Procurement of first phase of strategically important transport plans announced

The Abu Dhabi Department of Transport (the DOT) has recently announced plans to press ahead with the procurement of the first phase of its metro and light rail plans in a clear sign the Government of Abu Dhabi is re-focussing on the implementation of strategically important projects.

Evolution of the Surface Transport Master Plan

In June 2009 the DOT published the Abu Dhabi Surface Transportation Master Plan (the STMP). The STMP was intended as a comprehensive plan for the implementation of surface transportation in Abu Dhabi, prepared in light of the vision of the Emirate’s rulers set out in the Abu Dhabi Strategic Plan. One of the STMP’s recommendations was the implementation of a high quality and high capacity metro and light rail system that would complement other modes of surface transportation being implemented in Abu Dhabi. The proposed implementation of that recommendation has evolved over the last four years and the DOT’s recent announcement reflects changed economic circumstances and strategic priorities.

The announcement has already attracted significant interest from industry participants with reports of hundreds of companies having registered their interest in participating in what is expected to be one of the largest projects currently in procurement in Abu Dhabi.

Given the early stage of the procurement, what do we know about the project and what are likely to be critical questions that will need answering as soon as possible in the formal tender process? Are there any issues or risks, easily identifiable at this stage, that will require careful consideration by interested parties?

The Project

The DOT has confirmed the tender for this first phase will comprise the following elements:

  • A metro line (the Red Line)
  • 2 light rail lines (the Green Line and the Blue Line)
  • A bus rapid transit system (the Orange Line).

Metro Transit

The Red Line is expected to be approximately 18 km in length and will run from Zayed Sports City up to Mina Port at the north end of the island. The Red Line will form a central spine to the transportation network for the island and is expected to form a high capacity system that will significantly relieve current road congestion. At first glance, in an interesting omission from this first phase, the Red Line will not extend to the mainland and to Abu Dhabi International Airport, which is currently under expansion and forms one of the main gateways into Abu Dhabi. However, given recent press reports that the expanded airport is being designed to cater for such a line, it is likely this extension will be included in a subsequent phase.

The Red Line will be procured by way of three separate contracts, the first for the above ground structures, the second for the underground construction works and the third for the rail system, rolling stock and operation and maintenance. Both of the first two contracts are expected to be procured on the basis of a Fédération Internationale Des Ingénieurs-Conseils (FIDIC) based design and build contract. The third package will be procured on a design, build, operate and maintain basis, possibly also FIDIC based. How, if at all, the DOT will modify those FIDIC based contracts by sets of Particular Conditions of Contract will be clarified when the tender documents are released to bidders.

How much of the proposed Red Line will actually be underground and how much above ground remains uncertain. However, this is a detail we anticipate will change as the procurement gathers pace given the complications and additional expense that working underground brings to a project. When the tender documents are released, we expect bidders to be interested in whether the DOT is prepared to give bidders flexibility to propose alternative lengths for the amount of track underground and above ground from those specified in the tender documents.

Light Rail Transit

The recently announced plans comprise two initial light rail lines which will run at grade level:

  • The Green Line will run for 13 km from the Central Bus Station to Saadiyat Island with 21 stops.
  • The Blue Line will run for 15km from Marina Mall to Reem Island with 24 stops.

Currently, the DOT intends the scope of works for the two light rail lines will be procured separately on a design, build, operate and maintain basis, again probably FIDIC based. We expect bidders to be particularly interested in discussing with the DOT whether the DOT is open to the possibility that one bidder could be appointed to provide both LRT lines.

We understand that the LRT lines will run down the middle of the affected roads, therefore requiring substantial work to the affected roads to make this possible (e.g., diversions, re-design, modifications, traffic signalling changes etc.). When the tender documents are released, whether the DOT will procure this work itself, pass this portion of the project to separate third party contractors or include this in the scope of the successful bidders’ obligations will be of particular interest.

Bus Rapid Transit

The final element to the project will be the introduction of a bus rapid transit system towards the top of the island, which will include passage to and from the landmark new developments on Sowwah and Reem Islands. This Orange Line will be a closed loop of approx. 4 km with approximately 25 stops.

We expect this system will similarly be procured on a design, build, operate and maintain basis but await more detailed information from the DOT.

The Timetable

The DOT intends to move to pre-qualification imminently. It will be interesting to see how many parties the DOT pre-qualifies for each of the constituent elements of the project as we expect the size of the list to affect the extent of continuing interest from potential bidders, given concerns they may have about participating if the chances of success are particularly low.

