Undervaluation of work in progress is the UAE construction industry’s biggest challenge according to British Business Group survey
A poll of UAE-based construction leaders carried out by the country’s largest business group has found undervaluation of actual work in progress rather than delayed payment is considered the sector’s biggest challenge.
According to the British Business Group (BBG) survey of more than 70 construction heavyweights during a sold-out event in Dubai, 67 per cent agrees works need to be valued more accurately and on a more realistic basis for the health of the industry.
Of those polled, 69 per cent also believes there is a short term approach and a lack of consideration of the whole project life cycle when making decisions on capital projects during the construction phase.
Cynthia Corby, Audit & Assurance COO and Middle East construction lead for Deloitte, said: “It is encouraging to see the majority of people agreed with what we believe is one of the principal root causes for some of the symptoms we see in the industry today. A clear focus on the whole life costs of a capital asset is critical in order to ensure assets are delivered within budget, on time, fit for purpose and fulfil the planned return on investment for the stakeholders, be that a strategic ROI or a measured financial ROI. This focus ensures assets can be capitalised on the owner’s balance sheet with confidence it will deliver the business plan with robust cash flows to support its capitalised cost and the potential to monetise the assets if and when required, be that through a sale or securitisation of the asset.
“The BBG Construction roundtable is now working towards assessing how the UK Construction Playbook can be adapted for the UAE region, capturing best practice and suggesting key policies and guidance for how private and public work projects and programmes are evaluated for feasibility and funding, procured, delivered and handed over for operations – encompassing the whole lifecycle of a capital project.”
BBG’s construction lead and chair of the event, Alan McCready of Spencer Interiors & Contracting, said: “It was amazing how the participants attending this BBG construction-focused event were from such a broad demographic across every aspect of the industry, including clients, finance, legal firms, management consultants, architects, engineers, project managers, cost consultants, contractors, academia, manufacturers, equipment suppliers and facility management. The live poll was therefore very representative of the whole sector.”
With over 700 members, the British Business Group Dubai and Northern Emirates is a not-for-profit business group open to companies or individuals from the UK with business interests in the region.