The building and construction industry in the GCC is on the brink of a transformation that could ripple around the world. For the past 30 years, GCC governments have successfully deployed capital mega programs to diversify and expand their economies. From the creation of industrial port cities such as Yanbu and Jubail in Saudi Arabia, to the emergence of downtown Dubai, mega programs have created landmark places to live, work, and visit.
As of early 2020, close to 30 mega programs in the GCC construction delivery pipeline were expected to become largely operational over the next decade. These projects represent around US$1 trillion in investment, almost half of the region’s total construction pipeline of 2.3 trillion. They include urban regeneration programs, such as those focused on downtown Riyadh and Jeddah, large-scale smart cities, and other projects.
To encourage the industry’s transformation—and burnish the GCC’s reputation as a global leader in mega programs—regulators, owners, investors, and suppliers must pursue eight priorities.
Develop a clear mega program strategyAt the outset, it is critical to articulate a comprehensive delivery strategy for the mega program—including whether to build or buy the necessary capabilities or pursue a public– private partnership. This initial strategy decision can in turn define parameters for how to build: to advise and align decisions on contracting method, funding approach, technology deployment, value buying, and program operating model.
Use “industrialized” construction methods and next-generation materialsPrefabricated and productized construction methods can yield significant efficiencies in terms of time, cost, productivity, accuracy, and quality. The net effect is one of “industrialization” of the construction process—shifting it from a highly labor-intensive, manual, and project-specific approach to a more automated, standardized, and controlled approach with a clear hierarchy of modules and components.
Source strategically and resilientlyMega programs should seek to take advantage of the full suite of available strategic sourcing approaches across all projects to deliver maximum value. This includes taking advantage of scale benefits through volume aggregation and specification standardization across program projects, along with exploring opportunities for joint process improvements with suppliers, establishing strategic alliances and partnerships, pursuing global sourcing opportunities (where appropriate and compliant with local content requirements), and making procurement decisions based on total cost of ownership.
Establish a fit-for-purpose governance and operating modelA well-designed governance and operating model is essential for the successful delivery of mega programs. It should provide effective checks and balances while avoiding unnecessary bureaucracy. That means implementing a consistent stage-gate process whereby projects proceed through identifiable phases that cover the entire program life cycle, establishing governance committees, creating a delivery operating organization and model, defining standards and procedures, and managing talent effectively.
Establish in-house centers of excellenceCenters of excellence have the potential to greatly enhance the effectiveness of mega programs by facilitating knowledge sharing, ensuring compliance with technical standards, and driving innovation. A center of excellence defines policies, procedures, and standards, including material specifications; researches and adopts the latest trends; identifies innovative engineering and construction practices; and promotes the adoption of those practices in delivery.
Pursue digitization from the inception of the mega programDigitization is a fundamental enabler for unlocking significant benefits throughout the entire building and construction ecosystem and value chain. It enables more transparent, data-driven, real-time, and efficient decision-making. From their inception, mega programs should proactively use digitization to make the entire program life cycle easier to manage. At the heart of this approach is the full adoption of BIM as the single digital backbone for the mega program.
Get the right talentMega programs in the GCC must take proactive and targeted measures to mitigate the significant workforce challenges in the construction sector, specifically those related to labor availability and skilling.
Make ESG concerns an imperativeFrom an environmental angle, mega programs must consider greenhouse gas emissions and factors such as water and power consumption, waste and resource management, recycling, and building materials and resource efficiency. From a social angle, they must incorporate health and well-being, diversity and social inclusion, community impacts, education and innovation, emergency response planning, and legacy planning dimensions. From a governance angle, it is imperative to build sufficiently robust checks and balances into the program operating model and governance construct to deliver on the environmental and social concerns.
By taking full advantage of trends that are transforming and industrializing the construction sector, GCC mega program owners and policymakers can take a quantum leap forward in program delivery outcomes. The success of mega program delivery depends on carefully following all eight priorities over a multiyear journey.
Mega program owners can achieve timely and cost-effective program delivery and establish the requisite foundations for world-leading, future-proof construction supply chains, capability systems, and delivery disciplines. That in turn can generate a substantial economic dividend through enhanced economic value creation and increased employment as productivity improves, while also contributing to ambitious sustainability goals.
From a global perspective, the scale, scope, and ambition of GCC mega programs make them potentially transformative for the construction sector. There is a clear opportunity for mega programs to position the GCC construction sector as an exemplar on the global stage.
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