Strained market conditions mean contractors are shying away from risk

Disagreements over terms and conditions between contractors working on the Tower at Dubai Creek Harbour scheme and the project owner once again highlights the risks facing contractors working in the region.

Over the past two years, tightening liquidity has meant payments have slowed, claims have been either dismissed or hotly contested, and final accounts are not settled on time.

Contractors do not want a repeat of these painful experiences, which means that despite being hungry for new work to fill their order books, they are now more reluctant to sign up for projects that could hurt their finances in the future.

For the smaller, less technically challenging projects that are within the capabilities of the smaller local companies, this does not present much of a challenge when project owners are tendering deals as the likelihood is that at least a few firms will always be prepared to bid competitively.

The problem comes on the larger, complex schemes that require the technical expertise and ability to take on and manage risks that only a limited number of construction companies possess. For these schemes, project owners are now finding it more difficult to get competitive pricing as firms shy away from the risks involved.