A PwC Middle East capital project and infrastructure survey announced Saturday found 75 percent of respondents expecting an increase in spending in the coming 12 months. This is largely driven by mega events, including Dubai Expo 2020 and Qatar World Cup 2022, as well as increased spending on social infrastructure including housing, education and healthcare.
However, the results show that there is a ‘capacity crunch’ - market capacity fails to keep pace with demand — on the horizon. PwC identified two fundamental areas that will limit the ability to progress with project plans: people and financial resources.
Ninety five per cent respondents say their projects are delayed, with 45 per cent saying they are delayed by more than 6 months. Client decision-making is also cited as a big concern, with 35 per cent of contractors citing it as the greatest challenge they face delivering projects.
“Whilst our survey shows a good dose of optimism, there is a capacity crunch looming which threatens the delivery of projects. It is already having an impact, as we are beginning to see more delays on projects that are underway,” said Stephen Anderson, PwC’s Leader of Capital Projects and Infrastructure in the Middle East. “Broadly speaking, these problems have been apparent in our region’s infrastructure sector for several years, but the increase in activity is making them more acute. They need to be urgently addressed if the region is to deliver on its ambitions”.
The ability to find skilled people – both in terms of quality and volume — was identified as a key challenge for both project owners and contractors. Difficulties securing funding are also expected to lead to project delays — the survey suggests that there simply isn’t enough funding available. The sheer scale of commitments is making private sector finance a more attractive, and indeed necessary, option for funding infrastructure projects.
Respondents identified the UAE as their top target for investing in capital projects and infrastructure, closely followed by Qatar and Saudi Arabia.
However, optimism in the rest of the region is not as high, as political instability continues to affect confidence. The proportion of respondents to the survey saying they would be targeting projects in Egypt fell substantially compared to the last survey, and it remains to be seen if the election of El Sisi as President, along with announcements to expand infrastructure programmes, can restore confidence.
The 2014 Capital Projects and Infrastructure survey was completed by 130 of the region’s most prominent project owners, developers, contractors, advisors, and financiers.
