Indicators suggest that the ease of doing business in the Abu Dhabi construction industry is very high. The UAE as a whole (figures are not available for Abu Dhabi specifically) placed 31st out of 189 countries in the World Bank’s “2016 Doing Business” rankings, and second worldwide in the “dealing with construction permits” category (based on obtaining permits to build a warehouse), up from third place the previous year. Obtaining construction permits involves eight procedures, compared to a regional average of nearly 15 and an average of 12.4 in high-income OECD countries, and takes 43.5 days, compared to respective regional and OECD high-income averages of 139.7 and 152.1 days, respectively. The costs involved in obtaining permits are equivalent to 0.2% of the value of the warehouse under construction.
Room To Improve
However, some industry figures say there is room for improvement in the industry’s business environment. David Stones, who has worked in Abu Dhabi for 25 years and is currently the contracts manager at local construction firm and water infrastructure specialist Abu Dhabi Maintenance and Construction, told OBG that dealing with permits in the industry in the emirate could still be problematic at times. “Contracts tend to provide contractors with shorter periods for notices of intent, for example to dig up a road, than are required to get all the necessary permits from the relevant authorities, which can take up to six months in some cases,” he said. “Furthermore, construction tasks can require a lot more permits than in the past – for example you need a lot of permits if work might affect fibre-optic cabling, which is everywhere now. Design consultants also often don’t obtain the permits they are supposed to because they lack time, leaving contractors to apply for them.” In 2012 the Abu Dhabi City Municipality began providing construction permits online to improve processing times and standards, though Stones said that the impact of this was not uniformly positive. “Moving permit applications online has been helpful in some ways but is not always suited to the construction industry, in which it can sometimes be easier to work face-to-face,” he said.
Tendering
In 2013 the Abu Dhabi General Services Company, better known as Musanada, was designated as a centralised hub for tendering government-issued infrastructure and construction contracts. Reaction to the move has been mixed, with some industry figures questioning the wisdom of a central tendering body that might not, for example, have expertise in all of the fields it covers. Industry figures also say that it is common for tenders to be delayed or put on hold, even after bids have been submitted.
Materials & Subcontractors
Ali Haydar Özak, project director at TAV Group – part of the three-company consortium building the Midfield Terminal Building at Abu Dhabi International Airport – said that the availability of materials in the industry is good. This is an important issue for the terminal, the construction of which involves more than 600,000 cu metres of concrete, 69,000 tonnes of structural steel and 325,000 sq metres of stone flooring. “Due to the rapidly expanding infrastructure in the country, materials are relatively easy to import, export and transport, especially given the development of Khalifa port,” he told OBG. “There are government-approved lists of suppliers for particular materials; however, for most materials the choice of suppliers is large, so this isn’t a constraint,” said Stones.
While there have been signs of shortfalls in labour capacity such as rapid wage rises, Özak said that the calibre and availability of subcontractors across the country as a whole is also high. “The larger developers here are fortunate that subcontractors are of a very high standard. They know the market, including the ins and outs of getting supplies cheaply and efficiently, and most importantly they understand the high standards expected of them by the market.”
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