As the construction industry started to slow last year, doubt loomed over the future of Abu Dhabi's showpiece projects such as the Louvre and Guggenheim museums. Far from being an impediment, the slowdown has brought an unexpected bonus for the Tourism Development and Investment Company (TDIC), which launched both projects valued at Dh5 billion (US$1.36bn). With reduced demand in the sector, costs are expected to be 30 per cent less than they were a year ago, as experienced elsewhere in the sector. And once-scarce contractors are now plentiful. The TDIC engaged big-name architects for the big-name buildings: France's Jean Nouvel has designed the Louvre, which will resemble a floating dome, while the Pritzker Prize-winning Frank Gehry has come up with equally dramatic drawings for the Guggenheim. The buildings will form part of the Cultural District, the anchor project on Saadiyat Island.
Now the search for builders has begun, and construction of both is likely to get into full swing early next year . The Louvre broke ground in July as Bauer of Germany began enabling works. The shortlist of contractors is expected to be finalised soon. And contractors have been invited to pre-qualify for The Guggenheim contract, valued at Dh2.75bn, by October 15. The TDIC has taken advantage of the construction slowdown to rework tenders, with the aim of trimming costs. It has also been considering the wider field of possible contractors.
"They have brought in some of the best architects in the world and the projects have started with good intentions," says Farshid Moussavi, an architect at Foreign Office Architects, an international firm. "They will also need good companies to build them … and the thing is, most firms have already migrated to the region. It's not just about who builds them, but also the kind of procurement they follow."
The TDIC's requirements for the contractors are fairly demanding: they will need an annual turnover of Dh3.6bn and experience of building complex structures. So far these two high-profile buildings are attracting the interest of the world's heavyweight builders. Al Habtoor Leighton Group, Murray and Roberts, Dutco Balfour Beatty and Arabtec Construction are just some of the firms planning to compete.
"Things that sounded difficult two or three years ago, people are going to put more effort into getting them done," said a UK-based engineer, who asked not to be named. "This is a good time to create an icon as it's cheaper. More resources from contractors and designers around the world are available … and for that reason the client and the projects will benefit." When developers had a tough time securing good quality building firms during the height of the boom, some turned towards joint ventures with contractors to streamline costs and mitigate risk.
In 2007, the TDIC joined up with Leighton, the largest construction company in Australia, in a partnership that would have seen the contractor build most of the projects on Saadiyat Island. But the Dh5.1bn deal was abandoned in June, with TDIC saying the current economic climate made it more cost efficient to work with different companies. Leighton could still be involved as part of Al Habtoor Leighton Group, which has bid for the Louvre along with its joint venture partner Murray and Roberts of South Africa. The joint venture is also likely to bid for the Guggenheim.
In this soft market, competitive bidding is likely to be a boon for the TDIC. "It (developers partnering with contractors) is not a necessity right now and traditional contracting seems to be the way forward," says Ian Tarry, the regional director at Mace, a UK-based construction consultancy. "For a client who doesn't want risk, they will choose to keep the contractor at arm's length. But it's not so good for the contractor, who will pick up a lot of risk which perhaps they shouldn't be carrying."
The challenges of the projects means the contractors themselves may look for partners. Grahame McCaig, the general manager of Dutco Balfour Beatty, which plans to bid on the Guggenheim, said its involved design would raise more risks than the average project. "With very complex details and architectural finishes, it won't be straightforward," he says. Nigel Hayward, the director of project management at Hyder Consulting, expects both developments to attract a strong international line-up of bidders hoping to win the bragging rights associated with building such iconic developments.
"Projects like these are prestigious and contractors would like to have them on their CV," he says. "The client is likely to go for an international firm or a top-tier local one." The bigger challenges will revolve around the logistics of moving materials and construction workers on to Saadiyat Island, Mr Hayward adds. "You'll also have a lot of other projects being built around you at the same time, which will have the same demands."
The museums are among five cultural buildings planned for the Cultural District, including the Sheikh Zayed National Museum, a performing arts centre and a maritime museum. The Louvre will display works from the collection of The Louvre in Paris, as well as works loaned from other major French museums, while modern and contemporary art will be acquired and displayed at The Guggenheim. "Cultural development can positively impact the local economy by attracting tourism and investment," says Rita Aoun, the TDIC's director for culture. "The presence of these premier cultural institutions will assist in attracting the investors that will help to fulfil Abu Dhabi's vision."