The Gulf construction industry is facing an important transition as it seeks to iron out the chronic weaknesses exposed by the downturn in regional project spending that followed the 2014 collapse in oil prices.
At the same time, the traditionally-slow-to-change industry is seeking to utilise new technologies such as digital design software, 3D printing and drones in order to improve productivity and efficiency.
While much of the transformation taking place in GCC construction is coming from within the industry, there are also changes taking place outside the industry that require action. Increasing regulatory standards and new legislation require construction companies to reform in order to avoid penalties.
Over the past two years, the MEED/Mashreq Construction Partnership has looked at how the construction industry in the UAE is responding to these challenges by harnessing new technologies in its planning, design and construction process. It has also examined the opportunity to transform client/contractor relations and improve project delivery with a fairer balance of risk allocation in contracts and earlier contractor involvement in the design phase of a project.
In Regulating Construction: Adapting to New Standards, the partnership looks at the role of government in shaping construction in the region through regulation and enforcement.
From financial rules and accountancy standards, through to environmental protection and health and safety on site, government regulation has a major impact on every aspect of the construction industry.
Take, for instance, the recently introduced Basel III regulations in the UAE, a game-changer from both a banking and contractual perspective. While the regulatory framework improves a bank’s ability to deal with financial stress and credit crisis—such as the one faced in 2007-08—the regulations increase borrowing costs for the construction sector, with long-term implications for the entire industry.
The upcoming Dubai Expo 2020 has turned international gaze towards the region, forcing contractors to adopt best industry practices. Health and safety, technology and innovation are the frontrunners here, but lack of clarity on the part of the regulators makes it difficult to gauge the standard or level of implementation.
At the same time, increased regulations can also lead to higher cost for all players, an expense not everyone is willing to bear.
As the region seeks to raise standards to match the highest levels of international scrutiny, it also raises the bar for construction companies to improve standards and to innovate to find more efficient ways of working.