When Salman bin Abdulaziz al-Saud became King of Saudi Arabia in January, there was a widespread expectation that the leadership change would usher in sweeping changes for the kingdom’s construction sector.

Six months later, and those changes are starting to manifest themselves. Saudi Aramco is to form a new project management company with international partners that will be deployed to deliver SR600bn ($160bn) of government infrastructure and building projects over the next 10 years.

The new firm could have a major impact on the Saudi construction sector, as it will help the kingdom’s new leadership overcome two of the industry’s main sources of tension.

The first is that it will bolster Aramco’s non-oil and gas project delivery capabilities. Over the past decade, the oil company has been drafted in to deliver a wide range of projects including cultural centres, universities, hospitals, and a football stadium. While these schemes were new landmarks for Saudi Arabia they distracted Aramco from its core hydrocarbons business.

The second issue the new company will tackle is the dominance of large contracting companies in the kingdom. Saudi Arabia’s construction market has been dominated by one or two key players that have been relied upon by the royal family to deliver some of the kingdom’s largest and most ambitious projects.

These relationships between construction heavyweights and the royal family have become increasingly difficult to manage in recent years and have been surrounded by allegations of nepotism, corruption and inefficiency.

The new project management company will stymie the kingdom’s dependence on these large construction companies. Large projects will be divided into packages that can be delivered by smaller, more plentiful contractors that will have to compete to secure orders.

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