Dubai International Financial Centre (DIFC) (photo: )
Dubai International Financial Centre (DIFC)
07.04.2014, 08:31

Look Who's Counting

Portfolio Management, Features

Historically, accounting methods used in portfolio asset evaluation across the Gulf have been less sophisticated than those of more developed economies. Mahmud Merali, Chairman of The Merali’s Group and Executive Partner in multi-jurisdictional practice, Baker Tilly Merali’s, argues this is changing as international accounting protocols are adapted to the region’s needs.

Historically, accounting methods used in portfolio asset evaluation across the Gulf have been less sophisticated than those of more developed economies. Mahmud Merali, Chairman of The Merali’s Group and Executive Partner in multi-jurisdictional practice, Baker Tilly Merali’s, argues this is changing as international accounting protocols are adapted to the region’s needs.


There has been a sea-change across the region that has seen even the largest master developers abandon speculative investment in new projects (the build and they will come approach that was ubiquitous prior to 2010), in favour of strategies designed to maximise financial returns from existing property portfolios.


Accompanying this shift has been a growing awareness of the need for more sophisticated accounting and asset reporting systems that are sufficiently adaptable and robust to cope with the additional requirements made by the huge amount of property and infrastructure development that has taken place across the Gulf in the last 20 years.


The accountancy profession is working hard to bring the very best practices in building management and lifecycle cost accounting to the GCC. However, closer examination of the relationship between the new breed of accountants and their government and developer clients suggests it is a symbiotic one.


A new requirement for large asset management studies of entire cities has resulted in the creation of innovative accounting techniques that apply recognised international accounting procedures on a scale that has not been attempted hitherto. Indeed, many of these procedures are so advanced they may genuinely be described as world-leading.


Dubai’s Real Estate Regulatory Agency (RERA) Construction Tracker Study

One of the largest ever asset management exercises undertaken in the GCC monitored and tracked the progress of more than 1,000 development projects; capturing information information on buildings even as they were under construction.

The study was initiated in 2009 by RERA using pioneering, 5D citywide digital mapping and database technology supplied by a commercial partner.

This technology-led approach is now being considered by several master developers who are keen to record information about the condition of buildings in their property portolios.


What is building information modelling (BIM)?
What is building information modelling (BIM)? © FM Magazine (GCC Edition)
Building Information Modelling (BIM)

Leading architects and designers are also increasingly using building Information Modelling (BIM).


In the United States, the National Institute of Building Sciences’ (NIBS) publishes a consensus based standard (the National BIM Standard-United States or NBIMS-US™) which has been developed by referencing existing standards and can be imported by architects into 3D BIM software.


Whilst the application of BIM within property and facilities management is still in its infancy, it is abundantly clear that combining information from the procedure with lifecycle costing data will extend asset management capabilities within both sectors, strengthen systems used for capturing valuable information, and improve overall cost management across the design, procurement, construction and operation of built assets.


Asset Lifecycle Costing: Towards New Regional Standards

International and local expertise is frequently present on project teams assembled by global consulting firms in the Gulf and creates opportunities for developing new standards that combine the best components of different national and international standards; tailoring them to the needs of the region.


The United Kingdom’s Royal Institution of Chartered Surveyors (RICS) which plays a global role in developing and promoting lifecycle costing, is active in the region through its many affiliated companies.


RICS Building Cost Information Service (BCIS) standard, Standardised Method of Life Cycle Costing, is used frequently in conjunction with the International Organization for Standardization’s ISO 15686-5 Service Life Planning Part 5: Life Cycle Costing standard and will be enhanced further with the adoption of the forthcoming British Standards Institution (BSi) BS8544 standard – the first to be created specifically for modern building operations.


Unfortunately, the requirement for localised approaches to asset lifecycle accounting has not always been appreciated by international firms that have attempted to introduce home country approaches without understanding fully the intricacies or complexity of many projects in the region, or the lower operational skill levels that are being applied on assets they are taking on.


In the Gulf, projects that deploy lifecycle costing tend to be very large, complex ones. This makes it impractical for clients to use traditional, spreadsheet and database approaches to lifecycle costing.


Furthermore, developers and their operational teams are rarely experts on built environment asset management or lifecycle costing and assume consultants will deliver information that can be interpreted and implemented easily: quite the antithesis of the often huge spreadsheets and databases of asset and costing information that are still being delivered to project owners by many consultancy firms and deterring further adoption of lifecycle-based approaches to managing property developments.


At The Merali’s Group, we have been working with our project partners to present asset information in a way that is easier to understand. By using graphical interfaces to display data from clients’ developments alongside comparable maintenance and cost data from buildings in the UAE and incorporating maps, computer aided design (CAD) and BIM information; we have made it easier for operational staff to understand often complex collection, condition and lifecycle calculations. And by presenting all information visually, we have attempted to ensure the studies and systems from which data is derived become effective management tools which can live with the built assets they represent. Although we are still experiencing the dawn of the marriage of advanced accounting systems with new technologies, the fact remains that these systems are nevertheless being developed.


And, in light of the speed and scale of construction across the Gulf as a whole; and a growing appreciation of the need to better manage and look after the built environment, it is highly likely the most significant future advances in global asset management and lifecycle costing systems will originate in the GCC.

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