Getting the price right in Riyadh is essential

18 April 2008
Major infrastructure projects in Saudi Arabia are being hit by the poor management of contracts by ill-prepared clients, according to contractors.

While such firms often find it easy to moan, this time they have a point and clients should take notice.

Increasingly, contractors in the kingdom complain that ministries offer unrealistic budgets for projects and fail to communicate properly on tenders.

The under-valuing of projects means they regularly have to be scaled back, and additional contracts have to be agreed to complete the work.

It is the latest sign that clients, from the public and private sectors, are failing to keep up with the speed of change in the market.

Clients are already under pressure to change the contract models used so that price esca-lation clauses, which offer bidders some protection against rising raw materials costs, are increased.

In the absence of this, contractors often bid 40 per cent over-budget.

Rising inflation and a lack of resources means contractors are already enduring a torrid time, but this is compounded by clients' unwillingness to accept the realities of the current economic climate.

The longer the situation continues, the more damaging it will be for the kingdom. Without some changes, projects will continue to suffer serious teething problems, and the most ambitious aims will not be realised.

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications