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E9: Is NEOM Really Happening?
136 Plays2 years ago
In this episode, Carlos & Jason discuss the progress on the NEOM project, and what they think the reality is - as well as the world's biggest concrete pour...or is that cement?
They discuss the Saudi Vision 2030 & the five major parts of the NEOM project. The Line, Trojna, Oxagon, Sindalah, and an airport. With so many contracts awarded so far, the NEOM project is full speed ahead. But, does the experience on the ground in Saudi match the headlines?
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Transcript
Introduction to Offsite Podcast
00:00:00
Speaker
Hey everyone and welcome to Episode 9 of the Offsite Podcast where we chat all things construction and technology. My name's Carlos and I spend most of my days talking to construction teams about how they deliver projects. And I'm Jason and I help build software that construction teams use to deliver their projects.
What is NEOM? An Overview
00:00:17
Speaker
So today we're going to be chatting about NEOM and a world record concrete pour. So first up, NEOM. I guess to sort of summarize NEOM, for those of you who have been living in a bubble for the last year or two and not been reading the news, NEOM is a region of Saudi Arabia. It's kind of up in the northern region towards Jordan opposite Sinai, which is the Asian sort of side of Egypt. So Sharm al-Shay, a resort most people know. If you look across the sea, you'd be looking at NEOM.
00:00:47
Speaker
Now, Saudi Arabia have something called the Saudi Vision 2030. They basically want to reduce dependence on oil, diversify, and think of like a Dubai-type project. They need to have a tourism business. And they've got $500 billion to play with, so huge amount of money being invested into this one region.
00:01:11
Speaker
The NEOM scheme itself is split up into five major parts, which we'll cover a bit later on in the chat. But the main ones being the line. So that's 170 kilometer long, 500 meter tall, 200 meter wide structure. It will house something like nine million people. It's a fully controlled ecosystem.
00:01:36
Speaker
and yeah a mega project the whole thing is mirrored so the theory is if you're in the desert you're looking at this what is basically a massive wall you don't really see it so it doesn't obstruct the view but um yeah if you've seen pictures online it is nuts
Is NEOM too Ambitious?
00:01:52
Speaker
There's something called Trojena. This is a mountain resort, which is going to have skiing, lakes, sports, like a big sort of like out style resort that they've got towards the, what is the north eastern side of the line. We've got the Oxygon. This is a huge city that's built on the coast. Sort of is being built over the sea. So imagine the Palm in Dubai, but way bigger, an entire city.
00:02:19
Speaker
There's Sindala, which is a luxury islands destination, so building full five-star resorts out in the sea on their own independent islands. And there's an airport, because obviously this region of Saudi Arabia isn't the most visited at the moment, so they're going to need to get all of these tourists in.
00:02:37
Speaker
Jason, you're smiling. You were a skeptic at first. Does it feel real now? I don't know. It's hard to... Yeah, I was definitely one of the biggest skeptics. Like when I first saw the website, whatever, a year or two years or whatever ago, I thought someone was pulling a prank.
00:02:55
Speaker
or it was like an onion news story or something like ski fields in the desert and we're gonna build a line hundreds of kilometers long and oh by the way it's gonna be 50 meters wide and 200 meters tall and by the way it's made of glass I thought the whole thing was a was a was a prank but
00:03:15
Speaker
It's kind of hard if you're looking at the contracts being awarded right now to still have that view.
NEOM's Global Impact on Infrastructure
00:03:23
Speaker
I think I read that the plan is to between 2021 and 2025 award $570 million worth of contracts.
00:03:33
Speaker
for the project billion that's with a B billion and judging by the contracts being awarded like in the last six to 12 months they're doing that you know it takes a lot to get up to 570 billion but the contracts are being let they can fast to contractors around the world
00:03:54
Speaker
like, if you try and put the size of that project into context, there's no almost no one can really conceptualize that size of project because no one's really worked on. Like, you can't, you can't comprehend it cause that the line 500 meters tall, the shard is 330. So that's how big the wall is, right? That's absolutely insane.
