MARKET WATCH
Fossil fuels have supplied the driving force behind Abu Dhabi's economy in recent years. With almost one-tenth of the world's oil supply, the emirate controls the world's largest oil fund, totaling $875 billion in assets.
In 2008, the oil sector will represent nearly 60 percent of Abu Dhabi's GDP, which is expected to reach $105 billion.
But that focus is shifting as the government reinvests oil revenues in other sectors.
The Abu Dhabi Department of Planning and Economy reports it expects the emirate's GDP will reach $300 billion by 2025—and only 40 percent of that figure is expected to come from the oil sector. New economic drivers will include construction, electricity and water, telecommunications and tourism. The emirate is already making progress with its economic strategy. During the first quarter of 2008, non-oil exports increased by 57 percent.
SOURCES: Oxford Business Group, Abu Dhabi Tourism Authority, Abu Dhabi Department of Planning and Economy
FACTS & FIGURES
Population: The largest emirate in the United Arab Emirates, Abu Dhabi covers about 67,340 square kilometers (26,000 square miles), although only 30 percent of the land is inhabited. The population is about 1.5 million, with urban dwellers representing nearly 70 percent of that figure.
Language: Arabic is the official national language and is widely used in business circles. But English figures prominently, as do an array of other languages, given the high number of expatriate workers in the region.
Currency: Dirham (AED)
1 AED = US$0.27
1 AED = ¥29.76
1 AED = €0.18
During the early 20th century, the economy of Abu Dhabi, United Arab Emirates centered on camels and pearls. That changed dramatically 50 years ago with one simple discovery: oil. Today, the United Arab Emirates contains nearly one-tenth of the world's oil supply. And Abu Dhabi, the largest of the seven emirates, owns roughly 95 percent of that reserve. With about $875 billion in assets, the Abu Dhabi Investment Authority is the wealthiest sovereign fund in the world.
Oil has defined Abu Dhabi's fortunes, but recent developments suggest it won't define the city's future. The emirate is exploring a new path, one that emphasizes sustainability.
Case in point: Abu Dhabi broke ground earlier this year on Masdar City, a massive $22 billion portfolio of projects aimed at creating what's billed as the world's first zero-carbon, zero-waste, car-free city.
“Abu Dhabi is looking to position itself as the world leader in renewable and sustainable technology,” says Roland Salman, president of RW Armstrong, one of the companies working on Masdar City. The design and management consulting firm is headquartered in Indianapolis, Indiana, USA and opened an Abu Dhabi office in August 2005.
Masdar City may have the highest profile, but it's just one of Abu Dhabi's many projects aimed at increasing sustainability—and decreasing the emirate's economic dependence on oil.
“There is a growing awareness that the future of the Persian Gulf is in alternative energies,” says Uwe Nienstedt, an Abu Dhabi-based project development director at KEO International Consultants.
Abu Dhabi's population could reach 3.5 million by 2030—and it's no secret the government wants sustainability to serve as the cornerstone for that growth. It's all mapped out in Plan Abu Dhabi 2030, an urban policy “grounded by the three basic elements of sustainability: the natural environment, economic development and cultural heritage.”
It's not that the emirate is going to run out of oil any time soon. With 96 billion barrels of reserves, it has enough for a 100-year supply at its current production rate. But the government recognizes the need to diversify sooner rather than later.
“Abu Dhabi is blessed by a rare abundance of fossil fuels,” the 2030 plan says. “However, this finite resource will not create a windfall of wealth in perpetuity. The city needs to find new ventures and diversification for economic development. For example, Abu Dhabi can capitalize on the natural supply of solar and wind power to augment its fossil fuel-driven economy.”
“Plan Abu Dhabi 2030 is a testament to how city officials plan to revamp the entire city into a sustainable world leader,” says Alex Brigham, executive director of Ethisphere Institute, a New York, New York, USA-based business research organization.
But project managers may still have to make their case.
