September 2016

Issue #11

Global economy Industry focus

insight
Publicprivate
partnerships
Middle East in the Middle East
markets update

Commodities
price analysis
Global

Welcome to

Global economy
Insight #11.
In our 11th edition of Insight we take a

insight and trends

close look at the trends in the global
economy and in regional markets as
they impact on the Middle East and
particularly the Gulf Co-operation
Council (GCC) countries.
Uncertainty continues to be the agreement that, whatever the pain,
The uncertainty of the previous
watchword in most developed they will aim for that figure and no
12-18 months remains, but there
economies, albeit to varying more, as it appears that OPEC is
are clear signs that business and
degrees, as central banks and winning its battle to squeeze out
governments across all the major
governments continue to watch high-cost competition, particularly
economies are at least taking steps
events closely. They are influenced from the United States.
towards encouraging growth and
by the continuing civil war in Syria,
reducing uncertainty, despite several The $60/barrel point is seen as the
other conflicts in the Middle East
key geo-political and economic minimum price that would enable
and Africa, the slowing of growth in
issues remaining unresolved. re-investment in production by the
China and major markets such as
US shale producers (OPECs main
The Gulf region is no different. Major Europe, and the British decision to
target in this global price battle).
capital projects throughout the region negotiate their withdrawal from the
OPEC continues to stand firm in its
have been under intense scrutiny, European Union.
attempts to hurt the US producers,
with several delayed or suspended
When it comes to oil, the war even though some of its own
while negotiations have continued.
of attrition is slowly being won members, including Venezuela,
What is emerging is a stronger
by OPEC and the Gulf region have been pressing for a new target
sense of prioritisation for major
producers in particular, with prices of $70/barrel or even higher.
infrastructure projects, and also for
easing upwards since the lows of
those that are of social significance There remains little sign of a return
2014 and 2015, even though supply
such as in education or health. to the high-price, high-spending
remains relatively high.
era of pre-2014, even though some
One procurement solution for
Various forecasts had indicated OPEC sources have hinted at a
governments and other agencies is
that oil prices could reach $60/ longer-term target closer to $100/
public-private partnerships (PPP),
barrel by the turn of the year, but barrel. This indicates that the Gulf
an investment approach which the
that figure is likely to be a maximum states in particular are prepared to
public sector is less familiar with
rather than an absolute guide, as sit out the current impasse, with the
in the Middle East, but which is
OPEC partners struggle to keep aim of a longer-term competitive
attracting significant attention as an
prices contained at that maximum. gain.
alternative to conventional funding.
Most OPEC members remain in
In our focus this quarter we take a
look at the issues involved in PPP,
and what both sides of a typical
Average crude oil spot price 2016
collaboration should be looking out
for as they enter the fray.

2
4
Global
Regional
$ $ $
7 Commodities 37.34 47.69 45.93
9 Focus Q1 Q2 Q3
12 Currie & Brown offices
Source: World Bank
www.curriebrown.com
enquiries@curriebrown.com

September 2016 2
Global

One important trend resulting directly economies of France, Spain and Italy.
from the lower tax income from oil The British referendum decision has
production is that Gulf states are now added to the uncertainty, although
adopting different ways to fund public formal exit negotiations are unlikely
spending. In tandem, several states to be triggered by Prime Minister
have also accelerated investment Theresa May before early 2017.
in renewable energies, particularly
It is only when both sides negotiating
solar, in a clear strategic attempt to
positions are known that proper
steer their economies away from
forecasts can be made about the
conventional dependency on carbon
impact of Brexit on Europe, the UK
fuels and the expensive habit of
and the global economy as a whole.
funding massive spending on capital
Prior to the referendum in June,
projects from current accounts.
the IMF and other institutions had
This new assessment of public expressed significant concern about
expenditure is reflected in the the effect of Brexit, not only in Europe
growing interest in PPP indicated by but also on the world economy. The
most governments and other public UK is a significant member of the EU,
agencies across the Gulf region. As and accounts for around 10 per cent
we report in a separate article in this of its market. A hard Brexit, whereby
publication, investors and clients are the UK withdraws without agreement
embracing PPP much more seriously on the single market and freedom of
as a means of funding major capital labour movement, would jeopardise The UK wants to
projects across the region. New numerous international trade deals sustain and strengthen
investors from Europe and East Asia involving the EU.
are moving into this market with its partnership with
The uncertainty may be compounded
greater confidence.
by planned general elections in Germany once it has
Oil aside, uncertainty continues Germany and France next year. left the EU.
to hamper the world economy as
it travels forwards and away from
the banking crisis of 2008 and the
property slump that followed. The
United States economy continues
to demonstrate recovery, especially
in the number of jobs created, but
business and consumer confidence
in most western economies has
remained cautious throughout the year.
Growth forecasts overall have
remained sluggish, although in the
case of the US that may change
depending on the outcome of the
presidential election in November.
Regardless of who wins, there will be
close scrutiny of market reaction and
also any potential policy changes.
The European economy continues
to face serious uncertainty, with
growth remaining slow in the larger
UK Prime Minister Theresa May and German Chancellor Angela Merkel
Source: euobserver.com Credit: Tom Evans

