Unblocking blocks

There is, it would seem, some form of construction activity on every street corner, and each of these jobs need concrete. In many cases the concrete used is precast blocks. Even though the market for construction materials is booming, suppliers still face a number of key challenges. Construction Week spoke to block producers to find out what the obstacles are and how they can be overcome.

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By  Colin Foreman Published  June 30, 2004

Unblocking Blocks|~|Blocks Body.jpg|~|Blocks are used in all building projects|~|It is impossible to deny that Dubai is overwhelmed with construction activity at the moment. The level of development over the last two years is almost unprecedented worldwide and the market shows no signs of slowing in the near future. This growth will be fuelled by a number of major developments including Dubailand and the mass transit system that have yet to start on site and are still very much in the planning stages. With all this market activity suppliers and contractors alike are fortunate enough to be able to enjoy full order books as they struggle to meet demand. It has been well documented in the press over the last few weeks that the nations cement factories now have to churn out cement at full capacity just to meet the rising demands of the market. “At present about 7 million t of cement is being produced, but the market demand is about 10 million t, so there is a shortfall of about 300 000 t per month, this shortfall will be met by two new cement factories in Ras Al Khaimah and Abu Dhabi,” says Abhay Urankar, general manager, Emcon. Much of this cement is used to make concrete. Almost all buildings in Dubai are concrete structures so the demand for concrete, and therefore cement, is higher than it would be if more steel frame structures were developed. Traditionally the majority of concrete used was cast in situ using formwork. Although this remains a popular form of construction, contractors and consultants now often opt for precast blocks. Precast concrete is favoured for a number of reasons. The first is that it is faster. Large portions of a structure can be simply slotted into place without waiting for formwork to be erected or concrete to cure. Second, precast concrete is not a wet trade so many of the environmental problems such as wastewater from concrete pouring are eliminated. Third, quality is also improved as the blocks are produced in a factory environment. Fourth, reinforced precast beams can now be used for horizontal elements to span large column-free spaces such as car parks. The standards set for precast blocks are particularly high and blocks must be tested before they can be delivered onsite. “We have to wait before the municipality issues the blocks with a compliance certificate, which takes up a lot of time. We employ a number of people just to deal with this process,” says Nadim J. Hobeika, general manager, Phoenix Concrete Products. Despite producing a staple of the construction industry, concrete block producers face a number of major challenges if they are to be successful in the marketplace. Rising cement prices is the number one issue at the moment. As a key raw material in concrete rising cement prices places tremendous upward pressure on concrete producers bottom lines as their operating costs increase. Producers are effectively held to ransom by cement, as their businesses simply cannot operate without it. Dampening the affect of price increases is also very difficult as very few block producers have sufficient capacity to store large quantities of cement. Even the producers with larger storage facilities need fresh deliveries regularly as their silos only hold enough cement for one day’s worth of production at full capacity. “We can only store one day, or maximum one and a half days production. Our silos can only hold 100 00 to 200 000 t so that is just one or two days stock,” says G. Prithviraj, PRG Consultants. Over recent weeks the problem has been so grave that there has been cement shortages. Without their regular bulk deliveries that pump cement directly into the producers’ silos, the block producers had purchase large bags instead and devise ways of filling their silos – a labour intensive exercise that increases the cost of concrete production even further. “When you have a shortage of cement you have to cut shifts, your output drops you have to spread you overheads over reduced production and that obviously pushes the cost up,” says Alan Sakr, operation coordinator, Consent. With production at full capacity and fresh deliveries of cement needed regularly block producers have no alternative but to pass on any increase in price to contractors. With most main contracts negotiated as fixed sum contracts, contractors are reluctant to accept any increase in cost and in some cases payment may become an issue. Even when prices are favourable, non-payment is remains a very real concern. Unfortunately there are contractors out there who are known to go to extraordinary lengths to avoid payment. Contractors are not solely to blame for this as they themselves are in a tough situation and can often not guarantee that the client will pay them in full. The all too common practice of taking on jobs at a very low margin also increases the likelihood of non-payment as contractors sharpen their pencils and try to affect savings wherever they can, and delaying payments is often an option used. A dozen or so block producers have tried to overcome this hurdle by forming a representative group where producers can share experiences so that other suppliers do not make the same mistakes. Previously it was possible, and it did happen, for a contractor to not pay one supplier and then secure another order from a different supplier. With a number of contractors in the market this process could continue for some time until every suppliers’ fingers had been burnt. By sharing experiences other suppliers are made aware of which companies they should approach with caution and thus minimise the risk of non-payment. Others issues can also be raised. The recent cement price escalations for example were realised several months before the problem began to command front-page news coverage. “We knew that there would be problems with cement about nine months back,” says Prithviraj. “Although we were still shocked when the price increased twice in 48 hours,” he adds.||**||

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