Builders chasing US$300 billion (Dh1.1 trillion) of regional infrastructure projects risk getting in over their heads, consultants have warned.
They are in danger of being overwhelmed by the increasingly large and complex mega projects emerging from the UAE, Saudi Arabia and Qatar and could end up losing money on them.
According to Deloitte Middle East and the law firm Freshfields Bruckhaus Deringer, the amount of mega projects coming out of the UAE, Saudi Arabia and Qatar over the next five to nine years equates to a value of about $100bn for each country.
However, the firms warn that legacy issues at contractors hit hard by the global financial downturn, coupled with poor book keeping could push many construction firms in the region into financial difficulties.
"Many contractors are winning more and more projects, which are increasingly complex and larger in size and risk," said Rizwan Shah, Deloitte's regional managing director for corporate finance.
"Yet they are still dealing with legacy issues of poor performance and delayed payments by their clients."
British consultants were among the international firms hit by payment problems after the financial crisis. Other contractors from Australia and South Africa also reported losses on problem contracts in the Emirates.
At a seminar in Dubai yesterday, accountants and lawyers said they expected further consolidation in the construction industry.