Great Expectations

Colin Timmons was suffering through a particularly nasty, brutish and long Edinburgh winter when he received a phone call from someone in Dubai, inviting him to head up Al Faraa General Contracting.

Over the course of more than two decades, the construction veteran had come through the ranks with national construction contractors in the UK, working his way up to MD level with companies like Mace and Morgan Sindall on a wide range of projects. But with the UK at a standstill following heavy snowfall, the time seemed right to accept a new challenge in the sunny Gulf.

Five and a half years later the Scot made the move to Al Naboodah Construction Group where, after a brief stint as COO, he replaced Steve Lever as CEO on July 1. Timmons spoke to Jason O’Connell about his experience in the Gulf and his big plans for Al Naboodah.

What was it like making the transition from the UK to the Gulf?

I started here as General Manager of Al Faraa General Contracting with the aim of reshaping and growing the business by adopting a more UK mindset. Over a five-and-a-half-year period we tripled tu

rnover by getting bigger and bigger jobs. The big change coming from the UK was the culture of the company and how to do business. The cost of labour, the ability of labour, the number of staff that you would have in comparison to a similar project in the UK, is like night and day. A lot of it was about learning and understanding the culture.

Did you find people receptive to your changes?

Yes I did. Al Faraa took a bit of reshaping and reorganising so that it worked well as a business. Prior to my time here contractors were having a great time making big money in the boom days. The crash came in 2008/09 and all of sudden they weren’t hoovering up these big margins, where there was so much work and not enough contractors that you could pick and choose your job. In 2010 every contractor was looking to reshape their business to deal with the market moving forward so that’s exactly what I did at Al Faraa. I brought some key individuals into the business and prepared it for what was ahead, which was a much leaner market place based on performance. You get jobs if you do them well and deliver on time and on budget.

Then I was approached by Al Naboodah and my respect for them in the market place is second to none. I had five and a half years at Al Faraa of blood sweat and tears, working six days a week, 12 hours a day minimum. This opportunity has come as a result of the hard work and effort that went into the last few years.

What sort of shape did you find Al Naboodah in when you arrived?

It was a very different organisation from the one I’d just worked in. There was more of a UK influence here because Steve Lever, who was the CEO, and a lot of his senior staff were Brits with a good few South Africans, so the culture and the way they did business was already more akin to the UK way. It’s family owned so the principals of working for the Miller Group in Edinburgh as a graduate are the same as working for the Al Naboodah family. The third generation of Al Naboodah’s are coming through the business and I work very closely with them.

I joined as COO in March with a sort of outlined plan that, should I be the right person, then the current CEO would retire at an appropriate time. But there was nothing on paper that said this would happen, it was just an agreement of sorts. After 6-8 weeks in the business they probably felt I was the right person for the job. So I made the transition from COO to CEO officially on the July 1.

Is this your first role as CEO?

As a CEO yes but I’ve been running companies for a long time. Being GM at Al Faraa was a similar role with similar responsibilities. Being MD at Mace in Scotland was the same. The difference here is that it’s larger and more varied because we have a civil engineering division, a building division and an MEP division. Civil is the heart of the business and has been the strongest over the years. The job is about bring them together and getting as much synergy as we can. Every job that you do has an element of civil, building and MEP, so we’re looking at integrating that service offering. We’re in a market where liquidity is under pressure as we know, so clients want their jobs delivered but they’re looking for better prices. One way to do that is for us to integrate and make our offering more efficient but that won’t happen overnight.

In the UK contracting groups have been doing that for a long, long time, offering a client a design and build model where we do everything for you. That then extended to PPP which means bringing the finance and I think that’s going to come here in some shape or form. British companies are bringing UK trade finance and that tells me that clients, despite their view a year ago that that approach wouldn’t work in the UAE, are now keen to look at different funding routes.

Give me a snapshot of the company you’ve taken on.

I’m relatively new in the market. When I came here all I heard was Arabtec as the superstar in construction. It’s like being in Britain and talking about Balfour Beatty or Sir Robert McAlpine. For me at this moment in time we’re every bit as good if not better than some of our competitors. Other companies’ fall from grace is their issue not mine but I’m seeing that as a real opportunity to drive Al Naboodah forward and be the client’s first choice. But that only works if you deliver.

It’s about being out there and delivering jobs on time, on budget and building relationships. We want to keep close to existing clients and look to build on that relationship. That’s the key for us moving forward. Over the years Al Naboodah has done huge amounts of work at the airport, with the RTA on roads and bridges, so there’s a handful of key clients that I want to nurture relationships with.

What sort of projects are you working on right now?