00:04:21
Speaker
Yeah, you can't imagine the scope of it. I got a friend that visited a few weeks ago, works for one of the organizations over there. And he just showed one section of where they're piling. So they're building this wall in lots of sections, as you can imagine. And the scale of Trump's method. Yeah. A little bit bigger than that one. It's a fence. It's a fence. Yeah, you say you said I was made out of glass. Surely that the best place to
00:04:51
Speaker
manufacture later glasses in the desert, right? Yeah, maybe. But Carlos, if you think about, like to try and put this in context, if you think about global infrastructure spend, it's something like 1.1, 1.2 billion US a year, right? So if this trillion
00:05:14
Speaker
If you take this project alone, take the forecast contract value being let over five years, it's literally consuming like 10% of the expenditure of global infrastructure on a single project in the middle of nowhere in the desert. Just imagine the logistics of pulling in the plant.
Engineering Workforce Challenges
00:05:40
Speaker
Like even before that, right? Like if you think about what it's like currently in, like I'm obviously in Australia, if you think about what it's like currently in Sydney or Melbourne to try and hire an engineer and people are fighting over engineers and planners, try getting 10% of the world's infrastructure spend and finding people to do that in the desert.
00:06:03
Speaker
the house
00:06:17
Speaker
It's really hard to comprehend. And if you think about the UK and when these projects, large mega projects, they're normally in this thinking design phase for five, 10 years, years, years, years. I remember working on Crossrail, people would talk to me about how
00:06:38
Speaker
when they were a child, they remember the government passing the like crossrail one bill or something to start action. And then like, years later, when they're midway through their career, they're working on something that was an idea or like first approved decades before. Yeah, this is like going full bore. And it's hard to imagine. Yeah, how that happens. Yeah, the thing that sort of jumped out to me initially,
00:07:05
Speaker
500 billion is obviously a massive number. But if we had to pick, let's just pull out one of these contracts. So there's a 57 kilometer high speed rail between the line, which is the big wall to Oxagon, which is the city. And that's just been won by WeBuild. And there was another organization as part of that JV.
00:07:29
Speaker
that is 57 kilometers long and it's one and a half billion. If we compare that to high speed two, that is a bargain of a high speed rail. So if you're spending 500 billion and 1.5 of it is high speed rail,
00:07:43
Speaker
It's not even like they're overinplating all these numbers and overspending to
Why Invest Now? Timing of Saudi Infrastructure
00:07:48
Speaker
like, cover the fact that they're shipping in 99% of their work. Yeah, it's the it's the building greenfield, right? Like you're building, you've got you've you're not going through the the the busiest city in the world and dodging bombs and graveyards and ancient burial sites. Yeah. Yeah. But still, like the material
00:08:09
Speaker
Like I wonder what proportion of high speed two is to do with clearance and demolition. It's still not going to be half. And even then we're spending 60 billion building it. If we divide it by two, one and a half million is like, it's nothing, is it? I guess maybe there's only one station at each end and you haven't got like this massive stuff going on in between, but yeah.
00:08:35
Speaker
But I think actually, like, if you step back, this is like a real genius move from the kingdom. Because if you think, if you really look at it, over the last decade, governments around the world have been borrowing money at the, you know, zero interest rate environment to fund the construction of infrastructure, you know, the amount of money spent in the UK and in Australia and countries around the world to build infrastructure.
00:09:02
Speaker
because they were borrowing money at what appeared to be brilliant interest rates. That's starting to turn. And well, it's turned. And all of these countries are starting to go, well, I don't know if we can afford all this money that we've borrowed. And these projects are getting put, pushed back the UK's, you know, as we know, they've stopped whole sections of high speed to the Australian government recently written out as to review into all the projects that have been awarded.
00:09:27
Speaker
And expenditure on infrastructure is likely to just get cut back, right? Which will have a deflationary impact on all the materials. There should be more people available.
