Concern over capacity for infrastructure projects in Middle East

PwC survey finds an expectation for increased project spending in the next 12 months but market capacity is failing to keep pace with demand.

An increase in project spending is expected due to optimism created by Expo 2020.
Powered by automated translation

Concerns abound about a looming capacity crunch for key capital and infrastructure projects in the Middle East, despite optimism about increased spending in the coming 12 months, a survey from PwC yesterday showed.

PwC’s second Middle East capital project and infrastructure survey found that 75 per cent of respondents expected an increase in project spending in the coming 12 months, with the UAE considered the top target for investing in capital projects and infrastructure, followed by Qatar and Saudi Arabia.

Such optimism is largely driven by events such as Dubai Expo 2020 and the Fifa World Cup 2022 in Qatar, together with increased spending on social infrastructure including housing, education and health care.

However, the survey, which polled the views of 130 prominent project owners, developers, contractors, advisers and financiers, suggested that market capacity is failing to keep pace with demand, which has already negatively affected project delivery in the region.

“While 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 under way,” according to 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.”

Ninety-five per cent of the survey’s respondents said that their projects were delayed, with 45 per cent reporting delays of more than six months.

PwC identified the ability to find the right number of people with the right skills as a key challenge for both project owners and contractors, together with difficulties securing funding. Client decision-making was also cited as a concern, with 35 per cent of contractors citing it as the greatest challenge they face delivering projects.

Follow us on Twitter @Ind_Insights