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
  • Combined Group signs Kuwait upstream contract

    4 November 2026

    Register for MEED’s 14-day trial access 

    Kuwait-headquartered Combined Group Contracting Company has signed a contract to repair and revamp production facilities in West Kuwait, according to a company statement.

    State-owned upstream operator Kuwait Oil Company (KOC) awarded the contract, valued at KD9.7m ($31.4m).

    The contract has a five-year term.

    KOC issued the invitation to bid on 5 October 2025. The initial bid deadline was 4 January 2026, and a pre-tender meeting was scheduled for 4 November 2025.

    The contract award to Combined Group was approved on 13 September 2026.

    Kuwait’s oil and gas sector is currently in the midst of a major crisis, as disruptions to shipping through the Strait of Hormuz have dramatically reduced exported crude oil volumes.

    The disruptions are the result of a regional war that started on 28 February when the US and Israel attacked Iran.

    The disruptions to shipping in the Strait of Hormuz are also creating significant challenges for oil and gas construction projects, which normally import equipment and materials through the waterway.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21120792/main.png
    Wil Crisp
  • Aramco Q3 profit rises 9% despite attacks on facilities

    3 November 2026

    Register for MEED’s 14-day trial access 

    Saudi Aramco reported a 9% year-on-year increase in adjusted net income to $31.2bn in the third quarter of 2026, supported by stronger financial performance across its businesses, particularly downstream operations, and despite persistent attacks by the Yemen-based Houthi rebels on its facilities across the kingdom.

    The company’s revenue and other income from sales reached $140.492bn in Q3 2026, up from $111.509bn in the same period last year. 

    Downstream adjusted earnings before interest and taxes (ebit) increased by 234% year-on-year, reflecting stronger refining margins.

    Cash flow from operating activities increased to $38.7bn in Q3, compared to $36.1bn a year earlier, while free cash flow rose to $28.2bn from $23.6bn over the same period.

    The company maintained a gearing ratio of 5.5% at the end of the first nine months of the year, compared to 6.2% at the end of the first half of the year.

    Return on average capital employed in Q3 remained the same as in the previous quarter at 22.1%.

    Aramco’s capital expenditure in Q3 2026 declined to $10.52bn from $12.55bn in the same period last year, while capex in the first nine months of the year stood at $35.78bn.

    Commenting on the Q3 financial results, Aramco’s president and CEO, Amin H Nasser, said: “Geopolitical uncertainty and attacks on key energy facilities continued to amplify the global energy supply crisis in the third quarter of 2026, with serious implications for global energy security.

    “Despite challenges, the unwavering dedication of our workforce, our operational excellence, the flexibility of our system and the strength of a supply network built over decades enabled us to continue delivering reliably to our customers through this extraordinary period.

    “We continue to explore additional overseas storage capacity and alternative export routes to further strengthen our global supply network, and our robust operational and financial performance during this volatile period demonstrates the value of our resilience.

    “Backed by our strong balance sheet, we remain focused on the disciplined execution of priority projects and on leveraging advanced technologies to enhance performance and unlock new opportunities. This is how we will continue to meet the world’s evolving energy needs and deliver value for our shareholders and customers.”

    ALSO READ: Sabic swings back to profit in Q3 with $224m net income

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21121169/main.jpg
    Indrajit Sen
  • UAE monitors desalination plants after oil spill

    3 November 2026

    State utility Etihad Water & Electricity (EtihadWE) says it is monitoring seawater quality at desalination plant intake points following an oil spill off the UAE's northern coast.

    In a statement, the utility said it is continuing to "implement proactive measures to safeguard the water production system" following the spread of an oil slick towards coastal areas in the emirates of Umm Al-Quwain, Ras Al-Khaimah, Ajman and Sharjah.

    The spill involved the tanker Gem No. 2, which was struck by a projectile in UAE territorial waters on 9 October. The resulting oil pollution has raised concerns over potential contamination of seawater used by desalination plants along the northern coast.

    EtihadWE said its measures include continuous monitoring of seawater quality at plant intake points, regular testing of produced and distributed water, and verification of compliance with approved standards before water enters the distribution network.

    The utility added that the precautionary measures will not affect the continuity of water supplies to consumers in the Northern Emirates.

    In an earlier update on 30 October, the Climate Change & Environment Ministry said the oil slick was concentrated off the coast of Umm Al-Quwain, extending partially towards coastal areas in Ras Al-Khaimah, Ajman and Sharjah.

    The ministry said the concentration of pollution had declined significantly and that the leak had been stopped at source. However, surveying, monitoring and clean-up operations are continuing in affected coastal areas.

    The Energy & Infrastructure Ministry said specialised technical teams are continuing work to address technical issues with the tanker, including repairing damaged sections, restoring operational systems and assessing the integrity of its structure.

