Contractors too busy to meet tender calls

Major infrastructure contracts are going begging in the GCC because contractors are just too busy to respond to tender calls. Projects delayed and mothballed as clients fail to attract minimum bidder shortlists and contractors 'cherry-pick' only lucrative packages.

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By  Sean Cronin Published  October 22, 2005

Major infrastructure contracts are going begging in the GCC because contractors are just too busy to respond to tender calls. Projects have been delayed or mothballed entirely across the region, as contractors only cherry-pick lucrative packages. And the situation has reached crisis point in Dubai and Qatar where Construction Week has learned that some tender announcements are failing to attract even a single response. The capacity crisis in the industry has led to fears that public sector tender awarding bodies are not getting value for money. Ibrahim Yaqob Ali, director of the contracts and purchasing department at Dubai Municipality, said: “A few weeks ago we had a tender opening and for five of the nine tenders, we received no bids.” He added: “A lot of the time we open big tenders for 250 houses for example, and we receive only one or two bids and most of the time they are above our estimates or even our budgets.” The engineering department of the Municipality currently processes between 500 and 600 tenders every year, and the shortage of contractors responding to announcements is beginning to have a major impact on its infrastructure planning programme. Oil and gas projects in Qatar have also been hit hard; earlier this year Qatar Petroleum revealed that it had been forced to put upstream projects on hold because of a supplier crunch and through fears that the market was over-heating. The Qatari Public Works Authority has also been forced to simplify its pre-qualification procedures in a bid to attract more contractors onto shortlists. A substantial civils package put out by Dubai Municipality in recent weeks attracted just two bidders, and several other projects have had their tender deadlines extended, including thebeautification work on Jumeirah Beach Road, the Dubai Sports City infrastructure package and phase three of the Ras Al Khor creek crossing. Mohammed Fathi , director of the roads section at consultant Wilbur Smith Associates, said: “The main reason for this situation is that there are too many developments happening at the same time, so contractors put in the highest rates they can.” Contractors are also fearful of over-stretching themselves and gaining a bad reputation among clients for being unable to deliver projects on time. A source at contractor Wade Adams said: “There is a lot of work in the market at the moment and unfortunately there is not enough time available to do it. “One of the main reasons why contractors shy away from projects is because they are not given enough time to go through all the details. “The market here is so competitive that no one wants to risk not being able to finish the construction work on time and then get stuck with a bad reputation throughout the region. So the easier thing to do is to take up jobs that one is confident about.”

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