77.8% face non payment issues: poll

by Conrad Egbert on Nov 19, 2009 www.constructionweekonline.com

The majority of contractors say they're having serious problems getting paid by clients

According to an online poll on this website, 77.8% of respondents have said they are facing “serious difficulty getting clients to pay” for work they’re carried out on projects with only 22.2% saying they’ve “had some delays but cash is still coming through.”

No one (0%) clicked on the option “we've been fairly paid, and paid on time.”

Most contractors in the region have said they have had trouble getting some private and government clients to pay up money owed to them for projects they’re working on.

Due to the financial crisis, many developers in the region have had finance issues, which have resulted in their being unable to pay contractors for work done.

But contractors feel this is not good for the industry as it hurts the region’s image as a business hub. Some contractors like Besix have not tendered for the past nine months.

“If we’re not getting paid, what’s the point in putting in a tender?” asks Philippe Dessoy general manager Six Construct, which is part of a consortium working on the finishing touches on the Burj Dubai, scheduled to open on January 4.

“We’re not a bank, we are providing a service and we expect to be paid for it. It’s simple business. If we’re not paid, how will our business survive and in the end that would affect any company’s decision to be here,” he added.

Thomas Barry, CEO of Arabtec, which is the largest listed contractor in the UAE, also said that payment issues are an ongoing problem.

“We’re trying to come up with various ways to overcome the issue but we’re still going around in circles,” said Barry.

“We’ve been offered property in return but that’s not going to help us in any way as the property is being sold to us at boom prices which are not reasonable anymore.”

Dutco Balfour Beatty general manager, Grahame McCaig said at the Construction Week Dubai Conference earlier this month that property given in lieu of payments was not going to solve the problem.

“Accepting property in lieu of payments won’t allow us to pay our sub contractors or maintain a workforce of people. We have to pay their salaries so we need cash, not property.”

But Dubai’s Roads and Transport Authority (RTA) director of marketing and corporate communication Peyman Younes Partham told Construction Week that the RTA didn’t have these problems.

“There’s a contract that binds any work that we do. We have been operating for four years and have spent over US $8 billion (AED30 billion) on different projects, so that’s a lot of contracts and we haven’t had any issues.

“That’s because the RTA doesn’t have a habit of not honouring contracts, and neither do its partners. If we do a lot of projects, there’s bound to be a lot of work going on and some differences, but nothing that can’t be solved,” he added.