Ashraf Al Garf, CEO of Projacs, says the merger with French giant Egis will take the regional project management specialist to new heights. Jason O’Connell writes.
Regional project management specialist Projacs opened a new chapter in its history in 2015 when it merged with Egis, a France-based engineering company with an international reach. The move also marked a new chapter in the career of its chief executive officer, Ashraf Al Garf. In 1996 the Egyptian joined Projacs in Kuwait as a general superintendent on a major project and began the long climb to the summit of the company which he finally reached following the merger.
Mr Ashraf is currently seeing Projacs through the transition and integration phase of the tie up, which will last five years and eventually end with Projacs being 100 percent controlled by Egis. The merger made sense from a number of standpoints, allowing regional player Projacs to expand outside the Middle East and North Africa and giving Egis the opportunity to boost its profile in the Middle East.
“The objectives of both companies are matching,” he says. “Egis are in the Middle East but very small, mainly in Qatar and Saudi Arabia and they definitely want to expand here. Projacs is well established in this region so it was time for us to expand internationally.”
Starting out in Kuwait in 1984, Projacs spread first to the rest of the Gulf and from there throughout North Africa. Prior to the merger the company had its corporate headquarters in Bahrain but is now established in Dubai. The company specialises in project management for all sorts of buildings and oversees a number of other business units, including a Facilities Management division and its well-known Projacs Academy.
Projacs is currently managing a huge variety of building projects throughout the Middle East. They range from one of the biggest children’s cancer hospitals in the region in Egypt to the upgrade of two stadiums that will host matches at the 2022 World Cup in Qatar, including Khalifa Stadium which is almost complete. The company has recently finished working on the Central Bank of Kuwait, a national landmark, and is also engaged on the new National Bank of Kuwait headquarters. In the UAE it is working on a major hotel and furnished apartment complex on Palm Jumeirah.
A market that is clearly huge for Projacs is Saudi Arabia where it is working on Jeddah’s King Abdulaziz International Airport in partnership with Egis. In fact it is also managing four other domestic airports in Saudi and is hoping to secure more with the help of Egis which has a strong aviation background. Large scale residential projects and hospitality projects are also on the cards in the kingdom.
It’s well known that the construction sector in Saudi has been hit by an economic downturn induced by a drop in oi prices. So has Projacs been affected?
“We have experienced lots of projects that were delayed,” says Mr Ashraf. “Not cancelled but delayed. The period for releasing cash is elongated so it has affected the cashflow. 2016 was really a challenge and we are expecting 2017 to be the same. But there are some good indications that the market is improving.”
He points towards the new trend towards using alternative financing models such as PPP (public private partnerships) to overcome the liquidity and cashflow problems.
“For example, we are bidding for the project management contracts for 11 domestic airports in Saudi Arabia and all of them are on a PPP basis,” he says. “That trend is evident throughout the region. In Saudi they’ve started using PPP with airports but there are plans for housing projects as well. It’s very important for them because there is huge demand for housing among nationals. We are also expecting it to be adapted to the healthcare sector. They have some medical facilities that will be tendered on a PPP basis.”
These may be challenging times for construction in the Gulf but it seems Projacs’ geographical reach has helped it weather the storm to an extent.
“When things are bad in certain countries we can manage in others and this has helped us to survive over the years,” he says. “You remember what happened in Dubai a few years ago? At that time Dubai was our biggest operation, we had more than 250 staff here. But we managed because we had operations elsewhere so we could send people to other places.”
The merger with Egis, he says, has now given the company another competitive edge.
“We are project managers and Egis is mainly an engineering firm in the infrastructure field. So it’s been very important for us to expand in that direction, into airports, industrial projects, power and water, etc. They are new to us but for the past two years with Egis we are getting introduced to these fields.
“So diversification geographically and of activities through Egis helps us a lot to achieve growth even in tough times. 2016 was a tough year but we had slight growth of around 5 percent, which was remarkable, but we did it thanks to that diversification.”
Clearly infrastructure is a major driver for the construction industry at the moment throughout the Middle East and North Africa region and Mr Ashraf expects the partnership with Egis to help Projacs to take advantage of that.
“We have our core business activities and we are aiming to strengthen them,” he says. “But in the meantime we want to capitalise on the reality of Egis as our mother company and to do work in other areas and to capitalise on their experience.”
Another useful tool for Projacs is the training division which it uses for its own staff but also for other companies and government agencies. As well as being a good revenue generator, Projacs Academy is leveraged as a marketing tool that helps to spread the company’s network throughout the region.
“We deliver hundreds of courses per year, different types but mainly in engineering, financial so it’s a very important tool for us for marketing our business and to get introduced to more and more clients,” says Mr Ashraf.
In a world where the public sector is a very strong driver for the construction industry, it certainly doesn’t hurt to have a good network of contacts in government.
“We organise in house courses and tailor them for the Ministry of Public Works for example here or in Kuwait or Saudi or anywhere. They may have special needs in project management, engineering, financial, contracts or soft skills like presentations and so on, so we produce courses to suit their requirements. Then we have public courses for private clients so we work with both.”
He adds: “It’s also a very good revenue generating unit. Our business units are independent when it comes to financial reporting so all of them make money and Projacs Academy is one of the main contributors to our end results and a very successful business.
“It’s also mandatory for our engineers to be trained through our own Academy. It’s an important tool for us to keep our staff motivated and for them to develop a career path within the company. So it’s very useful for our own operations and means everyone is qualified to the same standard. Many companies do this of course but we also provide it for external clients.”
Projacs also organises conferences four or five times per year throughout the region. The upcoming Project Management conference in Dubai has run every year for the past four or five years.
“First of all as a business it helps to generate some money,” Mr Ashraf says. “But it also generates exposure because you engage with lots of highly qualified institutions and clients who are willing to come and exchange ideas and views. So that’s important for us to get to know what’s happening in the industry. It’s also complimentary to Projacs Academy and our network of operations.”
Facilities management is a relatively recent but fast expanding area of business. Projacs only ventured into the sector five years ago but has tripled activities in that time and expects 2017, despite challenging conditions, to bring a further 20 percent growth in revenues and net margins in these operations.
“There are a growing number of buildings and clients need to maintain them,” Mr Ashraf says. “We do it from the management perspective only. We don’t employ blue collar workers directly but we manage the project by tying up with a contractor and the owner will only have to deal with us.”