What projects is CCC currently focusing on here in Oman? What progress has been made to date?
ALAAIDDIN: The mother company of Consolidated Contractors Company (CCC) was established in 1952 in Aden, South Yemen. In the late 50s, they began thinking about expanding their construction company throughout the GCC. The company then moved into Kuwait, Abu Dhabi, Saudi Arabia, and Libya. They sent a delegate to Oman in the 70s with the prospect of opening operations here. CCC Oman was then established as a local company in 1971. This also marked the same time as the beginning of the renaissance era in Muscat under the wise leadership of his majesty Sultan Qaboos bin Said. Since 1971, CCC has been associated with all different types of construction disciplines.
CCC Oman started as a local company working with projects focused on buildings. Then, in the mid 70s, we moved into the road or transport industry. In the early 80s we moved into the oil, gas, and pipeline industry. After that, we moved into EPC in the 90s. We are currently recognized as a mutual EPC contractor working with companies such as PDO (Petroleum Development Oman) and OOC (Oman Oil Company). Since then, CCC has been associated with projects in various disciplines of construction. We have been relying on the resources of the head company outside of Oman. The head company has many resources available. For instance, in 2007-2008, CCC had roughly 170,000 people of manpower. At the time, we had almost more than 17,000 pieces of equipment. Our headquarters is in Greece, which provides technical and financial support to all of our construction areas. Since 1971, we have been associated with plenty of projects.
At CCC Oman, we pride ourselves with the fact that we have built many of the landmark projects in Oman. We have been involved with the construction of the refinery, the Port of Duqm, the current Muscat International Airport, and the ammonia Plant in Sur. We consider many of these projects as being landmarks. CCC here in Oman has been associated with all kinds of disciplines in the construction industry. We have been targeting mostly oil and gas projects, pipeline projects, and major civil infrastructure projects. We believe that with these types of projects we can use the resources from our headquarters and sister companies, such as those in Abu Dhabi and Saudi Arabia, to the best of their abilities. These are the types of projects we are currently focusing on here in Oman. For the time being, most of our projects are civil projects and one oil and gas project. However, I must say that we are focusing on the future. We are looking towards the future and we feel that there will be a lot of oil and gas projects and mega civil projects in the next 5-10 years.
Since 1971, when CCC Oman was established, we have been known for a few reasons. Firstly, we are adamant about ensuring that delivery is on time. We also have an excellent track record in the GCC with regards to quality control. We do our best to have an excellent relationship with our clients and our consultants. We are currently associated with two major projects. We successfully finished the Duqm project ahead of its completion date. We are currently working on our package that is a part of the Muscat International Airport project. Our package, which is MC1, is more than 80% completed. We are also focusing on small and medium size projects. Almost all of them are going as scheduled. Once again, CCC is known here because we complete our projects on time. For example, once when we were signing a contract, one of the Ministers called the client and ensured him that he was in good hands because CCC would complete the project on time. He also told our client that the project would be done to the best of the standards in the construction industry. We also pride ourselves on keeping good relationships with our clients. We do this by giving our clients quarterly satisfaction reports to fill out. These reports are then sent to our management and not here. They will analyze it, and if there are any shortcomings or mishaps, they will tell us and we will attend to them.
What are your future plans for growth and expansion in the Omani market? How do you see this progressing over the next 2-5 years?
ALAAIDDIN: I think we have to look at two clients when we refer to our growth in Oman. We have to consider the government sector and the private or semi private sector. The government sector has provided a lot of projects since they started the 8th 5-year plan 2 years ago. The government pledged to spend $78bn, which is quite a big number for Oman. This was in spite of a little lull in the market. However, I think in the coming 3 years there will be a lot of growth in Oman due to the 5-year plan. There are a number of big projects that are already being tendered and we are just waiting to see who is awarded them. Once the award is in place, I think the construction industry will flourish and grow. I am sure that the times will only get better. The government sector provides a good potential for growth in the construction industry.
