The man with the plan

MENA Infrastructure meets Hill International’s President of Project Management, Raouf Ghali, to talk about why managing the Middle East’s most ambitious projects requires a unique blend of vision and experience – and a solid plan of work.

“The Middle East does have a great appetite for innovation, and they will take the risk along with it”
-Raouf Ghali

As challenges go, the problem facing Raouf Ghali, Hill International's head of project management, is an enviable one given the current climate. "We've just got so many projects on the go at the moment," he says with a wry smile. "From Abu Dhabi to Qatar to Saudi Arabia, we've got lots of exciting and challenging projects under development. And they are keeping us very busy indeed."

Naturally, Ghali is hardly complaining. In an economic downturn that has seen thousands of the region's construction workers laid-off and dozens of projects cancelled, such a large volume of high-profile work can only be a good thing. The company is programme manager for Sorouh's SHAMS project, which involves the construction of a large community on Reem Island in Abu Dhabi. It is also doing project management work on the Jumeirah Etihad towers for Sheikh Suroor, in the Khalidiyah area in Abu Dhabi; project management for the King Abdullah Financial District in Saudi Arabia; and is working on the Barwa Financial District and Barwa City in Qatar. Add this to the project management work Hill is doing on Dubai's $2 billion City of Arabia complex and the fact that it is programme manager for villa construction on the Palm Jumeirah, and it is clear that the company's portfolio covers some of the largest and most prestigious developments in the Gulf.

"As far as our involvement is concerned, the first thing we like to do on a megaproject development is plan the work," Ghali explains. "In forward planning, you learn how to anticipate problems. At the end of the day, project management is nothing else but managing risk and managing changes. These could be changes in design, changes in the industry or changes in the economy as a whole – such as those we've seen in the last year or so – but planning the work is an essential part of looking forward rather than being reactive."

It's a philosophy that's reflected in a popular phrase within the company: plan the work and work the plan. "That's a pretty good summation of the way we approach our projects," laughs Ghali. "It also provides us the ability to do what-if scenarios in order to avoid unexpected delays or problems before they actually happen. So our involvement at the initial stage is identifying the work, planning it and then starting on the implementation."

Sourcing the right results

Such a common-sense approach is geared towards reducing risk in the project development process. Ghali explains that procurement strategy is probably one of the most important elements of the planning process, because it is here that you start defining in which direction you want to push the risk. "You need to decide how much of an appetite does the owner have to take on the risk themselves as opposed to pushing it out to the contractor," he explains. "Just because you push the risk to a contractor doesn't mean that the owner doesn't pay for it; it just means that most likely the contractor has priced for the risk that you've given him and it's now being managed by him rather by the owner. So a good procurement plan – one that's well established and that identifies what level of risk the owner wants to maintain in terms of managing it themselves versus paying for somebody else to manage it – needs to be defined as early as possible."

That process of managing construction risk and pricing it properly is one of the key challenges currently facing the industry. Hill's approach is to judge each project on its own criteria. "One size does not fit all in this regard," says Ghali. "Each project and each owner has certain objectives and goals for his project, and to reach those goals there are certain associated risks. Once you've identified both the goals and the risk associated with them, then you make a procurement plan. Just because a procurement plan works for one situation doesn't mean it's going to work for another. Identifying those, evaluating them and then finding the best way of procuring for them is the issue, and that's where the planning process comes into its own."

Of course, it is essential that a certain amount of flexibility be built into those plans as well. "Flexibility is the name of the game, because as things change, you have to adapt to those changes in order to manage the risk," he says.

A case in point is the external pressure currently being placed on development projects as a result of the recent financial crisis, and Ghali feels that attitudes to construction risk have certainly changed over the past 12 months in light of the global credit crunch and the economic conditions that followed. "We have seen very few new projects being launched since the economic crisis," he concedes. "Most of the megaprojects that we are managing are projects that were launched and under implementation prior to the crisis. However, with the economic crisis came an opportunity to analyse whether the need, the requirement and the demand for certain projects or components remained the same, and depending on the results of that analysis, we were able to shift certain priorities and risks and re-phase certain projects."

Indeed, Ghali believes that a number of opportunities have been revealed as a result of the economic crisis, particularly with regard to the fact that the price of construction has gone down. "Some of our clients have taken the option of exploiting this situation and completing their assets based on conditions that are more favourable for them," he explains. "They've renegotiated some of their contracts, bringing down the risk of possibly not having the demand that they had a year-and-a-half or two years ago. They will now have a much more competitively priced product with the hope that by the time they're finished, the economy will have turned around. Again, it comes back to flexibility and having that ability to adapt to changing conditions."

