Introduction
With the ongoing uncertainty in the Middle East entering its sixth week of conflict, there are understandably concerns across various sectors and the short to medium term outlook. Those sectors most immediately affected include hospitality, tourism, and real estate, though no industry is immune to the impact of recent events. A continuance of the conflict and the ensuing uncertainty could impact other sectors too, including construction, where often the impact of market conditions has a delayed but profound influence on new project awards, client budgets, pricing strategies, and contractual behaviors.
Evolving Market and Short-Term Pain
Under normal circumstances, a spike in oil prices would benefit oil-producing states across the region, but the strangulation of supply has had the opposite effect, which is causing jitters across global markets. Regional security concerns, along with an impaired ability to monetize the current oil supply at record prices, is likely to have a short and medium term impact across various sectors, not least construction.
Despite the narrative that those operating in the real estate sector would prefer us to believe, the reality is that projects are likely to encounter delays, endure supply chain issues, and suffer from material shortages if the conflict continues. Moreover, it would not be unreasonable to assume that new project awards are going to be impacted in some way: either delayed, deferred, or cancelled entirely as fiscal spending may pivot to other, more strategic sectors, away from the glut of residential and mixed-use schemes currently under construction. Consumer confidence may also be affected, meaning investors may not wish to pursue deals they were intending to close before Feb. 28, 2026, so real estate across the board will likely see some decline.
With around 30% of the world’s oil supply passing through the Strait of Hormuz, and with around 20% of the world’s liquified natural gas (LNG) supply being produced by Qatar, it is evident that recent events are going to affect the oil and gas (O&G) industry significantly. Without delving too deeply into legal opinion, many legal commentators have rightly pointed to the fact that there are certain obligations under off-taker agreements that have little to no remedies, and in engineering, procurement, and construction (EPC) contracts, a similar story emerges – obligations continue regardless of external events, so those contractors who are heavily reliant on the O&G sector, are not adequately prepared and do not have an appropriate “Plan B,” may be exposed. Those who are not adequately prepared — with a clear view of their cost-to-complete, supply chain exposure, and contingency options — risk finding themselves in a position that is difficult to recover from without structured intervention. The imperative now is not to wait and see, but to act: reassess project portfolios, stress-test cash positions, and engage proactively with clients and lenders before the pressure becomes acute.
What Does All of This Mean?
The ongoing uncertainty will unquestionably affect the construction industry, across all sectors. The extent to which this change in market dynamics shapes the ongoing viability of existing projects, or indeed contractors themselves, is largely dependent on several factors, including but not limited to:
- Potential price escalation;
- Availability of manpower, materials, and/or equipment;
- Supply routing;
- Cost to complete (and time to complete);
- Cash flows (both projects and contractors);
- Relationship strengths – both client and contractor;
- Strong project governance and systems;
- Contract strength (and interpretation); and
- Extent and completeness of project documentation and record keeping
Where contracts appear silent on relief from supply chain or workforce matters directly attributed to the conflict, it will be incumbent upon all project stakeholders to take a pragmatic approach to agree a remediation strategy and completion plan. This is where relationships will become increasingly important and where having the right tools in place to revise the plan, including turnaround strategies as an example, will be extremely important. Contractors who invest now in understanding their true cost and cash position — and who build a credible recovery plan before they are asked for one — will be significantly better placed to retain client and lender confidence through what may be a period of uncertainty.
Pathway to Recovery
Taking all of this into account, there are potential pathways to avoid distress and potential dispute or insolvency scenarios. These include:
- Understanding objectively the “As Is State” on projects, and the wider business as a whole;
- Proposing actionable steps and strategies to bridge any identified gaps in achieved progress or performance;
- Defining responsibilities, timelines, and required resources for each strategy; and
- Tracking progress regularly as strategies are implemented.
When implementing a turnaround strategy, for example, there are various underlying mechanisms that need to be in place before presenting any plan. These are considered below but are not exhaustive.
Pillar I: Governance
Strong governance is the foundation on which everything else rests. Without reliable project controls, accurate reporting, and clear escalation pathways, it is impossible to make good decisions under pressure.
