United Arab Emirates: Consultants' Roundtable - Opportunities And Challenges For Consultants In The UAE

Last Updated: 25 July 2017
Article by Will H. Buckby

In March 2017, Beale & Company (Middle East) hosted its first in a series of industry focused roundtables for our consultant clients and friends. The roundtable was held under the Chatham House Rule and provided an opportunity for consultants to share opportunities in the UAE and wider region and to debate the challenges they face now and in the future.

The roundtable covered a range of topics including:

  • Opportunities;
  • The contractual landscape in the UAE and wider region;
  • Obtaining payment; and
  • The dispute culture in the region.

It is clear that whilst there are some significant opportunities including mega projects for those active in the construction, engineering and infrastructure sectors, there are a number of real challenges including risks which are inherent and need to be managed in the UAE. The market in the UAE is a huge contrast to that, for example, in the UK, Europe and USA.

This note summarises some of the key items discussed at the roundtable: as a note for the attendees but also for wider circulation to other consultants in the region to raise awareness, amongst other things.

A further roundtable and other meetings of consultants active in the UAE will be arranged by Beale & Company for later in 2017 to build on the discussions at March 2017's roundtable.

Opportunities and funding?

The general consensus was that there are significant opportunities in the region arising out of various mega projects including Expo 2020, the Dubai Metro extension and others.

However, opportunities were not always coming to fruition. In relation to Expo 2020, all the significant number of projects which were publicised as being required for Expo 2020 have not materialised. There is still a lot of bidding for work and competition, all of which is taking up significant cost and time for consultants. Generally, things are quiet but the overall feeling is that the bigger projects need to and will come through.

There is concern as to what is next after Expo 2020 as little beyond this seems to be happening aside from the major infrastructure projects. Perhaps there are opportunities in the education and health sectors, and a significant need for maintenance and lifecycle, but these will not mirror the opportunities proposed prior to Expo 2020.

Some consultants are seeing a lot of upfront design being required, both concept design and also in relation to RFPs, even pre-concept design, but nothing following this. There was a large amount of master planning workarounds but, again, these materialising into actual projects was simply not happening. This is sometimes carried out for free or as a loss leader with a view to winning the future work, which is obviously frustrating and challenging.

There is probably "less cash in the system" than there has been in recent years because of market conditions and therefore financing construction projects is becoming an increasing issue. There seems to be a lot of discussion with regard to funding even so much as asking the consultants whether or not they can organise export credit finance for the job!

There was scepticism as to whether PPP could take off in the region for various reasons. There is a cultural issue of not wanting to let go which is required for a successful PPP project where you really need to give it over to an expert who hands it back. Also with the longer term projects, there are issues in relation to the significant turnover in client staff which can affect the success of a PPP project. There was also speculation that given the ability of the Government to easily change laws, this may be hindering PPP where parties are uncertain about participating due to the risk in the law changes to suit government clients.

In relation to planning policy, there was a feeling that employers are taking a more longer term planning policy perspective, rather than simply getting the building up with little thought about the planning approach. Thought is needed to be given by the government in relation to the significant number of expensive apartments but also to the large section of the population who cannot afford to live in those buildings. There is a need in relation to housing which is simply not being addressed.

The use of BIM and other innovations

The consensus was that there is a lack of understanding about BIM in the region especially amongst clients. This must present an opportunity for consultants – educating employers at the outset of the project.

There was general positivity around Beale & Company's role in educating employers in relation to BIM. There was hope that this would spread amongst other employers once it is known that certain are doing things correctly. However, part of the issue is the employer's lawyers not understanding BIM and therefore drafting appointments which simply do not make sense.

It was felt that given the lack of progress in relation to Expo 2020 as it nears, there is likely to be a need to innovate in order to get things delivered in time. There was a feeling that there may be innovation in order to rush towards Expo 2020. This could be exciting for consultants although it will bring its own challenges.

Contractual landscape in the UAE including sub-consultancy agreements

There is still with some developer clients a 'take it or leave it' approach. However, with others it was felt that there is an ability to negotiate, although consultants generally feel that they have little leverage in relation to negotiations due to the threat of blacklisting, amongst other things.

It was acknowledged that the contractual terms in the UAE are generally onerous and at times unclear, and negotiations are unpredictable. In particular, onerous terms are being required by employers without a real understanding as to the needs or purpose for them. The contractual framework is very different to that in the UK, USA or Europe and parent companies outside the UAE need to understand this.

There is a general feeling that overall the contractual landscape was improving with better understanding and with technology making things simpler, it is an improved marketplace in this respect. It was noted, however, that as consultants were hungry for the work, the businesses are softening in relation to contracts. This is always a sign of a market slowing.

Tender bonds are a challenge but overall there was consensus that they seldom get pulled, although one attendee has very recent experience of the issues arising out of a called tender bond. In relation to the issue of submitting qualified bids and the risk of a bid becoming unqualified, one consultant's approach was always to submit two bids, one compliant bid and one non-compliant bid: an interesting approach.

