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ARTICLE · 07 MAY 2024

Managing Supply Chain Disruption And Construction Price Fluctuation

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The Middle East construction sector is thriving (growth of 3.3% in 2023) [1] and is forecast to enjoy consistent year-on-year growth for the next few years.

GlobalReal Estate and Construction
Alistair Gray
Alistair Gray
Craig Mcpheator
Craig Mcpheator

The Middle East construction sector is thriving (growth of 3.3% in 2023)1 and is forecast to enjoy consistent year-on-year growth for the next few years. However, one of the major issues that the industry faces is high inflation and upward pressure on key materials, a trend that is likely to continue for a number of years. Managing supply chain disruption has become more and more important, especially as the Saudi Arabian giga-projects ramp up.

"More than one in four projects (26.6% are embroiled in cash flow and payment issues)"2

Traditionally in the Middle East, the risk of material price fluctuation in construction has been placed with contractors. To consider the potential impact of material price fluctuation, it is worth noting the reinforcement bar fluctuations that occurred in 2008 and the ramifications of which were felt throughout the UAE industry:

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