Unique challenges

In a region as fast-moving as the Middle East, the ability to shift gears quickly is essential. Indeed, up until recently, the pace of development was one of the most challenging aspects of working in the region for project managers such as Hill. "Up until the economic crisis, our biggest challenge was the pace and the speed at which the Middle East wanted to do things," confirms Ghali. "Everybody wanted their development to be done in record time, with superior quality levels, the lowest possible cost, and often using techniques that had never been used before – and as you can imagine, these are forces that are fighting against each other when you're trying to develop a project. And this was our biggest challenge: managing owners' expectations about what can be done, and it challenged both the engineering field as well as the management field to try and deliver those projects to the meet those high expectations."

Since the economic crisis, however, those deadline pressures have been relaxed – allowing Ghali to concentrate on improving the quality, the value and the risk versus return proposition. "I think we are now looking at some more realistic timeframes. Regarding unique challenges, I wouldn't say there's anything unique about the region other than the unique aspects of the projects themselves."

These, however, provide challenges aplenty. After all, over the last two decades, the Middle East has hardly been shy in terms of its appetite for innovation and risk-taking in the construction industry. So given that project management is largely about mitigating exposure to risk – and that innovation is an inherently risky proposition – how are the region's developers balancing pioneering design and construction with effective risk management?

"It depends how you define the risk element," he asserts. "Is it the risk of having a valuable product at the end of development that you can sell easily for a profit? Or is it the risk inherent in the process of creating that product? I think when you're being innovative and bring in elements that nobody has done before – for instance, sustainable products with zero emissions - there are certain risk and cost overruns that could result because these are often technologies that haven't yet been proven. There's also risk in maintaining a product that may turn out to be excessively expensive to run. So there are a lot of risks associated with innovations in the construction process, but unless we try those innovations out we will never find out where the risks lie and how to resolve them. For every risk there's a resolution, if you put your mind to it."

The region certainly has its fair share of pioneering projects. "Look around the UAE and other parts of the Middle East and you'll find a lot of iconic buildings and developments – such as the Palm developments – that nobody had ever dared to do before," continues Ghali. "There are many assets in this region that nobody thought could be or should be done because of the risks and difficulties they presented, and yet they have been a great success. So the Middle East does have a great appetite for innovation, and they will take the risk along with it."

Raising standards

Hill International's experience in project management spans every type of development from residential to commercial to retail to leisure. The company is active in the transportation, power, telecommunications, industrial process, manufacturing and building construction sectors, and as such has a vast repository of best practice upon which it can draw. Sharing such knowledge, skills and experience across the different projects on which it works has been critical to the company's success.

"Again, it's a matter of assessing risk, seeing what works in one sector and establishing whether it will work in another," Ghali explains. "The sectors don't really differ much in terms of best practices, which are generally applicable across all verticals. It depends more on the type of contracts that you want to let out, not whether it's a transportation project or a mixed-use development. I think the processes are very similar, and the ways in which you manage them are very similar. Of course, you will need expertise in each area to manage them effectively because they have different qualities and different challenges, but I think the best practices in managing the risks are the same across the board, and you can cross-reference them."

He also believes the Middle East has truly high standards when it comes to construction. "They've adopted both the British and the American standards, so they have a pretty high level of standards that they're working towards, be that in terms of infrastructure, civil works or buildings," he says. "I don't think they are short of any other Western country that we've worked in. They've come a long way in a very short period of time in terms of implementing pretty much any standard that you can think of in building design and construction."

One such area is in green certification. Regional developers have embraced standards such as the LEED Green Building Rating System, while homegrown environmental standards such as ESTIDAMA are driving a new culture of sustainable development in the Middle East. "As far as sustainability goes, I think they're probably one of the top regions in the industry," insists Ghali. "You've got Masdar in Abu Dhabi, which is really pioneering the idea of trying to create a city with zero emissions. Such developments represent the future, and the firms that embrace sustainability first are the ones that are going reap a lot of the gains and profits – maybe not on their first asset, but certainly on the reputation that they can do it, will be able to do it, and can redo it again."

Ghali believes there's a real opportunity - given the rapid pace of development and the huge volumes of infrastructure investment being poured into the region – for the Middle East to set the agenda in terms of standards development and take a lead in the global construction industry's approach to sustainability. "I would expect that they would be taking the lead in setting certain standards and showing the way," he says. "They've showed that in the construction industry over the last 10 years. The high media profile of Dubai has really showed the rest of the world what the region is capable of doing – what they can build and how quickly they can build it – so I have no doubt that they will be setting standards in numerous areas of the industry, including sustainability."