In civils we’re doing a parallel roads project for the RTA down by Business Bay, involving various bridges and interchanges. That’s a chunky project that will run on for another year and a half and is probably the single biggest project we’re doing in civils. That said we’re doing a big, big job at Midfield Terminal down in Abu Dhabi, building the tunnels for flyovers. We’ve got a number of smaller jobs for local residential developers in Dubai doing roads and infrastructure for their sites. We’ve worked at Dubai Airport for 20 years. We did the relaying of both runways in 2014 in 84 days, working 24/7 while keeping the airport live. That’s what makes me proud and excited to come to a company like Al Naboodah.

In building our biggest job is down in Nad al Sheba where we’ve built a huge indoor stadium for the RTA as well as all the car parking, roads, drainage, etc. It’ll touch a billion dirhams in value. We’ve got a big multi-use development down in Mankool that we’re doing for Rostamani.

Our MEP division tends to work as a subcontractor, so probably 60 to 70 percent of their work is internal work for our civil and infrastructure divisions but they’ll also subcontract for our competitors like Khansaheb and Shapoorji.

What are your ambitions for the company?

To be the contractor of choice. We outlined a plan with our shareholders to grow the business and we need to adhere to that to the best of our ability. Typically we want 10-15 percent growth year-on-year which is an aggressive target. But it’s got to be done in a controlled manner. In UK terms ‘turnover is vanity and profit’s sanity’. We don’t just want to buy jobs just to be able to say we’ve done X billion this year but lost our shirt. We want controlled growth in the right sectors with the right clients because there are liquidity challenges out there.

We’re looking at more international business as well. For example, there are clients based here that are funding projects in East Africa and other places so one of those – like DP World for example – might come along and ask us to price those jobs because they know us. We’re looking at international expansion in a very controlled way. The logic is to build around the success of a project. We’re not saying we want to be in this or that country and employ five new business managers and marketing guys and build offices. We’ll win a project and build around that.

What sort of headwinds do you face in achieving those aims?

The challenge is, will the market hold up? It’s ok saying we want to do X billion next year, but are the opportunities there? We believe they are. Is the funding there? We believe it is but the market’s got to remain fairly buoyant and this liquidity challenge is there. At the end of the day the banks call the shots for a contracting business or a developer or a sub-contractor. At the moment that is the constraint that might prevent our growth. If the UAE market dropped all of a sudden we would need to look at a strategy based on a bit of reshaping.

What’s the strategy to compete in such a tight market?

It’s to be more efficient and certainly to be consistent with performance. Build up relationships so you’re given opportunities because you’ve worked hard and developed that relationship that goes back over a period of time. Nine times out of ten the lowest bidder wins in this market. Certain jobs you’re not going to win because you’re not the cheapest so we’ve got to look and try and form relationships with clients that respect what delivery really means and have the wisdom to look further than just the cheapest price.

Margins are tough for everyone. Bigger volume, lower margin is where every business is going. But amongst that there are gems where, if you get the right client and the right project and can add real value, you’ll get more margin from that. For example, if you can break into a niche market then you might be able to command more margin. So that’s about identifying the right clients to work with.

And slowly we’re seeing clients coming and saying, do you want to do a two stage tender with us? Do you want to be involved early stage and help us developer our design? I think the mindset is coming here that no longer are we all sat at different sides of the table – client, contractor and consultant. We bring them all together and have one common goal which is the project. But you don’t see a lot of that here. Clients here are protected by consultants, which doesn’t always get the job done. I guess that goes back quite a long way to a time when contractors were less scrupulous and didn’t have the skillsets or the quality to build jobs. So the client needed a consultant to control everything because the contractor wasn’t delivering well enough. Those days are gone.

You’ve got to work with the contractor to get the best outcome. And subcontractors as well. Major British companies have partnering arrangements for all the main subcontractors – MEP, steel, cladding, etc. It’s not such a thing here. Why? Because they think they’re not getting the right price from their partner! It’s about making people understand that partnering can pay dividends. The job where you take on the cheapest contractor in town and they take on the cheapest sub-contractors can end up a disaster. It stops for a while and ends up in court and delayed and so the final price of the job to the client is much, much higher than at the start. Why not spend a little more at the outset and get the right people together and get them working collaboratively? We’ve got to think differently and ask how we can offer something better than our competitors.

Are construction disputes on the rise here?

We don’t have any. I’ve got a Masters Degree in Construction Law and know all about dispute resolution but what I always say is that it’s dispute avoidance that we need to be good at. If it gets to the stage when you’re in a dispute nobody wins other than the lawyers!

Has payment become an issue lately?

Frequency of payments I would say. You still get paid but the consistency has just slipped. Not everywhere, but when I talk to our competitors they seem to sense the same thing, that budgets are under pressure, so just be cautious and try to plan for that.

Are you expecting a better 2017?

Well 2016 will be a good year for our business. Our turnover will be up on last year’s figure because we landed a number of key jobs and we’ve got a reasonable carry through until 2017. Now we’re starting to see the 2020 tenders come out and these jobs have to go, so there’s certainly more work coming. We want to grow and we’ll be judged on that growth.