Top Contracts and International Involvement
00:09:38
Speaker
And the kingdom, who don't have to borrow money because they've got the world's greatest money printing machine, can capitalize on the, do the opposite of what the rest of the world's doing and just double down on this infrastructure investment in sort of a counter cyclical way. I think it's like a
00:09:56
Speaker
a brilliant play. Yeah, it's like the most cost effective time to do it. But I mean, I'm gonna say that's luck. Unless they predicted that 10 years ago when they started this vision. It's like, it worked out well. But yeah, it's a
00:10:15
Speaker
Yeah, but the difference between luck and vision is who's writing the book, right? Like, like you just... Yeah, yeah, yeah. Make that some sort of master plan to create this economic climate, just to support that SoundyVision fund to build this at the perfect time. Exactly.
00:10:31
Speaker
yeah that's uh yeah so do you want to do out of out of interest just for that like i'm interested and i i wonder if other people are what are the top five contracts um that have been awarded recently on the the project yeah so the one we're looking for new jobs who are the contractors
00:10:49
Speaker
Yeah, yeah. If you want massive salaries and no life, better head to NIO.
Global Resource Shifts: Impact of NEOM
00:10:55
Speaker
So we just mentioned the high-speed rail, that's one and a half billion. We've got the construction of the new airport, that's three billion. That's been led to the Saudi Bin Laden group. There is a two billion project given to a company called Larsen and two bro. I think I'm pronouncing that right. Yeah, they're an Indian contractor, I think.
00:11:14
Speaker
Yeah, they're like a huge conglomerate. But they are, they have an engineering procurement and construction of what is effectively power generation and distribution to everything using hydrogen energy. So huge project that that obviously supports their whole zero carbon eco side of what they believe the line and the city would be. Do we know where that plant is relative to the is it near the port?
00:11:42
Speaker
I don't actually know where the site is. So let me just do a quick search. It looks like it's pretty close to the city on the coast. So yeah, it's not. Yeah, that would that would make sense.
00:11:54
Speaker
Yeah, definitely. We've got a billion and a half contract value given to the delivery partners of the line, which is SNC, Lavalin, Jacobs and Parsons. So a lot of obviously here we see on LinkedIn and stuff and moved over as part of one of those organizations. And that's like general construction management services, planning, project management, construction, that sort of stuff.
00:12:19
Speaker
What do you think happens to projects around the world when this 10% increase of demand happens? Yeah, what happens? From a staff point of view. Yeah.
00:12:34
Speaker
Well, there's quite a number of individuals that we've seen on major projects here that have gone. Speaking to a few of them, they know that they can go over for two years, work tax-free on a tripled salary, come back, pay off their mortgage, and you're kind of done.
Engineer Lifestyle on NEOM
00:12:52
Speaker
I think it would be quite a difficult life. Most of the contracts are like four to six weeks on, and then like 10 days off. So you really are committing to losing a couple of years of your life in return for that cash. But then like the projects that are left behind, the ones that are already struggling to contain costs are like losing key staff that have got like knowledge of the project, the history, and probably the most experienced the ones that are getting the offers first to go over there.
00:13:19
Speaker
That's got to be a fairly big brain drain, I guess, on these projects and contractors generally where these people are getting pulled from. It'd be interesting to see how that plays out over the next little bit. Yeah. Can imagine the sort of the office vibe at the moment on some of these mega projects where you're getting budgets cut, you're losing team members who are going off to
00:13:44
Speaker
what will feel like the grass is greener and richer. And you're kind of stuck in a cabin somewhere on the M62 or wherever projects you're on. It'll be quite a deal too. Yeah, I've mentioned that because it's one of the projects that just got canned by National Highways. Okay. Yeah, it'll be weird. I think it'd be really difficult to not focus and believe that you're on the right sort of thing.
00:14:12
Speaker
even though those who have gone over have gone, actually, it doesn't seem like it's all it's up to. It is a bit of a sentence. Would you be tempted as an engineer? No. I think I'm past that point in my life. You asked me when I was 20, I'd be there in a hot minute.