www.curriebrown.com enquiries@curriebrown.com September 2016 3

Regional

Dubai continues to dominate

in construction projects
across the GCC
The Gulf states are undergoing significant policy changes which are likely to have
a long-lasting impact on both the construction sector and external investors.

The new realism which is being
felt across the region, and is being
emphasised by some administrations
more than others, has been driven in
part by the oil price shock of the last
18-24 months and a perceived need
to re-think the type of projects planned
by the public sector and the way they
might be procured and funded.
There are other drivers aside from oil
prices. In some areas, there is greater
emphasis on those projects that
demonstrate clearly-understood social
and economic value for example
health, education and transport
infrastructure while in other areas
the change is a result of clients re-
prioritising construction plans.
Overall the GCC region witnessed a
40 per cent drop in capital projects
during the first half of 2016, according
to research by Middle East Business
Intelligence (MEED). The situation is
blamed on a combination of low oil
prices, reduced government spending
and a weaker real estate market.

GCC contract awards 2015 vs 2016

The GCC witnessed a 40 per cent drop in capital projects

MEED Projects
researchers found
that contract awards
amounted to US$52
billion, a US$25 billion
drop on the same
period in 2015.

Source: meed.com.

www.curriebrown.com enquiries@curriebrown.com September 2016 4

Regional

MEED Projects researchers

concluded that market confidence
had been affected as a result, and
that clients were therefore particularly
reluctant to sign off new deals.
However, total awards for the year
are predicted to reach $140 billion,
a fall on last year but a figure which
nevertheless indicates some recovery
across regional markets since June.
The World Bank has further reduced
growth forecasts for 2016 in the
GCC countries to just two per cent.
Its overall figure for the Middle East
(2.9 per cent) is higher, mainly due
to greater activity in Egypt and also
the lifting of economic sanctions on
Iran. The World Bank also expressed
concern about ongoing military action Source: thenational.ae
in the Middle East region and the
risk of it spilling over borders, with The metro project is the single biggest award of the
economic and security implications.
$13.6 billion contract awards in Dubai in the first half
Nevertheless, economic conditions
are felt to be improving at a regional
of this year.
level, despite reduced spending,
(Spain), Gulermak (Turkey) and This plan includes numerous major
patchy confidence and other
Alstom (France). The line will also projects, such as the completion of
uncertainties.
connect to Al Maktoum International the Al Shindagha Tunnel, various
That recovery is variable, and is Airport. pedestrian and cyclist developments,
being led most strongly in Dubai, the extension of the Burj Khalifa
Dubais Roads and Transport
which continues to dominate in terms metro station and no less than 36
Authority (RTA) selected two
of construction projects, following a bridges. The Emirates News Agency
shortlisted consortia from a group of
general shake-out during 2015. said that the projects will be delivered
five bidders earlier this year.
in five phases, with completion set for
The bright spots around the region
The metro project accounts for nearly November 2019.
were mainly related to priority
half of all such deals made in the
projects, including event-driven work
GCC during the first half of the year.
such as the Dubai Expo in 2020 and
Transport infrastructure continues to
to a lesser extent this year the FIFA
drive growth, with a rail masterplan
World Cup planned for Qatar in 2022.
currently under way. In August MEED
Although the first half of the year reported that Sheikh Mohammed bin
produced the aforementioned big drop Rashid Al Maktoum had approved an
in contract awards, the biggest award RTA traffic and transportation plan for
of the year the $2.9 billion deal for a the period to 2030.
major expansion of the Dubai Metro
came through in June, lifting what was
otherwise a difficult period for clients
and contractors alike.
That contract will create a 15km
extension to the Expo site, leading
from the existing Red Line at the
Foster + Partners design
Nakheel Harbour and Tower station. for the mobility pavilion
Eleven kilometres of the line will has been chosen for
be elevated, including five of the
seven new stations to be created by the Expo 2020
the winning consortium of Acciona Source: expo2020dubai.ae