“While sustainability is a growing concern, many executives still focus solely on bottom-line numbers,” he says. “The project manager on the ground must convince his or her supervisor why it's important to focus on sustainability, not only for natural reasons, such as the environment, but because it is essential for long-term prosperity.”
Project leaders working on large-scale efforts such as the Abu Dhabi 2030 plan must remember such initiatives “invariably will need to be repeatedly defended against critics,” Mr. Brigham says. So the ability to not only prove but promote the short- and long-term economic benefits of a project “is one of the most powerful tools to keep such an ambitious plan on track.”
GREEN GOALS
The boom in sustainability projects in Abu Dhabi is influencing the kind of project managers most in demand.
“There is a new, more aware breed of project managers coming to Abu Dhabi,” Mr. Nienstedt says. “There are more consultancies specializing in sustainability that operate in the region.”
ZERO IN
Abu Dhabi's Masdar City is aiming low—for zero, to be precise, as in zero waste, zero carbon emissions, zero cars.
A large photovoltaic power plant will address most of the energy needs for the 6-million-square-meter (64.6-million-square-foot) development. And an electric light-rail system will provide the main mode of transportation.
“Masdar City will question conventional patterns of urban development, and set new benchmarks for sustainability and environmentally friendly design,” said Dr. Sultan Al Jaber, CEO of the Masdar Initiative, at the unveiling.
A $22 billion portfolio of mega-projects, the development broke ground in February 2008 and will house 50,000 residents upon its scheduled completion in 2016.
According to Foster + Partners, the architecture firm handling Masdar's design, “… the surrounding land will contain wind, photovoltaic farms, research fields and plantations, so that the city will be entirely self-sustaining.”
The city will also be striving for new levels of efficiency. For instance, planners anticipate that Masdar City will need about 8,000 cubic meters of desalinated water per day, less than half of what a traditional city would require. Also, the city plans to purify and recycle wastewater that will help grow plants with biofuel potential.
The mega-project has seven phases. The first is the Masdar Institute of Science and Technology (MIST). A collaboration with the Massachusetts Institute of Technology in Cambridge, Massachusetts, USA, it's touted as the world's first graduate university dedicated to renewable energy. Scheduled to open in 2009, MIST will focus on “developing the next generation of solutions to the world's growing dependence on fossil fuels.”
The initiative may help both the environment and Abu Dhabi's bottom line. Masdar officials estimate that the project's green technologies will save more than $2 billion in oil over the next 25 years (based on current energy prices). Masdar City is also expected to create more than 70,000 jobs and add more than 2 percent to Abu Dhabi's annual GDP.
Masdar is in accordance with global conservation group WWF's One Planet Living program, which prescribes 10 principles of sustainability—all of which are to be achieved by the project's close:
- 1. ZERO CARBON: 100 percent of energy supplied by renewable energy—photovoltaics, concentrated solar power, wind, waste to energy and other technologies
- 2. ZERO WASTE: 99 percent diversion of waste from landfills (includes waste-reduction measures, re-use of waste, recycling, composting, waste to energy)
- 3. SUSTAINABLE TRANSPORT: Zero carbon emissions from transport within the city and implementation of measures to reduce the carbon cost of journeys to the city boundaries
- 4. SUSTAINABLE MATERIALS: Use of high recycled materials content within building products, and tracking and encouraging the reduction of embodied energy throughout the construction process
- 6. SUSTAINABLE FOOD: Retail outlets to meet targets for supplying organic food and sustainable and/or fair-trade products
- 7. SUSTAINABLE WATER: Per-capita water consumption to be at least 50 percent less than the national average, and all waste water to be re-used
- 8. HABITATS AND WILDLIFE: All valuable species to be conserved or relocated with positive mitigation targets
- 9. CULTURE AND HERITAGE: Architecture to integrate local values
- 10. EQUITY AND FAIR TRADE: Fair wages and working conditions for all workers as defined by international labor standards
- 11. HEALTH AND HAPPINESS: Facilities and events for every demographic group
“Masdar is an example of the paradigm shift that is needed, and the strategic vision of the Abu Dhabi government is a case study in global leadership,” said Jean-Paul Jeanrenaud, director of WWF International's One Planet Living initiative, at the Masdar launch. “We hope that Masdar City will prove that sustainable living can be affordable and attractive in all aspects of human living—from businesses and manufacturing facilities to universities and private homes.”
