Corruption case comes at key time for Saudi projects

31 January 2024
Client bodies in Saudi Arabia are breaking with traditional procurement methods to accelerate the development of their projects

Colin Foreman

The suspension of a senior executive leading the development of one of Saudi Arabia’s flagship projects has come at a pivotal time for the kingdom’s construction sector.

Previous experience from Saudi Arabia and other regional markets such as the UAE and Oman has shown that a period of indecision typically follows high-profile corruption cases.

With most corruption cases normally centred on the procurement of contracts, individuals signing off on major contracts become reluctant to seal new deals out of fear that they, too, may be implicated in any further investigations.

The problem is complicated when a market is overheated, and organisations leading the development of projects feel the need to break with traditional procurement methods involving open tendering in favour of more limited tenders or direct negotiations.

Many client bodies in Saudi Arabia are in this position at the start of 2024.

According to regional projects tracker MEED Projects, the Saudi market enjoyed its best year on record in 2023 with $95bn of contract awards across all sectors. With a net project value of $181bn of deals at the tender stage, more contract awards are widely expected in 2024.

During MEED’s recent Saudi Gigaprojects webinar, 91 per cent of viewers said they expect the total value of contract awards in the kingdom in 2024 to exceed the 2023 total.

With contractors’ order books filling up, project clients are using alternative procurement methods to secure the resources they need to deliver their projects. Breaking from the norm to accelerate projects is always a challenge, and in 2024, it may become even more problematic for those leading projects in Saudi Arabia.

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