meed-logo

line1 line2 line3
SIGN IN / REGISTER

Middle East project disputes increasing

8 November 2023

 

The number of project disputes recorded every year in the Middle East and North Africa (Mena) is trending upwards as project activity increases and the pressure grows to execute projects on a fast-track basis.

Greater use of fast-track project models, where project execution starts before all the details of the preparatory design work are complete, can lead to a “triple whammy” of design issues that trigger disputes, according to Jad Chouman, a partner and the head of Middle East for the consultancy HKA, which specialises in risk mitigation and dispute resolution.

The three key causes of disputes related to fast-track projects are changes to the scope, design information being issued late, and incomplete designs supplied to contractors.

“In many fast-track projects, they start work before the design is 100 per cent complete,” says Chouman. “The fast-track nature of these projects is a major reason why we are seeing what we refer to as the ‘triple design whammy’.

“Owners want the projects quickly and they push the contractors to start early, and changes to the designs can cause serious problems to the projects.”

Growing pains

Due to the expanding Mena projects market, increasing project complexity and growing tendency to use fast-track project schedules, Chouman says he would not be surprised to see an upturn in the volume of project disputes every year until 2030.

“The rise in disputes related to fast-track projects is something that we’ve noticed over the past two or three years,” he says.

“The very compressed time frames for projects means that if there is disruption due to a change or a delay to an approval, the overall impact of that delay is often magnified.”

HKA also says some contractors are not fully considering the impact of the shortage of skilled labour in the region when estimating how quickly projects can be executed.

While these are all significant challenges, HKA also has reason to believe that many of the disputes could be resolved amicably.

Saudi resolution

In Saudi Arabia, Chouman says a share of future disputes could be resolved amicably because the kingdom is so focused on rapid project execution and will want to avoid projects stalling due to drawn-out legal disputes.

“In order for projects to be successful and to be completed within a reasonable time period, it is in the interest of everyone that they are resolved amicably.”

Another factor that could reduce the number of legal disputes is the increased use of more collaborative contract models.

In these contracts, the parties share the risk. The main contractor usually gets involved in the project at an earlier stage so they have a say in how the design is created.

One model increasingly used in Saudi Arabia is the early contractor involvement (ECI) model.

Under the ECI model, a single contractor is selected at an earlier stage of the design process. This may be either at the concept or detailed design stages, depending on the employer client’s preference and the level of involvement required.

A key objective of using an ECI contract and selecting a contractor early is to allow the contractor to use its knowledge and experience to influence design decisions to increase buildability or value during the process.

The contractor is appointed by the client during the first stage to perform services similar to a professional consultant.

“One of the main positive impacts that this sort of contract is likely to have is avoiding the worst kind of disputes between clients and contractors,” says Chouman.

“At the end of the day, the leadership in Saudi Arabia wants to be successful and get things done, and because of this, they are going to want to try and resolve any delays or cost overruns in a fair and amicable way.

“There is significant project momentum in Saudi Arabia and they want to maintain this positive environment.”

Arbitration centres

Dispute resolution processes have progressed significantly in several key markets in the Mena region over the past 20 years, which is having a positive impact on the projects market, according to Chouman.

He says Dubai and Abu Dhabi have developed mature arbitration processes that are competitive with international dispute resolution centres across the world.

The systems are maturing in Saudi Arabia and will soon reach a similar level.

“The development of these advanced dispute resolution centres has helped to make the UAE an attractive business hub,” says Chouman.

But while dispute resolution processes in some Mena markets parallel other world-leading hubs, the Middle East, on the whole, performs poorly in terms of project delays.

According to data collected by HKA, the average delay for projects in the Middle East is 82 per cent of the original time schedule.

This is high compared to the US, Europe, Asia and Oceania, where the average delay times are 59 per cent, 60 per cent, 63 per cent and 49 per cent.

Africa is the only continent that performs worse than the Middle East, with average project delays of 83 per cent of the original project schedule.

A key reason for the significant delays in the Middle East is the size of the projects market and complexity of the projects, says Chouman.

“It is a market with a lot of ambitious projects both in terms of size and complexity,” he says. “Additionally, the clients and contractors are also being even more optimistic with their predictions for project completion times, which is a factor.”

With the Mena region’s projects market continuing to expand rapidly, there are plenty of opportunities for contractors. However, there is also a growing scope for delays and disputes over project execution.

As the region’s biggest markets push ahead with ambitious project plans, it remains to be seen whether they have put enough thought into dispute resolution frameworks and methods to keep construction issues out of the courts.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11278295/main.jpg
Wil Crisp

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • BP advances Egypt offshore gas plans

    1 April 2026

    London-headquartered BP is making progress on its campaign to drill five wells in Egypt’s portion of the Mediterranean, according to a statement from the North African country’s oil and gas ministry.