00:14:33
Speaker
yeah okay yeah yeah i think it'll be super tempting at that age unless you had a girlfriend then you're gonna be dead disappear for six weeks at a time okay that's the clue yeah yeah there we go um
Low-carbon Concrete in London
00:14:49
Speaker
Okay, moving on. So the world's biggest continuous pour of low carbon cements happen recently. Sorry to be that person because someone's going to do it. And if there are comments, I don't know if there's comments, but did you mean concrete or did you mean cement? Carlos?
00:15:06
Speaker
Oh, never ask us a question like that. I'm pretty sure you mean concrete. I cements the the white powder, the gray powder stuff. Yeah, yeah, yeah. It'd be weird to just pour cement in there. No, no, that's cool. Someone's got like, there's always that person. I'll be that person. I said that now. Right. Anyway, yeah, hot chief Murphy joint venture, London power tunnel job. It was 736,000 liters.
00:15:36
Speaker
and it was a 55 meter deep tunnel sharp basically so it was the I guess the base slab of that so that obviously all sounds great I'm sure we could talk about how you clad a continuous pool of concrete that big but I wanted to focus on the carbon aspect or the low carbon factor of the cement so
00:15:56
Speaker
I think, sorry, before you dive in like that, I think the low carbon aspect is super interesting, but just for context, when this clip got sent around before we jumped on, it seemed odd to me that they were quoting concrete volumes in liters, because that's like, no one ever does that. And then I started thinking, maybe they're just doing that to inflate the number for a bit. And then if you do the conversion,
00:16:23
Speaker
It's not very many. It's so it's 736 cubic meters of concrete, which is actually a really small pour. I think the largest ever is something like 30 something thousand a cube of a continuous pour but large mega projects regularly like if you're doing a tunnel like HS2 probably do this but
00:16:47
Speaker
bearing the like pits where the TBM's end up or if they're not retrieved. Those pause are often 10 to 15,000 cube. I think the Hinckley one was like 20, I think, or it was the SCS on HS2 did a 20,000 cube pour at some point previously. So just for context, this is a tiny four, but
00:17:12
Speaker
Yeah, it's like someone saying, oh, Neom's 7,000 trillion pennies just to make it. Yeah, yeah, yeah. Cool. Thanks for that. So, yeah, small pour was completed, but the thing is to have a low carbon cement pour.
Benefits and Barriers of Low-carbon Concrete
00:17:32
Speaker
So I dug into this. Obviously, I'm an XQS. My knowledge on cement is subpar at best.
00:17:40
Speaker
So low carbon cement supposedly can be a 70 to 80% reduction in carbon. So big number. And apparently, 8% of the world's CO2 emissions comes from Portland cement. So my simple brain went, cool, we can reduce 6% of global emissions by swapping all cement for low carbon cement, if you just take those sort of rough numbers. So why the hell isn't everyone using it all the time?
00:18:10
Speaker
Again, did a little bit of digging. There's the cost side of things. It's just not produced at scale. That makes a lot of sense. That will get cheaper as more people use it. The other part is the risk of concrete mix. Jason, I'll come back to you in a second. Obviously, there's going to be like a strength and durability and everything else that comes with concrete mixes.
00:18:31
Speaker
that's quite least knowledgeable. But I did find out that part of it is the insurance market. They're not keen on mixes where there's no real sort of historical information on it. I'd imagine what the hell happens after 25 years or in certain climates and conditions and how does it perform? So yeah, you're a concrete mix nerd. What's what's your thoughts?
00:18:56
Speaker
That's on my LinkedIn profile, Concrete Next Nerd. You should change into that. Yeah, I think this is definitely an area for potential massive impact in terms of the sustainability of the industry. I think we spoke previously about how Langer Rourke announced that they were going to mandate all concrete on their projects from something like the 1st of April this year was going to be low carbon
Concrete's Role and Challenges in Construction
00:19:22
Speaker
concrete and that type of thing, that type of announcement I presume is specifically designed to push the industry, the concrete supply industry to start making the change that then can drive the cost down. If large contractors keep getting on that bandwagon, like you said, the costs should come down.
