While the rest of the world is going through a recession, the UAE is witnessing a major correction, says John G Spitz, Senior Vice-President and UAE Regional Manager, Hill International. He talks to Emirates Business on coping with tough times and Hill’s 2009 strategy, which involves reaching out to everyone.

When do you expect the market to recover”

Globally, I don’t see it happening this year. It will really start to have an effect in 2010. The Middle East, especially the UAE, has a chance to be ahead in the whole economic downturn. There is money available here compared to the horrific situation elsewhere. There is a plan in the UAE. It needs to get tightened up and formalised into a strategy. There are many beautiful areas in the UAE and those are the areas that people will want to flock to. If we start strategising, it will be fine.

In the UAE, you see a correction going on as against the recession elsewhere in the world. What you witnessed was the market trying to sell as fast as it could. Now people are complaining because they bought at the wrong time.

Things will come back to normal slowly but in the right way. However, it will never be the same as it was.

How do you handle the current slowdown in projects? Do you think that projects will now see a realistic deadline?

The clients are realising that the schedules that they were asking for will now be extended in order to save money. Saving money requires labour cut and we are helping them to minimise that exposure.

We also look at going back into the building and see where we can help in ways such as value-engineering. But at this stage of the game, it is late. Value-engineering is usually done upfront.

What is Hill’s strategy for 2009?

It is important for us to look at our existing and new clients’ needs and know what the market is about. Everyone is in the cash-saving mode. We are looking at how to get the best strategy for the clients, which includes getting the best quality on the project with the least amount of money and getting it built on time in these trying times.

We also see situations where we put together plans for some companies who put their project on hold or cancelled them. For projects on hold, there are certain things that happen to that product and needs to be done to keep it so that it will minimise its deterioration.

How do you liaise between the contractors and the developers who are now renegotiating their contracts or retendering?

It is a situation that never should have got out of hand in the first place. The unfortunate thing is that the market value of materials was too high due to the high growth in the UAE and China. Markets back in the US and Europe were running sky-high costs because everything was being sent to these areas.

The clients realised that they were overpaying for products that they could get for less. But neither retendering is the right way nor going to other contractors. They should utilise the existing partners they have and ask them to reprice the costs. You might save costs on raw materials but labour is still the same. Though you can reduce shifts to a single instead of double. We help the client by going out to the market and making sure that the numbers that we get are correct. We question those numbers.

So how do you cut costs?

For all the materials that are bought and on hand, there is nothing the owner can do. You are bound by the obligations you have. Where the owners will save money is on finished products that are not yet bought – like marble, stone and so on in the project. When it comes to projects coming out of the ground, they can save 20 per cent or more on concrete and steel because that market is down. We are also looking at ways where we can get them the product on time and at the same time, save money.

What are Hill’s plans for the region?

We are reaching out to new clients like the government. The market calls for management on office towers or residential and that is where our strength was at that time. We are now reaching out to everyone.

Company Profile: Hill International offers extensive project management and construction claims consulting services worldwide. Having participated in more than 1,000 projects with a total value of more than $100 billion (Dh367.63bn), Hill has managed all phases of the construction process. The UAE projects include Sama Towers, Dubai Mall Marina, City of Arabia, Lighthouse in Dubai; and Etihad Tower and Shams in Abu Dhabi.

PROFILE: John G Spitz Senior Vice-President and UAE Regional Manager, Hill International

John Spitz has over 30 years of US and international experience in managing the design and construction of large high-profile commercial projects and programmes for various types of facilities including high-rise towers, office buildings, hotels, conference centres and their related infrastructure. Spitz obtained his Bachelor of Science degree in Building Science from Aubum University, US, in 1978.

(Published on http://www.business24-7.ae on March 22, 2009)