Saudi project pressure drives change
30 March 2023
Commentary
Colin Foreman
Editor
The region’s construction industry has never recovered from the global financial crisis. As Dubai’s projects market ground to a halt in late 2008, a host of bad practices that were shocking at the time have become standard practice across the region.
Contracts are frequently terminated, performance guarantees or bonds are cashed, and projects lie half-finished as legal disputes drag on for years. Amid the malaise, a consensus has developed that the industry is broken and desperately needs repairing.
With relatively limited project activity, there has been little incentive for policymakers and project clients to change their behaviours. As a result, the clamour for improvements has passed largely unnoticed.
For change to happen, the region needs a functioning construction industry. In 2023, that is certainly the case in Saudi Arabia.
Having spent the past five years launching projects – including five self-styled gigaprojects – Saudi Arabia is moving into full delivery mode. The scale of these projects is unprecedented, and as an integral part of Vision 2030, they come with a fixed deadline.
As the pressure to deliver ramps up, steps are being taken to overhaul the construction industry. Companies are being invested in, behaviours are changing, new technologies are being deployed and payments are being made promptly.
These are all crucial steps in the right direction. The question will be whether these transformations last. Back in 2007, the UAE made similar adjustments as its projects market overheated and clients struggled to secure the services of contractors and suppliers.
That changed in a matter of weeks with the shock of the global financial crisis.
The construction industry is optimistic by nature, and this time around will be hoping the changes in Saudi Arabia will be more long-lasting.
MEED's April 2023 cover story: Saudi Arabia under project pressure
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