00:19:50
Speaker
The other, I guess, risks of all the insurance industries are one that's going to have the like, oh, this is risky view. But concrete does a lot of important jobs. And so one of the things, pretty much every structure that is a concrete structure is a reinforced concrete structure.
00:20:11
Speaker
And that's because not getting like totally into it but concrete basically can't take any tension. So if you think about a slab, half of the slab or a part of the slab is going to be in compression and the other part is going to be in tension. It's rubbish at the tension part. And so they're like a composite structure of steel and concrete.
00:20:35
Speaker
And the steel bit is like super susceptible to corrosion over time. And so the concrete is not only taking the compression load, but it's like protecting the steel from corrosion and protecting it from the elements. So one of the things that concrete has to do is provide that protection over the long term and the long term performance of concrete in doing that.
00:21:02
Speaker
is would be directly correlated to the like the degradation of buildings and stuff and concrete cans so where whole floors are starting to fall to pieces. But that type of stuff can usually be tested for when you're testing the mixes. So there's like a test that you can do that I've had to do on previous projects.
00:21:23
Speaker
it's called like a chloride conductivity test and you test the passing of I think it's like a charge through the concrete and so you're testing like how far a chloride iron could penetrate the concrete and so how well it does at resisting that penetration. So I'd imagine because Lang and Rourke know what they're doing if that was a real showstopping risk they would have tested for it
Barriers to Low-carbon Adoption
00:21:50
Speaker
And so yeah, I think that in general, my gut feeling is that cost is the biggest barrier and like quantity of supply, you know, around the world, especially when big infrastructure projects turn up in a city or a country, uh, if you're trying to build a, you know, if you're trying to build a house now in, in a, in.
00:22:10
Speaker
any major city in Australia, your concrete pause, you're waiting weeks because the infrastructure project is sucking up all of the supply. If you switch from the most commonly available, you know, GP cement to some specialty thing that doesn't have the supply, you just can't deliver your project. So I think it's a quantum of supply problem and probably a cost problem that are the two biggest hurdles to overcome. And I think everything else
00:22:37
Speaker
can probably get solved, is my wild speculation, if that's what we're after. I love the world speculation. The cost side of things, given the stats on how much CO2 is part of this process, surely even if it costs, let's go for crazy numbers like double,
Economic Factors in Concrete Choice
00:23:04
Speaker
Surely that's the type of thing that the client's organizations would be like, screw it, we'll do that. I thought you were going to say, surely it's the type of thing that the government should like price the carbon on. The client should be just paying for that because it's such a big difference that it's worth the money.
00:23:25
Speaker
Well, I don't know. I think it's like, it's, it's bigger than the client though, isn't it? Like, like say, even if your client is like a government body, like a roads division or something, or, you know, whatever, a railway, like transport for London or whatever it is, they still have a budget that they've got approved for the project. They, they probably can't fork out. They probably just can't turn up with the difference.
00:23:46
Speaker
But it's a bigger thing, it's a whole of economy thing and the argument for like pricing, this is like going to like the argument for pricing carbon because it's like the tragedy of the commons. It's something that people can emit, consume, whatever that is.
00:24:04
Speaker
that's not borne by them in the cost of the thing that they're producing or delivering. So I think if you had a real hole of asset cost that included the cost of carbon that someone had to actually pay for, like had to pay for, then the math is totally different. But anyway, that that's like a whole political argument that we're not going to get into.
00:24:26
Speaker
Yeah, it makes more sense anyway than you hear with a lot of projects hitting their carbon targets by buying credits. Then you hear about all these fake credit schemes where they're actually not delivering anything like they should be. It makes way more sense to do something that's actually part of the material of the building than some afterthought, effectively.
00:24:50
Speaker
Yep. Yeah. The rainforest has been sold seven times over as the same carbon credits. Yeah, exactly. Awesome. Right. Thank you, Jason. That's all we got time for today. So as always, thank you very much for listening.