Abu Dhabi’s ambition tests strained construction sector

• Infrastructure projects worth $57bn
• Shortage of skilled workers
• ‘Two-tier system’ of contracts

Ambitious construction targets unveiled by Abu Dhabi this week may prove difficult to deliver at the pace envisaged, according to industry figures.

While the UAE capital has outlined about $57 billion worth of infrastructure projects, shortages of contractors and skilled workers, alongside broader concerns, may complicate delivery of the emirate’s plans.

“I still don’t think that Abu Dhabi particularly has the capacity. We’re short of high-quality contractors [and] consultants given the pipeline announced this week,” said Chris Beasley, programme director at construction consultancy Turner & Townsend, during the Abu Dhabi Infrastructure Summit.

Beasley works with the Abu Dhabi department of municipalities and transport on large-scale projects, handling a team of about 100.

The UAE’s minister for energy and industry, Suhail Mohamed Al Mazrouei, said that Abu Dhabi will use national funds that are expected to flow after the country quit Opec to turbo-charge construction in the emirate.

“Whatever we built in the past 50 years, we will build in the next four to six years,” Al Mazrouei said.

Anaylsts have previously told AGBI that hitting a target of 5 million barrels a day in crude production after leaving the oil producers’ group is achievable by the end of the decade.

“The pressure in this region is to ‘deliver in two years’, but realistically it can’t be done. That’s something we need to look at,” said Prashant Kapila, board member of the International Federation of Consulting Engineers.

In the past year, Abu Dhabi has unveiled plans for the expansion of its financial district and construction of a Disneyland park, a Sphere venue and thousands of new homes.

“The relationship we have in the GCC is very much a ‘master and servant’ relationship where the client is the master and the contractor is the servant. People have very entrenched positions on whether they’re the master or the servant,” said Beasley.

Some contractors are turning away from Abu Dhabi, experts said, because of uncertain agreements.

“If you want to attract quality contractors to the region you need predictability. Use standard contracts. We’ve seen procurement teams applying contracts to things they are not designed for. You need predictability in terms of payments,” said Ziad Salloum, managing partner of law firm Salloum & Partners LLC.

“If I’m the main contractor for a major company and I’m presented an opportunity in Abu Dhabi, I’ll ask ‘what happens if I don’t get paid?’. [If] they [say] nothing can be done, well, I’m not interested,” said Beasley.

These non-standardised contracts are creating a “tiered” sector, industry participants warned.

“Something I see happening in Abu Dhabi all the time: a two-tier system. If you’ve got one set of entities with very fair contracts, contractors will work for them. If they have unfair contracts, no one wants to work for them,” Beasley said.

The government set up the Abu Dhabi Projects and Infrastructure Centre (Adpic) three years ago to oversee the delivery of projects, an initiative which Beasley praised.

Further reading:

• Abu Dhabi plans construction rush after quitting Opec
• Abu Dhabi developer Aldar reports $520m first quarter profit
• Aldar CFO says war impact has been ‘a bit exaggerated’

Khaled Naguib, Adpic’s head of audit and compliance, said his department has checked commercial compliance for about 190 projects in Abu Dhabi since 2023. It is also working on an official procurement manual and initiatives to improve “compliancy levels of professionals”.

“We have a lot of information on how well practices are ongoing, how government frameworks are being abided by. From this, we get information on how to improve,” Naguib said.

There was little mention of the Iran war at the state-sponsored construction fair. Abu Dhabi’s largest developer, Aldar, said this month that the impact of the conflict had been “exaggerated”.