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Managing change, mitigating risk

Interview - April 20, 2015

Qatar’s building boom has attracted a multitude of construction and engineering companies from abroad, all intent on obtaining a part of the estimated $200 billion that will be spent on infrastructure in the next five years. However, not all are prepared for the changes that can lead to unforeseen delays and cost overruns for their clients. Quantum Global Solutions shows them how to manage the unexpected.

PETER MURPHY, MANAGING DIRECTOR OF QUANTUM GLOBAL SOLUTIONS
PETER MURPHY | MANAGING DIRECTOR OF QUANTUM GLOBAL SOLUTIONS

Qatar has become a magnet for investors and contractors from abroad in recent years, due to its booming economy and of course, the preparations for the FIFA World Cup in 2022. Is there still space in the Qatari market for mezzanine foreign investors, and in which sectors?

According to a recent report by Qa-tar National Bank, Qatar’s economy has started a new diversification phase, as large investment spending in the non-hydrocarbon sector accelerated growth to 6.5% in 2013 (6.1% in 2012) with the main areas of investment shifting from oil and gas to construction and transport.

The population has more than quadrupled in the last fifteen years and is expected to continue to increase for the foreseeable future. This rapid growth leaves continued demand for services across all sectors. Qatar is a multi-cultural, rapidly developing economy and as such, the business environment offers multiple opportunities.

In addition, the business environment is tax-free for expatriate employees and companies pay a fixed rate of income tax on foreign ownership profits.

With over fifteen years of experience working in Qatar, I believe that with every ‘high potential gain’ opportunity, there are significant risks. That said, provided investors enter the market with a long-term view, an adaptable approach to developing regulations and an understanding of the risks to mitigate, there are tremendous opportunities in this dynamic and exciting market, unlike anywhere else in the world.

Over the next five years, it is estimated that Qatar could spend over $200 billion on infrastructure projects alone. How do you evaluate the current infrastructure boom and the supply of civil engineering and construction companies to meet the demand?

The current infrastructure boom provides tremendous opportunity for multiple construction disciplines, including designers, material suppliers, plant and equipment providers, contractors, sub-contractors, supervision consultants, specialist services and finally, facilities management companies to manage the increasing infrastructure portfolio.

The scale and number of infrastructure and civil engineering projects in Qatar is unprecedented, but given the high-profile award of the FIFA World Cup 2022 the ‘boom’ has been expected for some time. As a result, many companies have established a base in Qatar. Many have formed joint venture partnerships which brings to the country a blend of local knowledge and international experience, making them ready to take advantage of the large volume of work to be awarded. This includes many companies previously supporting the growth in the UAE.

There remains a surplus in supply of civil engineering and construction com-panies ready to support the infrastructure boom. However, there are signs that some companies now have full order books and are unable to take on further projects.

At Quantum, we recognize that Qatar’s buoyant and dynamic market offers our clients tremendous opportunities; however, these are not without risks and all construction companies should understand the risks and mitigate accordingly when pricing and carrying out the works.

What would you say are the benefits of doing business in Qatar?

From a business perspective, with its stable political system and a solid platform of growth supported by the country’s energy sector, Qatar is one of the most prosperous and vibrant countries in the world to do business. Remarkable opportunities exist for professional organiza-tions which have been greatly enhanced by Qatar being chosen to host the FIFA World Cup in 2022.

In addition, for employees Qatar is one of the world’s safest and most hospitable countries to live in, with excellent educational and healthcare services. Qatar’s economic stability and budget surplus over recent years enabled the development of five-star hotels, several museums, including the Museum of Islamic Art and the upcoming National Museum, as well as family cultural facilities such as Katara and Souq Waqif.

Would you share with us more about Quantum Global Solutions, its genesis and development?

I came to Qatar in early 2000 as Country Manager and Project Director for an international construction company. The population of Qatar was around half million at that time and it was much different to the country it is today. However, the same challenges exist then and now for contractors in this rapidly developing country. Change is inevitable in almost all construction projects and it is how this change is ma-naged that is the key to success.

Having faced these problems first hand, I could clearly see the need for specialist contractual, commercial and forensic planning consultancy support for contractors. Quantum Global Solutions was established in Qatar in 2007 in partnership with Quantum International from the UK headed up by Issa Abdul Rahman Al-Mannai as Chairman and myself as Managing Director.

With a customer-focused emphasis on solution-based services, we provide our clients with expertly managed, high quality, tailored services to meet specific business objectives in a professional and efficient manner.

Quantum has rapidly grown and we currently have around 100 experienced, multi-national consultants based in Qatar, operating around the GCC region and to wider international locations. Our success is based on client satisfac-tion, repeat calls and reputation.

Could you expand more on the Quantum brand and your regional and international presence?

Quantum is a recognized and trusted brand locally, regionally and internationally. Qatar is our headquarters and primary market and we have ongoing operations in the Middle East, Europe, Asia, US and Africa. This growth has been driven through the demands of our clients who also operate on a global basis.

At Quantum, we work according to a company-wide philosophy of seven core values: vision, excellence, customer-focus, integrity, innovation, solution-based creativity and the Quantum family. All of these values are intrinsic in how we do our business, how we become partners with a common goal with our clients and how we develop the highest quality of employees in our industry through continuous professional development, on-the-job training and knowledge sharing. Innovation, finding solutions, being creative with vision and excellence are what we stand for.

How attractive is it for UK engineering firms and construction companies to operate in Qatar?

Qatar is an excellent market for UK engineering firms and construction companies with English as the primary business language and the UK’s reputation for high quality and performance-driven project management clearly un-derstood and valued.

For employees, Qatar offers a tax free, safe environment with excellent education and health care services well suited to family postings. There are excellent transport links to the UK and a time difference of only three hours in winter.

In line with the Qatar National Vision 2030 and the developments surrounding Qatar’s hosting of the FIFA World Cup in 2022, the pace of construction in Qatar is phenomenal; I’d estimate 30 years’ of development being carried out within the next five years.

On top of that, the scale of the projects is enormous. According to Qatar National Bank, US$183 billion of development remains to be completed by 2022.

From a professional, business and personal perspective, where else in the world are such tremendous opportunities available?

What challenges do you face while advising clients to achieve or surpass objectives?

Most of our clients are experts in their fields, constructing amazing, unique and massive projects under cha-llenging time deadlines. Due to the rapid pace of development and the urgent need for the facilities, the projects are commonly not fully designed at award stage and undergo substantial change during the design, development and construction period. It is the management and negotiation of this change, in coordination with the client, where Quantum can truly add value.

Many clients accommodate the many changes during the course of the project resulting in large overruns in time and cost, having not dealt with these issues as they arise. This results in a dispute with their client, who is suddenly hit with massive delays and a significant cost increase at the latter end of the project, without the opportunity to discuss and mitigate such overrun and additional costs.

Our key challenge when initially meeting potential clients is to get them to understand the value of partnering together with Quantum at the earliest stage to help mitigate issues before they arise.

Using the analogy of a new car – most people understand the need for regular service and preventative main-tenance rather than waiting for it to break down before fixing it. A construction project needs the same approach. Many of our new clients are carrying out projects which have effectively “broken down,” whereas with many of our repeat clients, we partner from the start of the project dealing with issues as they arise and before they become problems or disputes.

We want our clients to look af-ter their projects whilst we look after their profits.

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