Face to Face: Jasmin Gregory and Bassem Hariri.
The Syska Hennessy Group has been involved in the region for 30 years, says critical facilities VP Gregory Jasmin. "Some of our key projects have included King Saud University, still Syska's largest square-footage project in its history.
We have done work with Riyadh Bank in the early 1980s, as well as in Kuwait and Iran. In the recent past we have done projects here in the UAE, which was more on the consulting side, especially in terms of sustainabiliy, and then about one-and-a-half years ago we started collaborating with Bassem [Hariri]."
Hariri is managing partner of LZ Technologies Middle East. "Our main capabilities revolve around commissioning and FM. We have been in the region almost two years. The reason we entered into the JV was because we saw a gap in the critical facilities space to provide an end-to-end solution, not only from a feasibility and design point of view, but throughout construction and operation, which is also key."
Hariri says that LZ Technologies turned to the Syska Hennessy Group as its partner of choice. The new company is called Syska Hennessy Group MENA.
"We took the decision to move forward and establish a JV to tackle the region, not only in terms of critical facilities, but also other key sectors like healthcare, aviation and government, mainly defence and law enforcement, basically anything that requires niche expertise and a criticality from an engineering perspective."
Jasmin says the new company has established its mark with relative ease, vindicating the founders' belief in this particular market segment.
"We have had good success working with some key platinum-type clients, Aramco being one, for whom we did a feasibility study. We have also have been working with the Capital Market Authority of Saudi Arabia on its CMA Tower project in Riyadh, and with the National Bank of Abu Dhabi, for whom we are working on their new data centre, as well as doing work for Mubadala.
Jasmin attributes this initial success to the synergy between the JV partners. "We have been able to gel and really present a clear message and vision to the region. We have various vertical markets we focus on, mission critical facilities being the largest.
Then we have services that go across those markets, such as ICT (information communications technology). We have our own lighting design team, and again that goes across all those markets; we have AV (audio-visual) and security, as well as commissioning and FM consulting."
Jasmin says it is not by chance that all these sectors are high-growth areas in the construction industry at present.
"When we conducted our initial market study and looked at where the dollars are being spent, these sectors fit right up our alley in terms of the markets we serve and the services we provide, which is why it made perfect sense for us to make the commitment to have a local team and office that can understand the local market and deliver the expertise we have in the US, but localised for the region."
Hariri comments that the new venture has been established at an opportune time to take advantage of the trend towards infrastructure development in the region.
"There are some key sectors that are still greenfield and under-invested, from the government specifically. This includes the critical facilities sector, which is just maturing in MENA."
This is because many companies grew so fast in the boom period "that they did not pay attention and invest in their infrastructure. They are still growing, but have found that they have under-invested in these critical facilities, and now it is time to invest over the next 15 years."
Healthcare and education are also a major focus. "There is a still a great need for good hospitals and healthcare across the whole MENA. Education is the key challenge for all GCC countries to get their nationals into these markets that are growing," says Hariri.
A consequence of the Arab Spring is that the defense and law enforcement segments are growing as well." In addition, Greenfield markets like Qatar and Iraq present major opportunities.
Jasmin explains that the downturn has not had much of an impact on the new venture or its business plan, as it is focusing on infrastructure mainly. "If you look at the type of projects companies focused on during the boom, it is not that market we are pursuing.
We are focused on the core needs of the region in terms of development and betterment of the nationals. These countries have to spend those dollars, and we are coming right along to provide the expertise to help them spend it in the right way."
Hariri says the new venture is markedly different from other engineering firms in that it is not opportunistic.
"We are here to build real partnerships with key clients, and these partnerships are not going to be as a result of a potential project in the pipeline. We want to be with the owner from the initial stages. With the clients we have currently, we are with the owner directly, directing vision, budget and timeline, so at every stage we are giving guidance and providing expertise."
Deciding to establish a new venture is one thing, but staffing and training are separate issues entirely. "Once we decided to move forward with the JV and the local team, we realised we would have to bring in a core team that understands the Syska culture.
From a technical standpoint, our team here can liaise with the US, but we can also use that core team to then train the local staff we going to bring onboard," says Jasmin.
"There are some very good engineers here in the local market, but we obviously have to train them in our way of doing things, and there are some things they are teaching us about how to do work in the local marketplace, in terms of local code compliance, for example.
So it is a balance between having a core team that understands the Syska way of doing things, the local team that understands the local way of doing things, and then merging the two to create the right balance. We want to keep the Syska culture and knowhow, because that is why we are here, and that is what we want to bring to the region.
However, we also understand it has to be localised somewhat to each particular country we are working in."
Hariri says that while the slowdown in Europe and the US has made it easier to attract talent to the region, retaining staff "is still going to be a challenge; that is the nature of the business here."
A beneficial consequence of the slowdown has been the realisation on the part of government entities in particular "that they have to spend the dollars to shore up their infrastructure," says Jasmin.
"Some projects have been delayed in terms of start-up, but these projects have to happen, so it is just a matter of when."
Hariri adds that a negative side-effect of the slowdown has been increased competition, "but not the right healthy competition, so you end up having to spend quite a bit to educate and have the client compare apples to apples. It is not an easy thing to do in this region right now, that is the negative impact of the slowdown. Everyone wants to do everything."
While this is partly due to the trend towards value engineering in order to cut costs and boost profit margins, Jasmin says it is critical that clients make informed choices.
"It is about giving clients the right information. Everyone wants to talk about value engineering, but unless you present the clients with the pros and cons, so they truly understand that if I cut this out, am I missing out on the true intent of what I am trying to build here?
"Value engineering is great when the client truly understands what he is doing. If he does not understand and is only cutting for dollars' sake, at the end of the day he may not be happy with the end product. So we feel even if we have to go down that route, we really need to present a case to the client: this is your intent, this is what you are cutting, and this is what you are getting or will be left with.
I think once framed that way, clients end up making the right decision. It is not something we can direct, but they will do what is best for their business," says Jasmin.
An interesting feature of the local market is the preference for mature systems and products. "They do not want to be the first to try it. They want to know if it is a proven solution that can be implemented.
What we are able to do is bring in our experience of doing projects in the US and China in terms of proven solutions, and then go straight into implementation. I do not think we can say it is a mature market; it is maturing.
There are opportunities - for example, when we talk about intelligent building systems, everybody has 'smart' buildings in terms of BMS, daylighting controls and AV systems, but who is going to come in and integrate these things?" questions Jasmin.
The question of integration also applies to larger developments. "If I have ten buildings to manage as a developer or property manager, how do I get a handle on all these buildings and systems, and how do they interact?
Are their ways to build efficiencies into what I am doing? One of the things that LZ Technologies brings to the table is property management on the FM side, which is when you look at the lifecycle cost of a building - there is a capex cost to build it, and then there is also the owner cost, the cost to run it, which you have to factor in as well."
Jasmin adds that this is financially beneficial as well. "If they run the numbers, it will cost them less for us to run it than if they ran it themselves. On top of that, when you run an asset like this, it is a living asset, you do not just design it and implement it and that is that.
There are other issues and challenges, there is growth and optimisation, so we always have the support of our engineering services for expansion, upgrading and bringing in more intelligent systems, new tools and technology, and thus it is much more than operating the existing system, and managing its lifecycle."
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