    The Fayoum 4 well is scheduled to start production in July, with an estimated output of around 100 million cubic feet of gas a day, according to the ministry.

    It said it expected the well to bolster domestic supply during the summer, helping meet demand from power stations and reducing Egypt’s import bill.

    BP is planning to invest about $1.5bn in exploration and field development in Egypt during the 2026/27 fiscal year.

    Karim Badawi, minister of petroleum and mineral resources, said that intensifying drilling for new wells is a top priority for the ministry, both to unlock fresh exploration opportunities and to increase output from existing fields.

    Egypt is currently a net importer of natural gas, and due to this, its economy is expected to be severely impacted by the recent spike in global gas prices as a result of the US and Israel’s war with Iran.

    MEED’s March 2026 report on Egypt includes:

    > COMMENT: Egypt’s crisis mode gives way to cautious revival
    > GOVERNMENT: Egypt adapts its foreign policy approach
    > ECONOMY & BANKING: Egypt nears return to economic stability
    > OIL & GAS: Egypt’s oil and gas sector shows bright spots
    > POWER & WATER: Egypt utility contracts hit $5bn decade peak
    > CONSTRUCTION: Coastal destinations are a boon to Egyptian construction

    To see previous issues of MEED Business Review, please click here

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16212519/main.jpg
    Wil Crisp
  • Algerian chemicals project faces delays

    1 April 2026

     

    The $1.1bn project to develop a linear alkyl benzene (LAB) plant in Algeria’s Skikda region is facing delays, according to industry sources.

    Under the terms of the original contract, it was expected to be completed over 44 months, with project execution starting in March 2024.

    One source said: “There have been some issues with the project and it is not currently progressing in line with the original schedule that was set out.”

    If the project had kept to the original schedule, it would have been completed in November 2027.

    The project client is Algeria’s national oil and gas company Sonatrach.

    When asked to comment on the delay, a spokesperson for Sonatrach said: “Please be informed that we do not confirm, deny or comment on rumours, speculation or any non-public information regarding project schedules, progress or commercial matters.”

    The main contract for the LAB project was awarded to Tecnimont, a subsidiary of Italy’s Maire, in March 2024.

    The contract it won uses the engineering, procurement, construction and commissioning (EPCC) contract model.

    It was originally tendered by Sonatrach with a technical bid submission deadline of 3 March 2023, which was then extended several times.

    The scope of the project entails the implementation of a new LAB plant with an annual production capacity of 100,000 tonnes, and the associated utilities, offsites and interconnections with the existing facilities.

    In December, China’s Jilin Chemical Construction (JCC) won a contract worth more than $100m to work on the project.

    Its contract is expected to be completed over 17 months after activation in March this year.

    JCC has said that its project scope includes engineering work “involving all disciplines”.

    JCC is wholly owned by China Huanqiu Contracting & Engineering and is affiliated to China National Petroleum Corporation (CNPC).

    Linear alkyl benzene

    LABs are a family of organic compounds mainly produced as intermediaries in the production of surfactants. Since the 1960s, LAB has emerged as the dominant precursor of biodegradable detergents.

    Hydrotreated kerosene is a typical feedstock for high-purity linear paraffins, which are subsequently dehydrogenated to linear olefins.

    Alternatively, ethylene can be oligomerised to produce linear alkenes. The resulting linear mono-olefins react with benzene in the presence of a catalyst to produce the LABs.

    Sonatrach has been planning to develop a large LAB project for at least a decade.

    In 2016, the energy major said it was planning a LAB project with a capacity of 100,000 tonnes a year (t/y) and that it would be developed in either Skikda or Arzew.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16212518/main.png
    Wil Crisp
  • Dubai approves $272m stimulus package

    31 March 2026

    Register for MEED’s 14-day trial access 

    Dubai has launched a AED1bn ($272m) economic support package for businesses operating in the emirate. Approved by Crown Prince of Dubai Sheikh Hamdan Bin Mohammed Bin Rashid Al-Maktoum, the measures roll out from 1 April 2026.

    The stimulus targets immediate liquidity through a broad deferral of government fees over the next three to six months. In the hospitality sector, hotels can now postpone 100% of sales and tourism fees for 90 days. This financial breathing room is designed to enhance cash flow and maintain the sector’s post-2025 momentum.

    Trade and logistics are also set for a boost via extended customs grace periods. Dubai Customs will move its data grace period from 30 to 90 days for compliant firms. Simultaneously, the government is streamlining residency permit processes. The goal is to lower the barrier for global talent entering the emirate’s labour market.

    Further structural reforms include the Virtual Warehouses Initiative to digitise the movement of temporary imports. The Council also approved the Dubai Empowerment Strategy to raise living standards for Emirati families. This is paired with a new Health and Safety Strategy for Workers’ Accommodations to improve conditions across the industrial and construction workforce.

    In a statement, Sheikh Hamdan emphasised that the package aims to turn global challenges into local opportunities. He added that the Executive Council remains focused on providing stability to families and businesses.

