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Increased infrastructure projects may shoot up construction costs

The cost of construction materials in Qatar is likely to surge, as the Qatar intensifies infrastructure building and completion of other building projects ahead of the 2022 World Cup, say industry experts.

Qatar is likely to invest more than $200bn on soccer tournament, which forms part of 2030 development plan, although tough contract terms and state bureaucracy have left some contractors in difficulties.

Qatari officials have confirmed that the 2022 tournament will go ahead as planned, although corruption allegations at soccer’s governing body FIFA have always put media focus on Qatar.

There is high level of construction activity under progress, particularly in the capital Doha, and it makes it hard for contractors to get workers and materials to sites.

According to the Partner at Engineering Consultants, Arcadis, Nick Smith, the pinch point will be during the years 2017-19, and he predicted that materials inflation would be 3 percent this year.

The materials inflation may surge 15 to 20 percent from 2018, says Steven Humphrey, a Director at infrastructure specialists Aecom.

Qatar, like most other Gulf States, suffered from late delivery of projects, due to reasons like over budget. However, with a fixed deadline like 2022, these attitudes will not be permitted. As prices get squeezed, most contractors who bid at the incorrect prices may shy away from doing projects and move their resources into more profitable projects, says Aecom’s Humphrey.

Many of the building materials may be imported by Qatar from neighbouring UAE. With limited port facilities in Doha, it implies that these goods should travel on small barges or through truck via Saudi Arabia.

Contractors usually chose their properties, and considering the bids at present, they seem very competitive. It gives a feeling that these projects may not be delivered on time, Humphrey said.

Posted on 2/7/2015

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