Drones and data point the way forward for better returns in UAE construction

Drones and data point the way forward for better returns in UAE constructionA couple of the giants of the management consulting industry produced weighty documents over the past few weeks that made for slightly depressing reading for the region’s construction industry.

The one that grabbed attention locally, for understandable reasons, was from AT Kearney. It predicted “a perfect storm” for the Arabian Gulf’s property development market, largely as a result of overbuilding by local developers.

“Overcapacity looms on an unprecedented scale,” it warned, citing the fact that the number of homes currently under construction is four times the amount that has been completed within the past 10 years. What’s more, a further 10 years’ worth of supply remains in the planning and development phase.

If all of this were to be brought forward, the amount of new homes flooding on to the market would equate to seven to 12 times the amount per year that was being delivered at the height of the last regional property boom between 2007 and 2009.

The property crash that followed the 2008 global financial crisis was not just a problem for the developers stuck with unsold inventory, it also proved to be pretty disastrous for the region’s construction industry, with many firms going out of business as projects were cancelled and payments dried up. Indeed, since 2006, the value of cancelled projects in the GCC is almost twice as high as that of completed projects. The chances of an announced property project making it all the way to completion has been calculated at just 35 per cent.

The impact of the previous crash is also being felt in other ways, not least in the relationships between developers, architects and contractors.

Ralf Steinhauer at RSP Architects described the 2006-08 boom period as the “Google car environment for real estate in the region”, where innovation and a boundless sense of optimism for what could be achieved ruled.

“The aftermath of the crisis stripped away some of the trust among parties. Now we are less ready for open self-criticism, and that makes improvement much more difficult,” he says.

Developers are much more stringent in their briefs, jobs are awarded to contractors based on lowest bid and even after this there is pressure to reduce mat­erials, costs and construction time, according to Ihab Abdulbaker of the Consolidated Contractors Company. Pressure to start jobs on site as quickly as possible often results in substantial design changes during construction, leading to delays and cost overruns.

Not all of these problems are unique to the Middle East, as a second report by McKinsey & Company titled “Imagining construction’s digital future” revealed. It said that large projects worldwide typically take 20 per cent longer to complete than scheduled, and are up to 80 per cent over budget.

It argued that technology use in construction is among the lowest of any sector (only agriculture is less technologically orientated).

Both reports call for major changes not only in terms of technology use, but also working practices. McKinsey says engineering and construction contractors should appoint a chief technology officer or innovation officer to “think boldly about the digital agenda”.

Both extol the virtues of building information modelling, or BIM software, which is already mandatory for larger projects in Dubai. It serves as a collaboration tool between architects, contractors and project owners, providing a 3D, data-rich model of a building which evolves as design changes are made. McKinsey encourages the use of “Next Generation 5D BIM”, which not only provides the 3D designs but also integrates scheduling and budgets.

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