www.curriebrown.com enquiries@curriebrown.com September 2016 5

Regional
Rationalisation is the key for both
public and private sectors. Abu
Dhabis International Petroleum
Investment Company (IPIC) was
forced to write down oil assets by $6
billion and reported a loss of $2.7
billion for 2015. Managing director
Suhail Mohamed Al Mazrouei, who
is also the United Arab Emirates
energy minister, confirmed that IPIC
will merge with another Abu Dhabi
sovereign wealth fund, Mubadala
Development Company. The plan is
to diversify the energy portfolio and
reduce risk.
The family-owned Al Jaber Group has
confirmed plans to raise $1.6 billion
from a sale of assets as part of a
recovery plan aimed at reducing debt
and restructuring liabilities, according
to Bloomberg. The deal, which
involves the disposal of property
and shares, is being supported by
Al Jabers major creditors, including
several banks.
While the UAE continues to build,
other GCC countries continue to re-
trench, with some interesting results.
Saudi Arabia, for example, is using
the oil price downturn to re-evaluate
its approach to all projects. The
results could virtually revolutionise an
economy known for its comparative
conservatism.
According to Bloomberg, Saudi
Arabian government officials have
indicated that as many as a third of
current project plans worth more
than $60 billion could be cancelled.
www.curriebrown.com enquiries@curriebrown.com
The result of all this is that Saudi
Arabia is setting new priorities.
It is making firm moves towards
diversifying energy production to
include renewables such as solar.
As the worlds single biggest oil
producer (reclaiming this title from the
USA in early September) it remains
committed to investing in facilities
to support the shipbuilding and
distribution industry, such as on the
countrys east coast, where state oil
company Aramco needs more tankers
to be built to meet recovering demand.
The difference is that Saudi Arabian
officials are now looking at new ways
to fund investments. As we report
elsewhere in this publication, this
includes public-private partnerships
(PPP). This year, schemes including
the Taif airport have been delayed
as clients struggle with the support
mechanisms for collaboration with
private investors, many of which are
foreign banks.
Tourism is seen as a major source of
future income by most GCC states,
but many of them acknowledge
that they need to improve transport
infrastructure in order to exploit such
demand. In the case of Saudi Arabia,
officials have indicated a willingness to
effectively privatise the running of their
airports in exchange for significant
investment.
The international consultancy Deloitte
has pointed out that far greater
regulatory clarity is required from
governing authorities across the
Abu Dhabis International
Petroleum Investment
Companys (IPIC) plan
is to diversify its energy
portfolio and reduce risk.
region. It also pinpointed flaws such
as weak structures concerning dispute
resolution and what it described as
optimism bias, whereby detail is
skirted over in favour of a general
feeling that a project will work out in
the end, whatever the problems it faces.
Saudi Arabia has a national
transformation plan envisaging major
PPP contracts across various sectors
by 2020, including transport, energy,
health and education.
In Qatar, three groups have submitted
bids to complete the Doha Metro
project following the termination of
the previous consortiums contract
earlier in the year. The deal includes
the completion of the Msheireb and
Education City stations.
Oman has begun the implementation
of a public transport strategy, with
urban and long-distance buses
creating closer links between the
three main cities of Muscat, Sohar and
Salalah.
Oman authorities, however, have
put a 2,135km rail project on hold
following the continued suspension
of construction operations by Abu
Dhabi-based Etihad Rail. The initial
207km development was due to run
between Sohar and the UAE border.
The project has faced two such major
delays and will not meet its original
2018 completion date.
H. E. Mohamed Al Mazrouei
Minister of Energy, UAE
Source: arabianoilandgas.com
September 2016 6
Commodities