There was a feeling that consultants should band together and make sure they do not inflict the same harm on each other in relation to sub-consultancy arrangements. There was talk of some consultants operating automatic back-to-back provisions where it was illogical to have those and also sub-bonds! There was a call for consultants to work together and have sensible engagement in relation to sub-consultancy agreements so that something positive could come out of the forum/roundtable - there is demand it was felt for a well-drafted standard form sub-consultancy agreement. Beale & Company are looking at this.

In addition to the "bucket list" of terms that consultants always seek to incorporate such as limits of liabilities, there was an appreciation that there was also a need to focus on how the contract worked, so that on a project the delivery team dealt with, for example, variations properly. Clauses which govern the working relationship need to be given attention to. One consultant uses pro formas which they set-up early in order that the project team talk the same language as the contract in their project documentation. Also, others have summary documents that sit alongside the contract to highlight key terms (e.g. deadlines for notices) in relation to the operation of the contract. These are all good risk management approaches.

Consultants said that generally they try to tailor-make sub-consultancy agreements but there is laziness which creeps in where standard sub-consultancy agreements are sent out and if there is kickback on this, then a short form may be provided. This approach is simply due to lack of time and there was general agreement that a proportionate approach on all projects should be endorsed.

JVs are not overly fashionable in the region albeit there is a lot of work which is done as part of consortiums.

It was discussed that difficulties arise on projects when there are different design standards, given the make-up of the consortia, such as the EuroCodes and US standards as well. This can cause complications in terms of delivery of services. There needs to be absolute clarity on what design standard applied or took precedence.

There is a feeling that little attention is given to the scope of services and that quite often our consultant clients see fitness for purpose type provisions being incorporated into the services or real ambiguity in wording and, for example, a lack of clarity as to what international standards and best practice means.

Decennial liability is a risk in the UAE market which is spoken a lot about, but is it really a concern? There was a mixed view. Whilst the consultants could see sense in taking on supervision obligations in order to check on the quality of the construction given the potential for decennial liability, the difficulty was that whilst due diligence could be carried out on the contractual team, there was no control over the process and quite often there was a feeling that the lowest bid was accepted and therefore the poorest quality contractor. In those circumstances, the consultants did not want to be supervising.

Payment and getting paid

Consultants have very little leverage where there is non-payment. Possibilities are the threat of suspension and holding back on deliverables, but suspension rarely carries through because of the relationship issues, but also costs involved in re-mobilisation. One consultant has recently suspended and was very careful to do so in accordance with the contract and with the awareness of the client.

It was felt that holding back on deliverables was a sensible threat but quite often not acted upon. No-one felt the 'good faith' obligation enshrined in the Civil Code assisted in relation to poor payment practices.

It was felt that the suspension clause was a key one to get into a contract as if nothing else, the threat to suspend could be good leverage. Unfortunately, it is not often that the suspension rights are included in a consultancy agreement. However, a right to suspend for non-payment can arise out of the Civil Code.

Parent company guarantees are often requested but clients have now tuned onto the need for an ultimate parent company guarantee rather than a company which was not "worth the paper it was written on". A few consultants had a corporate policy never to give a parent company guarantee and never provide insurance policy documentation. There was a real sense that ultimate parent company guarantees were being requested especially in Qatar.

Dispute resolution and the local courts

None of the group had actually been on the receiving end of decennial liability claims, albeit they had been threatened on a few occasions, but usually in circumstances which were not a decennial liability situation, i.e. the defect did not threaten the stability of the structure. There was a feeling that fire was a significant risk area in relation to decennial liability as there were a lot of buildings that are still at risk in relation to fire.

There was a general consensus that consultants needed to avoid getting into the courts albeit few had actual experience in relation to the local court process. There was a general feeling that the quality of the court-appointed expert was an issue and not something that the parties have any control over. There was some horror stories as to experts in different disciplines being appointed by the court and coming up with bizarre opinions even when matters were clear-cut. If possible, arbitration was sought as a more beneficial tribunal.

Conclusion and future events

In conclusion, it was felt that those projects where there are good relationships, low staff turnover on all sides and also excellent communication within the various parties, are the ones that succeed, but these are rare. It was also felt that consultants that make a nuisance of themselves to clients and contractors, do far better than those that simply roll-over and capitulate.

Overall, there is a feeling that the understanding of the "UK head office" had improved in relation to the Middle East market, but some still struggle to understand the market. One consultant commented that Middle East expectations were quite a common discussion point with head office.

It was agreed by all that the roundtable was an excellent forum for consultants to come together and share their own experiences including lessons learned. Beale & Company were encouraged to arrange a further consultant focused roundtable or informal gathering for later in 2017.

In order to preserve the discussion led nature of the roundtable format, numbers for future roundtables will continue to be strictly limited, However, if you would like to express your interest in contributing to further discussions, we would be very pleased to hear from you.

Originally published May 2017

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions