Contractors are facing delays and additional costs in completing ongoing work and are concerned about their ability to mitigate some of the risks they are facing as a result of the Covid-19 outbreak.
Although construction in the UAE has been deemed a vital industry during the lockdown, allowing work on sites to progress, contractors have told The National they are facing additional time and cost pressures.
This is not just an issue confined to the UAE alone. Last week Moody's Investors Service said projects globally "will face increased operating difficulties during the coronavirus outbreak associated with staff absences, reduced supply of materials and more onerous workplace practices".
Some project companies and their clients "are discussing temporary relaxations of parts of the performance regime or payment mechanism, or both", the ratings agency said.
“We are seeing clients suspend projects – we have had several projects suspended. We have had some clients say, ‘we’re not suspending but we’d be really happy if you guys slowed down’, and we have other clients who are outright telling us, ‘where you were going to bill us $100 this month ... we want you now to make sure you are going to cap this at $50’,” says Bishoy Azmy, chief executive of Dubai-based Al Shafar General Contracting.
However, in terms of making up the additional costs incurred, “neither of us has broached the topic”, Mr Azmy says.
“We’re all recognising that this is quite a global thing. It’s not anybody’s fault. It’s not like the client defaulted, or I defaulted.”
Bishoy Samy Edward, chief executive of Dhabi Contracting, says his company is continuing to work around the clock “with my full force” of about 10,000 workers.
“I’m paying salaries for these people and they need to work so they can get paid – the same for me,” he says.
“I cannot afford putting 2,000 people idle in the camps and pay them nothing. There’s no law saying you can put people in camps and pay them no money. It would be a big problem,” he says.
Contractors have taken precautions to prevent the spread of the disease. Rules have been introduced, such as limiting the number of workers travelling on buses to and from sites. Typically, buses carry about 60 workers but this has been limited to 20.
“Either I make more trips, which will cost me more, or I just get more buses and transfer everyone at the same time. This is what I am doing because I have a huge fleet of buses. However [that] means more fuel [and] more drivers’ salaries,” Mr Edward says.
He has written to clients detailing the extra costs being incurred and requesting their support. He also said social distancing can be impractical on some sites, especially in city centres where footprints are tight and rest areas are small.
The UAE Construction Industry Think Tank, a body co-ordinated by lender Mashreq and industry title MEED, this month called for the introduction of standardised contracts.
A white paper produced by the organisation says contracts are currently written by project owners, meaning the majority of risk in the delivery is borne by the contractor.
The introduction of a standardised construction contract tailored for the UAE could benefit the $710 billion (Dh2.6 trillion) pipeline of projects that are planned or underway by restricting bad behaviour and reducing disputes, the paper states.
The additional pressures contractors are facing as a result of Covid-19 has brought this matter to a head, Mashreq Bank’s global head of contracting finance, Mohammad Khader Al Shouli, says.
“I believe there will be a lot of requirements for time extensions, variations and delays without penalties. If that doesn’t really materialise or there is no collaboration on it, I think people will resort to those specific paragraphs in their contracts where force majeure is mentioned,” he says.
Force majeure is a concept in most countries with a civil law code, including the UAE, which will be incorporated in most “construction contracts of any sophistication”, explains Thomas Wilson, a partner at law firm Squire Patton Boggs. In general, it covers an event that “prevents the contractor’s performance of its obligations”.
“Contractual force majeure clauses may cover circumstances such as Covid-19,” says Nesreen Osman, a construction advisory and disputes partner at law firm Pinsent Masons. “Generally, these clauses can excuse a party from its delays but may not allow it to recover additional costs.”
Other contract provisions could help with cost recovery, though, Mr Wilson says.
“In civil law jurisdictions, including the UAE, the law includes provisions for exceptional public circumstances causing performance of a contract not to be impossible but to be extremely burdensome financially. In which case courts or arbitration tribunals can adjust the burdens to the parties to a more reasonable [level]. That’s an interesting provision of the law that will be used when the dust settles, but it is not going to be applicable in all respects and it is not a panacea,” he said.
