International construction company OHL has announced that it will sue Qatar Foundation (QF) after it was sacked as one of the main contractors of the unfinished Sidra Medical and Research Center this week.
The Spain-based company had been leading the design and build of Sidra Medical and Research Center in a QR8.79 million joint venture with Contrack International since February 2008.
However, earlier this week QF, which is funding Sidra with an endowment of QR28.75 billion ($7.9 billion), terminated the JV’s contracts.
Hundreds of staff were escorted by security from the site, as it was closed just ahead of the Eid holidays.
Reasons for termination
QF has not publicly revealed the reasons behind its decision to fire the contractors.
However, in an official letter to the London Stock Exchange (LSE) this week, the Vice Secretary of OHL’s Board of Directors, Jose Maria del Cuvillo Peman, wrote that QF is claiming the project was late and the contractors missed deadlines.
OHL is publicly listed on the LSE, and as such is required to issue a notification of any event that could be considered to have an impact on their share price or profitability.
The under-construction hospital, billed as “an ultramodern academic medical center” dedicated to the care of women and children, was originally supposed to open in 2011.
The most recently floated timeline was 2015, but as of May, Sidra could no longer provide a solid opening date because work on the building had not been completed.
In the letter, Peman disputed QF claims that the consortium had breached its contract, particularly with regard to “the pace of works and delivery deadlines.”
He acknowledged that the contract was awarded in 2008, but said:
“According to the current estimations, the degree of completion in the execution of the Contract is of around 95%, with the final delivery to the Client being scheduled in the first quarter of 2015.”
Peman also announced OHL’s intention to seek legal action against QF, saying:
“OHL considers that the reasons given by the Client lack of any legitimate grounds, and consequently intends to activate through the Consortium the mechanisms set out in the Contract to claim before the International Chamber of Commerce (ICC) based in London, through arbitration the effective protection of its interests.”
Finally, he assured the stock exchange that OHL would not suffer a financial hit as a result of the contract termination or legal action.
New contractor after Eid
The sacking of OHL and Contrack this week left many employees flummoxed. Some told Doha News that they were given no notice about what was happening, and only told at 8am on Tuesday to pack up their desks before being escorted by security from the site.
Many colleagues were also out of town on summer break at the time.
It is understood a new, as yet unnamed, main contractor will be appointed to restart work on the hospital after Eid.
But the fate of those working on Sidra who are not directly connected to OHL and Contrack remains unclear.
On big projects, a new main contractor will often rehire existing sub-contractors who already know the site to finish the job. When asked for comment, QF was not able to provide any further official details for now.
Thoughts?
This is so shocking and unexpected!!!!
As I said yesterday, QF PR team is a catastrophe, but I think they are not the only ones to blame here.
Whoever came up with this decision needs to give the right details and communication plan to the PR team, so that they can prepare a professional and diplomatic answer.
Since this is not the case and the story is becoming international, you should expect another round of “Qatar-bashing” articles soon in the international media.
In Sidra hospital people are just sitting nicely and eating govt fund. The project was delayed for last 4 years. The consultant/staff sitting on high positions, charging huge fees/salaries, takes money under the table and assign the contractors on their choice. I request govt must take action against the corruption specially in govt organizations. Govt must investigation, and find out the root cause! show it publicly.
Looks like its now getting interesting.. All this arbitrary sackings, terminations, etc for no ryme or reason is not the way how the business world works in the modern age. When big organizations and establishments do things this way the other small and tiny little companies do the same or similar way with their workers and employees because they know they can get away with such things
not surprised as they started having problems a couple of years ago, not surprised at all by the way things are done here.
How come the foreign company changes, but whatever the project is it ends up always this way? Which is the common denominator? …Qatar maybe?
because big foreign companies keep their A team on home projects and hires sub par employees and weak workers for projects in the middle east
To some degree, you are right. A lot of employees aren’t willing to come to Qatar for all sorts of reason–concerns about personal freedoms, school places for children, perceived safety issues, leaving family, etc. Therefore, the potential pool is already artificially small. If these sorts of were addressed on a national scale, then the pool of potential expats would be significantly larger. I routinely see people turning down Qatar as option in favor going to the UAE, other Western countries, Singapore, etc.
agreed, countries have to decide if they wana make changes for its benefit vs what the local population will accept. a problem effects many nations
Maybe also because Mohammed when those with relevant experience try to talk ‘reality’ with the clients – they tend not to be listened to? I have heard of cases when those with lots of relevant experience in the building industry at home and abroad are being told to leave as they are ‘not liked’ by the client – merely because they pointed out the truth? Unrealistic time scales, changes to programmes, lack of programmes, designs that are not buildable, designs that are so radically altered in construction that they lead to years of additional work? Sub par employees and ‘yes men’ seem to be liked in Qatar as long as they shut up! Also, on many projects the budgets do not allow for hiring the best – you pay peanuts unfortunately – you get monkies!!
don’t forget they cannot take the truth! If you are right but your truth shows that others are wrong…..be ready to pack.
