By Sona Nambiar www.business24-7.ae
Rail is the next area of opportunity in the GCC, according to a senior official from Halcrow, an international consultancy.
“We have hired a market sector specialist to lead our thrust into rail,” said David Yaw, Regional Managing Director, Halcrow. The firm specialises in planning, design and management services for infrastructure development.
“We are also bidding on the Abu Dhabi Metro project with Mott and Parsons. We are waiting for the evaluation of the bid and expect that the results will be announced around Eid. The value runs into millions of dollars and we are hoping that we get the project,” added Yaw.
Six consortiums have submitted presentations for Abu Dhabi Metro, according to reports. The shortlisted groups are the Adim consortium, consisting of Coteba of France, Khatib & Alami of the Lebanon, plus four German firms – Hamburg Consult, Obermeyer, ILF Consulting Engineers and Dornier. The second consortium is led by Systra of France supported by Arup of the UK, Foster & Partners of the UK and Cowi of Denmark. The third bidder is the Adapt consortium of Aecom of the US, Germany’s DB International and Parsons Brinckerhoff (US). UK-based Atkins has linked up with Australia’s Bovis Lend Lease in another consortium, while the fifth consortium is Lebanon’s Dar Al Handasah (Shair and Partners), Egis of France with Spain’s Gestisa and Ineco Tifsa. A consortium of Mott MacDonald and Halcrow of the UK plus US-based Parsons International is also taking part.
The network will be mainly subterranean and will cover 340km. The first stage of the project will connect the centre of the city with the international airport. The project is part of a more complex infrastructure and transport improvement project under the Abu Dhabi 2030 Plan.
The Metro will be also connected to the network that links the UAE.
In an exclusive interview with Emirates Business, Yaw spoke of the industry issues, the stress of laying off staff and new opportunities.
How do you perceive the current market?
What has changed is the rate of winning work. We had to close doors last year. We are still getting enquiries though they have slowed, which is a good thing and helps us to be selective. What we notice is that a lot of those enquiries are not getting decided. That is a big change. They are mostly from the public sector in Dubai and across the board. The overheating in the industry did not reflect on the absorbent capacity of the builders or the delivery capacity of the industry. Correction is not a bad thing – it is an opportunity for clients to relook their projects. It is not just in Dubai. Some of our key clients in Doha and Abu Dhabi are also putting projects on hold. I don’t think we have got to the bottom yet.
What are revenues for this year?
In 2009, we have a good backlog of work and are looking at nine months of earnings. I am not worried about 2009. Our gross earnings of 2008 in this region stood at about £125 million [Dh752.66m] and was a quarter of Halcrow earnings worldwide. Net earnings were about £105m. We were 25 per cent up on our budget. This year, we have budgeted about £125m in net earnings and we won’t quite meet that figure. We are forecasting about £117-£120m at this moment. It all depends on whether we get the work in time or collect the money in time. 2010 will be a difficult year since our forward order book is not getting replaced at the same time as we are running it down. It depends on the geographies. In Dubai, we have been extremely fortunate and it is probably the area that is hit the hardest. Qatar and Abu Dhabi are holding up pretty well. We have long-term commissions in these markets. We would term them as stable rather than spectacular.
So what is the strategy for the coming year?
One of the things we have been trying to do is to try and shift our attention to some of the emerging markets. Most of our 2008 earnings were from the UAE and Qatar. Less than five per cent of our revenues came from our emerging markets. We have identified where we want to work more in the coming year and that includes Saudi, Syria [where we have a strong presence] and Libya. We do see Kuwait as an immediate market and also do work in Jordan. Most of our core work is in infrastructure – ports, harbours, highways bridges and so on.
We are working on the Red Sea Saudi Gateway and hoping to build on that. Saudi needs infrastructure, which is our core strength. Libya has the most of our attention. We are hoping that between now and end of year we will report good news from that part of the world.
What about staff layoffs?
It has been a trauma for us. We are strongly focused on our staff and recruited 500 people last year. At peak we were 2,000. On January 11, we made the first cut and then had two further rounds. Many of them have come to the end of site work. We just released 250 people in UK. I can’t remember the last time, Halcrow was in such a situation. We are not in oil and gas industry where the process is to hire, work for three years and then fire them. Our industry does not work like that.
What are the lessons learnt from this market?
Be careful about the clients you pick. Where we have strayed is when we have not understood our clients limitations. But you can never be too selective and when we have not obeyed those rules, we have got burnt. In 2008 and 2009, we would ask if the job was profitable. Now we ask if it will be cash positive.
What are the current ongoing projects in your portfolio?
We are working on Yas Island and on track for the November 1 deadline. Post that, ongoing infrastructural and commissioning work will continue for months after that on the island. It remains to be seen how the client develops the rest of the island.
We are also working in Business Bay and Culture Village in Dubai. In Qatar, we are working on the NDIA’s [international airport] A380 hangar, cargo warehouse and 20 operations and the QEC Conference Centre.
We have some projects in Liwa and a project called Mist within Masdar in Abu Dhabi, apart from the Shahama freeway, Al Bateen marina, Department of Transport congestion studies and Qasr Al Sarab. In Sharjah, we are working on Al Wahda Street and King Abdul Aziz Road improvements and the Sharjah wastewater treatment plant. In Oman, we are working on the airport terminal apart from the Eighth Gate development in Syria, the Great Man-Made River in Libya and the Amman water conveyance system.
Have you go into any form of arbitration?
The stance that we have taken is that since most of work is with regional long-term clients, if we go into arbitration, then those relationships will be gone forever. We are trying to take a measured approach where we can. Our clients are genuinely facing the same regional macro-economic situation that we are facing. We agree with them to either slow work down, stagger payments or reprioritise work.