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Firms vie for Qatar’s $8.2B World Cup construction contract
Everyone wants a piece of the World Cup pie in Qatar. The country’s bullish growth is estimated to result in 5,000 employees by 2017 from the current 3,500.
October 18, 2011 2:18 by Reuters
The builder behind the Shard skyscraper and one of the key partners on the London Olympics, Britain’s Mace, is gearing up for a fight to win Qatar’s $8.2 billion soccer World Cup construction contract, as building markets flag.
Global market jitters as well as a dearth of financing and government spending on infrastructure are forcing contractors and consultancy firms to scour further afield to win lucrative contracts and top-up order books.
“It has been worrying in the last 3 months as there has been a reining back of a commitment to fund projects,” Mace Chief Executive and chairman Stephen Pycroft told Reuters. “Every client we speak to is constrained by a lack of bank finance.”
Privately-owned Mace is tipped as one of the favourites to win the 2022 soccer World Cup stadium deal after helping to deliver the London Olympic site, for which it joined forces with British builder Laing O’Rourke, on time and within budget.
It is bidding alone in Qatar.
“It’s tough, there is no doubt it’s tough. Qatar are looking for the best people in the world … We’re one of five, everyone’s been interviewed, and the view is that they will decide on somebody before December,” said Pycroft.
A construction industry source in Doha said on Monday that Qatar would likely award a contract next month.
The 850 million pound turnover company has also worked with the Qataris on the 1,016-feet tall Shard at London Bridge, which is being funded by the state of Qatar and will be Western Europe’s tallest building when completed next year.
This is the project which Pycroft sees as a game-changer for Mace, which had previously kept its profile below the radar.
“In terms of reputation it’s put Mace on the map,” said Pycroft, who will be succeeded in his role of chief executive by Mark Reynold in 2013, but will stay on as chairman.
“The whole industry thought that the Shard would never be built, so there was a complete attitude of why are you wasting your time,” he added, as Mace worked with the project creator before it secured funding and planning approval.
However, big-ticket deals such as these are going to be few and far between in the UK over the next 3-5 years.
“Our view is that 2012, 2013 and 2014 are going to be tough years in the UK,” said Pycroft. “The only real pocket of light is in central London, where prime real estate is being bought up by external funders, who are dealing with the weak pound.”
International consultancy work will be the biggest growth engine. Mace estimates the unit’s income will double to over 200 million pounds by 2017, while overall group turnover will rise to 950 million pounds in 2011 and grow further in 2012, offset by a squeeze on margins.
Already operating across 65 countries, Mace is diversifying and looking to emerging markets such as the Middle East and the East Coast of Africa including Angola, Nigeria and South Africa.
“You’ve got the Arab spring happening, there must be a major investment in social housing in many other countries. That must be another opportunity we will try and focus on,” said Pycroft.
Many contractors are also slowly returning to Libya, with dozen of executives from France, Britain, Italy and other countries having spent months building ties with potential Libyan partners.
The debt-free company must also maintain its position in a pond with ever larger fish. Dutch group Arcadis said it would buy out British firm EC Harris, as global construction groups look to offer a wider range of services.
Mace’s Pycroft admitted the consolidation trend did make the mid-sized company feel slightly vulnerable, but…
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