The other sector involves the private or semi-private companies, such as PDO, Oman Oil Company, PP Hassan, and Orpic. If things go as planned with these clients, then maybe in 5-10 years we’ll see oil and gas projects worth much more than $45bn. So, there will be good potential and good prospects for serious contractors. These companies need contractors who can deliver on time, and provide quality and HSE services. Every contracting company needs these attributes in order to remain competitive in the market. It is not always based on the prices. There are also major civil projects going on. For example, roughly OMR 1bn ($2.6bn) has been invested in the Al Batinah expressway and maybe even more. There is also the Bidbid-Sur phase 2 project that we hope will materialize because we are between Shana and Masirah. There will be another big project in Khasab with at least $500m-$600m invested into it. All of these projects will materialize in the coming 2-5 years. As a result, the construction industry will experience better times. I believe that 5-10 years from now will be the best time in the construction industry here in Oman.
How would you describe CCC’s current ratio between government related and private sector projects? What are your expectations for obtaining future government contracts that are similar in size to the Muscat International Airport and the New Port at Al Duqm?
ALAAIDDIN: CCC mostly works for the government sector. This is where we feel that there is more security. There is greater assurance of receiving your payments, bonds, and even with regards to resolving issues. It is easier to resolve issues that might occur when you are working in the government sector. Having said this, we have also been associated with clients in the private sector. However, once we decide to go into the private sector, the contract conditions, financial conditions, and payment conditions, undergo a thorough study before we decide to bid or not to bid. We have been involved in the private sector. We have been associated with the Dubai realty project here. Currently, we are working with an American company on a big real estate project called the Omagine. This is quite a substantial project because the construction aspect is roughly $2.5bn. For the future, we will be focusing on the forthcoming big projects. We feel that in the big projects we can be more competitive rather than in the smaller projects. It is a very competitive market.
How competitive is the construction sector in Oman? What are the main competitive advantages that foreign companies, such as CCC, have over local players in the industry?
10 years ago, there used to be 5-7 companies bidding on a road project. Currently, you will find maybe 20-23 companies bidding on a road project. For one of the projects, 54 contractors purchased the documents.
ALAAIDDIN: Since 2007, after the financial crisis hit Dubai, many of the contractors there came to Oman. Many of the contractors working in Dubai, Spain, Italy, and Portugal came here. Most of these newcomers do not know the market conditions and are not familiar with the laws and regulations. They are also not familiar with the Omanization process. Since they are undergoing bad times, they have a bid strategy that is to bid very low prices for projects. However, after a few months, most of these contractors realize that those projects cannot be done for those prices. As a result, they cannot deliver the project on time. This usually leads to problems between the client, consultant, contractor, and different stakeholders. In some cases, they end up taking the project and giving it to other contractors. The length of this situation will depend on the performance on the markets outside of Oman. Dubai is picking up now and I hope that this will make things better here and less competitive.
CCC is quite competitive in the market because we have been here for the last 41 years. We are familiar with the laws and regulations. Also, We have a better Omanization program and process than the new arrivals or newcomers. Lastly, CCC in Oman is famed for completing its projects on time. We have an excellent track record with regards to quality, HSE, and resolving disputes. We have never been through an arbitration process. Usually, we are able resolve our issues and capability with our clients. These attributes really help us to be very competitive in the market but with the newcomers it’s a different ballgame. Sometimes you bid a low price just for continuity, but you cannot continue surviving with such prices. So, at one time you have to either run away and give up or change your prices to survive. 10 years ago, there used to be 5-7 companies bidding on a road project. Currently, you will find maybe 20-23 companies bidding on a road project. For one of the projects, 54 contractors purchased the documents. However, one out of 20-23 companies will have a fatal mistake and it will be forgotten. When the selection process comes around, I think the aspects that need to be focused on are things like completion on time, safety, quality, and disputes arising. It cannot only be about the price. In the end, if you get a low price you might actually end up with double the price of the highest bid. These projects are really needed but if clients want them to be done in a certain time frame, then they should go with the excellent contractors.
