ASGC: why we can afford to be choosy

UAE-based Al Shafar General Contracting (ASGC) has announced growth of more than 50 per cent during the past three years. And with more new contracts being awarded, senior company officials have said they expect a turnover of Dh3 billion during 2008. Established in 1989 as a small family business, ASGC has grown to emerge as one of the top 10 construction companies in the UAE.

Recently, Middle East Economic Digest reported that Nakheel awarded ASGC and Athens-based Consolidated Contractors International Company a Dh1bn contract to build part of the Jumeirah Heights development. Bishoy Azmy, CEO of ASGC, spoke to Emirates Business about the changing nature of the construction industry in the UAE.



The construction industry in the Gulf, especially in the UAE, has been growing at a tremendous pace. How do you see it progressing in the future?

The construction industry in the UAE is growing at a meteoric pace and we expect this growth to continue during the coming decade. Thanks to the visionary leadership of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, the industry's growth has been phenomenal. The UAE's construction industry is presently valued at more than a trillion dollars and even as we speak new projects are being planned and announced. However, it would be very difficult for me to predict the industry for more than a decade. ASGC itself has grown along with Dubai and we are planning to now expand into Abu Dhabi. For the past year we have been working on two projects in the capital and are working towards expanding our portfolio. There is so much happening in the UAE that we are not thinking of expanding to any of the neighbouring countries as of yet.

Tell us about the company's growth over the past few years?

We are very proud to have been an efficient partner to many of the reputed names in the region. Our continuous focus on reliability and integrity has played a vital role in making us a recognised contracting leader in this highly competitive market place. Established in 1989, ASGC has been an integral part of Dubai's growth story as we have worked on more than 250 projects worth several billions of dollars.

Today, we try and implement the most advanced techniques in terms of operations and management. Our fleet of equipment has grown several fold and our investment in materials is aimed at achieving efficient results via asset sufficiency. We have our own state-of-the-art central workshop, which co-ordinates all equipment machinery needs in terms of purchasing maintenance and repair. We also have a central warehouse in Dubai Industrial City sprawling across an area of two million square feet. Among our list of completed projects include the Dubai Police General Headquarters, and the UAE Ministry of Public Works and Housing.

What are the current projects you are working on?

Currently, we are working on 14 different projects valued at more than Dh11 billion, which are in various stages of completion. Next in line to be delivered is the Dubai Airport Free Zone Authority headquarters. The list of other projects include: Citadel Towers, The Palm Golden Mile, Al Tayer Tower, The Winsdor Manor, Phase Two of The Villa for Dubai Properties, Sector Six at Jumeirah Beach Residence, 12 residential and commercial buildings and a luxury hotel at Bay Square, Emirates Crown Tower and the Twin Towers. We are also in the advanced stages of negotiations for several other projects with major developers worth billions. Details will be revealed as the projects are finalised.

How is the industry handling the shortage of materials and manpower and increasing costs?

The less said about the shortage of materials and manpower the better. The prices of cement and steel have increased sharply over the past few years and inflation has been growing up by almost one per cent every month. The main reasons can be attributed to the sudden growth in the UAE. Every link in the supply chain has a certain output capacity. Developers are sending out requests to more than 15 people at a time and three are responding.

Such is the demand and shortage in the market that massive recruitment is going on worldwide in search of qualified professionals. Yet the industry is finding it tough to recruit qualified professionals. Our company has been successful in ensuring a steady supply of materials thanks to our well-established relationship and network with a group of suppliers. The cost has gone up. We are paying a higher price for uninterrupted supply of materials.

Do you think there is a need for contractors to come together and form some sort of joint association?

There is definitely a need for contractors to join hands and discuss relevant issues and emerge at a common platform to find solutions to some of the problems. But at the end of the day most contractors view each other as competitors and that has prevented us from joining hands to create a strong group.

Is it true that the method of awarding construction contracts has changed over the past year?

Today most of the big projects are awarded following negotiations. Almost all our contracts acquired during the past few years have been done through a negotiated process. Gone are the days when companies used to apply for tenders. Companies of late do not want to waste time in the tendering process. Usually the first one is tendered. Following which there will be a healthy relationship between the developer and the contractor. Everything is based on the comfort level between the two parties.

As far as ASGC is concerned, we have been accepting only one out of every 10 projects we are approached about. I am not being rude but that is the reality. An excess of projects and limited number of qualified world-class contractors have made contracting firms choosy about the projects they accept.