World Economy

(P)GCC Projects to Reach $172b in 2015

(P)GCC Projects to Reach $172b in 2015(P)GCC Projects to Reach $172b in 2015

The value of contracts placed in the (P)GCC will rise to $172 billion in 2015 despite lower oil prices, marking a value higher than in 2014 and a new record for the region, said an industry expert.

This is good news for the market which feared major reductions in government spending on projects in 2015 said Ed James, content and analysis director at Meed Projects, a Mena leader in providing market information, TradeArabia reported.

The forecast means that demand for material and skills will continue to grow. This will test the capacity of the supply chain to meet the needs of the construction industry.

“The scale and quality of the (P)GCC construction boom is reflected in the growing number of top-quality infrastructure, building and industrial projects being completed across the region,” said Meed Quality Awards for Projects judges panel chairman Edmund O’Sullivan.

“This shows that the (P)GCC construction industry and its clients have the capacity to tackle challenges that would defeat most other parts of the world.

 Project Market

Saudi Arabia is the region’s biggest project market. Construction leaders say the country’s building boom will compound longstanding challenges the industry faces.

“There are a number of issues facing the construction industry in Saudi Arabia,” said Faisal Alsharif, assistant secretary general for projects at the Riyadh Chamber of Commerce & Industry and a judge at Meed Quality Awards for Projects.

“Rapid changes in regulations and policies are a major challenge facing investors and contractors involved in these projects. Finance is a major issue as well, with payments delays making cash-flow planning and management a real challenge.

“Human resource shortages are another big issue. The lack of adequate and qualified labor and technicians can result in project failure in the form of cost and time overruns,” he added.

Qatar is expected to be the fastest-growing projects market in 2015. A total of $30 billion worth of new contracts are to be awarded during the year and a similar figure in 2016 as the country accelerates its preparations for the Fifa World Cup finals in 2022.

About $135 billion worth of contracts are due to be awarded in Qatar in 2015-20. This is on top of about $100 billion placed since it was appointed in 2010 to host the finals.

“The two big challenges facing the Qatar construction industry are insufficient logistics facilities needed to support the delivery of projects and finding the right resources including labor and engineering skills,” said Qatar Society of Engineers chairman Ahmed al-Jolo.

Some construction leaders working in Qatar say shortages of steel, asphalt and gabbro are possible in 2016.

Qatar and Saudi Arabia both have substantial private and public savings which are more than enough to maintain capital investment despite lower oil prices. For Oman, the fall in oil constitutes a serious challenge for the government. But its project agenda is more modest and Meed Projects forecasts about $15 billion worth of new contracts should be placed in 2015.