Security gobbles up much of Iraq's rebuilding money
Logistics and building costs of US $500/m2 in the country are further significant problems
UAE construction companies hoping to do business in Iraq face a security bill of 25% of the cost of construction, and the problems do not end there.
Building costs and logistics are further hurdles companies must jump. “If 200 schools are to be developed at a cost of $200 million under a fast track programme, the problem is that 25% of the cost goes on security to guard the site. A quarter of the funding is going waste,” Ammar Al Assam, business development manager of Dewan Al Emara, told Construction Week.
The company is a leading architectural engineering and design consultancy firm that has a major presence on the ground in Iraq. It started life in Iraq in the 1970s, but then moved out to the UAE. Now the firm is back doing business from the centre of Baghdad.
“Out of the US $18.6 billion committed by the USA, only $10.6 billion is left after deducting administrative costs,” said Ammar. “Iraq has international sized projects, but a lot of money is going to security and administration,” he said.
“Then, there are the logistics of it all. There are 2300 concurrently running projects in various parts of the country, and some in very hostile areas,” he said. Building costs too are nearly three times the cost of the same building elsewhere. “It takes about $500/m2 to build in Iraq, while you can build at $200/m2 in Pakistan,” said Ammar.
He said the war-ravaged country is still facing several uncertainties, but hoped that the situation would improve. Recently, the US handed over power to a civilian national government in Iraq, which is hoped to quieten down the insurgency .problem.
“In Iraq you face problems such as how to manage to fast track a project that normally takes three years. How do you manage to create safe zones to work in; the logistics are very complicated of bringing in the raw materials. The UN sanctions of the past 14 years have really killed the economy,” the Dewan Al Emara business development manager pointed out.
He said another problem being faced is that of finding skilled personnel locally in Iraq. “There are no skills, and though the people are beginning to learn quickly, they have no technical base. Knowledge transfer is of critical importance. However, we are optimistic. Iraq is a big country. It has lots of work,” said the Dewan official.
He pointed out that Iraq is one of the key markets for his company. “We went back last year. Compared to what we do here, we are doing relatively smaller projects such as headquarters and warehouse for General Motors in Baghdad and Basra; a five-storey hotel in Basra. Our major interest there is to work with the US’ Project Management Office, which manages US grants.”
Ammar pointed out that consultants would be needed on the ground in Iraq to help implement and build projects that have been contracted out such as the $900 million security and justice project to Parsons or the $500 million for schools and healthcare project.