Pioneering modular construction in Saudi Arabia

11 October 2021
Amana is working on gigaprojects in the kingdom that, thanks to their remote locations, are well suited to modular construction

As development in Saudi Arabia accelerates, and gigaprojects such as Neom, Al-Ula, The Red Sea Project, Qiddiyah, Diriyah Gate and Amaala gather pace, the kingdom has demonstrated the scale of its ambitions.  

At the same time, it has expressed a keen desire for construction companies to invest in the kingdom and help pioneer modern construction techniques to deliver upcoming projects more efficiently and effectively.

One firm already enjoying success working on new Saudi projects is Amana.

“We have been in Saudi Arabia since 2006 as Amana. We have constructed many facilities for Almarai, Del Monte, Aramco, Volvo and Ikea, and today a third of the company is in Saudi Arabia,” says Riad Bsaibes, president and CEO of Amana Investments (pictured).

Over the past decade, the contractor has established itself as an expert in modular construction, which is particularly well suited to the kingdom's remotely located projects. 

“We were ahead of the curve for modular construction," says Bsaibes. "It was an investment for the first four or five years, and it is paying off now with all the plans in Saudi Arabia and with the PIF [Public Investment Fund]-related entities, especially The Red Sea Development Company and Neom. The more remote the location, the better it is for modular construction.”

At our facility, 45 per cent of our staff are locals, which is unheard of in a construction company
Riad Bsaibes, Amana Investments

Saudi investments

Amana has invested in a modular factory to serve its projects in Saudi Arabia.

“We established a facility 200 kilometres from the actual site as soon as we started the project two years ago. The whole point is, first, to localise the work in Saudi, and second, to not environmentally impact the location because that is very important for this project," says Bsaibes. 

"The facility is about 100,000 square metres in size, and the output is about 70,000 to 80,000 sq m of built-up area a year. We have shipped the whole project from there.”

Working in an offsite factory environment has a range of benefits. “Our experience is that modular construction dramatically cuts the number of people on site. It depends, of course, on the remoteness of the site and other factors, but by and large, it cuts worker requirements by almost 50 per cent,” says Bsaibes.  

The change in the nature of the work also means better quality, and as it is more akin to manufacturing work, it is more attractive to Saudi nationals.

“The nice thing about it is that the workmanship that's done in the factory becomes factory work, not site work, which is great for local content," he says. "At our facility, 45 per cent of our staff are locals, which is unheard of in a construction company. Manufacturing rather than working on-site allows you to attract and retain local talent.”

Timing and schedules also improve. “Factory quality is generally better than site quality, and it is more predictable in terms of time, so the schedule becomes more predictable. It is also safer because everyone's working on the ground rather than at height as they would be on-site,” says Bsaibes.

Design certainty

For modular construction to work, the contractor needs design certainty early in the project.

"One of the few weaknesses in offsite construction or modular construction is that you have to design and agree on everything before you go to production. You cannot do it in stages as you can with bespoke or normal construction,” he explains.

“You overcome that weakness by making sure that all the stakeholders, starting with the client, the consultants, the end-user, if they're different from the client, are aware of that early on in the project. And we try as much as possible to build within our contract terms,” he adds.

If done correctly, Bsaibes argues that this weakness becomes a strength. “It is a positive because it reduces variation on the project and [resolves] uncertainty early in the process. It forces all the stakeholders to make a decision quickly. Once that's done, the project becomes smoother because the decisions are made early on,” he says.

Modular allows you to maximise your return on investment because you match demand with supply ... the return equity is much faster

Industry disruption

Bsaibes argues that other benefits of modular construction have the ability to transform the industry.

“Modular is game-changing for two reasons. One, it allows you to maximise your return on investment because you match the demand with the supply. If I'm a developer that wants to develop $1,000, and I don't know if there's a market for it or not, traditionally you put it out in phases, the infrastructure, the buildings and so on. With modular, you can make those phases even smaller because they're all being manufactured in a factory. Therefore, the return equity is much faster,” he says.

“The second major advantage is you can relocate the building if you want to. So you put out a hotel – you're not sure about the market and three years down the road, you find there is no demand for it. You can, for 10 to 15 per cent of the cost, relocate that building somewhere else, instead of demolishing it and starting a new building,” says Bsaibes.

Investing in modular construction is a bold move as it requires a significant outlay in equipment and facilities.

“Our chairman is a serial entrepreneur. Back in 2009, we interacted with a company in the US, and then the global financial crisis happened, and at one point, we were looking to buy into the company in the US. Instead, we built a company here locally in-house with some technical support from the US,” says Bsaibes.

“The first project was an internal accommodation project for ourselves as the owner. At the time, we had a contract to build a hospital on the border between Abu Dhabi and Saudi Arabia, and there was no accommodation close by,” he says. “It was a prototype. And then after that, we got the confidence that this can be done, and moved on to external clients.”

Amana’s success has come from approaching modular construction as a contractor with deep roots in the construction industry.

“We are not a technology company. We are not a design company – we are a contractor, so from the start, it needed to be commercially viable. It is not about scaling the business as a tech company would do. Construction is all about managing risk, so it becomes commercially viable,” says Bsaibes.

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