Authored by: Marco Fahd, Group Chairman and CEO, Versatile International
Destination-scale projects not only showcase a nation’s capabilities but also reflect its heritage and identity. This is particularly evident in the Middle East, where the use of natural stone in these projects is providing not just building blocks but also a vital ingredient in forging the region’s architectural identity and its march towards forward-looking development.
For asset owners, a key challenge in sourcing natural stone for these large-scale projects is ensuring that the material is delivered on time, within budget, and to the desired standard of quality while navigating the growing complexities of the global supply chain.
The impact of getting material sourcing and procurement right from the start is significant. An estimated 30 percent of overall construction globally is rework – including failure to procure materials in sufficient volume on time, replacing materials that are unfit for purpose, correcting errors made during installation and lack of coordination among contractors.
Today’s market dynamics, especially in the wake of the significant global supply chain disruptions brought by the COVID-19 pandemic, call for an agile and transparent procurement approach. Asset owners must adopt an integrated strategy in sourcing natural stones — one that aligns their vision with the evolving realities of the global market. This approach is more than just meeting timelines and budgets; it’s about upholding quality standards that define these monumental projects.
The Importance of Supply Chain Transparency
The foundation of effective destination-scale project management lies in the transparency of its supply chain. However, supply chains were not designed to be transparent. Traditionally, companies and suppliers have harbored a reluctance to divulge detailed information, fearing the erosion of competitive advantage or exposure to criticism. This veil of secrecy, while seemingly beneficial in a competitive market, can inadvertently sow the seeds of inefficiency and risk, particularly in giga projects where stakes are high.
In the natural stone industry, the risks for asset developers are multifaceted. To begin with, sourcing quality material that adheres to the project vision is critical. In the Middle East, where these projects often represent a blend of cultural heritage and modern engineering, the choice of stone is not merely a matter of aesthetics but also of authenticity and longevity.
The variability inherent in natural stone adds layers of complexity in ensuring consistency and quality. Faced with such variability, asset developers must navigate a labyrinth of stone suppliers, each offering material of different quality. Handling a modest volume of material in this way may be straightforward; but overseeing a supply large enough to cover 100 football fields – as is often the case with destination-scale projects – is an entirely different matter. Due to these projects’ sheer size and complex supply chain, even minor quality issues can spiral into significant schedule delays and cost overruns.
This challenge is compounded by the changing landscape of Environmental, Social, and Governance (ESG) regulations. With policies becoming more stringent in many destination countries, developers are increasingly held accountable by regulators and investors not just for their immediate practices but for their entire supply chain’s adherence to these standards. The Saudi Stock Exchange, for example, has published a list of ESG guidance including metrics on labor management, material sourcing, supply-chain labor standards, and tax transparency. Neglecting transparency in the supply chain, thus, may bring potential regulatory breaches and ethical non-compliance, leading to reputational damage and the possibility of significant investment withdrawals or project cancellations.
The natural stone industry is particularly susceptible to supply chain opacity due to several inherent factors. Firstly, natural stone quarries, often located in regions with varying labor and ESG compliance standards, can pose ethical and regulatory challenges, if not properly vetted and monitored. Additionally, natural stone’s inherent variability poses a significant challenge. Quarries, even within the same region, can yield stone with considerable differences in quality and appearance. This complexity of sourcing from diverse geographical locations, combined with the natural variability of the product, makes transparency in the supply chain not just a matter of ethical compliance but also of ensuring the integrity and quality of the final construction project.
Getting Stone Procurement Right from the Start
The escalating scale and complexity of modern-day giga projects, compounded by global supply chain disruptions and stringent ethical and regulatory demands, reveal that traditional procurement methods in material sourcing are fundamentally broken.
According to the McKinsey Global Institute, the demand for destination-scale projects is increasing, now representing 8% of the world GDP. Yet, mere 0.2% of these projects successfully have met their initial projections in terms of cost, schedule, and expected benefits since the 2000s.
Asset developers need to adopt a more integrated and transparent procurement approach, one where the entire supply chain, from quarry to installation, is closely monitored and managed to ensure alignment with both the quality standard and ethical and environmental compliance.
At Versatile International, our work pioneers this innovative procurement approach. As the first fully integrated stone project management consultancy (SPMC) in the Middle East, our project governance model is designed specifically for destination-scale asset developers. Our approach guarantees certainty of outcome by meticulously removing supply chain risks at every stage of the procurement process.
At the outset, we work closely with developers to guarantee the selected stone aligns with project requirements, considering properties such as water absorbency, tensile strength, and resistance to weathering. When potential risks surface, we offer corrective recommendations for the best procurement strategy.
During procurement, we evaluate suppliers based on material quality, delivery timeline, and appropriate ESG practices. We inspect the stones at their source to confirm they match specifications, ensuring consistency with the project’s vision upon delivery.
By getting stone procurement right from the start, we remove supply chain risks, increase transparency for asset owners, and guarantee precision and quality in project delivery. Our partnership with the Diriyah Gate Development Authority, Saudi Arabia’s flagship cultural heritage initiative, has seen the successful completion of more than 50 projects, reflecting our commitment to managing large-scale, complex supply chain challenges in the natural stone industry.
Conclusion
In conclusion, our imperative is clear. Embrace a holistic, transparent procurement strategy that stands resilient and adaptable in the face of evolving market dynamics. At Versatile International, we understand this and have in place a robust approach to natural stone procurement that significantly reduces the supply chain risk at every stage.
By adopting this approach, asset owners in the Middle East have the unique opportunity to set a global benchmark in project management. It’s a chance to lead, showcasing how change and innovation can drive long-term success, even amidst the most challenging scenarios. In doing so, the region can demonstrate its capability not only in envisioning monumental projects but also in executing them with unmatched efficiency and foresight.