How has Omanization impacted the construction industry? What actions are being taken to help construction companies meet Omanization requirements and to ensure that the skill set of local workers is on par with what is being demanded from industry players?
ALAAIDDIN: Since our presence here in Oman, we have noticed the importance of Omani manpower. It is the same as in Saudi Arabia, Libya, Yemen, and a lot of other areas in the region. Local manpower is very important for future success in the country. The Omanization process is not only important for CCC but also for the stakeholders. You have the employee himself, the government, and the contractor. The Omanization process has very positive effects on the government and the overall economy. It also has a positive affects on the individual. He or she will acquire a skill, achieve a better standard of living, have less unemployment, and there will be less distortion of demography throughout the country. At CCC, we realized the importance of this and knew that one day our manpower would be mostly Omanis. We realized back in 2001 that we should establish a CCC vocational training center, which opened in 2002. We have to get Omanis trained or have them trained. This center really shaped the role of Omanization for CCC. If a project requires masons or steel fixtures, I will go and train people to do it. If I require welders, machinists, or mechanics, than I will go and train surveyors. We are training Omanis in almost 14 disciplines. We have currently trained more than 1,400-1,500 Omanis and this is only in our vocational center. We are also sending people to centers outside of Oman for some of the trades that we do not offer.
Training the local work force has helped us because Omanization is taken into account when the tender board is ordering a project. The higher your Omanization percentage is, the better chance you have at obtaining a project. CCC is not just involved in construction. We have CCC Construction, CCC Oman, CCED, which is based on energy, and the Wood Group - CCC. In all three of these entities we employ more than 3,500 Omanis. We are maybe the second or third largest employer of Omanis outside of the government. That is why, over the last 10-15 years, we have concentrated on the training of Omanis and we will continue to do so. This will help us in the future and we will most likely be able to cut down our costs. We will also be able to better compete with other companies. If you have a better percentage of Omanization then your chances of getting projects will be higher. At CCC, we consider ourselves to be partners with the government. We are not trying to act as a competitor. We are a partner and we have a duty to fulfill our promise to the people of Oman and to the government. Obtaining the required or acceptable Omanization level comparable to the expat workers will take time. It will not happen overnight. Other countries, such as Kazakhstan, have a 30 year plan. I think Singapore had a 15 year plan. In Malaysia, they have a 20-year plan. Contractors need to know that they have to be patient. We have to also do our best not to leave the situation up to the government. We cannot leave it solely in the hands of the government. There are many ways you can train people. You can train Omanis in house, on the job, or by sending them outside of the country to other institutions. This is very important aspect here in Oman.
Which areas is CCC looking to establish joint ventures and potential partnerships in? How do you see this progressing over the medium term?
ALAAIDDIN: With regards to joint ventures and partnerships, CCC usually prefers to do the work on its own because we have a lot of resources. We currently have roughly 125,000 for manpower and more than 17,500 pieces or equipment. We have a lot of support from our headquarters in Athens. Our headquarters can help us in terms of planning, HSE, quality control, and estimations. This is helpful because sometimes you lack expertise or you want to minimize the competition. As a result, these are the conditions. This is important because when we look for a partnership, not in just any project, but also some unique special projects, you need a lot of investment, equipment, and additional expertise. This situation usually comes about with the major infrastructure projects such as ports, airports, freeways, and railways. These are the projects where you need to associate with other partners. We have a successful partnership in Duqm. We worked with Jan De Nul and they were our partners for dredging. We have a partnership with STFA, a marine contractor. We are currently working on the Muscat International Airport project with TAV. TAV is a Turkish contractor well known for airport projects. So, you have to choose the proper partnership to avoid disputes in the future. We have been very successful with our partnerships at CCC and we will continue to do so. Once you get a challenging or unique project you have to look for partnerships, either to be more competitive or to minimize the competition.