Ministry emerges as top client for infrastructure projects in Saudi Arabia

10 October 2011

The Interior Ministry is tendering a variety of major infrastructure projects, from hospitals to integrated security compounds

Key fact

In the first three quarters of 2011, the Interior Ministry awarded more than $2bn of projects

Source: MEED

Saudi Arabia’s Interior Ministry is emerging as an increasingly important client in the kingdom’s construction sector. In the first three quarters of 2011, the ministry awarded more than $2bn of projects and received bids for a further $10bn-plus worth of construction and infrastructure schemes.

Two of these are the largest construction packages to be tendered in the GCC in 2011. The ministry has received bids for multibillion-dollar medical complexes and security compound schemes worth $3bn. With contract awards expected on the majority of pending projects before the end of the year, the ministry is set to surpass the $3.5bn of contracts it awarded in 2010.

The Interior Ministry is expected to be a major player in Riyadh’s infrastructure development programme in the coming years. According to estimates from sources in Saudi Arabia, the ministry has about 4,000 schemes planned, with about $10bn-worth of projects currently under construction.

Interior Ministry important client

“The Interior Ministry is definitely becoming a more important client. They are tendering a lot of projects, from hospitals to integrated security compounds,” says a consultant based in the kingdom.

The ministry’s growing role in the construction sector is not surprising given the country’s rapid population growth.

Saudi Arabia’s population has expanded more than 25 per cent over the past decade, rising from 21.5 million in 2002 to about 27 million in 2010. It is predicted to continue growing at a rate of about 2 per cent over the next five years. “As the population grows, the need for bigger police and civil security forces grows. And of course, growing police forces will require more facilities,” says an international consultant involved in the kingdom’s infrastructure programme.

Interior Ministry Schemes
ProjectEstimated value ($m)StatusContract award date
Security compounds (phase 3)3,500EPC bids submissionna
Security forces medical cities6,600EPC bids submissionna
Border check-point buildings67ConstructionSecond quarter 2011 
Accomodation buildings, Riyadh25ConstructionThird quarter 2011
Emergency communications network1,200ConstructionSecond quarter 2011 
Security forces airport25ConstructionFirst quarter 2011 
Rehabilitation centres for prisoners3,400ConstructionFourth quarter 2010 
King Abdullah bin Abdulaziz security headquarters buildingnaPlanningna
 EPC=Engineering, procurement and construction; na=Not available. Source: MEED Projects

“The Interior Ministry is a huge part of the government and they have a tremendous amount of work.” The ministry has tendered several large construction and infrastructure schemes in the past 12 months. These include the Security Forces Medical Cities in Riyadh and Jeddah, two of the biggest construction contracts tendered in 2011, which will cost the ministry an estimated total of SR25bn ($6.6bn).

In August, the ministry received bids for the main construction packages on the medical complexes, which will each have a built-up area of 1.3 million square metres.

The two medical cities will have the same design and will include three hospitals and related medical and residential facilities. The medical facilities will have a total built-up area of about 400,000 sq m. Each complex will also contain academic and clinical centres, as well as a research centre. The cities will also have office buildings and service stations.

“The medical city projects are challenging and high value, we are very interested in schemes like this,” says a contractor competing in the tender.

The medical cities are part of the kingdom’s efforts to expand its healthcare infrastructure to cope with rising demand. Interestingly, the largest healthcare projects up for tender are for the Interior Ministry, rather than for the Health Ministry.

“It’s not just the Health Ministry building hospitals. A lot of the country’s healthcare facilities are dated and need upgrading and expanded. Facilities for the security forces are a major part of this,” says a project manager in Riyadh.

Security compounds for civil service

The Interior Ministry is also investing heavily in building a series of security compounds to train and house its civil service personnel.

In July, it received bids for the project to build the third phase of its security compounds programme. The low bid of SR10bn was submitted by the local Seder Construction Company, which was considerably lower than the estimated SR20bn value of the scheme. It covers the construction, operation and maintenance of 28 different types of facilities at more than 50 locations throughout the kingdom.

Interior Ministry contract awards
YearTotal value ($m)
Source: MEED Projects

The majority of the security premises will be built in and around Riyadh, but facilities will also be built in the provinces of Qassim, Hail, Tabuk, Jeddah, Medinah, Taif, Al-Jouf and on Saudi Arabia’s northern borders.

“The security compounds programme is a massive project that shows what Saudi Arabia is hoping to build over the next 10 years,” says an international contractor hoping to win work in the kingdom’s infrastructure investment programme. “It is planning to build on an unprecedented scale and the Interior Ministry will be an important client.”

Rehabilitation centres in Saudi Arabia

In addition to healthcare and training facilities for civil defence staff, the Interior Ministry is also undertaking large projects to build prisons and rehabilitation centres.

One of the biggest construction contracts in 2010 was a $3.4bn package awarded to the local Saudi Binladin Group to build seven rehabilitation centres for prisoners across the kingdom. The centres, which will each have a built-up area of 230,000 sq m, will be located in Riyadh, Jeddah, Medinah, Taif, Baha, Dammam and Al-Jouf.

With the population continuing to grow at a rapid pace in Saudi Arabia, contractors are hopeful that more of these large-scale construction projects are to follow.

The Interior Ministry’s vast construction programme will create huge opportunities for local and international contractors. International project managers and consultants have already started to reap the benefits from the raft of construction projects the ministry has planned.

In August, US-based Hill International was awarded a three-year contract by the ministry to provide project management services for an undisclosed number of projects. One of the first projects it will supervise is the Interior Ministry’s King Abdullah bin Abdulaziz security headquarters building.

“Saudi Arabia is a key market for us. We are looking at a lot of projects across the board there and the Interior Ministry is an important client,” says a Hill International representative.

Other international construction firms are hoping to follow Hill International’s lead and win work in the kingdom.

“The ministry will be looking for contractors with proven track records to carry out and manage its projects. We hope we can benefit,’’ says an international contractor looking to enter the Saudi market.

Contractors already in the kingdom point to the importance of patience when trying to enter the Saudi market and good local connections.

“It is important for contractors and consultants to have a good relationship with government clients, there is a trust that needs to happen if they are to win work,” says a contractor working on a project for a Saudi ministry.

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