{"id":14382,"date":"2016-05-25T23:30:11","date_gmt":"2016-05-25T16:30:11","guid":{"rendered":"http:\/\/www.siamlandbank.com\/propertynews\/?p=14382"},"modified":"2016-05-25T21:48:57","modified_gmt":"2016-05-25T14:48:57","slug":"gulf-contractors-face-tough-market-conditions-amid-cashflow-constraints","status":"publish","type":"post","link":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/gulf-contractors-face-tough-market-conditions-amid-cashflow-constraints\/","title":{"rendered":"Gulf contractors face tough market conditions amid cashflow constraints"},"content":{"rendered":"


\nContractors across the Gulf are facing a tough set of market conditions, with cash flow constraints and greater competition for fewer contracts placing a squeeze on margins, according to Deloitte. The accountancy firm’s 2016 Powers of Construction report states that contract awards are likely to drop to US$140 billion this year, a reduction of 17 per cent on the amount of awards last year. Despite this, Deloitte argued that the pipeline of future projects due for delivery in future years means the region still offers decent long-term fundamentals for companies prepared to ride out the current slowdown in the market.Speaking at the launch of its report, Deloitte’s Middle East construction industry leader, Cynthia Corby, said: “We see a tough year ahead still for contractors. There is still a lot of pressure on cash on legacy projects and trying to close those out, and be paid for projects delivered back in 2008-10.”Saudi Arabia is the market that has been hit hardest, with contract awards set to decline by 20 per cent to $40bn, but it remains the region’s single biggest projects market, followed by the UAE.The report states that there is more than $2.6 trillion worth of projects either at pre-execution or execution stage in the Gulf. However, just $657bn of this is currently under construction, and $2tn remains on the drawing board. More than 90 per cent of contractors who were surveyed at the event stated that market conditions were tougher than in the previous year and 64 per cent said that they had witnessed an increase in construction disputes.”There are clearly delays in payments, and that affects the cash flow cycle,” said Ben Hughes, a director in Deloitte’s Middle East capital projects team. “Cash collection days are going from typically 45-90 days up to 180 days. “We have clients who are just not being paid at all, and yet they still are obligated to pay their subcontractors because they still need to finish a project.”Supply chain disputes is clearly a major issue as well. Where a number of contractors aren’t being paid by the client, they have just stopped paying their supply chain. But clearly, they need the materials and they need the labour. That, again, gives rise to disputes.”Speaking at a panel debate at a Meed conference yesterday, Gary Adams, the Mena president of US-based building consultancy Parsons, said: “There’s largely a perception that cash issues are largely a fallout from low oil prices and pressure on revenues to government, but I really think this is a systemic issue in the market, which has been exacerbated by low oil prices.”Mark Andrew, the Middle East managing director of UK-based contractor Laing O’Rourke, said: “Life is difficult generally for contractors in a market which, certainly for the last few years, has been very competitive. We’re all bidding at relatively low margins, and I think the reality is that contractual terms here are pretty onerous.”He said that problems with projects are often compounded for contractors by the fact that they often receive drawings late, and that there are often variations to original contract scopes, which then means payment for contracts takes even longer.”I also feel that cash retentions [by clients, in the form of performance bonds] are extremely unfair. We’re operating at margins of single-digit percentages and virtually every client is holding 10 per cent cash retentions.”mfahy@thenational.aeFollow The National’s Business section on Twitter
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\nSource : thenational.ae
\nRead more…Gulf contractors face tough market conditions amid cashflow constraints<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Contractors across the Gulf are facing a tough set of market conditions, with cash flow...<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true},"categories":[1],"tags":[],"class_list":["post-14382","post","type-post","status-publish","format-standard","hentry","category-property-news"],"jetpack_featured_media_url":"","jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p75ss1-3JY","jetpack-related-posts":[{"id":17940,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/market-analysis-gulf-contractors-feel-the-squeeze\/","url_meta":{"origin":14382,"position":0},"title":"Market analysis: Gulf contractors feel the squeeze","date":"June 28, 2016","format":false,"excerpt":"\r The region's listed contractors are expected to post another poor quarter of results as companies have to contend with a lack of new project awards, declining revenue and shrinking margins.An analysts' note from EFG Hermes says that company disclosures on contract wins show a 75 per cent year-on-year decline\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":10900,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/deloitte-trims-real-estate-arm\/","url_meta":{"origin":14382,"position":1},"title":"Deloitte trims real estate arm","date":"April 19, 2016","format":false,"excerpt":"\r Move highlights constraints as big four attempt to expand beyond core audit market\r \r Source : ft.com\r Read more...Deloitte trims real estate arm","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":7816,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/new-construction-contract-awards-in-saudi-arabia-drop-25-in-final-quarter-of-2015\/","url_meta":{"origin":14382,"position":2},"title":"New construction contract awards in Saudi Arabia drop 25% in final quarter of 2015","date":"March 13, 2016","format":false,"excerpt":"\r \r The value of new construction contracts awarded in Saudi Arabia during the fourth quarter of 2015 slumped by 25 per cent on the previous quarter to 45.6 billion Saudi riyals (Dh44.6bn), according to new research by National Commercial Bank (NCB).Its Construction Contracts Award Index showed that 62 per\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":37984,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/damac-awards-contracts-worth-dh1-26bn-in-last-four-months\/","url_meta":{"origin":14382,"position":3},"title":"Damac awards contracts worth Dh1.26bn in last four months","date":"December 14, 2016","format":false,"excerpt":"\r Lucy BarnardDubai developer Damac awarded 15 construction and consultancy contracts worth Dh1.26 billion in the four months between August and November, the company said on Tuesday.Damac said this included main works contracts for villas and apartments at several clusters at its 42-million-square foot Akoya golf course development.It also included\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":47327,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/damac-awards-dh1-4-billion-in-contracts-in-first-two-months-of-2017\/","url_meta":{"origin":14382,"position":4},"title":"Damac awards Dh1.4 billion in contracts in first two months of 2017","date":"March 9, 2017","format":false,"excerpt":"\r Damac Properties has awarded 121 construction contracts in the first two months of the year with a combined value of Dh1.4 billion.The developer said that the awards include main contract packages at five of its sites - Akoya Oxygen, Damac Hills, Aykon City and at two new towers in\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":4160,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/contractors-feel-the-pinch-as-saudi-government-goes-slow-in-awarding-projects\/","url_meta":{"origin":14382,"position":5},"title":"Contractors feel the pinch as Saudi government goes slow in awarding projects","date":"February 9, 2016","format":false,"excerpt":"\r \r The value of new contracts won by the Saudi contractor Abdullah A M Al Khodari & Sons last year fell by nearly 50 per cent as \"government entities did not proceed with awards\" in the run-up to its 2016 budget announcement in December.The company, which is based in\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/posts\/14382"}],"collection":[{"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/comments?post=14382"}],"version-history":[{"count":0,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/posts\/14382\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/media?parent=14382"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/categories?post=14382"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/tags?post=14382"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}