Gulf MEP contractors call for regulations to protect against increased market risks

Gulf MEP contractors call for regulations to protect against increased market risks
Published: 25 April 2019 - 5:15 a.m.

The Middle East's mechanical, electrical and plumbing (MEP) contractors have called for regulation to protect them against increased market risks as competition squeezes contract prices in a market facing payment delays and issues with the design-build contract model, it emerged at the fifth MEP UAE Conference 2019, held on 24 April 2019.

A panel on 'Contract Negotiations and Risk Analysis' was held during the half-day conference to discuss how the region's MEP contractors may safeguard their financials and boost growth for the long term, with experts agreeing that MEP builders must conduct more thorough analyses prior to signing to the contract.

Technical director at Griffin Consultants, Hassan Younes, moderated the panel, which comprised vice president of Semco, Subhash Pritmani; head of technical support and planning at Wasl Properties, Suhas Inamdar; and senior general manager of operations at India's Tata Group-backed contractor, Voltas, A R Suresh Kumar.

Kumar said the lack of an association or similar professional body for MEP contractors was a longstanding problem that would continue to hurt the industry.

He continued: “Either governments or [a global] association should introduce regulations to make sure that all the issues faced by MEP contractors [...] are resolved with clients, contractors, and consultants.

“The practice [followed by clients] of issuing prequalifications before signing the tender should be reversed, and only then will MEP contractors be able to create a solid foundation for their companies.”

Semco's Pritmani said that MEP contractors must be handed build-only contracts instead of design-build ones, adding that design ought to be the responsibility of consultants.

Additionally, Pritmani explained, main contractors must stop the 'pay-in, pay-out' model, and instead establish proper mechanisms to ensure MEP firms are paid in line with the schedule agreed as part of their contract.

Wasl's Inamdar agreed, warning that payment variations could also cause challenges during implementation, paving the way for errors during the course of the contract.

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