Grand designs

“Lack of or poor maintenance will result in loss of value of an asset, therefore, the choice of material and equipment must take account of the lifecycle cost”
-Wael Allen, Hyder Consulting Middle East

Despite the global economic crisis affecting development in the Middle East, construction still goes on. MENA Infrastructure asks a panel of experts for their opinions on where the sector is heading.

The Panel:

Wael Allen, Regional Managing Director, Hyder Consulting Middle East
Adam Minatre, International Sales Manager, Bay Shore Systems
Michael Sagermann, Regional Business Line Manager, Atlas Copco Service Middle East

Performance is a critical element of any piece of construction, be it equipment or consultancy. In your opinion, does the Middle East offer any particular or unique challenges in terms of performance requirements?

Wael Allen. Designing sustainably to reduce maintenance requirements is a critical success factor in achieving maximum performance across an assets' lifecycle. The Middle East operations and maintenance capability is at an embryonic stage, which poses unique challenges. Attention should focus on 'operability and maintainability' to realise an assets' true cost and value.

Constructability, commissioning and operability must be aligned to achieve optimum use of an asset. Constructability reviews and value engineering seeks maximum value for money and companies need to maximise project value through this approach, rather than traditional cost cutting practices. For example; a communication network system that facilitates future changes, may not necessarily have the lowest initial cost, but its future value i.e. lifecycle cost in terms of its expansion and technology upgrade capabilities are worth exploring. Lack of or poor maintenance will result in loss of value of an asset, therefore, the choice of material and equipment must take account of the lifecycle cost.

Adam Minatre. I don't think the Middle East is anything out of the ordinary from the rest of the developed world. Performance is required on any project, large or small. Of course there is the heat, which can take its toll on the people and equipment but other parts of the world have similar extremes, such as the cold. Certain countries have had supply problems, concrete for example, but so have many other parts of the world. So, of course there are unique challenges in the Middle East but the rest of the world sees variants of these challenges as well.    

Michael Sagermann. Extreme temperature puts enormous pressure on operating limits. Couple high ambient temperatures with the frequency of airborne dust, plus the extended working hours (some cases 24/7), creates a working environment challenging the performance, reliability and durability of any piece of equipment.

In consulting, extreme climate must be considered to make the right product choice. For example, at +50°C a generator needs de-rating as much as 20 percent, meaning the need to oversize. Not considered could result in performance shortfall or even unusable equipment supplied.

Lastly, the Middle East region is one of the few markets still active. Naturally everyone worldwide is looking for business in active markets, bringing some challenges with low quality low cost products not previously sold here. The market can sometimes seem very crowded.

There has been a growing focus on sustainability and greener construction evident in the sector over the last few years. What impact have you seen this trend have on business?

AM. Our products are very customisable. One major area of customisation is that we allow the customer to choose the excavator that our equipment will be mounted to. This may not sound very 'green' but all new excavators at least meet or exceed tier three emissions, are equipped with an auto idle programme and some with an auto shutdown after 10 minutes of idling. This all reduces the amount of fuel used per day. The state of California has been one of the first US states to take strict emissions steps. This is a huge step forward but contractors are now facing extraordinary costs in re-powering older equipment (which still works perfectly well) or replacing their fleet with new equipment. Look for higher construction costs if the rest of the world has similar plans.   

MS. A major focus within the Atlas Copco Group is the environmental impact of our products. Some years ago we introduced our 'Because We Care' campaign promoting the environmental advantages our products. We had undertaken the challenge to be greener long before it became a trend. All our products incorporate great attention to reducing their environmental impact, and are manufactured in ISO 14001 production sites. Using more fuel-efficient engines reducing exhaust emissions, spillage-free bases and centralised drains preventing spills to the ground, and lowering noise emissions, all contribute to a better environment.

Atlas Copco has developed an innovative fuel savings device, FuelXpert, on our larger portable compressors further reducing fuel consumption by 10 percent, significantly lowering carbon monoxide, hydrocarbons and other harmful gases emitted. It's been calculated that if all compatible Atlas Copco compressors were fitted with FuelXpert we would save over 150 million litres of diesel fuel per year.

WA. From a developer's perspective, there are clear benefits associated with pursuing a greener model. Innovative design solutions can result in energy and water use that is more efficient, reducing capital and operating costs. From a user's perspective, international experience has shown buildings, which offer users an enhanced indoor environment, better access to public transport, community space and lower utility bills are more likely to pay a premium. Therefore, we are likely to see such developments attract higher prices and retain higher occupancy rates in the future.

We are increasingly seeing developers not seeking to bolt-on sustainability as an afterthought. Hyder has long understood sustainability is not the exclusive reserve of dedicated sustainability professionals. Our approach is to identify and develop sustainability champions across our business, to shape and inform the sustainability of our solutions. We see this integrated design approach as the future of design consultancy.

The current global economic crisis is without doubt affecting the construction sector in the Middle East. What do you perceive as the key opportunities in these challenging times?

