Yemen’s construction industry: A foreseeable change [Archives:2006/965/Business & Economy]

Raidan Al-Saqqaf
Notwithstanding intense developments in terms of construction as part of a nationwide strategy to build dependable infrastructure, Yemen's construction industry still suffers considerable obstacles preventing further growth in the industry.

Having averaged an annual 6.9 percent growth rate during 2000-2005 – significantly higher than the average 4.3 percent growth rate – the construction industry emerges as a lively driver of non-oil based economic growth, with a potential annual growth reaching 14 percent.

After agriculture and manufacturing-based industries, the construction industry is Yemen's third largest employer, employing more than 7 percent of the workforce, with a steady growth rate exceeding almost all other industries in Yemen. However, the critical issue is that despite such growth, there's been almost no development in the construction process itself.

Despite immense development in the science and knowledge of the construction process itself, construction in Yemen remains expensive, inefficient and utilizing outdated technology, thus making the industry extremely vulnerable, both in the medium and long terms.

A recent academic paper by scholars Basel Sultan and Stephan Kajewski from Australia's Queensland University indicated that obstacles to construction industry development range from initial feasibility and design study to cost management and the construction process itself. This indicates that considerable capital and time is wasted in the construction process, thereby resulting in a shortened lifespan of poorly designed buildings requiring redevelopment or demolition, especially if the materials used were questionable and the construction practices proved substandard, thereby resulting in a magnitude of problems throughout the building's lifespan.

The two indicated that virtually no research has been done to study the magnitude of the subject, despite the high costs and overspending involved in rehabilitating and redeveloping most Yemeni buildings and houses, which is undertaken routinely.

Multinational contractors will change the industry

Several construction contractors and firms have taken the initiative to modernize their equipment and recruit skilled engineers to ensure increased efficiency, thus indicating a sense of understanding the industry's problems. Similarly, new investments are taking place to manufacture cement, steel and other raw materials critical to the industry's growth.

However, the single most significant development is the expansion of renowned construction firms like Eemar from the Emirates, which specialize in constructing residential townships and dazzling office buildings.

Eemar and other multinational construction firms will change the face and core of Yemen's construction industry due to three factors: efficiency and quality, cost and speed, directly resulting from utilizing their know-how in terms of planning and managing resources, marshalling their expertise toward excellence and avoiding additional costs and overspending, as well as errors during the construction process, resulting in providing clients more value and quality.

The knowledge and systems followed by Eemar is the result of years of extensive experience in cost reduction and utilizing technology, knowledge and experience elsewhere in the world in order to become more competitive.

Competition is limited within Yemen's current construction industry. With tailor-made solutions for every client wishing to construction a home or building, there's virtually no negotiating power and the owner or financer currently must tolerate any errors or mishaps, especially in residential construction.

With multinational contractors coming to Yemen, there would be another option, resulting in a spill-over effect in the local industry to either improve quality, cost and time factors – and in turn become more competitive – or lose business to those who are doing so.

In a market scenario wherein construction costs drop significantly and quality is enhanced, one can expect the demand for such services to boom, with a possibility at hand to reach an annual 14 percent growth.
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