Transforming Middle East Procurement

Wilfred Asamoah
Following lessons learned from Dubai, it’s clear that clients throughout the region are now seeking more efficient ways of working. Could this new emphasis persuade the market that alternative procurement strategies are the way forward?

In a relatively buoyant construction market for much of the Middle East, there is still a preference for traditional procurement and contracting. The Middle East has largely adopted UK procedures, but whereas the UK has moved on – with Bills of Quantities used less and less – the Middle East is slow to change. The traditional single-stage selective tendering method is often unsuited to the delivery of today’s more complex buildings and the fast track timeframes required. Design and Build has proved the most consistent challenge to the traditional procurement process, used with some success in the UAE.

Locally there is a shortage of suitably experienced contractors able to successfully execute the construction manager or management contractor roles. This leads to a lack of competitive tender. As one of the more robust global markets, however, the Middle East is increasingly able to offer greater volume of opportunity – maybe sufficient to tempt inward investment contractors to take up the slack.

New relationship-based approaches need to be forged if clients are to benefit fully, and we may see more Partnering and Alliancing in the future. Joint ventures between international and local contractors are becoming more common. These present an opportunity for the international players to introduce alternative procurement routes.

This is not a homogenous market and each country within the GCC has its own nuances, but tends to be insular in its approach to construction. Many client organisations are inexperienced constructors and proceed cautiously, particularly with regards to price certainty). Clients are attracted to the familiarity of the traditional approach, perceiving that it carries less risk. However this may not be the case, and moreover may not offer them best value or schedule certainty (shorter project durations). Inefficiencies and lack of trust may also result from the delayed payment schedules which frequently occur in the region.

  • earlier site start
  • early contractor involvement
  • ongoing design development during the construction phase
  • quality deliverables
  • greater client control
  • earlier completion

It seems that we are poised for transformation as both government and private sector clients open up to the idea of tailoring the procurement strategy to suit the project’s objectives and characteristics. Evolving models include Construction Management and Management Contracting. Both facilitate the use of specialist works packages which offer the advantages of:

Faithful+Gould can add most value at the early stage of projects, offering independent and impartial advice. We can help our clients select the most appropriate procurement route, beginning with a risk and value analysis of the likely options and providing advice on the most appropriate project team for each procurement route option.

No procurement system is suitable for all clients and all projects. Each route has its own advantages and disadvantages and these should be explored and evaluated. The procurement strategy should take account of the project’s time, quality and cost objectives, together with the client’s management capability and risk profile.

Recent commissions have included a procurement strategy study for a US client proposing to build a KSA hospital. We anticipate that more and more clients will seek this type of early advice and our role is often educational – helping the client to become better informed about the procurement options.

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