The number of contracts awarded this year has fallen despite an increase in tender activity, the managing director of cost management consultancy Rider Levett Bucknall (RLB) has said.
According to Sam Graham, though his business has seen steady growth over the last couple of years, the overall performance of the market has seen a slowdown due to a number of economic and geopolitical issues in the region.
“There has been a slowdown in the last couple of years, but fortunately that slowdown has not been isolated to one market as the oil prices have affected all markets generally," he said.
“And then obviously now in the last six months it has been affected even more by political issues in the region."
RLB has continued to grow its Middle East market despite these challenges, which has been bolstered by several long-term contracts allowing the consultancy to maintain work in the last year.
In fact, RLB has seen a growth of 20% year-on-year, mainly due to a number of blue chip clients and large projects with long durations, such as major city developments in Dubai.
“This has enabled us to remain steady throughout that period, so we have a number of long-term contracts that enable us to maintain a pretty steady foundation,” Graham said.
“But in terms of new work in the last few months, it’s been quiet. We have picked up a few exciting opportunities, but overall in the market, there is a lot of tender activity, but not a lot of award activity.
“Some of our global markets are picking up, but it is still slow here in the region,” he added.
Graham reiterated that this slowdown is mostly due to the oil price as the available capital is down significantly from previous years.
He also explained that markets are now going through the process of prioritising budgets and reallocating their revenues – meaning more budget cuts.
“Though I still think every market is going through the process of prioritising budgets and basically trying to reallocate their revenues as best they can, which is understandable, it is still frustrating when you are a consultant operating in a market like this.”
Project delays have also been prevalent in the market in the last 12 months.
Graham said budgets are tightening across the board, and as a result several projects in the UAE and across the region have been put on hold.
“A project would be delayed either with the design complete, or there would be significant delays with awarding and starting construction,” he said.
RLB is currently working on a number of high-level projects including Al Wasl Plaza, one of the major developments under construction within the EXPO 2020 Dubai site.
“The only challenge with this project is that there is a fixed deadline, though the project is on track with no major challenges so far.
“Budgets are getting reviewed constantly because there is pressure in the market, but it doesn’t mean that projects stop, it just means that things may need to change – or re-designed – as they go,” he said.
Sam Graham was recently appointed to managing director of RLB in the Middle East and is based in the company’s Dubai regional headquarters.