Building up to the next level

From humble beginnings in 1989, with just two members of staff and a contract for a four-storey building on Al Diyafah Street, ASGC has become one of Dubai’s foremost contractors with over 7,000 employees. Bishoy Azmy, deputy general manager, discusses the company’s modus operandi and his thoughts on the industry

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By  Christopher Sell Published  December 2, 2006

|~|148int200.gif|~|Azmy says that ASGC’s policy of bidding for larger and larger projects and competing with international contractors, has increased the company’s standing in the local industry and enabled it to grow at a faster rate.|~|How has ASGC negotiated its way through the Dubai contracting landscape to get where it is today?

The growth of the company has certainly been rapid. From 1989 to today, we have moved from an income of less than US $13.6 million (AED50 million) to over $272 million annually. We’ve expanded in various directions every year and we have jumped up the scale of contractors every couple of years, moving into a new ‘zone’. Contractors are graded; even if it’s unofficial, it’s the reality.

We have improved the status of our company by getting involved in jobs that are always moving up in terms of size, complexity and prestige. Each one of these took us a notch up, and we incrementally improved at a fast rate. Usually contractors stay at the same level.

Are you concerned when you tender for bigger projects than you are used to?

No, this is our style! We always go for something bigger. That is why we have projects in hand worth $1.08 billion.

It is no secret that the sheer scale of construction has led to issues with tenders and capacity. How is ASGC dealing with this?

We are trying to focus on those jobs that add value to our company, so we are not taking on projects for the sake of it. We are undertaking a cautious, studied expansion. There is obviously a lot of work around – so the more work you take, the more your company grows. But there is a limit, and the shortage in the market now, is that of management skills. A severe shortage of human resources is limiting expansion. Workers are a problem, materials are a problem, storage is a problem; but the key, the hindering factor in the industry, is a huge shortage of management skills.

Why is this?

Dubai is a small place; there was ‘x’ amount of work, and now there is ‘10x’ amount of work. You need people to manage that. If you are not managing correctly, things will collapse, disintegrate and disappear. All companies are aware of this. Market margins are very slim because it’s a very competitive place.

Ordinarily, a company will get anyone to fill the job. Even if you do a bit of sloppy work you can get away with it. Here you cannot. You need to get qualified people. You need to do competent work and get the job done well, safely and on time.

Due to shortages, the price of managers and engineers are going up; I would say they are going up more than 100% annually. If a project manager on a typical job would have earned $6,800 per month in 2005, he’d be earning $13,600 per month this year. This is more or less across the board.

So what does ASGC look for in a project?

We look for understanding and professional clients. They are arguably the most important part. An informed client gives you a better job – they will not argue on engineering points, not delay decisions unnecessarily, and not argue. They are more efficient, hassle-free and less obnoxious.

They say that beggars can’t be choosers. But now we are in a luxury position to pick and choose. We try and focus on projects that enhance our portfolio and help us climb up the contract ladder, such as Emirates Crown Tower or the Golden Mile on the Palm Jumeirah.

What do you personally look for in a project and what excites you enough to get involved?

What I like is the design-build approach to projects; we are a contractor but also a developer. Emirates Crown Tower is an example of this. From our experience as a developer and contractor we realise that when a contractor is on-board early on the project-cycle it make a real difference to the job. Costs go down, total duration goes down and ‘project constructability’ goes up.

So when a contractor gets involved with a design early on, it benefits the client. The client puts the liability on the contractor but he is given a free hand to run the show, so that is what we like.

If you are good, you are proved to be, if you are bad you cannot blame anyone else as you hold all the keys.

So what improvements could be made to make the industry better with regards to legislation, and do you have any concerns?

I think there are a lot of positives in Dubai that make the construction industry vibrant. A lot of international contractors are coming in, which wouldn’t happen if market was unattractive, so the overall impression of the industry is positive. If I had to identify one thing, however, it would be the legal framework of contracts. The market has not matured, so not everyone has sufficient contractual knowledge. Projects are very big and need to be clearly defined, and there are a lot of responsibilities and duties for all parties. Things are much better defined in other countries. A legal and contractual framework needs to be developed and people need to be informed, and there has to be a legal system that supports speedy decisions in case of disputes.||**||

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