COMMENT Saudi summer slowdown is no cause for concern

22 July 2010

Contracting companies in Saudi Arabia can sit back, relax and enjoy the summer. Saudi Arabia’s Interior Ministry recently extended the deadline for groups to submit bids for its largest-ever construction contract. They now have until 24 August to bid on the plan.

When it was issued, the SR22bn ($6bn) tender caused a flurry of activity among contractors in the kingdom as the ministry specifically requested them to bid on the entire scheme.  

Contractors – especially those looking to partner with other bidders – must have breathed a collective sigh of relief when the news broke of the deadline extension, especially after so many of them were hoping for more time. It is very likely most of them knew they were going to get it.   

The deadline extension probably had as much to do with contractor requests as with the timing of the original tender and submission date. The original deadline was 26 July – directly in the middle of the Saudi summer and a time when business across the kingdom traditionally slows down.

For example, two Jeddah-based private developers delayed until the end of summer bid deadlines for the estimated $533m Al-Mada Towers and the $373m Ewaan al-Farida project.   

The Saudi Education Ministry postponed until August a $150m contract award for a hospital at Najran University. And, the Interior Ministry extended bid deadlines for a governor’s residence in Al-Ghatt province and a network of care centres throughout the country.

Although the summer slowdown in Saudi Arabia’s construction market is common, it is cyclical. It comes and goes every year. It is neither indicative of a shrinking market nor is it sector specific. One thing is certain, it is not cause for concern.

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