"Generally, these clauses can excuse a party from its delays but may not allow it to recover additional costs."
One measure that should be avoided, according to Mr Al Shouli, is the withdrawal of performance bonds, which are sums contractors have to provide at the outset of a contract that typically serve as open-ended guarantees.
“Those instruments need to be now tackled with caution and with care,” he says. “Today, you cannot use them to pressure a contractor or to agree to certain changes or discounts that you used to do in the past because it puts so much pressure on the system, and on the contractor. I believe that a lot of contractors will not be able to survive [withdrawal of bonds].”
The heads of three major Abu Dhabi government branches - the Department of Economic Development, the Department of Municipalities and Transport and the Department for Culture and Tourism – held meetings with business owners and investors in a number of industries to discuss the impact of Covid-19, including the contracting sector. They heard concerns from contractors about the importance of keeping funding flowing to projects and calls for regulatory consistency, the departments said in a statement on Sunday.
"The challenges faced by the contracting sector and their companies in these circumstances makes us more adamant to increase our cooperation and efforts with all strategic partners concerned to reach immediate and more effective solutions and presenting proposals for quick and more impactful measures that revitalise the sector in the short term, while contributing to enhancing investor confidence in the national economy in the long run,” said the Department of Economic Development's chairman, Mohammed Al Shorafa.
Mashreq's Mr Al Shouli says the lender is continuing to extend support to contractors in terms of financing projects that face cashflow disruption and pointed out that in some instances – especially for many government-related projects – payments are being accelerated.
“We used to get within 60 days of certification, now we are getting within 20 days of certification."
However, he says non-essential spend – for acquisitions, or anything not related to projects – is being discouraged.
One of the most pressing issues for contractors currently is repatriating workers whose contracts have ended, given that some countries have temporarily closed borders even for returning nationals, and flights are unavailable.
“Now, a lot of our workforce aren’t even able to go home,” ASGC's Mr Azmy said. “If that’s for two weeks, maybe we can shift them to other sites that are working. If it’s a month maybe we can shift them a little and pay them some of their paid leave. But if it’s three months, obviously we’re not going to be able to take that huge cost ourselves and we’re going to be looking for help either from clients or government. We don’t really know.”
Western Region Asia Cup T20 Qualifier
Sun Feb 23 – Thu Feb 27, Al Amerat, Oman
The two finalists advance to the Asia qualifier in Malaysia in August
Group A
Bahrain, Maldives, Oman, Qatar
Group B
UAE, Iran, Kuwait, Saudi Arabia
'The Woman in the House Across the Street from the Girl in the Window'
Director:Michael Lehmann
Stars:Kristen Bell
Rating: 1/5
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Company name: Play:Date
Launched: March 2017 on UAE Mother’s Day
Founder: Shamim Kassibawi
Based: Dubai with operations in the UAE and US
Sector: Tech
Size: 20 employees
Stage of funding: Seed
Investors: Three founders (two silent co-founders) and one venture capital fund
57%20Seconds
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Rusty%20Cundieff%0D%3Cbr%3E%3Cstrong%3EStars%3A%20%3C%2Fstrong%3EJosh%20Hutcherson%2C%20Morgan%20Freeman%2C%20Greg%20Germann%2C%20Lovie%20Simone%0D%3Cbr%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E2%2F5%0D%3Cbr%3E%0D%3Cbr%3E%3C%2Fp%3E%0A
Killing of Qassem Suleimani
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
Killing of Qassem Suleimani
Global state-owned investor ranking by size
|
1.
|
United States
|
|
2.
|
China
|
|
3.
|
UAE
|
|
4.
|
Japan
|
|
5
|
Norway
|
|
6.
|
Canada
|
|
7.
|
Singapore
|
|
8.
|
Australia
|
|
9.
|
Saudi Arabia
|
|
10.
|
South Korea
|
Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
more from Janine di Giovanni
The%20Mandalorian%20season%203%20episode%201
%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3ERick%20Famuyiwa%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%20%3C%2Fstrong%3EPedro%20Pascal%20and%20Katee%20Sackhoff%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E4%2F5%C2%A0%3C%2Fp%3E%0A
More from Neighbourhood Watch:
Our legal advisor
Ahmad El Sayed is Senior Associate at Charles Russell Speechlys, a law firm headquartered in London with offices in the UK, Europe, the Middle East and Hong Kong.
