Average value of construction sector disputes soars in the Middle East

15 August 2018 Consultancy-me.com

The average length of disputes in the Middle East construction industry is falling according to an analysis from global engineering, design and project management consultancy Arcadis, although the average value of those disputes has risen.

In its 2018 analysis of disputes within the global construction industry, Arcadis, a multinational design and consultancy for built and natural assets with office throughout the GCC along with Jordan and Turkey, has tracked an ongoing downward trend in the length of resolution for disputes in the region. Despite this, the average value of the disputes has rocketed.

Globally, both the average length and value of disputes within the construction industry has grown, with the length of disputes stretching from 13.9 months to 14.8 months to resolve, and the average value jumping from $32.5 million in 2016 to $43.4 million last year – an average long skewed by the Middle East’s contribution which is commonly up to three times greater or more than elsewhere.Global comparison for length and value of construction disputesWith a near 40 percent year-on-year increase in the value of construction disputes in the Middle East, from a three-year low of $56 million in 2016 to a near-record $91 million last year – the highest figure since the $112 million recorded in 2011 – the region then is a primary factor in the global rise in average dispute values.

According to the Arcadis report, the high value of disputes in the Middle East is chiefly a reflection of the scale of the projects being delivered in the region – with, naturally, larger projects typically carrying a higher dispute value. Further, the firm says, while the number of disputes remained steady, the higher value figure was “due to a small number of high-value disputes and a flow of ‘mid value’ final account claims.”

On the flip-side, the average 13.5 month length of local disputes in 2017 is the lowest since 2011, when the average resolution time was just nine months. “Over the last year, the average length of time needed to resolve a dispute in the Middle East fell to just 13.5 months. This trend towards swifter resolution was also observed last year, and reflects the industry’s focus on trying to improve liquidity across the wider supply chain,” the report stated.Construction dispute average length and value in Middle EastDelving deeper, the report analyses the nature of the disputes, finding that issues around contract administration continues to be a prominent concern in the Middle East, although the cause has dropped from the foremost spark of disputes to the second spot – superseded by ‘failure to make interim awards on extensions of time and compensation’, with ‘owner directed charges’ in third.

The results don’t come as a surprise according to the firm, with a lack of liquidity due to comparatively low oil prices seeing firms take a tougher approach to contract entitlements. Rob Nelson-Williams, head of contract solutions for Arcadis Middle East, concludes; “Over the next 12 to 18 months, major regional construction related events loom ever closer. As pressure increases to meet fixed deadlines, the need to make smart decisions around contract and procurement strategies will be even more important.”

Recently, the Dutch origin consultancy was selected to build a tunnel under the Suez Canal, following an earlier successful project by Arcadis on the Suez expansion. 

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Construction consultancy Drees & Sommer launches innovation hub in Dubai

18 April 2019 Consultancy-me.com

The Middle East branch of international construction and real estate consultancy Drees & Sommer has launched a new innovation hub in Dubai

Following the appointment of ex-Ramboll exec Abdulmajid Karanouhas as its Head of Interdisciplinary Design & Innovation earlier this year to spearhead the firm’s R&D drive in the Middle East, the local branch of German-origin construction and real estate consultancy Drees & Sommer has now launched a new innovation hub in Dubai – designed as a collaborative environment to serve both external start-ups and its own employees.

“It has always been part of our corporate culture to promote our own ideas and initiatives,” said Drees & Sommer executive board member Steffen Szeidl. “Increasingly, digital transformation and our clients are calling for completely new and disruptive business models. The Innovation Centre is one of our responses to these challenges. All 3,200 staff members can upload their ideas virtually.”

According to Szeidl, from there, promising concepts and solutions addressing identified market gaps in areas such as planning, construction and operations will be developed, funded and localised for any market which sees the potential. He continues: “Adding the Dubai innovation hub emphasises our status as a global innovation company by being one of the few companies doing R&D in this region.”Construction consultancy Drees & Sommer launches innovation hub in DubaiLocally established in 2003, Drees & Sommer was founded close to 50 years ago in Stuttgart, since growing to include some 40 offices worldwide, with its global headcount of 3,200 professionals generating revenues upwards of $430 million in 2017. The firm’s offerings span the gamut of real estate and infrastructure requirements, delivered according to its ‘blue way’, which takes into account economic, functionality, and ecological aspects together.

This, for Drees & Sommer, is an important point in the regional context.  “There is a huge demand in this market for contextual solutions as most models and systems are imported from abroad with little to no adaptation to the local culture, economy, and environment,” explains Karanouh. “As a consequence of this approach, we are facing major challenges related to user-comfort, efficiency, manageability, durability, and overall sustainability and feasibility of the built environment in the region.”

Accordingly, the firm has tailored each of its innovation hubs rolled out so far across the world to drive specific initiatives. In Aachen, Germany’s ‘Silicon Valley’, for example, there is a focus on customised smart buildings, IoT product testing and cyber-security, while the firm’s Stuttgart hub focuses on start-ups and processes and its Berlin one on smart cities and smart quarters. The Netherlands hub meanwhile focuses on wellbeing and sustainable innovation.

Karanouh: “The innovation hub brings together specialists of various disciplines from across the industry as a single interdisciplinary team that advises clients from early feasibility studies all the way to operation and revitalisation of buildings to maximise comfort, efficiency, sustainability, return of investment and overall value. The platform allows for brainstorming ideas, identifying market gaps and needs, adapting existing solutions or/and developing new solutions tailored to the local market and environment.”