Price analysis

2015 2016
Commodities Unit Q4 Q1 Q2 Q3
Non-ferrous metals
Aluminium alloy US$/tonne 1,600.00 1,602.75 1,576.71 1,576.24
Aluminium US$/tonne 1,503.67 1,586.95 1,636.38 1,693.07
Copper US$/tonne 4,651.33 4,656.68 4,733.98 4,860.00
Lead US$/tonne 1,685.17 1,769.41 1,741.67 1,860.19
Nickel US$/tonne 8,778.33 8,695.89 9,013.90 10,487.77
Tin US$/tonne 14,711.67 15,335.68 16,805.83 18,049.40
Zinc US$/tonne 1,519.83 1,691.14 1,899.62 2,208.30
Steel
Reinforcing bars US$/tonne 328.33 351.67 466.67 400.00
Steel beams - channel US$/tonne 463.33 471.67 541.67 507.50
Hot rolled plates US$/tonne 311.67 316.67 413.33 387.50
Cold rolled coils US$/tonne 338.33 370.00 493.33 457.50
Pre-painted galvanised steel, 0.35 US$/tonne 516.67 565.83 705.00 612.50
Stainless steel HR coils 304 base US$/tonne 1,800.00 1,725.00 1,841.67 1,875.00
Energy
Crude oil US$/barrel 34.75 29.74 42.30 42.89
Diesel (Dubai only) US$/gallon 6.97 5.53 6.27 6.83
Cement
Cement US$/bag 3.47 3.57 3.57 3.56
Concrete (Dubai suppliers) AED/bag 261.33 257.33 258.67 263.50
Rubber
Rubber US$/100kg 168.01 157.12 203.11 210.71
Bitumen 60/70
Bitumen US$/tonne 503.11 503.11 503.11 503.11

Non-ferrous metal prices are derived from London Metal Exchange, whereas steel prices are derived from Middle East steel price
Indications; all based on average prices for the month.
The price of rubber is derived from International Rubber Board, based on average prices for the month.
All prices for commodities are based on bulk quantities, cash trade, US dollar.
Where ranges have been provided, an average price has been assumed for the purpose of comparison.
The rate for beams - channels has been derived from Far East/Europe/India market.
Cement prices are derived from UAE local supplier.
Crude oil price is derived from light crude brent, US market.
Diesel rates are from EPPCO.
Concrete rates AED/m3 based on the average price of concrete 45/27 from four UAE local suppliers.
Reinforcing bars are based on the average price from four UAE suppliers.
Cement rates AED/tonne based on the Dubai government cap imposed in 2008.

www.curriebrown.com enquiries@curriebrown.com September 2016 7

 Commodities

Crude oil (2006 - 2016) Cement (2006 - 2016)

30.00

120.00
25.00

105.00

90.00 20.00

AED/bag
75.00
15.00
US$/barrel

60.00

45.00 10.00

30.00
5.00
15.00

- -
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3

Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2006 2007 2008 2009 20102 011 2012 2013 2014 2015 2016

Diesel (Dubai only) (2006 - 2016) Steel (2006 - 2016)

Steel beams -channel

16.00 5,000.00 Hot Rolled Plates
Cold Rolled Coils

14.00 Reinforcing bars

4,000.00 Prepainted Galvanised Steel, 0.35
Stainless Steel HRCoils 304 Base
12.00
US$/tonne

3,000.00
AED/gallon

10.00

8.00
2,000.00

6.00

1,000.00
4.00

2.00 -
Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q2
Q3
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2009 2010 2011 2012 20132 014 2015 2016 Q1
2006 2007 2008 20092 010 2011 2012 2013 2014 2015 2016

Crude oil (2006 - 2016) Non-ferrous metals (2006 - 2016)

