Polishing Qatar's pearl
FM Magazine traveled to Doha to speak with David Cannon, General Manager of Operations for the Pearl-Qatar project.
Developers of mega projects in the GCC are having to learn a new core competency: operations. David Cannon, General Manager of Operations on the Pearl-Qatar, tells FM Magazine why.
Finding original superlatives to describe appropriately each and every one of the GCC’s mega real estate projects is becoming an onerous chore for the region’s fantasy-weary media brigade. Clichés gush. The Pearl-Qatar has had its fair share. ’Breath-taking’ is as good a start as any.
David Cannon is General Manager of Operations for United Development Company (UDC), Qatar’s largest private sector shareholding company and developer of the massive offshore Pearl-Qatar project. He believes they will set a precedent to be followed by developers around the region. “We will be setting the standard internationally for the prestigious island that is the Pearl-Qatar,” he says.
Nick Bashkiroff, UDC’s Development Director, describes the Pearl-Qatar as an “iconic destination in its own right, a postcard asset, not just for Qatar but the entire region.” He goes on to say that the ’Riviera-like’ Pearl-Qatar will be a ’destination within-a-destination’. The thing is, though, he’s right.
The $2.5-billion (Dhs 9.2 billion) Qatar-Pearl comprises 400 hectares of reclaimed land and more than 40 kilometres of new coastline. The man-made island is Qatar’s first international real estate venture, the largest real estate development in the country and the first to offer freehold and residential rights to international investors.
Cannon is never short on visionary ideas when it comes to facilities management. He brings a wealth of FM experience to the project and hopes to set new benchmarks for other developers in the region to
As head of operations on the Pearl-Qatar, what does your role entail?
I recommend to UDC’s executive management of The Pearl, the optimum business solution and the recommended strategy to effectively manage The Pearl in order to create and enhance the environment, realise the vision, and ensure we maximise the customers’ experience.
We have to create strategies and systems, processes and procedures and go through the project life cycle looking at every area and where we can enhance it. By introducing energy consultancy, operations consultancy, and enhancing design if necessary in terms of making the systems better operated, more energy efficient and easier to maintain. It’s all those sorts of things.
The operating company, which will be located directly in the centre of the island and is at the heart of the global integrated model, will control and maintain all the companies that operate on the island for the benefit of the customers.
As the operating company for the entire island, what are your major areas of responsibility?
The operating company that we will establish will in effect act as the municipality for the entire island’s infrastructure. It’s a higher level model than TIFM [Total Integrated
Facilities Management]. It will link in to all the operators, so that every member of the operating company, and every partner, joint venture, and strategic alliance will be an operator. It’s what I call a global integrated model [see diagram overleaf] and I believe it’s a first for the Middle East and perhaps the world.
The operating company, which will be located directly in the centre of the island and is at the heart of the global integrated model, will control and maintain all the companies that operate on the island for the benefit of the customers. That will include the retail and marina infrastructure maintenance, security, cleaning, property management, facilities management, specialist subcontractors, district cooling, telecommunication, waste management – the full spectrum. We will control and operate all those elements and ensure the service delivery of each of those operators is in accordance with the quality standards that we set.
We will measure that by certain key performance indicators [KPIs]. So we would have people that specialise in those core competencies that can integrate with those companies and manage effectively. They would make sure that services are set and kept to the highest standard.
Will UDC self-perform any services?
If we haven’t got a particular core competence, we’ve learnt from other developers in the Middle East that you can’t create it overnight. Therefore we will approach those companies that have the best service, have the best systems, and have the best people to deliver those services. They could be Qatar-based, Middle East-based or international. Our emphasis is on quality and cost control in delivering the service level required.
UDC will make sure that it sets up an operation company on-site, whether it is a joint venture with other companies, or whether it is a partnership or a strategic alliance or whether it creates a new company itself. That decision hasn’t been made yet.
Being in design phase, are you now having an input in terms of optimising the functionality of the project?
Absolutely, that is one of our key objectives, to look at all the designs for the islands: infrastructure design, waste management, district cooling, energy conservation and consumption, landscaping and so on. We’ll look at all those areas and also identify the best way of procuring quality products for them and testing them – we will do our own independent testing to validate the equipment, to make sure that when it is fitted it will operate to its required level or output. And the right type of equipment should have low energy consumption.
Then we look at the calculations – or the break up of the service charge. So what I would like to do is segment service charge, know each area of the service charge, then focus specifically on those areas, and then enhance the design so we don’t have
a problem later.
The issue of service charges is very topical in Dubai at the moment. How do you go about accurately estimating service charges?
If we take lessons from Dubai: originally a major developer in Dubai set the standard at eight dirhams per square foot and then later almost doubled it. Now you have to appreciate that at the time the decision was made, they were leaders in the field of development. They set the service charge. Of course, at that time they may have not had the core competency to correctly calculate the service charge, and so they have learnt from that experience and they are going though a dramatic change.