    The proximity of the oil slick to the Naqa'a desalination plant in Umm Al-Quwain has drawn particular attention. According to media reports, the slick approached to within approximately 2 kilometres of the facility.

    Naqa'a has a production capacity of 150 million imperial gallons a day, equivalent to approximately 682,000 cubic metres a day. The plant supplies water to the Northern Emirates and has been operational since 2022.

    It is owned by Naqa'a Desalination Plant, a special-purpose vehicle established by Mubadala, Acwa and the former Federal Electricity & Water Authority, now known as EtihadWE.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21104534/main3427.jpg
    Mark Dowdall
  • Oman signs 1GW battery storage agreement

    3 November 2026

    Oman's Nama Holding, a subsidiary of Oman Investment Authority (OIA), has signed a framework agreement with China's State Grid International Development to develop battery energy storage systems (bess) with a targeted capacity of 1GW.

    The agreement covers two battery storage systems, each with a capacity of 500MW, at Duqm Industrial Station and Al-Subaikhi (Ibri Solar 3) Station.

    It is understood that both systems will operate at 400kV and connect to Oman's national electricity transmission grid.

    The deal is part of a package of economic and investment agreements signed by OIA with Chinese institutions and companies during the Oman-China conference on 2 November. OIA put the combined value of the bess projects at approximately RO384.5m ($1bn).

    The agreement comes as Oman advances plans to expand its renewable energy capacity and strengthen the electricity transmission network.

    Nama Power & Water Procurement Company is also procuring a separate 950MW standalone bess programme comprising five facilities in the sultanate, as MEED exclusively reported.

    The wider package of agreements, signed during Sultan Haitham Bin Tariq's state visit to China, covers sectors including renewable energy, mining, logistics, digital transformation and space technology.

    In the wind energy sector, Oman's O-Green and Shanghai Electric Wind Power signed a strategic partnership to establish a joint research and development centre and wind turbine testing facility at the Mawarid turbine factory in Duqm.

    The partnership will focus on adapting turbine technologies to Gulf climate conditions, supporting local manufacturing and developing green ammonia projects in Oman.

    The partnership is valued at RO3.85m-RO7.69m ($10m-$20m). It also identifies potential future contracts exceeding $1bn, alongside green ammonia projects and initial investment commitments in Oman exceeding $200m.

    In solar, OIA signed a preliminary term sheet with Chinese firms PCG Power and Hoymiles for a partnership valued at RO38.45m ($100m).

    The partnership aims to develop solar energy projects in Oman and establish a solar inverter manufacturing facility serving markets in the Middle East and North Africa.

    It is also intended to support the localisation of solar-related industries, expand domestic production and develop export markets.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21102638/main.jpg
    Mark Dowdall
  • Consultants bid for Roshn’s north Riyadh scheme

    3 November 2026

     

    Saudi gigaproject developer Roshn Group has received proposals from lead design consultants for its planned flagship development in north Riyadh.

    Consultants submitted proposals on 1 November for detailed design, tender documentation and construction documents for the project’s first plot.

    The planned development covers 13.7 square kilometres and will be a residential-led mixed-use scheme containing retail, office, hospitality, education and civic facilities.

    The consultancy scope for plot one includes infrastructure, utilities, public-realm works and the site adaptation of Roshn’s residential prototypes. It has been divided into two work packages.

    The first package covers phases A, B and E, which cover about 7.8 million square metres (sq m) and will include 17,000 units.

    The second package covers phases C and D, covering about 4.7 million sq m and with more than 15,000 units.

    The site is bordered by the Expo 2030 site, King Abdulaziz Park, the Sports Innovation Lab Zone and National Housing Company’s Khozam development.

    Transport connectivity is a key element of the masterplan. Two metro stations are planned, including a station at the interchange between the existing Line 4 and planned Line 7, and a dedicated Line 7 station. The development could also be served by the planned Qiddiya high-speed rail link and a potential diversion of King Salman Road.

    The scheme will add to Roshn’s existing development pipeline in Riyadh, which includes the multi-phase Sedra community. The developer is expanding its focus from single-family housing to larger mixed-use districts under its Roshn 3.0 strategy.

    Last month, Roshn signed a preliminary agreement with TMG Saudi, the local subsidiary of Egypt’s Talaat Moustafa Group, to establish a joint venture to explore a separate mixed-use project in Riyadh.

    TMG Saudi will hold a 51% stake in the proposed joint venture and Roshn will hold the remaining 49%. The companies said they will undertake detailed masterplanning and prepare a business case for the project, which preliminary studies indicate could include more than 55,000 residential units.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21101503/main.jpg
    Yasir Iqbal