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Residential Development

Middle East

HKA played a pivotal role in the turnaround of a major executive housing project following the bankruptcy of a contracting partner and non-performance by subcontractors.

Brief

Our client, a top-tier international construction company headquartered in China, formed a consortium with a local contractor to construct more than 790 high-quality villa homes in eastern Saudi Arabia. Midway through what was supposed to be a five-year project, the majority partner declared bankruptcy. HKA was retained, initially, to advise on our client’s contractual position as it undertook to complete the entire programme itself. The scope of our commission widened as the construction company strove to achieve the best practicable outcomes for the owner, a leading Saudi and global corporation; the eventual homeowners (valued employees of the developer); and its own reputation as a world-class contractor.

What we did

The project was already two years beyond the planned completion date as our consultant began his review of the consortium contract. This two-month secondment expanded to a strategic review of the entire project and advice on the best course for completing the programme as HKA became part of the project team. Over a total period of 11 months, we provided a range of services, which included:

  • Calculating the cost to completion: This involved extensive site visits to estimate the construction work outstanding and quantity surveyor assessments of damage to part-built properties and requirements for materials and labour.
  • Reappraising the project schedule: Having identified the critical path, our consultant planned a robust 10-month schedule – in place of a highly unrealistic two-month forecast – and communicated this to all stakeholders.
  • Reviewing and managing subcontractors’ performance: More than 90% of the 20 or so subcontractors were replaced due to their non-performance. As time did not permit a traditional procurement programme, a vetting process was used to select capable contractors, each with the necessary skills and commitment to complete a single package of 20-25 villas. From 80-90 personnel on site, manpower rose to some 2,200 over the first four months of the revamped programme.
  • Managing contracts: Among other duties as the owner’s ‘approved project controls manager’, HKA’s consultant oversaw the drawing up of realistic handover plans for each villa and subcontractor performance against programme.
  • Managing claims and disputes: Our scrutiny of project documentation confirmed that our client had no recourse to recover costs due to poor document management and reporting. With sound project controls in place, we managed subsequent subcontractors claims. As mutual trust had been established, these could be negotiated amicably, in some cases by releasing additional works in return for discounted prices. The more rigorous systems in place also underpinned a claim on our client’s behalf for additional costs due to disruption related to COVID-19.

Outcomes

The project is on course for completion, confirming the realism of the revised schedule and value of the contract management and project controls instituted by HKA.

Our client now has confidence that future projects in the region can be delivered to budget and schedule where such a robust framework and procedures are put in place.

Having salvaged the most satisfactory outcomes achievable in extremely challenging circumstances, safeguarding its professional reputation, our client praised HKA’s pivotal contribution, including our “technical competency, problem-solving skills, dynamic approach, and excellent crisis management”.

"Working with the HKA team, I was delighted to play such a pivotal role in the turnaround of this residential project following the bankruptcy of a contracting partner and non-performance by subcontractors. "
Farhaan Mirza, Managing Consultant
Project Details
  • Client
    Confidential
  • Year
    2020–2021
  • Value
    More than US$300 million
  • Services
    Claims & Dispute Resolution
  • Sectors
    Buildings