The proposed ambitious timetable reflects the project’s significance to Abu Dhabi and the desire to see the system implemented as soon as possible. The DOT currently intends to complete the evaluation of the pre-qualification documents in October 2013 and release the first contracts for tender during Q1 2014. The DOT expects the first parts of the project will come into service during 2016-17, another ambitious deadline, given the scope of the works and the probability that contracts may not be awarded before Q3 2014.

Procurement strategy and issues

We would hope bidders would be allowed to bid for, and could be awarded, multiple packages as this may bring price and other procurement benefits (e.g., potential economies of scale and potential reductions in overall project risks).

When the tender documents are released we expect bidders will pay particular attention to reviewing and considering the DOT’s proposed approach to risk transfer and management. Historically, the DOT has viewed the private sector participant as better placed to manage the majority of potential project risks.

Neither the length of the intended operational period for each of the lines nor whether bidders will be permitted to price an alternative operational period has been confirmed yet. Obviously the length of the proposed operational and maintenance period for each of the lines will be of critical interest to potential bidders and an operational period that bidders consider too short may affect the willingness of some potential bidders to participate.

We understand the DOT intends to procure the project by way of direct procurement and will directly fund the project itself. This reflects the approach that DOT has generally adopted for large scale capital procurements in recent years and should help to ensure that construction can proceed relatively quickly after contract award.

Impact of other regional public transport projects

During the procurement process the DOT is likely to focus intently on bidders’ ability to successfully deliver the works on time. Bidders will be particularly concerned with understanding in greater detail the DOT’s proposed approach to evaluating the extent of delivery risk associated with a bidder’s submission, given the ambitious timeframe.

As part of that focus, we would expect the DOT to be very interested, in both its pre-qualification process and its evaluation criteria, in determining if individual bidders are actively involved in other regional metro and light rail projects - both in terms of whether bidders are currently bidding for such projects and particularly whether they have been awarded any contracts for those competing projects. Since other GCC governments are in similar and, in some cases, more advanced stages of procurement of their own public transport programmes, the DOT will want certainty that awarding a contract to a bidder who is already engaged in one or more competing projects will not be counter-productive and lead to an increased risk of delays to its own project.

By way of an example, similar public transport projects being procured in Qatar are currently in bid evaluation stages and have broadly overlapping construction periods with the Abu Dhabi project. Given the limited number of industry players possessing the necessary specialist expertise in some of these areas, there may be practical constraints on project execution teams, tunnelling expertise and especially bidders’ ability to procure the necessary signalling and other specialised metro and light rail expertise required to successfully implement such projects.

In addition, potential bidders will need to be certain, at an early stage, of their ability to source the necessary rolling stock required for the project since rolling stock supply will have long lead times. This is especially critical given the current competing demands for similar rolling stock in the region and the Far East.

Therefore, bidders who have not been successful so far in other competing regional metro and light rail projects may consider themselves better placed to succeed in this strategically important Abu Dhabi project given they should be free from immediate scheduling conflicts.

Interface risk

As the project is essentially a number of separate projects being implemented at the same time in a confined area, bidders will need to be comfortable they understand the likely interface risks and that those risks have been contractually allocated in a manner that represents value for money. Such interface risks will include both the interface between the various packages forming the Red Line as well as the interface between the 2 different light rail transit lines being procured in close proximity with each other on a design, build, operate and maintain basis.

The initial route map provided by the DOT shows areas where one or more of the lines will intersect each other (below, at or above ground level) and therefore bidders will need to carefully consider and evaluate whether there will be interface and co-ordination issues related to the extent to which other lines or works may interfere with a bidder carrying out his own scope of works. Obviously, given the overlapping construction timetables both the DOT and bidders will need to carefully consider these interface risks. Bidders will need to be comfortable that all such interface risks have been identified and it is clear who is contractually responsible for those risks.

Competition and revenue related risks

On the basis of the STMP we expect the DOT will retain control of the fare box and also the setting of the fares. Therefore, given the geographical proximity, and in some cases intersection, of the various lines with each other in some areas, we expect bidders will be keen to understand who bears the passenger risk. Bidders will need to understand clearly what protection, if any, the DOT will give operators that passenger choice will not be manipulated (e.g., through the introduction by the DOT of cheaper bus travel along the Red Line route) if such risks are passed to operators.


We expect the DOT to scrutinize bidders’ ability to deliver this strategically important project on time and to budget (especially in the light of other projects being procured on the same or substantially overlapping timeframes) and, as such, potential bidders not currently involved in competing regional projects may consider themselves better placed to succeed in this strategically important Abu Dhabi project.

In any event, after a number of years of subdued activity, the launch of this project as a first phase in the implementation of Abu Dhabi’s updated transport master plan represents a significant milestone in the development of the Emirate’s critical infrastructure. This procurement represents renewed confidence and a welcome return of the infrastructure development market in the Abu Dhabi.