“I have heard of cases when those with lots of relevant experience in the building industry at home and abroad are being told to leave as they are ‘not liked’ by the client – merely because they pointed out the truth?”
and usually the truth that is not liked is that the contractor when trying to cut every possible corner to save every penny has messed things up
“Unrealistic time scales, changes to programmes, lack of programmes, designs that are not buildable, designs that are so radically altered in construction that they lead to years of additional work?”
contractors agree to a time scale before they take on the project, if it wasnt possible they shouldnt have signed the contract and agreed to it. secondly when changes are made the contractor is asked to provide a cost and time estimate before the client decides to go on with the change, if their is a significant impact it is their responsibility to point it out. also assuming the contractor who made the design is different than the one doing the construction they are still asked to endorse it, if it wasnt buildable they shoudnt have endorsed it.
” Also, on many projects the budgets do not allow for hiring the best – you pay peanuts unfortunately – you get monkies!!”
hahahaha, qatar spends billions and usually project in the ME cost significantly more so than other parts of the world, this is the last place to complain about low budgets
I can tell by your comment that you are clearly NOT in the industry. Your comments, in principle, should be the way things are done. But I can assure you, that is not the way things are done in this country. disqus_ZM5UFScbWq is spot on!!
actually i am, my comments are basically the way we do things where i work
FANTASTIC COMMENT!! So true!!
up to a certain extent…..if you have also other people who are not expat interfering in everything without even the knowledge, the result is a catastrophe!
And honestly, super-professional expats at key position would not last here, they don’t want to waste their time HERE.
most of the people working on the qatari side (including key decision makes) are expats themselfs. something that people tend to forget
Sue Qatar Foundation ? Hahahahaha. Yeah, right.
They can inflict a considerable damage on it on the international scene if they win. QF is not only about projects in Qatar and does a lot of things abroad too.
It appears from the article above that Dispute Resolution clause of their contract has named the place of arbitration as London via the ICC, so I would say OHL has a chance for a reasonable and justified hearing.
Now, if their contract had named the place of arbitration as Qatar, then I would agree with your comment completely!! And I would advise OHL to not even waste their time and money pursuing it, just cut your losses and walk away!! RUN rather!!
Unfortunately many construction contracts do name the place of arbitration as Qatar (obviously to favor the client); OHL must have had a wise Contract Advisor at the time of contract development.
QF is claiming the project was late and the contractors missed deadlines.
umm is the contractor actually trying to say QF is wrong and the project isnt late?
If only it was that simple…
The contractor, Lindner Depa, kicked from the Hamad International Airport project (which was late) is now seeking damages of $250 million from Qatar Airways.
The contractor, Al Habtoor Leighton building the Shangri-La project next to City Center (which was late) is now seeking $272 million from Sheikh Faisal Holdings after a contract dispute.
Just because you were the contractor, and just because the project was late, doesn’t render you 100% at fault. The world is more complex than that.
I think they’re saying that the project was late through no fault of their own and that QF was culpable somehow, meaning they were wrongfully terminated.
A couple of thoughts- who would like to guess that the main contractor has not been paid, the subcontractors have not been paid, and the SCs workers have not been paid? So much for QF standards of migrant worker well being.
Sounds like another airport debacle.
Like I said………………WAIT for the facts on this – you’re on to something Greylag
When I read the article, my first thought was Hamad International Airport. Knowing numerous engineers and architects in Qatar, I had a great deal of firsthand information offered to me in conversations about working on projects such as these, and there’s no way on earth I’d want to be working directly with the Qatari side on these things. Far too often they hamstring the contractor, refuse to pay, make major project revisions, or just piss off someone in such a way as to delay a project (civil defense comes to mind with the airport.) There’s more to this story than missed deadlines and such, and I’m 100% convinced that the contractor is not entirely to blame here. In fact, their blame is probably much less than what is represented by QF. This is far too common in Qatar.
This is not an occasion for a round of “I told you so.” It should be an occasion for Qatar to appoint a true independent to look pragmatically at why it’s major public service projects almost inevitably result in delay and conflict. I’ve witnessed it first hand and unless there is a radical change of thinking from the public service client bodies there will simply be repeat after repeat. A tragic and wasteful mess.
Construction industry in this country is out of control. If the government and semi government projects are poorly managed by incompetent people, then we should expect the manipulation by construction companies. Despit the billions thrown in those incomplete projects, still quality is below standards.
It clearly shows that : workmanship, including highly paid consultants, project managers etc.. Are of a low quality themselves. The question is who allow them to tamper with this country’s vital infrastructure project.
Just another symptom of mixing official authority and business. The usual lethal mixture that all middle eastern country suffers from.
Usually when a deadline is missed in a contract, there is a monetary penalty (per day). The penalty applies unless the delay was caused by the “other” party, or mutually agreed to by both. Some better reporting would state what the case was here. Second, must have been a dozen delays and the modifications to the contract would also provide a lot of information on “fault.” If the delays were “mutually” agreed to, it would seem QF has to pay up.
Last I saw, they put out a RFP for project management software (November last year) but had not made a contract award (as of May this year). Apparently no one at Sidra knows what project management software is, or how it works, so they can not decide which software is good and which is not.,,,,and, if the deadlines have been extended, it can not be done unilaterally. Sounds like Sidra needs to hire some managers to replace what it now thinks are managers but obviously don’t have the necessary skills or education. One good manager is worth 10 committees of 10 people trying to run this project.
At one time I regarded QF very highly for their vision,involvements in projects and always trying to be cutting edge. Now that has changed and my opinion is one that the organization is so large,with competitions between centres, and decisions sometimes made that would baffle the best of us. I would like to see it save itself from the pitfalls of being so large and PR driven.