meed-logo

line1 line2 line3
SIGN IN / REGISTER

Neom to fix construction

25 April 2023

 

The global construction industry is in a parlous state. Construction companies typically operate with low single-digit margins if they are doing well, and one bad project could mean they join a growing list of bankruptcies. 

Developing the world’s largest project may seem like a step too far against this backdrop, but for David Heron, Neom’s director of industrialised design and construction, the scale of development at the $500bn Saudi gigaproject offers the scope and continuity required to solve the industry’s problems.

“There is a general recognition within the industry that it is broken. The challenge has been that individual companies are too small to have the required level of impact to change the industry,” says Heron. 

“Neom is a unique opportunity because of its scale, in terms of spending and the longevity of the project. It will be able to build up the evidence base that demonstrates that things can be done differently.”

Neom has grand ambitions as it sets about transforming the construction industry. “We want to achieve 30 per cent reductions in cost, speed and time, and we think we can go beyond that,” he adds.

World’s largest piling project shifts to The Line’s marina

Improving efficiency

The key to unlocking those efficiency improvements is integrating the design and the construction processes. “When we say design and construction, most people think construction, but we are constantly trying to shift the conversation back to design,” says Heron.

Before design work can start, the brief has to be clear. “The starting point is understanding what people want, and most construction projects today are too small to warrant that kind of investment.

“You need to do market research to really understand what you want, so what happens in most construction projects is that 40 per cent of the design spend goes on during the course of construction as people figure out what it is they actually wanted to build,” says Heron.

“If we understand more clearly what we are designing, we can deliver it more efficiently. We call that an end-to-end process, or industrialised design and construction, because we are industrialising both the design process and the delivery. 

“We would even love to not use the word construction because it is really much more about manufacturing and assembly. When you say construction, people think concrete blocks and mortar. We are trying to shift away from that.” 

The proposed shift requires moving construction activity off-site and rethinking how projects are delivered. “It is completely rethinking the whole process for understanding what we are trying to create, as an experience.

“The starting point for Neom is that we are the investor, so it is incumbent on us to be clearer about what we want,” he adds. 

“When we start thinking about the design process, we need to be clear. We will probably be much clearer than on many other projects about who the target population is and what the experiences are that we want to create for that population.”

Neom will build up the evidence base that demonstrates that things can be done differently
David Heron, Neom 

Manufacturing approach

Heron explains that manufacturing environments are far safer and provide higher-quality jobs with more diversity. 

Gender diversity has been easier to achieve in the manufacturing environment than on the construction site. Quality control is also easier in a manufacturing environment, as it can be monitored from both a process and product perspective. 

For a manufacturing approach to work, different processes must be adopted from the beginning of the architectural design process.

“Typically, it is the general contractor that starts to think about how the site is organised. If we are going down a prefabricated route, you start to think about it at the beginning. Logistics becomes an issue for architects because the access to the site influences the way we design buildings,” says Heron.

Innovation is essential to Neom’s vision of transforming the industry. “If we are going to transform the industry, the opportunity is absolutely massive. We are not talking about incremental innovation, we are talking about fundamentally transformative innovation, and we want that to be done here at Neom,” Heron says.

“Because of the scale of Neom, there is a massive economic return on investing in innovations that just do not exist outside of Neom,” he adds.

The benefits are not just financial. In the modern world, construction has come under pressure for its carbon emissions, and while it is developing large projects, Neom is reducing the impact on the environment. 

“Thirty-eight per cent of global carbon dioxide emissions come from building, and 40 per cent of what goes to landfill is construction and demolition waste. Something like 70 per cent of all the embodied carbon in a building is from the concrete. 

“We are building big buildings, so one of the very first things we did two years ago was to look at how we can significantly reduce emissions from concrete, and there is a whole host of levers that we are pulling,” says Heron.

“We are working closely with local industry. On the cement side, we are looking at different cement mixes, looking at using alternatives to clinker, looking at Neom-specific concrete mixes that maximise the use of locally available materials, and we have minimised the logistics. 

“We are also looking at design and challenging the engineers that are designing buildings. We see that as a massive opportunity. Everyone talks about construction, but really the opportunities lie in design.” 

https://image.digitalinsightresearch.in/uploads/NewsArticle/10786799/main.gif
Colin Foreman

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

Click here to register
Exclusive from Meed
Related Articles
  • Kuwait receives bids for Al-Khairan phase one IWPP

    2 June 2026

     

    Two developer consortiums have submitted bids for the first phase of Kuwait’s Al-Khairan independent water and power producer (IWPP) project, according to a source.

    Bids were received by the Kuwait Authority for Partnership Projects (Kapp) on 1 June.

    The facility will have a capacity of 1,800MW and 150,000 cubic metres a day of desalinated water. It will be located in Al-Khairan, adjacent to the Al-Zour South thermal plant. 