Experience: Commercial litigator who has assisted clients with overseas judgments before UAE courts. His specialties are cases related to banking, real estate, shareholder disputes, company liquidations and criminal matters as well as employment related litigation.
Education: Sagesse University, Beirut, Lebanon, in 2005.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
UAE currency: the story behind the money in your pockets
BIGGEST CYBER SECURITY INCIDENTS IN RECENT TIMES
SolarWinds supply chain attack: Came to light in December 2020 but had taken root for several months, compromising major tech companies, governments and its entities
Microsoft Exchange server exploitation: March 2021; attackers used a vulnerability to steal emails
Kaseya attack: July 2021; ransomware hit perpetrated REvil, resulting in severe downtime for more than 1,000 companies
Log4j breach: December 2021; attackers exploited the Java-written code to inflitrate businesses and governments
BULKWHIZ PROFILE
Date started: February 2017
Founders: Amira Rashad (CEO), Yusuf Saber (CTO), Mahmoud Sayedahmed (adviser), Reda Bouraoui (adviser)
Based: Dubai, UAE
Sector: E-commerce
Size: 50 employees
Funding: approximately $6m
Investors: Beco Capital, Enabling Future and Wain in the UAE; China's MSA Capital; 500 Startups; Faith Capital and Savour Ventures in Kuwait
hall of shame
SUNDERLAND 2002-03
No one has ended a Premier League season quite like Sunderland. They lost each of their final 15 games, taking no points after January. They ended up with 19 in total, sacking managers Peter Reid and Howard Wilkinson and losing 3-1 to Charlton when they scored three own goals in eight minutes.
SUNDERLAND 2005-06
Until Derby came along, Sunderland’s total of 15 points was the Premier League’s record low. They made it until May and their final home game before winning at the Stadium of Light while they lost a joint record 29 of their 38 league games.
HUDDERSFIELD 2018-19
Joined Derby as the only team to be relegated in March. No striker scored until January, while only two players got more assists than goalkeeper Jonas Lossl. The mid-season appointment Jan Siewert was to end his time as Huddersfield manager with a 5.3 per cent win rate.
ASTON VILLA 2015-16
Perhaps the most inexplicably bad season, considering they signed Idrissa Gueye and Adama Traore and still only got 17 points. Villa won their first league game, but none of the next 19. They ended an abominable campaign by taking one point from the last 39 available.
FULHAM 2018-19
Terrible in different ways. Fulham’s total of 26 points is not among the lowest ever but they contrived to get relegated after spending over £100 million (Dh457m) in the transfer market. Much of it went on defenders but they only kept two clean sheets in their first 33 games.
LA LIGA: Sporting Gijon, 13 points in 1997-98.
