Managing risk effectively on the Middle East’s giga-projects will require behavioural change along with a raft of measures to pre-empt the schedule and cost overruns seen on past megaprojects in the region.

This was among the conclusions to emerge from an expert panel discussion hosted by RICS and HKA, the global risk mitigation consultancy. The webinar,¹ attended by over 400 people from 41 countries, heard how the giga-projects involve unprecedented concentrations of materials, skills, new technologies – and risk.

Dele Oyekanmi, Senior Manager – Contracts & Commercial, at NEOM, the vast zero-carbon city to be built in Saudi Arabia – explained how analysis of project-critical factors showed team behaviours outweighed even cost estimation and project management systems in importance.

“We need to work as a team and have a different mindset if we’re going to deliver these projects successfully,” Dele Oyekanmi said, adding that collaboration had to be underpinned by robust governance processes.

A shift to more collaborative ways of working is happening in the region, confirmed Husam Gawish, HKA Partner & Head of Operations for Saudi Arabia. While partnering is not yet in evidence, there was “a slow and steady” move to more proactive engagement between employers and contractors, and a “one team” mentality.

The enablers and prerequisites for better project outcomes were set out by Amanda Clack, RICS Past President and HKA’s EMEA Regional CEO. Standard contract forms help allocate risks in a clear and balanced way understood by all parties. Setting up a Dispute Advisory Board at the outset would help them problem-solve together rather than adopt adversarial stances, she advised.

HKA’s research programme, CRUX,² also revealed how design failings and changes in scope drove project claims and disputes across the region. It was essential to allow enough time for design so it could be frozen and analysed for errors and gaps before works starts, and to ensure designs keep pace with construction progress.

Projects in the Middle East suffered longer overruns, averaging over 83% of the planned schedule, CRUX showed. The scope changes inevitable on highly complex and massive capital projects are better managed in conjunction with construction teams. Early contractor involvement (ECI) could capture insights to pre-empt design and other conflicts later.

The panel agreed that transparency and openness about the realism of programmes were also crucial. Schedule risk should always be on the risk register, understood by all and managed proactively, Dele Okyekanmi stressed.

Other themes explored by the panel included skills, technology and market capacity:

Skills: Given the global under-supply of skilled construction professionals, these giga-projects must take remote working further, aided by technology and lessons from the pandemic. While, they offer career-defining opportunities, “to get the best and brightest talent is going to require extra effort at the outset,” Amanda Clack said. More investment is being made in training and developing local talent, Husam Gawish noted. The net may also need to be cast wider to attract experienced staff who have followed the vocational rather than academic routes, and people from outside the construction industry, Dele Okyekanmi noted.

Technology: The scale of giga-project investment, and the visionary nature of capital programmes in Saudi Arabia and the United Arab Emirates, should drive adoption of BIM (Building Information Modelling) and Industry 4.0 technologies. Amanda Clack envisaged better data sharing through digital transformation and “a huge opportunity to solve old problems in new ways” and cascade this knowledge and innovation down to future megaprojects and the wider industry.

Market conditions: The ‘war for talent’ applies to contractors too, Husam Gawish observed, as they could afford to be more selective about tendering in an overheating market. Employers increasingly need to adapt, feeding the trends toward more balanced risk allocation and negotiation, contractual mechanisms for late payment, collaborative working, and arbitration. “Slowly, these are bringing Saudi Arabia in line with other jurisdictions.”

NOTES:

1. The RICS webinar, Risk management and the giga-projects of the Middle East, was held on 31 May 2023.
   https://www.rics.org/training-events/wbef-events/risk-management-and-the-giga-projects-of-the-middle-east
   
2. CRUX is a research programme analysing the causes of claims and disputes investigated by HKA consultants worldwide. See the Fifth Annual CRUX Insight Report for regional results:
   https://www.hka.com/crux-insight-fifth-edition-battling-the-headwinds/

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