Managing the challenges of Middle East projects

Working on power infrastructure projects in the Middle East can be challenging. Drawing on years of experience in the area, Dr John Richardson of Parsons Brinckerhoff discusses how to successfully manage IPP, IWP and IWPP projects in the region.

Parsons Brinckerhoff (PB) has been operating throughout the Middle East from its base in the UAE for many years. During this time our clients have ranged from traditional government utilities through to multinational developer consortia and financial institutions on projects located throughout the entire region.

Al Hidd IWPP in Bahrain
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As the Middle East power and water sector has increasingly embraced privatisation, PB has taken a central role in, firstly, successfully assisting the region’s leading developers to secure the right to implement independent power and water projects and, secondly, working with the successful project companies throughout the implementation phase to assist in delivering projects in accordance with contractual requirements and off-taker/procurer agreement commitments ” particularly in the areas of reliability, operability, safety, quality, performance, and completion on time and within budget.

Today PB is providing management and technical services as owner’s engineer for many of the major IPP, IWP and IWPP projects in the Middle East. Spanning both the main power and water facilities and also external facilities for interconnection and operation of a plant with the existing fuel supply network, water supply network, and electrical network, PB’s management and technical services typically include project management, design review, supervision and co-ordination through engineering and construction, quality inspections and testing and commissioning support.

Different and challenging

While perceptions may exist that working in the Middle East is ‘different’ and challenging ” which in some respects it is ” as far as PB is concerned there is nothing fundamentally different in managing projects in the Middle East than projects in, for example, Europe, Africa, Asia or Australia-Pacific. To begin to successfully manage any IPP, IWP or IWPP project, whether its

in the Middle East or elsewhere, the most important issue is to clearly understand the project by knowing:

  • who are the participants, what are their capabilities, what are their objectives?
  • what is the scope of the project, what are the time frames?
  • where is the project, with whom are the interfaces, what are the local issues?

Once the project issues are clearly understood it is simply a matter of applying both basic and appropriate techniques to the management of the project in order to plan, monitor and control the project budget, schedule and quality. Such techniques include project policies, procedures and communication protocols, for example, through to document management and other systems tailored to suit specific project requirements.

Taweelah B IWPP in the UAE
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It is also important to remember that without capable personnel, project management tools will not get a project very far; from the project manager through to lead engineers, discipline inspectors and general administrative support at site, effective people play a key part in successful projects.

Compared to other parts of the world, problems can be encountered with projects in the Middle East by, for example:

  • believing that the Middle East in general requires just one approach when each sovereign nation requires its own approach
  • believing that methods that work and standards that apply in the contractor’s home country work and apply everywhere else
  • believing that the same levels of technical and commercial awareness and environmental and safety consciousness that exist elsewhere do not exist in the Middle East.

Each country has its own approach

Each country in the Middle East region has developed and refined its own approach to the procurement of IPP, IWP and IWPP projects, the most sophisticated and successful to date being that in Abu Dhabi in the UAE. It may be argued that this is because all of the participants have a common objective and this promoted by the Emirate’s relatively small and close and capable governmental structure.

Elsewhere a number of models run side-by-side state-sponsored independent projects, state-managed projects, and private-sponsored independent projects ” which can lead to a lack of clarity concerning the positions of the project developer and the organisations providing tie-ins and/or support. Without feeling too sorry for his predicament ” given the healthy returns that can be realised from an IPP, IWP or IWPP project over the course of its off-take agreement tenure ” the independent project developer can find himself sandwiched between:

  • a procurer who believes he should have little or no risk
  • the lenders who want no risk of default on their loans
  • a contractor who typically tries to accept no risk whatsoever, particularly in the present contractor-constrained Middle Eastern power and water market.

The key point about risk in a project is actually recognizing that risks exist and are real, identifying them, and then addressing them accordingly. That means actually understanding what the risk is, what the consequences are and who is likely to be impacted, recognizing the symptoms associated with the risk occurring and then pro-actively managing issues to try to contain/minimize the risk and/or acting quickly to negate its effects. From the owner’s engineer perspective, the key risks he can assist an owner to control can be pro-actively tackled by, for example:

  • working closely, openly and directly with the owner, contractor and other project-related parties both on a local level and internationally rather than at arm’s length
  • deploying the right level and depth of project personnel (including dedicated scheduling/project controls and health and safety management expertise) to assist in managing a project rather than compromising overall project objectives or longer term project benefits for short-term cost savings.

The ability of the owner’s engineer to influence and assist in successfully managing IPP, IWP and IWPP projects should not be underestimated. And while it is recognised that the Middle East is certainly at least as cost conscious as other parts of the world despite its inherent wealth, it is essential that the local inflation issues that the Middle East is presently facing (and which are driving up local costs) do not drive down the level of management support that is considered necessary or sought for projects.

One of the key characteristics of the Middle East is the diversity of its culture and population. This is even more amplified with the large independent projects which are sourced on a global basis and can potentially see, for example, European-based developers linking with Asian contractors for projects that use US-based support and draw on international (e.g. European, Asian and Middle Eastern) finance.

The need for effective communication

This means that effective communication, spoken and non-spoken, is of the essence and, as noted earlier, lines of communication are clearly defined. Whilst English is the common technical language for projects in the Middle East it is vary rarely the first language of the users and those at the workface (especially site-based resources) and geographical interpretation is notoriously variable, even between English and Americans.

So not only should the words be clear and heard but the consequent actions monitored and, if not in line with what was intended, further dialogue continued in an effective and timely manner.

It should be remembered that listening is more important in the communication process than speaking. Moreover, whilst English law is the starting point for most project contracts, civil law is the pre-dominant legal approach worldwide; given that the interpretation of project documentation will not be consistent across the project parties, effective and timely communication helps to bridge any gaps.

In summary, therefore, the key to the successful management of IPP, IWP and IWPP projects in the Middle East is firstly know IPP, IWP and IWPP projects and players.

Secondly, know and apply the right level of project expertise locally and, where appropriate, internationally. Thirdly, know the Middle East. MEE

Dr John Richardson, Director of Power & Water Middle East, Parsons Brinckerhoff

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