    Dubai’s economic support package is the latest to be announced in the UAE during the Iran War. Earlier in March, the Central Bank of the UAE (CBUAE) approved a comprehensive Financial Institution Resilience Package designed to reinforce the stability of the banking sector as the UAE economy deals with extraordinary market conditions resulting from the conflict.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16198544/main.jpg
    Colin Foreman
  • Egypt approves $1.7bn capital spending in 2026-27

    31 March 2026

    Egypt’s cabinet has approved E£90bn ($1.7bn) in capital spending as part of the draft 2026-27 budget announced this week.

    Total spending under the new budget is projected to be about 13% higher than this year’s, aimed at supporting economic growth and reducing debt.

    Expenditure is estimated at E£5.1tn ($98bn), while revenue is projected at about E£4tn ($77bn), up 27.6% compared with the previous budget.

    According to remarks posted on the cabinet’s website, Finance Minister Ahmed Kouchouk said the draft budget – still subject to parliamentary approval – sets aside E£90bn for projects and other economic activities and seeks to lower the overall deficit by 2.1 percentage points to 4.9%.

    The budget will take effect on 1 July 2026 and aims to bring public debt down to around 78% by the end of the fiscal year, from nearly 78% the year before.

    MEED’s March 2026 report on Egypt includes:

    > COMMENT: Egypt’s crisis mode gives way to cautious revival
    > GOVERNMENT: Egypt adapts its foreign policy approach
    > ECONOMY & BANKING: Egypt nears return to economic stability
    > OIL & GAS: Egypt’s oil and gas sector shows bright spots
    > POWER & WATER: Egypt utility contracts hit $5bn decade peak
    > CONSTRUCTION: Coastal destinations are a boon to Egyptian construction

    To see previous issues of MEED Business Review, please click here

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16186238/main.jpg
    Yasir Iqbal
  • Abu Dhabi receives four bids for Al-Nouf IPP

    30 March 2026

    State utility Emirates Water & Electricity Company (Ewec) has announced it has received four bids for the development of the 3.3GW Al-Nouf independent power producer (IPP) project in Abu Dhabi.

    Located within the newly established Al-Nouf complex, the facility will be the largest single-site, carbon-capture-ready, combined-cycle gas turbine plant in the UAE. 

    Ewec issued a request for proposals for the project last August. It received statements of qualifications for the contract in April 2025.

    Earlier this month, MEED exclusively revealed that Aljomaih Energy & Water (Saudi Arabia) and Sumitomo (Japan) were among the bidders for the project.

    The groups that submitted bids include the following three consortiums and one individual company:

    • Aljomaih Energy & Water (Saudi Arabia) / Sembcorp Industries (Singapore) / EDF Power Solutions (France)
    • Engie (France) / Korea Overseas Infrastructure & Urban Development Corporation (Kind) / Korea Western Power Company (Kowepo)
    • Korea Electric Power Corporation (Kepco) / Etihad Water & Electricity (EtihadWE)
    • Sumitomo (Japan) 

    As MEED previously reported, the project will follow the model of Abu Dhabi’s IPP programme, in which developers enter into a long-term agreement with Ewec as the sole procurer. 

    This involves the development, financing, construction, operation, maintenance and ownership of the plant, with the successful developer or developer consortium owning up to 40% of the entity. The remaining equity will be held indirectly by the Abu Dhabi government.

    The project site was selected for its ability to accommodate both seawater-cooled power generation and reverse osmosis desalination technologies.

    The plant will have the capacity to support several utility-scale energy and desalination projects in the future.

    The facility is scheduled to begin commercial operations in the third quarter of 2029.

    Taweelah C IPP

    Last year, the Taweelah C IPP became the first gas-fired power plant project to be procured by Abu Dhabi since 2020, when Ewec awarded Japan’s Marubeni Corporation the contract to develop the Fujairah 3 IPP.

    Ewec is procuring the 2,500MW gas-fired IPP, which will be located in the Al-Taweelah power and desalination complex, approximately 50 kilometres to the northeast of Abu Dhabi.

    It is understood that three groups have submitted bids for the developer contract. These are:

    • Sumitomo (Japan) / Korean Midland Power / Korea Overseas Infrastructure & Urban Development Corporation 
    • Aljomaih Energy & Water (Saudi Arabia)  / Sembcorp (Singapore)
    • Etihad Water & Electricity (UAE) / Korea Western Power (Kowepo) / Kyuden (Japan)

    A team of UK-based Alderbrook Finance and US-based Sargent & Lundy is providing financial and technical advisory services to Ewec for the Taweelah C IPP.

    The power purchase agreement for the project was previously expected to be signed by the end of 2025, with the project scheduled to begin commercial operations in the fourth quarter of 2028.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16185238/main.jpg
    Mark Dowdall