­o­rates.

The firm’s big­gest is­sue is over­runs. “For project over­runs we in­cur the cost. We don’t nec­es­sar­ily get the fair treat­ment and re­cov­ery of the costs in the mar­ket. You are al­ready un­der tight con­di­tions from a ten­der­ing process. Project over­runs can cre­ate ad­di­tional cash flow is­sues. Es­pe­cially, on large projects there is gen­er­ally a cer­tain per­cent­age of over­runs and change that oc­curs. For smaller projects, it gen­er­ally fin­ishes within the time pe­riod.

“Most com­pa­nies have taken on work as a self-preser­va­tion process which is not nec­es­sar­ily what the true cost of the project will be. There has to be fail­ure for some­thing to be­come right. I do see cer­tain fail­ures com­ing up in the next year. There is a prob­lem in the mar­ket.”

But will liq­uid­ity is­sues im­prove in the fu­ture? Hanns be­lieves that “the mar­ket can’t con­tinue like this as we can’t have a neg­a­tive eq­uity in the mar­ket”. He says that the mar­ket has to rec­tify it­self at some stage. At the mo­ment, he says, the con­trac­tors and the sup­ply chain are fo­cused on hav­ing good tech­ni­cal skills and work­ing for the right clients.

The other chal­lenge fac­ing the mar­ket is re­tain­ing tal­ent. He says: “The big­gest chal­lenge that we face as an MEP com­pany is re­tain­ing pro­fi­cient skills. So in or­der to carry out our large scale chal­leng­ing projects, you need to have a very good skill level. And we have to main­tain that skill level within the in­dus­try. Be­cause if we lose it, we lose projects. There is tal­ent avail­able in the re­gion. But we try and re­tain the tal­ent as much as pos­si­ble. We have quite a good length of em­ploy­ment within the busi­ness. That’s our fo­cus. Keep­ing peo­ple and train­ing peo­ple.”

A re­cent Great Place to Work study con­cludes that “the best work­places have found a way to cut at­tri­tion in half”. The abil­ity of th­ese top em­ploy­ers to re­tain em­ploy­ees is closely as­so­ci­ated with pride and mean­ing at work, the study states. ALEMCO be­lieves in that phi­los­o­phy. Hanns says: “The longer the teams work to­gether, the bet­ter they per­form. That’s one of the ben­e­fits of work­ing with ALEC on a num­ber of con­tracts. The teams work to­gether for longer pe­ri­ods. They be­come more ef­fi­cient by work­ing to­gether. There is a lot of un­der­stand­ing of what each party needs.”

Fo­cus

ALEMCO has a cou­ple of key driv­ers when it comes to technology and in­no­va­tions. Hanns ex­plains: “We have a com­mer­cial-based sys­tem that is driven pre­dom­i­nantly through track­ing of costs and ac­count­ing which is live so we can see ex­actly where we are. It is im­per­a­tive for a con­trac­tor to know where ex­actly you are stand­ing with the costs.

“Our BIM and 3D mod­el­ling [teams] are de­vel­op­ing auto mea­sure­ments within the sys­tems. So as a busi­ness we gen­er­ally op­er­ate all projects in a 3D model and in cer­tain lev­els of BIM. But we are de­vel­op­ing full sched­ules of parts and ma­te­ri­als against the draw­ings. It helps us in cor­re­lat­ing the costs and all our or­der in process. And also the fi­nal de­liv­ery onto the build­ings. We model all of our en­gi­neer­ing draw­ings in 3D. It makes it eas­ier for clash de­tec­tion and co­or­di­na­tion.

“In ad­di­tion, we are re-look­ing at the con­ven­tional meth­ods of con­struc­tion by try­ing to find faster and pro­fi­cient in­stal­la­tions. For ex­am­ple, mod­u­lar con­struc­tion and pre­fab­ri­ca­tion, where we can re­duce the labour con­tent at ground level and have it pre­fab­ri­cated for quicker in­stal­la­tion. We have our own fab­ri­ca­tion yards, but we gen­er­ally tie up with a pre­fab com­pany for the mod­u­lar units. Our fo­cus in our fac­to­ries is pre­fab­ri­ca­tion on pip­ing and duct­ing.”

ALEMCO has al­ways fo­cused on be­ing fast and pro­fi­cient since its in­cep­tion. Hanns con­cludes: “I have worked for ALEC my en­tire ca­reer in the Mid­dle East. Through the early stages there was a lack of sup­port in the mar­ket for quick de­liv­ery and fast track op­er­a­tions on a lot of ALEC con­tracts. And that’s how ALEMCO was formed, to bridge this gap.”

Main­tain­ing good turnover with prof­itabil­ity is a chal­lenge.″

The Ma­rina Gate 1 project ren­der­ing.

The in­te­ri­ors of Ma­rina Gate 1 res­i­dence.

ALEMCO’s key re­gional fo­cus are in the UAE and Oman.

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