Contracting is a balancing act, one that has to manage the requirements of a demanding client against tight budgets and even tighter schedules.
These constant project pressures are reflected in the trends that could have the most influence over how contractors work – and how they make a profit – in the medium term. We’ve picked nine that stand out as the most important right now.
1. Cost control
Contracting margins are tighter than ever, emphasising the need to control project costs on the way to handover. Sometimes cost control can be about not spending the money in the first place and might best be achieved by integrating value engineering into the build process. When done right, this enables contractors to provide greater value at a lower cost. Also important is accurate tracking of material use and subsequent expenditure. Software and hardware for such tracking has come a long way in the last decade, making managing every minute detail easier and swifter.
2. Fire safety
The issue of fire safety is one contractors and the entire construction community cannot ignore. High-profile tower fires in the region and internationally have put a laser focus on the issue and cladding in particular. As contractors may face claims of liability in the case of disaster, they need to be on top of local regulations and thoroughly understand the qualities of the materials they are working with.
3. Material prices
Prices for core materials have been trending upwards, forcing contractors to simply pay more or find viable alternatives. While the construction industry has a tendency to stick with what it knows, increasing prices may force more contractors to look for alternative materials, which meet the required specifications, but help retain some of the wafer thin margins they have to work with.
4. Private sector future
As Gulf economies mature and diversify the private sector is likely to have a larger role to play on big-ticket projects. There are two strands to this very long term trend. One is the gradual privatisation of large state-owned, or backed, enterprises, through the process of initial public offerings. The other is the very gradual progress being made toward initiating public-private partnerships. Large contractors and the sub-contractors who work with them need to be ready for the changes in funding this trend could bring.
5. Selective technology deployment
A lot of new technologies are emerging and evolving, each one with the potential to make a difference to the efficiency and effectiveness of a contractor’s work. Realistically it would be tough and expensive to deploy all of them, so the challenge for contractors is finding the right technologies that will make the biggest difference to a particular business. Contractors that find the best expertise and get the decision right stand to make important operational gains.
6. Skilled teams
There is a growing skills gap in the construction industry, particularly for technical professionals. The result is tough competition for the best people, which mean assembling a skilled and capable team can take time, influence and money. Contractors with strong networks among industry peers have a better chance of securing the best available construction talent for their projects.
7. Smart sourcing
Smart and innovative sourcing of materials is now an essential part of sticking to tight construction project budgets. Procurement and tender teams need easy ways keep up with new materials and innovations from across the global construction industry. They may also need to develop excellent lobbying skills to ensure any new materials and methods they look to introduce are approved by local municipalities.
The gradual introduction of taxes is coming to the GCC. The UAE and Saudi Arabia were first off the mark with the introduction of VAT on 1 January this year, but other states are obliged to follow, according to the GCC Unified VAT Agreement. The upshot is a need for contractors to improve record keeping and business processes to track, file and claim VAT through complex supply chains. Contractors also need to be up on the rules for contracts that may have begun well before the introduction of VAT and conclude well after.
9. Waste reduction
Less is more when it comes to construction waste. Reducing the amount of waste generated by a project helps achieve what should be several important aims for the construction contractor. For starters, it boosts the sustainable credentials of a build, reduces costs of raw materials and reduces the costs of waste disposal. This all makes for a more efficient build. Waste reduction is pegged to be one of the key benefits of 3D printing, as it grows in importance for the regional construction sector.
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