Building boom forces firms to snub tenders

Contractors are forced into a tendering moratorium as capacity is stretched to the limit

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By  Construction Week News Team Published  September 16, 2006

The frantic pace of construction in the UAE is forcing contractors into placing a moratorium on bidding for new work – sparking fresh fears that the industry is over-heating. Most large building contractors are now replying to just a fraction of the invitations to tender they receive, while some are returning nominal bids with inflated prices, to deliberately rule themselves out of the running without causing any offence to clients. “In the emirates we are refusing many clients because we have enough work now – especially in Abu Dhabi, where we are overloaded with work. We are refusing to participate except in some very selective projects,” said Adli Al Khatib, senior estimator at Greek contractor, CCC. “The increase of construction work will affect everything – it will affect resources, materials. Now the volume of work is more than the capacity of the contractors.” It means that an increasing number of private sector clients are being driven towards letting projects through negotiation while many public sector clients are being forced into re-bids because they have failed to attract the necessary bidders. High-rise specialist ACC is also in increasing demand as plans for hundreds of new towers in Dubai and Abu Dhabi are drawn up. “You can only grow so much in a year as a construction company, and if the number of projects is much more than that, then you just have to be selective,” said spokesman Rasheed Mikati. The tender for the new air navigation building let by Abu Dhabi International Airport was sent out to 20 contractors, but just ten of them returned bids. “We conducted a tender over a period of eight months and we invited 20 companies to bid. We got ten tenders back and we found that some contractors had moratoriums, and some were responding without opening the tender documents, said Alan Ettridge, project and planning manager, General Civil Aviation Authority, Abu Dhabi. Main contractor on the Burj Dubai, Samsung, is another company that is stretched to capacity. Business development manager, Beejay Kim said the company was only bidding for work let by a few clients. “We are using all of our capacity and we don’t have any other capacity for other contracts right now,” he said. Palm Jumeirah Golden Mile contractor Al Shafar General Contracting currently has around 15 tenders under appraisal but will probably proceed with just four or five of them. General manager Bishoy Azmy said that invitations to tender were being received by the company on a daily basis but that the firm was only in a position to respond to about 50% of the tender documents it received.

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