Having attended a construction industry leader’s event in the UAE recently that explored the hypothesis “is the recession over in the GCC and what opportunities lay ahead?” it made me start thinking.. Is it?
For me, before we get carried away with the notion that a boom is on the way for our construction industry, we really need to stop and reflect on recent history to make sure ‘we all’ learned the painful lessons of the tough last 5 years in the Gulf and in doing so, make mental notes on how to use this collective experience to chart and build a better and more sustainable future for all.
The last 5 years have demonstrated it is essential, whether for a contractor, developer or consultant to have a robust but flexible plan to align to the Middle East market, one of the most dynamic and fast moving markets in the world (upwards and downwards!). The idea that a one-off plan, such as an annual business plan or a one-off development feasibility study for a new project, is sufficient to guarantee success, needs to be quickly confined to the garbage bin.
Instead, we should see there is a more interactive and dynamic process of checking, reviewing, revising,– and constantly seeking to move into new space as it arises. By being flexible and developing various scenarios, organizations will be in a better position to ‘flex’ their resources, whether capital or man power to take advantage of market changes, which, in turn, will give them first mover advantage and therefore competitive edge.
More mature and predictable Western economies show how often the path out of recession can be very quick, with great opportunities presenting themselves early to those ‘looking’ for them. For those who are not looking, they will feed with the masses on the scraps left by early adopters, innovators and market makers. In our industry, those who reflect and develop well-considered market entry strategies for emerging markets such as Libya, Iraq etc… will be better placed to maximise opportunities, understand risks and how to mitigate them. Whilst fortune does favour the brave, it will be more sustainable if augmented with a robust plan and by being prepared. Knowing when to do something and more importantly what to do if x, y or z happens needs to be at the heart of all businesses that want to grow and be successful. The importance of having a robust business, understanding the market and how to operate within the market will be increasingly important as joint ventures increase territories blur, and markets, demand and clients converge.
Making a mistake is often excused as common human failure. As the regional markets continue to grow, making the same mistake twice should not be excused and lessons learnt over the last 5 years should and must prevent this. This should be the ‘only’ reason to refer to the past!
Another factor to consider in an expanding market is the growth and strength of competitors. From talent to resources, land to market segment industry participants all need to choose a market space and defend it with all their might. Take a UAE-based Developer; they will continue to face increasing product and price competition as more entrants come into their space. Those who will be most successful will be those who can for instance adapt their product, say purely 5 star residential developments to 4 star, mixed-use development design to meet the ‘now’ market need, not the need appraised 2 years ago when the scheme was conceived and the business case signed off.
By adopting a refocusing and rebalancing approach, leading organizations should continually evaluate what attributes of their business offering drives client value and remove those that don’t.
Again history has shown that out of economic downturn come opportunities as well as casualties. The question is which category will you fall into?
One of the most critical areas in the whole process of moving forward to face the future is reorganising to be able to meet ‘new’ needs, not old ones. Businesses should look at professional sport as their inspiration in this arena. In sport, say a football team, season goals are defined, coaches appointed and players bought, sold and swopped through the transfer process – all to align capability with plan, i.e. to win the cup. Unfortunately, our industry is slow to change and often old players try to learn new ways of playing, with variable success. Clients similarly suffer with teams playing to outdated rules, formations and ways.
Wherever you are in the industry community and whatever role you have, or aspire to, the alignment to new market needs must be understood and fully supported by the right product, offer and capability as buyer’s choice increases across the region over the coming years. Admittedly the process of re-organising and restricting can be a painful one, needing specialist support, insight, and skills; but like pruning a tree, businesses need to choose between erratic growth or vociferous and controlled growth after careful and professional pruning.
As the discussion and chatter of the ‘recession is dead’ echoed around me with numerous upbeat speakers declaring better times, others expressed caution of a still difficult and challenging road ahead. Certainly things do appear on the right track. The question remains: How much and how soon? Will you follow or will you lead?
by: Andrew Jeffery, director, infrastructure and capital projects at Deloitte Middle East