    The bidders include:

    • Abu Dhabi National Energy Company (Taqa) / A H Al-Sagar & Brothers (Saudi Arabia) 
    • Acwa (Saudi Arabia) / Gulf Investment Corporation (Kuwait)

    The Al-Khairan IWPP is being procured by Kapp in partnership with the Ministry of Electricity, Water & Renewable Energy (MEWRE).

    The main contract was tendered last September. Three consortiums and two individual companies were previously prequalified to participate in the tender.

    Ernst & Young, BNP Paribas, AtkinsRealis and Addleshaw Goddard are financial advisers on the project. Chadbourne & Parke is acting as legal adviser.

    The winning bidder will sign a set of public-private partnership agreements covering financing, design, construction, operation and transfer of the project. The energy conversion and water-purchase agreement is expected to cover a 25-year supply period.

    Future phases

    The Al-Khairan IWPP project is expected to run on low-sulphur fuel oil as the primary fuel and to accommodate crude oil, gas oil and natural gas as backup fuels. Future phases will further expand capacity.

    It is understood that the estimated $750m second phase of the Al-Khairan IWPP project will add a further 1,800MW of generation capacity through a combined-cycle gas-fired power plant.

    The project, first mooted over a decade ago, remains in the early development stages, with no plans currently to advance to procurement in 2026, a source said.

    According to the source, the immediate focus is on advancing plans for the 3,600MW Nuwaiseeb power and water desalination IWPP project.

    The Nuwaiseeb IWPP plant will have a desalination capacity of 75 million imperial gallons a day.

    Kapp plans to release a transaction advisory tender for the project by the end of the year.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17072685/main.jpg
    Mark Dowdall
  • Doosan confirms Saudi Jafurah 2 cogen contract

    2 June 2026

    South Korea’s Doosan Enerbility has confirmed it has signed an engineering, procurement and construction (EPC) contract worth about $556m for the second phase of the Jafurah combined heat and power (CHP) plant in Saudi Arabia.

    The project is being developed by Korea Electric Power Corporation (Kepco) in partnership with Saudi Aramco.

    Doosan said the contract covers design, equipment supply, installation, construction and commissioning of the facility.

    The Jafurah CHP phase 2 project will be built near the Jafurah gas field, about 400 kilometres east of Riyadh. Once operational, it will generate 330MW of electricity and produce 465 tonnes of steam an hour for the nearby gas field.

    According to the firm, the project’s main steam turbine will be supplied by Doosan Skoda Power, a subsidiary of Doosan Enerbility.

    WSP is acting as the project management consultant for the project, which is scheduled for completion in 2029.

    The Jafurah gas development is part of Aramco’s $3.2bn unconventional resources programme, which aims to develop shale gas in three areas. Jafurah lies southeast of Ghawar, the world’s largest conventional oil field.

    The programme is part of Riyadh’s plans under Vision 20230 to ensure the kingdom remains self-sufficient in gas supply amid rising demand from the residential and industrial power sectors.

    Jafurah phase one

    In February 2025, MEED exclusively reported that talks were under way to expand the capacity of the $500m Jafurah cogeneration independent steam and power plant (ISPP).

    Construction works were completed on the facility last November.

    At the time of its procurement, the plant’s first phase was to have a power capacity of 270-320MW, and a low-pressure (LP) steam demand of 77-166 thousand pounds an hour (klb/hr) and high-pressure (HP) steam demand of 29-126 klb/hour by 2023.

    The LP and HP steam demand will increase to 283-373 klb/hr and 66-321 klb/hr by 2027, respectively.

    The oil giant issued the letter of award to Kepco for the contract to develop the Jafurah ISPP scheme in July 2022.

    Kepco subsequently awarded South Korea’s Doosan Heavy Industries & Construction the project’s EPC contract.

    US/India-based Synergy Consulting provided financial advisory services to Kepco on its bid.

    Sumitomo Mitsui Banking Corporation (SMBC) served as the client’s financial adviser for the project. Germany’s Fichtner Consulting Engineers is technical consultant, while the UK’s Wood Group is project management consultant.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17072199/main.jpg
    Mark Dowdall
  • Lack of truck-loading facilities in Iraq restricts oil exports

    2 June 2026

     

    A lack of truck-loading facilities at oil fields in southern Iraq is restricting the country’s exports, according to industry sources.

    Since the US and Israel attacked Iran on 28 February, Iraq’s exports shipped through the Strait of Hormuz have been severely disrupted, increasing the country’s reliance on exporting crude using trucks and pipelines.

    In April, Iraq’s state-owned oil marketing company, Somo, said it had awarded contracts to supply about 650,000 metric tonnes of fuel oil a month for overland trucking across Syria.

    On top of this, Iraq is also transporting oil by truck from the south of the country to export pipeline infrastructure in the north.

    One industry source said: “Moving crude by truck is very inefficient and expensive compared to using a big pipeline or large ships.

    “Iraq’s infrastructure was not designed with the idea of using trucks to move crude at the current scale.