4,500.00
Lead 50,000.00

Aluminium Alloy Copper

4,000.00
Aluminium 45,000.00 Nickel

Zinc Tin
3,500.00
40,000.00

3,000.00 35,000.00
US$/tonne

US$/tonne

2,500.00 30,000.00

2,000.00 25,000.00

20,000.00
1,500.00

15,000.00
1,000.00

10,000.00
500.00

5,000.00
-
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3
-
2006 2007 2008 2009 20102 011 2012 2013 2014 2015 2016 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3
2006 2007 2008 2009 20102 011 2012 2013 2014 2015 2016

www.curriebrown.com enquiries@curriebrown.com September 2016 8

Focus
Precision and good planning
are vital to successful
PPP procurement
Middle Eastern governments and
other public agencies are turning to
public private partnerships (PPP) as
an alternative funding mechanism for
major projects amidst greater financial
uncertainty affecting most of the Gulf.
PPP is very much a new concept
for many officials in a region which
previously was comparatively free-
spending, especially on high-profile
iconic projects of Dubai and many
other cities in the United Arab
Emirates, Saudi Arabia, Kuwait, Oman
and Qatar.
But economic circumstances, not least
the prolonged dip in oil prices, has
prompted many in government to re-
think the way ahead when it comes to
www.curriebrown.com enquiries@curriebrown.com
the project management and funding
of major infrastructure investment.
The experience of mature PPP
markets such as Canada, Australia
and the UK can be applied
to influence and support the
development of Gulf projects. This
would be of benefit to both clients and
investors, but there would need to be
regional and local adaptations rather
than a straight copy of approaches
from elsewhere.
The first thing to consider when
examining the suitability of PPP is
the rationale itself. The obvious and
conventional method has been for
the client to fund a project directly
or to borrow from the bank. But with
There is no standard global
definition of precisely what the
term public-private partnership
means. It is sometimes used
to refer to any cooperative
combination of the public and
private sectors to achieve a
public-policy goal. The World
Bank Group defines a PPP as a
formal contractual relationship:
A long-term contractual
arrangement between a public
entity or authority and a private
entity for providing a public asset
or service in which the private
party bears significant risk and
management responsibility.
September 2016 9
Focus
tighter controls on public spending and
reduced cash income, PPP becomes
an attractive option, tapping into
longer-term funding solutions, creating
output-based specifications for
construction and operational periods,
and developing skills in both the public
and the private sector.
The Gulf Co-operation Council
(GCC) states have between them
many thousands of construction
projects proposed, approved,
under way or on hold as public and
private sectors grapple with the new
economic realities. The oil price
situation is happening in tandem with
considerable uncertainty worldwide.
Clients, therefore, need to review
commitments and prioritise activities,
and this trend has become more
apparent over the last two years.
Infrastructure is emerging as the top
priority: roads, railways, water and
renewable energy projects all over the
Gulf are gaining traction as potential
PPP vehicles. Similarly, school and
medical facilities are priority public
sector projects which may well be
chosen for this type of funding.
Many parts of the region have growing
populations with increasingly middle-
class aspirations. Apart from places
to live, they are seeking good schools
and hospitals, and they expect
world-class transportation. To varying
degrees, this driver applies across
the region, and governments have
been carefully examining long-term
economic growth and a move away
from hydrocarbons as the main source
of income. As cash becomes less
freely available, clients and potential
investment partners are having to
learn how to work together.
Successful PPPs depend very much
on trust and collaboration; this is
absolutely key to both parties as
they negotiate building and service
specifications, costs and payment
schedules. When a PPP agreement
is finalised and signed off, it involves
major international investors and
cannot be changed easily, if at all.
Relationships must be developed with
potential investment partners.
www.curriebrown.com enquiries@curriebrown.com
Early attempts at PPP-style projects
faced difficulties, and it is important
that both parties understand the
demands involved in embarking on
this path. Successful PPP projects
result from competent pre-planning of
clear outputs for both construction and
asset operation, followed by strong
negotiation. By their very nature they
attract leading international banks and
construction groups. Their position is
to agree long-term partnerships but
also to stick to agreements, with the
allocation of risk between the public
and private sector made very clear
within the contract terms.
PPP contracts are not structured to
readily accept contract changes, and
this factor, as well as provisions for
termination, can be complex.
What does that mean for partners in
the Gulf? Firstly it means that clients
and their advisors must develop a
clear understanding of what they
expect from any project, and how
much it will cost over the projects
lifetime, which could be up to 30 years.
This introduces additional discipline
to project management: project
specification should be well thought
through. Details should be future-
proofed as far as possible, with both
the initial construction requirements
as well as the long-term operational
In Gulf countries a
funding gap of around
$270 billion is expected
over the next three
years, with around $50
billion of that directly in
infrastructure.
(Source: Standard & Poors)
requirements carefully considered
and documented in the output
specifications.
What are the benefits? The PPP
structure means that projects are
funded by financial institutions so
that the project cash does not initially
come directly from government
capital budgets. Instead, the client will
typically commission a major building
such as a hospital, and then agree
a deal whereby the building, and all
facilities management at least, are
paid by the government in instalments
over an agreed period.
Previously, some GCC countries
have funded projects from their
own reserves, but other pressures
now make PPP more attractive to
governments that are seeking private
sector investment and are willing to
September 2016 10
Focus