MS. For Atlas Copco the crisis has allowed us to get even closer to our customers - to further build the strength of our relationships. We continue to be product driven, customer focused - which we consider a cornerstone to our success. For new potential business, proving our products offer better return on investment through lower operational costs, our customer's can increase their profitability. Fuel use alone accounts for up to 80 percent of lifecycle costs of equipment. Offering more fuel-efficient products lowers customer costs and increases their profitability.

Expanding customer share and market penetration shows greatest potential. As market leader in compressors the current economic climate opens opportunity to further strengthen our market position. For generators, our goal is to grow aggressively with the increasing demands for more available power. With the right approach and by demonstrating the benefits of our products we foresee great opportunities.

WA. The economic crisis has had a significant impact on the property sector. Incomplete construction opens up new challenges and opportunities of re-adapting distressed assets into a usable form. Uniquely positioned to capitalise on these opportunities, Hyder offers expertise and knowledge to help clients with their distressed assets.

Social infrastructure remains a top priority for the region's governments and the private sector alike. Demand for effective healthcare is rising, as the population ages, new medical needs emerge and the disease burden of the developing world increasingly resembles that of the developed world. Hence, we see a strong demand for social infrastructure projects including education and healthcare establishments.

AM. Now is the best time to evaluate your equipment and processes. When you are busy it is easy to overlook inefficiencies and areas you should explore. While used equipment is not very easy to sell right now, new equipment can be purchased at a bargain price. Successful companies are buying now what they need to be ready when the market does improve, for the jobs they have and need to get done quickly and efficiently and to give them an edge over their competition. If there is a process that your company currently does not specialise in but would help you offer a turnkey solution, now is a perfect opportunity for research, planning and implementation.

Community engagement is currently a hot topic in the construction sector. What are your thoughts regarding this and what do you hope to see achieved in this area? 

WA. Unlike other parts of the world, community engagement on development projects is not a statutory requirement in the Middle East; most projects in the region are not subject to financing by the World Bank where public consultation would be a requirement. However, more developers in the region appreciate community engagement can assist with stakeholder buy-in for their projects, option appraisal and resettlement of affected groups. Hyder regularly facilitates public exhibitions for its clients where environmental and social concerns are considered during the planning and design process to facilitate approval and avoid negative PR.

Proactively engaging the local community before and during construction on potential nuisance impacts and explaining how they will be managed can help avoid bad publicity for developers. Providing the public with access to information during construction will help manage public perception and can avoid unnecessary complaints. Hyder staff regularly assist developers and contractors with resolving complaints during construction.

AM. It is excellent when any company is fortunate enough to share their prosperity with those around them; whether this is shared with the local community or within your organizations internal community. Bay Shore Systems, for example, has an annual golf tournament and sponsors a local or national charity. Last year we donated close to US$30,000 to the Make-A-Wish Foundation with the help of our employees, vendors and customers. The Make-A-Wish charity was proposed by one of our customers. They took the money we raised and used it in another fund raising event, which increased the total close to US$250,000. We were also fortunate to share a large amount of our profit with our employees. After all, here in the US we can share extra profit with Uncle Sam or with the people around us. We chose the latter.     

MS. We all have a social responsibility within the communities we work. Being part of the community we should help improve the quality of life for everyone. This year we celebrated the 25th anniversary of our 'Water for All' programme. 'Water for All' has funded projects across the world bringing sustainable water supplies to more than one million people. Funds are raised through monthly member donations and matched by Atlas Copco.

Locally, we've implemented our STEP Programme aiming to increase local knowledge and employment opportunities in our Saudi operations. There's enormous reliance on foreign work resources, we'd like to see local resources develop opportunities.

For the near future, we would like to see a greater attention to environmental concerns in this region. Europe has always been the benchmark and we should aspire to reach their level of attention to this important aspect for the benefit of future generations.

What new developments can we expect to see from you over the next six to 12 months?

AM. We are taking the time to expand our product line and our business capabilities.  After all, our sales people are working hard but not necessarily busy taking orders. We are seeing where our customers want to expand so we can evaluate if we agree and want to follow and are also looking at what we can offer to other industries. Globally we will expand our distribution network and entertain some new business development prospects. From a manufacturer's perspective, I am focused on how well the competition is doing. Many companies grew too fast when times were good and are in serious trouble.  This is something the purchaser should be wary of too. 

MS. This year's been very busy having introduced new ranges of high pressure (25 to 35 bar) compressors, a new 250-500 kVA generator range, and a new dedicated lighting tower. Today more than 85 percent of our current product range is less than three years old in design, reflecting our commitment to our customer's superior productivity through interaction and innovation. The next six to 12 months shouldn't be much different, despite the current economic climate we continue to invest in developing new products. Let's not spoil the surprise by going into details, but what can be said is we will satisfy customer demands to supply more.

WA. Market penetration is a key strategy for Hyder, hence our recent restructure into three main sectors (Property, Transportation & Infrastructure, Water and Environment). Diversifying services in the current climate is a risk, providing engineering solutions through our core competencies is the way forward.

Hyder will focus on addressing the issue of distressed assets throughout the region. Within our property sector, we will expand our focus on commercial and residential development towards social infrastructure projects that include hospitals and medical centres, to meet the demands of the Gulfs' health challenge, and education establishments.