- Corporate governance and systems
- Project team structure (size, competency)
- Project controls
- Escalation procedures
- Reporting integrity and cadence
- Real-time cost-to-complete monitoring — tracking actual input costs against tendered rates across all active sites
- Material sourcing risk assessment — identifying import-dependent or oil-linked supply lines and developing alternative sourcing strategies
- Early identification of cost overrun exposure on fixed-price and lump sum contracts, with evidence base to support commercial recovery discussions with clients
Pillar II: Financial and Delivery Performance
Cash will be the single most critical variable for contractors navigating this period. With clients likely to delay interim payments and supply chains demanding continuity of payment, the gap between cash in and cash out will widen.
- Financial reporting and analysis at Corporate Level
- Banking relationship strength
- Project level financial reporting (cost control, finance reporting, revenue recognition, interest, taxation, change management, risk management, etc.)
- Project bank accounts and finance facilities (including finance facility management)
- Proactive lender engagement
- Accelerating receivables
Pillar III: Strategic Transformation
A structured project rationalization enables a prioritized response: Push hard on the sites with the strongest recovery profile, sequence or slow those with manageable risk, and seek to exit or novate those where the downside is unacceptable.
- Business planning at corporate level
- Project triage
- Capital and resource reallocation map
- Project recovery plan
- Roadmap development
Pillar IV: Dispute Preparation and Record Keeping
Early, disciplined preparation does not escalate disputes; it creates the conditions to resolve them quickly and favorably, or to avoid them entirely.
- Contract notice requirements review
- Contemporaneous records
- Quantum preparation — understanding exposure and potential recovery positions early, with the financial evidence base needed to support or defend commercial claims if required
How We Can Help
At Ankura, our experts bring deep, hands‑on experience gained from executive‑level roles across companies and consultancies in the Middle East. With a large, senior, and regionally-based Construction Advisory and Turnaround & Restructuring team, we support clients through immediate actions, mid‑term recovery, and institutionalizing capability to navigate current challenges and drive sustainable performance.
1. Immediate Actions (6-8 Weeks)
- Integrated Project Visibility and Controls: Establish a single, validated cost-schedule-risk baseline, and deploy a control tower to enable real-time tracking of cost-to-complete, schedule performance, and key risk indicators.
- Immediate Performance Improvement: Identify cost overruns, productivity gaps, and bottlenecks, and implement targeted short-term interventions across procurement, labor productivity, site operations, and material sourcing risk assessment to improve cost efficiency and cash generation.
- Value Assurance (Engineering-Led Cost Optimization): Reduce cost-to-complete through design optimization, alternative materials, and construction methodology improvements, while removing critical path constraints via resequencing, modularization, and alternative sourcing.
- Cash, Capital, and Financial Stabilization: Stabilize liquidity through working capital optimization and receivables acceleration, while securing near-term financial flexibility via proactive lender and stakeholder engagement.
2. Mid-Term Recovery (8-16 Weeks)
- Performance Improvement: Implement a portfolio triage and capital allocation framework to prioritize projects, cascade optimization across supply chain and procurement, and roll out value engineering initiatives to drive sustained cost reduction and delivery efficiency.
- Turnaround & Restructuring (Financial Recovery): Support execution of the comprehensive restructuring plan aligned to capital allocation and spending priorities, including debt refinancing, covenant renegotiation, equity raising, and coordinated stakeholder engagement to restore financial stability.
3. Institutionalized Capability to Sustain and Enhance Performance (Over 16 Weeks)
- Governance and Operating Model: Redesign the operating model and embed enterprise-wide governance frameworks to clarify roles, decision rights, and accountability across corporate, portfolio, and project levels.
- Commercial and Contracting Strategy: Establish structured commercial management frameworks and optimize contracting strategies and risk allocation to enhance variation control, claims effectiveness, and long-term performance.
- Digital and Technology Enablement: Deploy digital engineering tools (building information modeling (BIM), digital twins) and integrate enterprise systems (enterprise resource planning (ERP), project management information system (PMIS), electronic document management system (EDMS)) with advanced analytics to enable data-driven, end-to-end project management.
- Supply Chain and Ecosystem Strategy: Build strategic supplier partnerships and resilient sourcing models, including localization and vertical integration, to improve cost efficiency and supply reliability.
- Claims, Disputes, and Commercial Protection: Establish structured claims management and defense processes supported by clear governance, standardized procedures, and robust documentation and evidence capture to strengthen commercial outcomes.
© Copyright 2026. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC, its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.