A global leader

Indeed, Ghali feels that Middle Eastern companies will soon be expanding overseas and using their expertise to drive project development in other parts of the world – in a direct reversal of the recent trend that has seen international firms importing skills and knowledge into the Gulf. "Given the global economy and globalization, there's no doubt in my mind that in the near future you're going to find expertise coming out of the Middle East that will be sought and bought by other countries – both in the West and in Asia and the Far East too," he asserts. "They are creating their own industry, they are setting standards and with the innovation and the investment that they've put in, they will be able to export that, certainly."

For the moment, though, there are still plenty of opportunities to keep both regional and international developers busy in the Gulf itself. "We're seeing a lot of activities in Qatar; we're seeing a lot of activities in Saudi Arabia; and we are maintaining activity levels in the UAE, with Abu Dhabi leading it," says Ghali. "Dubai will soon be back, as well. Oman is another place where I believe we'll see some good opportunities. It's gone a little bit quiet of late, but we feel in the near future, as soon as the economic situation improves, there's going to be high demand in terms of growth there. But right now, we see the Kingdom of Saudi Arabia, Qatar and Abu Dhabi as being the three leaders."

And as to the effects of the downturn, Ghali is wary of making any predictions as to how long the recession will last or how deep it will be. "If I knew the answer to that one, I would be a rich man by now!" he jokes. Yet despite his reluctance to make any firm predictions for the coming year, Ghali is fairly optimistic on prospects for the next 12-18 months. "We're starting to see some signs of owners coming back to the table, of tenders coming out," he says. "I think a lot of the activity is going to be spurred by the governments of UAE, and in particular Abu Dhabi and Dubai. We're also seeing a lot of infrastructure projects being announced, which are generating other developments, and so the cycle is restarting again. If I was a guessing man, I'd say by mid-2010 we're going to start seeing activity in the construction industry rising again."

And until that time, Ghali has more than enough work to keep him occupied.

SHAMS ABU DHABI 

Location: Abu Dhabi, UAE
Client: Sorouh Real Estate
Service: Project management
Project Value: $2.7 billion

Hill provided project management services for the Shams Abu Dhabi, which will offer 82 million square feet of residential, office, hotel, retail, entertainment and parking space. The first project to be built will be the Sky Tower, a planned 83-storey residential and commercial skyscraper that will be the tallest building in Abu Dhabi.

THE PALM JUMEIRAH 

Location: Dubai, UAE
Client: Nakheel Corporation
Service: Programme management
Project Value: $2.8 billion

Hill managed the reclamation of The Palm Jumeirah in the Arabian Gulf off the coast of Dubai, UAE. Hill is currently managing construction of 1300 villas on the island's fronds. The trunk of the island provides public entertainment, amusement, shopping, dining and some residential facilities while the fronds are dedicated to upscale housing.

CITY OF ARABIA COMPLEX 

Location: Dubai, UAE
Client: Ilyas & Mustafa Galadari
Service: Project management
Project Value: $2 billion

The City of Arabia showcases the largest lifestyle development in the region, including 35 high-rise towers, a five-star hotel, 1400 apartments, a dinosaur theme park, and what is predicted to be the largest shopping mall in the world, all covering more than 20 million square feet. The population of the complex when completed will be approximately 34,000.

Project management takes off

Hill International recently announced that it has been awarded a contract from Bahrain Airport Company to provide project management consultancy services in connection with a major expansion programme at Bahrain International Airport (BIA) in Manama. The contract includes a four-year base term with a four-year optional extension period. The contract has a potential estimated value to Hill over its full eight-year term of approximately $35.6 million.

BIA is experiencing unprecedented growth and is attracting more international airlines to use the airport as a regional transfer and aviation services hub. BIA handled 7.3 million passengers in 2007 and the number of passengers continued its growth in 2008. The expansion programme at BIA includes two new passenger terminals, aprons, separate piers, a people mover system and their associated facilities such as car parking, necessary road network expansion and utilities infrastructure. The programme also includes the development of an adjacent Airport City with state-of-the-art facilities and infrastructure, including hotels, conference centres, retail and recreational facilities. Upon completion of the program, total combined capacity at BIA is expected to exceed 30 million passengers per year.

Hill's responsibilities will include planning, time control, time management, preparing and evaluating contractual documents, design overview, value engineering, technical, legal and financial support services, staff augmentation and project administration and coordination in order to achieve an efficient performance of the design and construction of the project. "BIA plays a significant and integral role in the economic development of Bahrain," says Raouf Ghali, President of Hill's Project Management Group. "We are honoured to be part of their ambitious expansion programme."