shift priorities to projects that make

the greatest social and economic
sense.
Recently, Kuwait and the UAE
have witnessed the updating or
creation of new regulations aimed
at accommodating the PPP concept
within existing legal frameworks. This
has led to a surge in PPP proposals
at various stages of tender. Qatar
has not written such regulations into
law, but has appointed consultants
to advise on framework and
legislation issues. Saudi Arabia,
actively considering what would
be a significant change of policy, is
using existing commercial law, but is
exploring changes to support a more
active PPP programme.
Business culture has been a historic
stumbling block. Governments and Artistic impression of the new multi-facility
regional authorities are less familiar Transit Oriented Development at Union Square
with PPP, and officials have not Source: thedubaitram.com, Credit: RTA
always understood why it takes time
There are many examples where The process of evaluating and
to take a project to market, reaching
dedicated PPP units have supported selecting a bidder is important too.
financial close only when all other
the development of procurement and The procurer and advisors must
stages are complete, before work
delivery skills in the public sector, and shortlist bidders, talk to them, make
can begin. In economies where cash
collaborated with the private sector. the evaluation very clear so that
might previously have been released
This allows for clarity of procurement there is no risk of misunderstanding,
once a project was approved, this
processes, engagement with funders, and ensure transparency along the
process can appear unnecessary
development of a pipeline of projects, way. Key issues here include the
and frustrating. Experienced PPP
and clarity around contract terms: all implementation schedule and the
advisors and investors are more
essential ingredients to attract the payment structure. Both sides must
familiar with the idea of detailed
private sector and support delivery. understand and agree to the
output-based specifications and
specific negotiations before a deal is So what are the practical tips for process before a final decision is made.
effectively closed. In addition, financial a procurer? US law firm King &
New legislation in places such as
close means closure, and a PPP Spalding recently issued their top
Dubai helps provide a formal roadmap
deal should not be re-negotiated, or ten pieces of advice, urging clients
for procurers, tenderers and advisors.
unpicked, once that has happened. to concentrate on proper planning,
The introduction of PPP could
including consideration of the shape
All of this puts greater emphasis effectively support the procurement
and membership of the procurement
on the need for clients, advisors of major projects, such as Dubais
team and timescales. Decisions made
and investors to set out carefully in Al Maktoum International Airport, the
about funding, project management
order to achieve a truly collaborative Union Square Plaza and the extension
and the management of the tendering
relationship that can be translated into of the Dubai Metro to the Expo 2020 site.
process can all have a fundamental
formal binding agreements. This is
impact on a projects success or failure. For the Gulf states, the prize is simple
new territory for many clients, and it
may be wise to start with small, self- The output specification is vital too. and attainable: a new way to ensure
contained projects which offer a route Essentially this becomes the core that significant social and economic
to success but also the chance to gain book which will provide the basis of projects move ahead. PPP can deliver
valuable experience at developing the work to be done. Apart from the successfully, but it needs to be clearly
structures and building relationships. construction requirement, the ongoing understood so that it is implemented
Diligent selection of experienced operational needs must be assessed in a way that works for everyone.
advisors, strong management and over the project lifetime, and set down
collaboration with clients will all be before agreement is reached. Later
essential. variations can be very costly indeed.

www.curriebrown.com enquiries@curriebrown.com September 2016 11

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