    “The current level of exports is a fraction of what was being exported before the disruption to shipping through the Strait of Hormuz started.

    “There are a lot of problems that are emerging and these include a lack of truck-loading facilities at oil fields in the south of the country.

    “Many fields don’t have the truck loading stations, loading arms, pumps and meters that are needed to increase truck export volumes.”

    Iraq exported 10 million barrels of crude in April, an 89% drop from the 93 million barrels exported the month before the Iran conflict.

    READ: Gulf races to reroute trade

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17063350/main.jpg
    Wil Crisp
  • Iraq’s reform window narrows

    2 June 2026

    Commentary
    John Bambridge
    Analysis editor

    Iraq enters mid-2026 with the most expansive projects pipeline in its post-2003 history, with more than $420bn in planned and active work, but an increasingly narrow fiscal margin within which to deliver it.

    The cumulative pipeline builds on a 2025 performance that witnessed a record $17bn in contract awards in the power and water sector and looks forward to a construction industry forecast to expand at 4.8% annually through 2028. In the energy sector, the Gas Growth Integrated Project is advancing towards its 2028 commissioning, while the country’s North-South logistics expansion remains in active procurement.

    The pipeline is very real, but the conditions that were expected to fund it no longer exist in the wake of the Iran war.

    April oil exports ran 90% below the previous year’s monthly average as Strait of Hormuz transit remained effectively suspended. The IMF projects Iraq’s real GDP to contract by 6.8% in 2026 – the sharpest regional revision after Qatar. Even before the conflict, Iraq’s reserves were falling by about $10bn every year. The three-year budget framework expired in 2025 with no 2026 successor in place, leaving forward-looking spending uncertain. Ali Al-Zaidi was sworn in as prime minister on 14 May with fragile coalition support and nine cabinet portfolios still unfilled.

    The structural collision is between an infrastructure ambition built for 4 million barrels a day of exports and a fiscal reality running at a fraction of that. Iraq’s oil revenue funds over 90% of the federal budget. An exports collapse of the scale now visible will strip more from the budget in months than any reform programme can replace in years. And some of the production lost may not return. Many of Iraq’s southern fields have been running at reduced rates rather than fully shut in – the better strategy for preserving well integrity – but the longer the downtime, the higher the share of capacity that may not recover in the coming months. The revenue base on which Iraq’s pipeline was assembled is not just suspended; some of it is structurally imperilled.

    The current situation will force reform. Every Iraqi government since 2014 has faced reform pressures, but 2026 has not just tested the underlying assumptions; it has shattered them. Past reform programmes attempted to optimise governance amid volatile oil revenues; the current one must contend with existential risk to the revenue base.

    Al-Zaidi’s first task will not be the budget or the Hormuz crisis in isolation; it will be to convert a fragile mandate into the policy leadership and governance necessary to sustain the projects pipeline. The window for this is open, but it will not stay open long.

     

    MEED’s June 2026 report on Iraq includes:

    > GOVERNMENT: Al-Zaidi takes Iraq’s premiership under US shadow
    > BANKING: Financial challenge tests Iraq’s resolve
    > ECONOMY: Iraq enters era of resilience, reform and rising risks 
    > OIL & GAS:     Iraqi oil and gas sector in crisis
    > POWER & WATER: Focus shifts to delivery of Iraq utilities expansion
    > CONSTRUCTION: Momentum builds in Iraq’s post-war construction sector

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17061271/main.gif
    John Bambridge
  • Saudi firm to build Al-Henakiyah solar IPP grid link

    1 June 2026

     

    Saudi Services for Electro Mechanic Works has won the main contract to build a 380kV overhead transmission line in Saudi Arabia’s Medina region, according to market sources.

    The project includes the construction of a 354-kilometre-long overhead transmission line that will connect the Al-Henakiyah 3 solar independent power producer (IPP) to several main substations and export power from the plant into the national transmission network.

    The scheme is being developed by Saudi Energy, formerly Saudi Electricity Company.

    The scope covers the supply and erection of transmission towers and foundations, as well as associated grid interface and termination works.

    The Al-Henakiyah 3 solar IPP is part of Saudi Arabia’s wider pipeline of utility-scale solar projects being developed under the Public Investment Fund’s (PIF’s) renewables programme, which runs parallel to the National Renewable Energy Programme (NREP), now in its seventh round.

    In 2025, the PIF outlined plans to advance second- and third-phase extensions to five existing solar plants, including Al-Henakiyah, totalling 9GW of additional capacity.

    According to official documents, the negotiation process for the directly-awarded concessions was due to start last year.

    Saudi Services for Electro Mechanic Works, meanwhile, is continuing to advance several transmission line projects for Saudi Energy.

    In June 2025, it was appointed as the main contractor to build a separate 380kV overhead transmission line linking the 2GW Afif 1 solar IPP to the national grid.

    Works on this project are not expected to be completed until at least 2027.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17058114/main.jpg
    Mark Dowdall