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Facilitating large-scale infrastructure projects

Daniel Brawn of Galadari Advocates & Legal Consultants considers the myriad of factors that need to be taken into account in Umm al Quwain's enormous Firdous Sobha project.

Umm al Quwain's government hopes that the project will turn the emirate into a major tourist attraction

With any construction or engineering project, the key to success is proper planning from the very beginning. A large scale project is an extremely complex affair and many of the complexities are far from obvious. Let us start with the parties involved, who must be supervised and coordinated by the lead consultant. The master developer is likely to have a funder, usually a bank, often more than one. There may be sub-developers and project management companies, there will certainly be contractors and sub-contractors, including specialist trade sub-contractors, all of whom will have their own suppliers of materials and equipment. Each stage of the project must be designed properly, involving teams of architects, engineers, quantity surveyors and specialists such as acoustic consultants, environmental impact assessors, traffic-flow assessors, and so on. When the project is completed, there will be tenants and purchasers (who may have their own funders) and their respective consultants and fit-out contractors. The completed project will require experienced facilities managers and an experienced hotel operator if it includes a hotel. The contractual matrix between all these parties becomes even more complex when one considers that funders and purchasers will often require “collateral warranties” to guarantee the obligations of the contractors and designers with whom they have no contractual relationship. Furthermore, besides obligations in contract there are also obligations in tort, and there will be third parties who have an interest, including adjoining land-owners and utility companies who enjoy easements over the land. The devil is indeed in the detail.

Now let’s take a real situation, and add some more complexity. The government of the emirate of Umm al Quwain in the United Arab Emirates has entered into a 50-50 partnership with Sobha Group (a Dubai-based real estate developer) to develop the “Firdous Sobha” island resort project and turn Umm al Quwain into a major tourist attraction. The intention is to develop Al Seniyah Island (one kilometre off the coast from Umm al Quwain City) and the Khor al-Beidah coastal strip as an eco-resort comprising 53 million square feet of villas, terraced apartments, hotels, retail outlets, recreation, entertainment and resort facilities, canals, lagoons, a marina and of course the obligatory eighteen hole golf course. The total cost is projected to be around US$ 7 billion. A team of architects and other consultants is being appointed and work is expected to commence in the middle of 2017.

We have already considered some of the parties involved; now let’s add a few more. Although the natural level of ground water is close to the surface, the supply is nowhere near sufficient, and fresh water must be provided by desalination plants. Electricity generation facilities will be required, including solar generation if the project is to live up to its “eco” designation, and there will be numerous local sub-stations. Communications technology networks must be installed, as well as sewage networks and treatment plants. All of this infrastructure must be provided and designed into the project, together with take-off connection points within the development itself.

The various consultants must be coordinated in designing all elements of the project, which will involve Building Information Modelling. This is a process that uses computer-aided design and collaborative working to address the entirety of the project and the relationships between the client, the design team and the contractors. It requires detailed forward planning and a clear understanding of the outputs that are to be achieved, which party is responsible for each element of the model at each stage and to what level of development, as well as protocols for file sharing formats, levels of detail and structures for interoperability. Detailed critical path analysis is required to clarify which parts of the project must be completed before the next stage can commence. All this must be achieved in compliance with municipal planning requirements, building regulations and health and safety requirements. And all of this must be achieved without “trade stacking”, where there are so many contractors on site they trip over each other and compete for space in the car park.

A further complexity lies in the fact that commercial parties (and their funders) may seek to achieve cash-flow at an early stage through off-plan sales, the monies from which should be held in escrow accounts. Furthermore, a large project is often completed in stages which are occupied as soon as possible, to bring in further sales and rental revenue.

Now let’s throw in a little more complexity. Al Seniyah Island is significant internationally as home to the UAE’s largest (and the world’s third largest) colony of endangered Socotra cormorants, as well as herons, plover, flamingos, gulls, terns, Arabian gazelle, abundant marine life and green turtles. Between the island and Umm al Quwain City is the Khor al-Beidah, an area of sand and mud flats and mangrove that form a wetland of international importance to waterfowl. This is one of the least disturbed areas of coastline in the United Arab Emirates, and the Environmental Impact Assessment alone will be a beauty to behold.  What it is important to recognize, however, is that these very distinctive environmental factors that have provided critical guidelines in the selection of all parties in the contractual matrix as much as they have in the planning, design and implementation of the master plan. The project would have no sustainable foundation or future without thorough consideration of the emirate’s unique, rare and indigenous elements.

When environmental elements of this magnitude are thrown into the mix, there can often be a conflict of commercial and political expectations.  The planning and co-ordination that is required will test the wits of the best master consultants. Simple matters that are often overlooked include the completion dates under the various building contracts, which should complement each other, and ideally should coincide with the completion dates under the various development agreements and purchase agreements.

The government is understandably committed to modernising its systems and developing its infrastructure, in a sustainable and cost-effective manner. Firdous Sobha is a massive project of extraordinary complexity that requires the most skilled consultants to plan and coordinate from the very beginning. Political objectives must meld with commercial objectives and must balance with realities on the ground and in the minds of the numerous stake-holders.

Daniel Brawn is a senior associate at Galadari Advocates & Legal Consultants.

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Daniel
Brawn

17 June 2016

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