While the contractors working on the Riyadh and Doha metros may be facing unknown risks, the benefits make them worthwhile
Construction is very different from manufacturing. Instead of striving for perfection through repetition, it involves a team of people who have never worked together before making something that has never been built before. Construction is inherently risky and the bigger the project is, the bigger the risks are.
The Riyadh Metro and Doha Metro are two of the region’s biggest schemes. In Riyadh, contractors will build 176 kilometres of metro lines within five years – an undertaking that even seasoned metro builders say has never been taken on before. The Doha Metro also involves the construction of multiple tracks. Both schemes face a multitude of challenges ranging from land acquisition to traffic management and manpower to financing.
While these risks may be new for local players that have had few opportunities to work on metro projects in the region, they are familiar ones for international construction companies. These firms were prepared to compete aggressively for work on both metro schemes since other markets, most notably southern Europe, have offered few major opportunities for contractors in recent years.
With the majority of the metro work now awarded, the focus will shift to delivery and the consortiums that won the contracts will find out exactly how accurate their predictions were as they discover the amount of risk involved in building metros in cities such as Riyadh and Doha.
However, with risk comes reward. The multibillion-dollar deals will generate significant cash flows for work-hungry contractors and will create thousands of job opportunities for construction professionals and close to 100,000 jobs for labourers in both cities.
More importantly, the two schemes will transform two of the region’s capital cities into modern metropolises, and for the residents of Riyadh and Doha, that is the greatest reward of all.
© Meed, August 2013