Firms prepare for Riyadh airport

04 October 2012

Saudi Arabia is planning to spend about $10bn expanding King Khalid International airport

The invitation of contractors to bid on the first major package as part of the King Khalid International airport expansion in Riyadh is the latest of several major airport contracts that have been tendered in Saudi Arabia in recent years. About seven groups have been invited to bid for the contract to build the new terminal five as part of the expansion.

With the kingdom planning to spend $10bn on expanding its capital city’s airport, further major construction tenders will be forthcoming in the near future.

While the contractors invited to participate in the tender will welcome the latest opportunity to win work, they will be hoping that the competition for the work is more even than during the selection process for the Jeddah airport expansion scheme.

In 2010, the King Abdulaziz International Airport in Jeddah was tendered as two main construction packages. The local Saudi Binladin Group (SBG) submitted substantially lower bids for both packages, about 20 per cent lower than the nearest bidder and 40 per cent lower than the highest bidder for both packages. The group was subsequently awarded both packages for an estimated combined total of SR25bn ($6.6bn).

SBG is still by far the kingdom’s largest and most successful contractor, but its dominance is most overwhelming around its Jeddah base.

For the Riyadh project, contractors will hope that they are able to submit prices, which are competitive and have an opportunity to win some major work. The answer to whether they are able to do this will be revealed on
17 November.

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