Design-build deals gaining ground

There is a growing trend of design-build contracts being awarded in the UAE, a sign of the market moving towards maturity, said a senior industry official. The trend started last year when there was a shortage of contractors in the market and developers wanted to lure major contractors with design-and-build contracts. But the trend appears to be continuing, especially as developers are increasingly trying to save cost and time. Imad Al Jamal, UAE Contractors' Association, told Emirates Business that many contractors are capable of carrying out design-build contracts and this trend is more common in infrastructure-related projects. "The trend is specifically visible in the awarding of infrastructure contracts. It is similar to build-operate-transfer (BOT) contracts. While we have major contractors who are capable of taking up such jobs, we need to move forward to allow smaller players get into such contracts," he said. "However, the prices will not be much cheaper. The contractor is going to charge the same as he has to fulfil additional responsibility. The advantage of such contracts is that it is going to be awarded lump sum and there would be all the guidelines and specifications," he said. "For example, many projects at Al Raha Beach were awarded as design-and-build contracts, where the developer, consultant and contractor went into a consortium. It is, however, a good sign as it shows maturity in the market," he added. He said this method provides more assurance to developers and there will be less chance for claims and counter claims between the developer and the contractor. "It does not mean that there will be no consultants at all. The consultant will be working under the contractor," he added. Brian Evans, Vice-President, Aecom Middle East, said the design-build concept has been going on for quite some time. "In Abu Dhabi, a lot of tenders for sewage treatment plants are being tendered for design build. In Saudi Arabia, most of the sewage treatment tenders are on design-build basis," he said. When asked if it is feasible for major residential and commercial projects to be awarded on design-build basis, he said: "Everything depends on the feasability of the design. Those involved need to keep the element of feasability into the design," he added. According to him, another trend that is gaining ground is the public-private partnership. "Given the current slowdown and issues with project financing, the public-private partnership will be beneficial for the industry," said Evans. Material prices have fallen drastically and have gone back to where they were five years ago, he said. Evans said Aecom has diversified its activities to meet the tough times. One of the divisions, Aecom Technology Corporation, recently announced that a joint venture of which it is a part of has been awarded a design-services deal worth $82 million (Dh330.9m) for Hong Kong high-speed rail terminus project, which will connect the network to mainland China. Aecom Technology Corporation is one of the leading providers of professional, technical and management support services for government and commercial clients around the world. "As far as Aecom is concerned, we are diversified across the GCC and are in all kinds of markets. Although the Dubai office has not done as well as expected, our other associations have been doing quite well," he added. He said the other units are doing pretty well. Keep up with the latest business news from the region with the daily Emirates Business 24|7 newsletter. To subscribe to the newsletter, please click here .