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Constructing in frugal times

Constructing in frugal times

Raheem Bani Zaman Lari explains why maximising value offerings is essential to delivering value in today’s construction industry

There is an adage, ‘when the going gets tough, the tough get going’, which aptly describes the construction sector in the United Arab Emirates.

Construction is synonymous with the country, especially in Dubai where construction equipment is a part of the emirate’s landscape – figuratively and literally. As such, it has become an informal barometer of the UAE’s economy.

The strong, healthy, and vibrant sector has weathered tough challenges in recent years – some of these due to the recent oil crisis and others a symptom of the general economic climate befalling the globe – to reach an equilibrium where the tough climate is tackled by capable counterparts.

This is how the construction sector is currently poised, with healthy and diverse demand, stringent budgets, fluctuating market conditions, and liquidity constraints. And with mega-projects on the horizon in both Abu Dhabi and Dubai, the sector is truly alive and developing. No longer can developers take chances with sloppy, unprofessional, low-quality engineering, and bad customer service rendering contractors and consultants. If businesses want to compete, and deliver the best solution for clients, they have to rise to the challenge.

The pertinent question is how? How do you deliver high-quality, awe-inspiring, on-time projects in a climate of lowered or limited budgets? How does an organisation maximise value offerings? The answer is simple – they have to get tough. Not with clients, and most definitely not with suppliers or employees. Instead they have to get tough on the way business is conducted by getting better at how it is done.

This entails change, however difficult for an organisation, is necessary for progress. Change does not have to be in everything the business does. Small, incremental changes can have seismic effects on the way businesses handle stakeholders, communicate, practice product and service innovation and plan for the future. These are important factors for success in a low-budgetary environment.

It is of utmost importance that stakeholders, such as suppliers and employees that are integral to business success, are treated with the highest respect. These stakeholders who know the ins-and-outs of the business cannot be replaced overnight. Relationships with local, regional, and global suppliers should be developed to ensure materials of the highest quality or speciality items can be sourced as required, and a deep professional understanding that withstands the pressures of payment delays, rushed orders, and changing institutional and governmental standards is maintained.

When it comes to employees, efforts should be made to ensure that the drive and contribution of professional employees, especially during trying times, remains excellent – even if it means paying them higher wages than the market average. Investing in employee development through conference attendance or professional courses is a good way to stay ahead of the competition.

An integral part of meeting a client’s expectations, and keeping all stakeholders content is communication. Thorough, clear and frequent communication is necessary to meet clients’ requirements, stay on-time with the delivery of a project, and assuage investors’ and owners’ concerns in relation to project delays and unforeseen developments or circumstances.

It is in communicating with clients that consultancies can carve out their niche offerings. For instance, communicating new trends and shifts in the UAE construction sector – such as the increasing demand for affordable residential and commercial units – will help developers in decision making. A shift such as the growing preference for mid-market projects is a departure from industry-defining demand for mid to high-end residential and commercial units, marking a monumental change in the market. Communicating these undercurrents can be difficult to developers set on a high-end portfolio, but developers need to match the end buyer’s requirements to remain successful.

Similarly, clients’ requirements need to be adhered to when designing a project. Usually when budgets are lowered, there will be less use of non-functional and artistic features, a replacement of manufactured with natural elements while limiting high-end finishes, and increased simplification in design of the project facades such as its elevation, wall features (both internal and external) and a reduction of smart building options. It is essential that client requirements be communicated to the entire project team so that any solutions to achieve the client’s objectives are done so in a reliable and cost-effective manner.

In a low-budget environment, the location of the property has a considerable effect on its attraction to end-users. And if the property has no added value (such as elaborate design, smart features, and service offerings), investor and owner ROI could take a hit. End-users have become savvier in selecting the highest or best value-for-money due to increased awareness of varied supply choices and offers in the market through the use of online property portals.

Therefore, to offset and compensate for any limitations that low-budgets could entail, product and service innovation is necessary to maximise the project’s value for end-users – vital in maintaining a property’s high-quality value and in delivering expected ROI.

It can be argued that innovation is more important than ever in a low-budget environment, but how does an organisation innovate in such an environment?

Firstly, consultants must be aware of the client’s budget – designing according to requirements by reducing or eliminating non-vital elements and through the use of existing or new technologies to produce innovative design. Getting the design phase of any project perfect is the first step in avoiding variations and obstacles during construction, which ultimately increases costs, delays the project and could affect ROI. It is imperative that value engineering practices are applied throughout the initial design stages.

Innovation in sourcing materials is also key in sticking to low budgets. Informing procurement and tendering engineers with material alternatives, material equivalents, and providing up-to-date information on new global construction materials is an easy way to utilise innovative products available in the market. And with good stakeholder management, sourcing materials becomes an innovative step in cost reduction.

However, understanding different material specifications and their alternatives comes with experience, or with learning, and this is why it is important to invest in employees and business knowledge, so that the right materials, especially the electro-mechanical items, are chosen at the beginning of a project.

Another way to increase innovative services is to establish a methodology in which consultants are required to gain an intrinsic familiarity of the regulations landscape. This is important in the current environment as new and upcoming regulations can be flagged and competencies developed to help clients. It is also necessary because familiarity with regulations will avoid unforeseen obstacles and risk taking leading to increases in costs.

Further, building competencies through the examination of solutions to reduce wastage of resources such as water, energy, time, maintenance, and life cycle costs, will reduce costs for the client. Ultimately, these service innovations provide better functionality, quality and sustainability.

Technology will always play a part in innovating products and services for the construction sector. In the recent past, the advent and increased use of 3D printing and Internet of Things in the global, regional, and local construction sectors has increased their value offerings. And with cost of labour increasing across the globe, relying on technology and other construction tools such as prefabricated items will have the double effect of lowering costs and shortening delivery time.

Lowered budgets have not had a direct negative impact on operations. However, the likelihood of delivering projects on time diminishes with each reduction of services made to fit budgets. For instance, some developers reduce the scope of work, eliminating services such as project management that control, monitor, and evaluate the development of the project through its life cycle. Without these measures in place, the delivery time may be lengthened.

Other reasons that projects are delayed during a low-budget environment include the choosing of low-cost contractors that do not possess the capabilities to deliver projects on time, and delaying payments to sub-contractors, which could in turn delay the project’s efficiency.

Clients are responsible for picking the appropriate contractor and consultancy. The best contractor will possess the necessary capabilities and financial abilities, while the right consultant will include quantity surveying and cost consultancy as core services to reduce project costs, and increase project profitability.

To maximise the value of the project, choose those that can deliver the service, not those that only reduce their costs.

Most businesses prepare for the future by understanding the imminent changes in their industry and planning towards these. The trend towards affordability in the UAE construction sector will accompany others such as energy and timesaving, underscoring the need to save costs both in the short and long run.

While this trend may not completely replace big budget projects, it has taken root – and business should take notice.

Raheem Bani Zaman Lari is managing director and founder of Abdul Rahim Architectural Consultants

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