A week to forget. That was the headline in the Dubai press last Friday after 100bn dirhams (£18bn) were wiped off the value of shares on the UAE stock exchange in five days.
At the same time, developers announced hundreds of job cuts and credit became harder to come by than in the UK. Yes, the toxic debt tsunami has finally arrived at the shores of the Gulf, bringing uncertainty bordering on panic to those working there. As we report this week, Dubai is the main casualty in the Emirates, partly because it has been founded on borrowed money rather than oil. Hundreds of schemes are on hold and those that are still live are being built at a much slower pace.
But that’s not to say UK firms about to head east need cancel their tickets, either. Abu Dhabi, Qatar, Doha (and Saudi Arabia for those able to stomach the environment there) are booming markets sustained by vast oil reserves.
In Abu Dhabi, for example, the pace of commercial and cultural development is likely to slow because of the fall in the price of oil, but the need for roads, sewerage, desalination plants, power stations, schools and hospitals is not going to go away.
The way buildings are being designed and constructed is changing quickly, too – just take a look at our Gulf awards. The demand for technology that can deliver sustainable development is bound to ensure that the phones will long continue to ring for firms that can provide it. For sure, UK firms will need to accept tighter margins, take on more competition and perhaps negotiate trickier payment regimes – the Middle East is no longer a get-rich-quick Eldorado (which for most firms it never was) nor a perfect refuge from recession. But it is instructive: the slowdown there is a reminder that, wherever you are in the world, there’s no substitute for a sound business plan.
A Breakdown in trust
This week we take a detailed look at the accounts of specialist contractors, with our first ever table of the biggest firms in each of nine specialisms, from groundworks to roofers. Given that the results mostly relate to trading in 2007, they reflect a bygone era, but they are still a good indication of how each firm is faring in relation to its competitors. As with most other areas of the industry, specialists are unlikely to maintain such healthy figures for much longer. And it’s not just about falling workload. As the industry redraws its battle lines, specialists are fighting the eternal battle against lengthening payment periods and retentions.
This time, though, they face a new foe: the growing popularity of double tendering. This is where a contractor wins a job based on a price agreed with a specialist, then, out of sight of the clients, asks it to bid again. This even occurs when a specialist joins up with a contractor to provide an integrated bid for a project – a sight that would bring a sentimental tear to the eye of Sir John Egan.
It won’t surprise anyone, least of all specialists, that some firms are reacting to the recession by adopting beggar-your-neighbour tactics, before the contract has been signed and the supplier is armed with the right to adjudicate. The only comfort is that firms that do behave themselves will enjoy the benefits of collaborative working that Egan promised – even in a downturn.
Denise Chevin, editor