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Sun, 05 Jul 2009 | 06:41 GMT

Al Shafar seeks to expand Dh9bn order book

Emirates Business 24/7
 
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01 September 2008
Al Shafar General ContractingAl Shafar General ContractingLoading... (ASGCASGCLoading...) is in the process of signing Memorandums of Understanding (MoU) with two companies to look at synergies in business.

Bishoy Azmy, CEO of ASGCASGCLoading..., said: "We are also looking at options in Qatar but our primary scope of work remains in Dubai. And we are definitely looking at expansion in terms of turnover."

The company has an order book of Dh9 billion so far.

Established in 1989, ASGCASGCLoading... is one of Dubai's leading contracting companies. Its projects include Phase III of Dubai Internet City, Emirates Airlines Staff Accommodation, the new Dubai Police Head Quarters, Phase II of the Greens, Lamcy Plaza, Sector 6 of the Jumeirah Beach Residence, Golden Sands Tower, Al Tayer Tower, The Golden Mile, Windsor Manor, Vision Tower, The Villa, Dubai Studio City and Bay Square. The company currently employs more than 10,000 people.

Azmy, who is currently pursuing an MSc in Construction Management from the University of Bath in the UK, spoke to Emirates Business on the current trends in the construction industry in Dubai, which he says are signs of a maturing market that has started to mirror international markets.

What does the current order book of ASGCASGCLoading... look like?
The numbers keep changing. It currently stands at Dh9bn. We are working on the Dh1.6bn Bay Square project, some commercial projects in DIFC, the Dh1bn project called The Villa for Dubai Properties and we have also started a Dh1.1bn project with NakheelNakheelLoading... called the Golden Mile in addition to Dh3bn or Dh4bn of work with miscellaneous projects.

We are also working in Abu Dhabi on the Formula One project in Abu Dhabi for Dh100m and a couple of schools around Dh400m for AldarAldarLoading.... We have many tenders but we are in the process of also deciding what to take and what not to take.

What are your expansion plans?
Our primary scope of work is in Dubai and it is a very important market for ASGCASGCLoading.... We started working in Abu Dhabi more than a year ago and it is still somewhat a new market. We have also recently assigned one of our directors to Qatar to explore the options. We are looking at expansion in terms of turnover, which is being served very smoothly right now in Dubai. Once the Dubai construction market starts slowing down or is unable to sustain our required growth in terms of turnover, we will have to start looking at other markets. But in the last five years, we have been maintaining an annual growth year-on-year of about 50 per cent in Dubai.

How do you deal with labour issues, especially in terms of shortages?
We have no labour problems. You have to do proper resource levelling and that is the challenge. It is very tricky. If you have too much labour that is an extra cost. The way it works in Dubai, you do not just pay them day-by-day because they are your employees. If there are less workers, you run into a risk of delays in projects and penalties. We have been lucky that we have the correct number of projects starting and ending. Also, with the construction getting larger in size, we are negotiating with our clients before we need our sources.

How do you deal with delays in projects due to the reported shortage of materials?
I do not adhere to the reports that there is a shortage of materials. There were steep price hikes, which was not forecast a year ago. For a few months in the first quarter of the year, there was a shortage of cement and projects got delayed because there was no concrete supply. But it was the first time in 19 years. The delay was to some extent.

ASGCASGCLoading... is known to do direct negotiations with companies?
We have been around for 19 years and have developed a certain reputation with big clients in town such as Emaar, NakheelNakheelLoading..., Dubai Properties and other well-known developers. We do not tender anymore. We do design build, turnkey projects and casual long-term relationships with repeat clients.

What are your strengths in what is a very competitive market?
We have never been penalised and never paid liquidated damages in 19 years of being in the business. This reflects our commitment to deliver and perhaps, the most important parameter. We deliver tangible production of fast results. We were one of the first companies to qualify for ISO in quality in 1999. Recently, we went in for ISO 14001, which is for environmental compliance and OSHA 18001 for occupational health and safety by Bureau Veritas.

Has the market peaked in terms of the boom in construction?
I don't think so. The new projects being announced are more ambitious than before. The projects that we are negotiating for have gone from Dh1bn to Dh2bn to Dh3bn and Dh5bn in value. We hear of projects that are as large as Dubai, such as Palm Deira and many announced projects will take four to eight years to complete.

How do you cope with the increase in size and volume of projects?
Contractors are today in a situation where they can take work if they want and they are in a situation to deliver it. We have been expanding at over 50 per cent year-on-year and it is extremely difficult to maintain. But we have been maintaining the growth

What do you think about the current joint ventures or synergies that are being created by the construction industry to cope with the volume of projects in the GCC?
With the launch of many big projects, international companies have started taking an interest in this market and want a slice of the pie. So the contracting industry has overall matured at a fast pace and has started following international trends. Instead of a fixed-price lump sum contract, we are seeing things that are happening internationally such as negotiated contracts, escalation clauses, cost plus contracts, BOTs, joint ventures, long term partnering, private financing initiatives. The market is maturing very fast. We have signed up several MoUs with couple of big entities in terms of partnering but it is still in the confidential stage.

The Palm Golden Mile on track
Al Shafar General ContractingAl Shafar General ContractingLoading... (ASGCASGCLoading...) yesterday announced that The Palm Golden Mile project construction is on track. The project is scheduled for completion by beginning of 2009.

The company said that the construction comprises 200,000 cubic metres of concrete, 40,000 tons of steel reinforcement, 6,250,000 blocks, 700,000 square metres of plaster work and one million square metres of paint. Additionally, the project will use 12,000 doors, 9,500 windows, 20 escalators and 60 lifts. The Palm Golden Mile, located on the trunk of The Palm Jumeirah, is a shopping, residential and office project covering 60,000 square meters.

"To say that the project is massive would be an understatement, the sheer quantity of materials used in the construction is an indication of the scale of this exclusive luxury development. Al Shafar General ContractingAl Shafar General ContractingLoading... is proud to be associated with this prestigious project, and we are pleased that the construction is progressing as per schedule," said Maged Rofail, project director from ASGCASGCLoading....

The project will have a total built up area of 454,200 square metres with 860 apartments, which includes penthouses and townhouses.

Currently, 120 engineers are working on-site to ensure that the highest standards of quality and safety are maintained during all stages of construction.

By Sona Nambiar

© Emirates Business 24/7 2008

 
 
 
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