OBG talks to Robert Card, President and CEO, SNC-Lavalin Group

Interview: Robert Card

How do you view the scope for growth in emerging infrastructure projects?

ROBERT CARD: The market forecasts indicate major upcoming project investments in both the Middle East and Africa, driven by several factors. Increased urbanisation will encourage governments to invest massively in urban infrastructure, public utilities, water systems and transportation systems. Additionally, there are many private investment initiatives to exploit natural resources in these regions, which in turn require basic infrastructure and operating facilities, thus creating more opportunities for growth in infrastructure projects.

In addition, the establishment of an institutional framework for the emergence of private companies and the development of educational systems drive growth. Algeria, for example, has ambitious development plans in various sectors and should experience growth as its people take advantage of greater political stability. This development will affect both social infrastructure, such as highways, railways and buildings, as well as energy infrastructure, which has enormous potential for growth and job creation.

In terms of competing for bids, what challenges present themselves to multinational contractors?

CARD: There is healthy competition between multinational contractors bidding on infrastructure projects in Algeria. The challenges for any contractor consist of understanding the various laws and regulations that affect the bidding and execution process. Partnership with a local company is required. Another common challenge faced by the multinational contractors is the fierce competition from other emerging countries that offer their professional services at very low prices. Many bids are based on the lower price rule, which can challenge companies like ours to maintain a competitive position. However focusing on providing high quality services with a strong emphasis on health, safety, security and environmental standards can help sustain a competitive advantage. Competition ultimately benefits the client since it is in the bidder’s best interest to present a proposal that meets the client’s exact needs and for the price to fairly reflect the nature of the work involved to maximise the value the clients receive for their investment.

What obstacles do multinational construction and engineering firms face in increasing local content?

CARD: Multinational companies face numerous challenges that appear to be common in emerging markets and these include bureaucracy, rigid investment laws, fiscal pressure and bid requirements stipulating a minimum of local content. The fact that the local workforce does not have access to some of the tools used by multinationals and their lack of practical knowledge poses additional challenges as the workers need training in order to deliver the same high standards.

The situation is changing rapidly in the Middle East since factors like inherent local labour shortages, the lack of raw materials and the increased desire for technological transfer have encouraged governments to ease restrictions and support entrepreneurs.

How can private participation in infrastructure construction in Algeria be encouraged?

CARD: The model we use is based on a mix of directly hiring local staff and working with Algerian private sector sub-contractors. The turnkey approach is one of the most effective ways to develop major infrastructure projects in terms of cost, quality and delays of execution.

Some of the advantages offered by turnkey projects include reduced stress and pressure on the client as they have entrusted one company to manage the project. Since only large organisations have the in-house multi-disciplinary expertise required to manage turnkey projects effectively, the client deals with one project authority rather than managing many sub-contractors. Having one project authority also ensures tighter cost control and scheduling. This approach is beneficial to both clients and consumers.