We, of course, do not want to do the same, and we have learnt from their experience. We would calculate the service charge and make that transparent to the owners. So when they buy property, when they commit as customers to us, we will indicate what the service charge is, how it is broken down, and what the expected rise due to inflation will be.
So at design stage, within the next six months, we will calculate the service charge based on our experiences in the industry, from professional people quantifying the cost, and we will make that transparent to the owners.
How do you go about making a life cycle cost analysis on The Pearl?
It’s a huge task, but we can segment it, we can break it down into components. Doing this at design stage and through the project process involves collecting thousands of drawings and individual bits of data and migrating that into a management information system (MIS) prior to the handover. So the asset register for the maintenance system is ready, with all the costs, and all of the development of the life cycle model done prior to handover.
We rely very heavily on manufacturers and suppliers to give us information on the life of the assets and the best recommendation of maintenance in order to prolong the life of the assets. When you look at a 25-year life cycle, everything has a life and that is why you have a sinking fund, which is a very new concept in the Middle East. Contributions into a sinking fund would be over a period of years, and the basis of the calculation of that cost is on the lifecycle of each asset. That pays for high capital expenditure 10 years down the line.
How much influence will you have on how the individual property developers build their towers?
What we have done is set a benchmark of specifications. So the developer has to meet those specifications. After all, it is in the developer’s best interests to meet those specifications because that will mean the product keeps its value, it’s easier to maintain and you can leverage off our economies of scale with procurement.
We will set up a procurement strategy for the whole island, which we think is the first time this has been done in the Middle East. We want to make sure the developers, who are developing the land through our specifications, benefit. It’s not just that we sold a plot to them, but it is an ongoing relationship. Developers want to make revenue and to grow and everyone wants to profit.
What we want to do is to make available economies of scale in the procurement of items.
People sometimes say in this part of the world that clients aren’t that concerned about reducing energy consumption. What’s your view?
The culture here is that, in the past I think, they lacked awareness.
Nowadays, with growth, people are more aware of the importance of protecting the environment, that we must commit to it. And look at globally what’s happened with tsunamis, earthquakes, changes of weather patterns and so on. If you spoke to a local in the Middle East, they would probably notice a weather pattern change over the past 10 to 15 years.
So whatever we are creating on earth is changing the environment. We can all contribute by looking at sustainable projects and more efficient energy systems and we are doing that. We will have an energy consultant coming in and looking at a wide range of issues – I think there’s a list of 45 issues to review, and let’s come up with the best solution for each of those areas.
And the developers will each bring in those people with the experience and core competency to look at these ideas. Don’t forget we have freehold properties here, and we are bringing in a customer base of many different nationalities. So those customers, especially those coming from cultures where saving energy is the norm, will demand to use better products and less energy. They don’t want to see people wasting energy, and they want to see the environment in pristine condition. That will have an impact up the chain and we recognise that and we are addressing that.
Given the fast-track nature of projects in the GCC, what would you say about the challenges of ensuring contractors and project managers deliver a quality product on time?
We are under no illusion. The main contractors have an obligation to build quality products in accordance to specifications. We foresaw problems that would arise through our experience of mega projects and our backgrounds. What we have put in place already is a technical committee that will actually inspect and validate the design they are building to. That is a collection of MEP management skills, project management skills, hard services skills and soft services skills.
One thing that happens in many projects is that contractors may offer another solution that they believe meets the specification. We would arbitrate and make sure that whatever specification is there is maintained – and that is a contractual requirement.
My experience with project managers is that they are very professional, they have a job to do, they have to get a project off the ground, they have to deliver it on time and within budget. Project managers invariably do not like change. In the past what we've done is, at the wrong time, tried to introduce change to the project managers. They do not like change through the project cycle; it’s best to do it in the beginning. So at design stage, as a developer, we bring a project management company in but they must also understand the requirements of the operator. Hotels have got it right. They bring the operator in to check the design. We are catching up in property management in the Middle East by starting to bring the skills in at the right stage of the project. Project managers will leave the project at the end of the project life cycle; the operators will be maintaining it through to perpetuity. There is a dramatic change occurring in project management. Because they understand the value of bringing in operators at the right time of the project, they understand the reason and they support the activity, and more and more project managers need to understand that in the future.
What messages would you give to other property developers in the region?
I've got a number of messages to give to other developers, but firstly that we are learning from you and, conversely, you should learn from us. We are open to sharing our experiences with other developers: the procurement cycle, the best techniques to use and to learn from the mistakes made.
Developers need to learn from the problems associated with service charges. Analyse the service charge and what makes up the components of it and then look at each of those elements and come up with some innovations to reduce the cost. Developers must respect the operator’s requirements because the operator represents the face of the developer these days.
By maintaining property through to perpetuity, the developer has added ’operations’ to his core competencies. Normally, a developer develops and sells on – that’s it. However, in the case of mega projects, developers retain a vested interest in the property.
They therefore need the expertise in-house to direct the operational requirements in the project development and construction stage. Skills such as design review to ensure the maintainability and operation of the systems, service charge calculation, life cycle analysis and so on.