Gulf builders urged to cut headcount as market slows

Construction companies in the Gulf Cooperation Council must take action to reduce headcount and procurement costs to cope with the slowing economy, according to a new report.

The report said that regional construction firms face a number of challenges such as low oil prices and geopolitical issues and as a result they must have leaner operations, improve their management capabilities and develop more flexible organisational models.

Today, that spending has declined, in part due to low oil prices. In addition, companies are required to hire more nationals, which increases labour costs. These factors, along with geopolitical developments, have forced GCC contractors to suddenly cut costs and tighten their operations.”

The report urged regional builders to adopt effective manpower management to accurately forecast their labour needs as well as setting up a specialised team to ensure coordination across the HR, planning, and operations functions.

The report also said reducing procurement costs is also vital, adding that firms should plan and aggregate purchases for the entire portfolio of projects, rather than on an individual project basis.

It said they should also coordinate purchases with the finance department to ensure better payment terms and introduce technologies to make procurement faster, more efficient and more accurate. And such measures can lead to savings of 5-10 percent on procurement costs.