BUNDESLIGA: Tasmania Berlin, 10 points in 1965-66
UAE - India ties
The UAE is India’s third-largest trade partner after the US and China
Annual bilateral trade between India and the UAE has crossed US$ 60 billion
The UAE is the fourth-largest exporter of crude oil for India
Indians comprise the largest community with 3.3 million residents in the UAE
Indian Prime Minister Narendra Modi first visited the UAE in August 2015
His visit on August 23-24 will be the third in four years
Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, visited India in February 2016
Sheikh Mohamed was the chief guest at India’s Republic Day celebrations in January 2017
Modi will visit Bahrain on August 24-25
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
The biog:
Languages: Arabic, Farsi, Hindi, basic Russian
Favourite food: Pizza
Best food on the road: rice
Favourite colour: silver
Favourite bike: Gold Wing, Honda
Favourite biking destination: Canada
Most sought after workplace benefits in the UAE
- Flexible work arrangements
- Pension support
- Mental well-being assistance
- Insurance coverage for optical, dental, alternative medicine, cancer screening
- Financial well-being incentives
UAE currency: the story behind the money in your pockets
More on animal trafficking
The specs
Engine: Direct injection 4-cylinder 1.4-litre
Power: 150hp
Torque: 250Nm
Price: From Dh139,000
On sale: Now
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
The team
Videographer: Jear Velasquez
Photography: Romeo Perez
Fashion director: Sarah Maisey
Make-up: Gulum Erzincan at Art Factory
Models: Meti and Clinton at MMG
Video assistant: Zanong Maget
Social media: Fatima Al Mahmoud
Zayed Sustainability Prize
Representing%20UAE%20overseas
%3Cp%3E%0DIf%20Catherine%20Richards%20debuts%20for%20Wales%20in%20the%20Six%20Nations%2C%20she%20will%20be%20the%20latest%20to%20have%20made%20it%20from%20the%20UAE%20to%20the%20top%20tier%20of%20the%20international%20game%20in%20the%20oval%20ball%20codes.%0D%3Cbr%3E%20%0D%3Cbr%3E%3Cstrong%3ESeren%20Gough-Walters%20(Wales%20rugby%20league)%3C%2Fstrong%3E%0D%3Cbr%3EBorn%20in%20Dubai%2C%20raised%20in%20Sharjah%2C%20and%20once%20an%20immigration%20officer%20at%20the%20British%20Embassy%20in%20Abu%20Dhabi%2C%20she%20debuted%20for%20Wales%20in%20rugby%20league%20in%202021.%0D%3Cbr%3E%20%0D%3Cbr%3E%3Cstrong%3ESophie%20Shams%20(England%20sevens)%3C%2Fstrong%3E%0D%3Cbr%3EWith%20an%20Emirati%20father%20and%20English%20mother%2C%20Shams%20excelled%20at%20rugby%20at%20school%20in%20Dubai%2C%20and%20went%20on%20to%20represent%20England%20on%20the%20sevens%20circuit.%20%0D%3Cbr%3E%20%0D%3Cbr%3E%3Cstrong%3EFiona%20Reidy%20(Ireland)%3C%2Fstrong%3E%0D%3Cbr%3EMade%20her%20Test%20rugby%20bow%20for%20Ireland%20against%20England%20in%202015%2C%20having%20played%20for%20four%20years%20in%20the%20capital%20with%20Abu%20Dhabi%20Harlequins%20previously.%0D%3C%2Fp%3E%0A
How to help
Send “thenational” to the following numbers or call the hotline on: 0502955999
2289 – Dh10
2252 – Dh 50
6025 – Dh20
6027 – Dh 100
6026 – Dh 200
U19 WORLD CUP, WEST INDIES
UAE group fixtures (all in St Kitts)
Saturday 15 January: v Canada
Thursday 20 January: v England
Saturday 22 January: v Bangladesh
UAE squad
Alishan Sharafu (captain), Shival Bawa, Jash Giyanani, Sailles Jaishankar, Nilansh Keswani, Aayan Khan, Punya Mehra, Ali Naseer, Ronak Panoly, Dhruv Parashar, Vinayak Raghavan, Soorya Sathish, Aryansh Sharma, Adithya Shetty, Kai Smith
The biog
Family: He is the youngest of five brothers, of whom two are dentists.
Celebrities he worked on: Fabio Canavaro, Lojain Omran, RedOne, Saber Al Rabai.
Where he works: Liberty Dental Clinic
More from Rashmee Roshan Lall
MATCH INFO
Uefa Champions League, last 16, first leg
Liverpool v Bayern Munich, midnight (Wednesday), BeIN Sports
More from Neighbourhood Watch:
Boulder shooting victims
• Denny Strong, 20
• Neven Stanisic, 23
• Rikki Olds, 25
• Tralona Bartkowiak, 49
• Suzanne Fountain, 59
• Teri Leiker, 51
• Eric Talley, 51
• Kevin Mahoney, 61
• Lynn Murray, 62
• Jody Waters, 65