ECONOMIC SUSTAINABILITY
Saadiyat Island model
That, in turn, triggers the local project management community to alter its approach, he says. “Project managers need to be more aware of the consequences of their work.”
The need for visionary project managers focusing on sustainability is growing very rapidly, says Noman Zafar Chaudry, planning manager with CAP Emirates, an architecture, planning and construction supervision company in Abu Dhabi.
“During recent years, Abu Dhabi has awakened to the mega-project arena, which was earlier limited only to Dubai,” Mr. Chaudry says. “The residential and commercial sectors have seen unprecedented growth. This has led to the implementation of the sustainable development idea.”
And government is leading the way. In May, the Abu Dhabi Urban Planning Council announced new guidelines and regulations that promote the development of green buildings and communities. Called Estidama (which means “sustainability” in Arabic), the program will include a point-based rating system for meeting certain criteria, such as the addition of green roofs or the reduction of water used for landscaping. Similar to the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) certification, Estidama will certify developments with a number of “pearls,” with five representing the highest achievement.
SUSTAINABILITY SKILLS
The focus on sustainability will shape the future of the emirate, not to mention the work of local project managers.
“Right now, many clients are demanding a sustainable approach, such as Masdar,” Mr. Salman says. “The Abu Dhabi government is also about to require that all projects in Abu Dhabi are sustainable and meet the requirements of the newly developed Estidama rating system.”
But the increased interest may require project leaders to acquire new skill sets.
“You can learn bits and pieces, but until you learn how to integrate all the aspects of sustainable design, it's not going to make much sense,” Mr. Salman says. “Project teams must include team members with experience in sustainable design to help lead the sustainable design process and educate the other team members.”
One example is building orientation, he explains, “a very simple, passive strategy that can limit solar heat gain.” And that can be important in Abu Dhabi, where air conditioning is a fact of life.
The tightly integrated realm of sustainability means team communication takes on elevated importance. The entire project team—from the architects to the mechanical engineers—has to work together.
“They all have to sit down and talk about all the different things they can implement and how they will affect each other,” Mr. Salman says. “The challenge with a sustainable project is to have each team member contribute to a higher level of building integration by finding synergies where changes in one element can assist with improvements in other elements.”
Plan Abu Dhabi 2030 is a testament to how city officials plan to revamp the entire city into a sustainable world leader.
—Alex Brigham, Ethisphere Institute, New York, New York, USA
In Abu Dhabi, project managers must also contend with budget concerns. Due to the spiraling oil prices and general inflation in the United Arab Emirates, construction costs are rising sharply, he says. For 2007, the inflation rate reached more than 11 percent. “The market demand for fast-paced work with good quality management and efficient cost management is [now] at its peak,” says Mr. Chaudry.
THE NEXT STEP
The push for sustainability is obviously good news for the environment—and for project leaders who seek a competitive edge. But all that enthusiasm can create problems, too.
“The danger with green developments going too fast is that the decision-makers may not fully understand the impact they can have on a larger scale,” says Mr. Salman.
Some stakeholders may have sustainability goals that are simply not feasible. “So the engineers and the architects are going to be banging their heads against the wall to figure out how you're going to achieve that, without the cost shooting through the roof or without compromising other things,” he says.
That's where savvy project managers can make their mark. “They have to have the experience and the track record to say, ‘In this case, you can't achieve that, because we've tried it elsewhere. This is the maximum you can achieve in this sector or in this aspect of the building,’” says Mr. Salman. “They must balance a sense of reality with a creative approach to determine what can and cannot be done.”
And when it comes to coordinating the intricate puzzles inherent in sustainability projects, that need won't diminish anytime soon. “The management of sustainable design and construction, as seen from the project management role, is viewed as the next step in management excellence,” says Mr. Salman. PM