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.”
Register for MEED's guest program now to access this article.
Exclusive from Meed
All of this is only 1% of what MEED.com has to offer
Subscribe now and unlock all the 153,671 articles on MEED.com
- All the latest news, data, and market intelligence across MENA at your fingerprints
- First-hand updates and inside information on projects, clients and competitors that matter to you
- 20 years' archive of information, data, and news for you to access at your convenience
- Strategize to succeed and minimise risks with timely analysis of current and future market trends
Related Articles
-
Oman’s Barka 5 IWP solar plant begins full operations1 May 2026
Spain’s GS Inima has begun permanent operations at the solar photovoltaic (PV) plant serving the Barka 5 independent water project (IWP) in Oman.
The solar facility is the third of its kind in Oman to power a large-scale desalination facility through a self-supply model.
In a statement, GS Inima said it will provide up to 50% of the desalination plant’s electricity needs during daytime operations, improving efficiency and reducing reliance on external power sources.
The PV plant has an installed capacity of 6.5MWp. It is designed to optimise energy consumption at the adjacent reverse osmosis desalination facility.
The project was developed by GS Inima in collaboration with local firm Nafath Renewable Energy as the engineering, procurement and construction (EPC) contractor. China-based OCA Global provided owner’s engineering services.
The Barka 5 IWP has a desalination capacity of approximately 100,000 cubic metres a day.
GS Inima won the contract to develop the Barka 5 IWP project in November 2020. As previously reported, financial close was reached in 2022, and construction of the facility was completed in 2024.
The self-supply solar PV plant is equipped with 10,504 bifacial modules supplied by China’s Jinko Solar. These are mounted on fixed structures provided by Mibet Energy.
Power is managed through 18 Sungrow inverters with a total capacity of 320kWac each, while electricity is fed into the desalination plant through an 11kV connection.
The integration of solar power supports the efficiency of the Barka 5 facility, which has an energy consumption rate of 2.7kWh per cubic metre.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16645971/main.jpg -
Qiddiya receives high-speed rail PPP prequalifications1 May 2026
Register for MEED’s 14-day trial access
Saudi Arabia’s Royal Commission for Riyadh City, in collaboration with Qiddiya Investment Company (QIC) and the National Centre for Privatisation & PPP, received prequalification statements from firms on 30 April for the public-private partnership (PPP) package of the Qiddiya high-speed rail project in Riyadh.
This follows the submission of prequalification statements for the engineering, procurement, construction and financing (EPCF) package on 16 April, as reported by MEED.
The prequalification notice was issued on 19 January, and a project briefing session was held on 23 February at Qiddiya Entertainment City.
The Qiddiya high-speed rail project, also known as Q-Express, will connect King Salman International airport and the King Abdullah Financial District (KAFD) with Qiddiya City. The line will operate at speeds of up to 250 kilometres an hour, reaching Qiddiya in 30 minutes.
The line is expected to be developed in two phases. The first phase will connect Qiddiya with KAFD and King Khalid International airport.
The second phase will start from a development known as the North Pole and travel to the New Murabba development, King Salman Park, central Riyadh and Industrial City in the south of the city.
In November last year, MEED reported that more than 145 local and international companies had expressed interest in developing the project, including 68 contracting companies, 23 design and project management consultants, 16 investment firms, 12 rail operators, 10 rolling stock providers and 16 other services firms.
In November 2023, MEED reported that French consultant Egis had been appointed as the technical adviser for the project. UK-based consultancy Ernst & Young is acting as the transaction adviser, and Ashurst is the legal adviser.
Qiddiya is one of Saudi Arabia’s five official gigaprojects and covers a total area of 376 square kilometres (sq km), with 223 sq km of developed land.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16641057/main.gif -
Bid deadline extensions hint at tighter project market1 May 2026
Commentary
Mark Dowdall
Power & water editorThere has been a steady run of bid deadline extensions across major power and water projects in recent weeks.
The latest is the Al-Dibdibah and Al-Shagaya solar independent power producer (IPP) plant in Kuwait, where the submission date has been moved again to 31 May, following an earlier shift from February to the end of April. Similarly, bidding for the first phase of the Al-Khairan IWPP has also been extended.
In Bahrain, bidding for the 1.2GW Sitra IWPP has been pushed back by another month to 17 May, having already been under main contract tender since last August.
Meanwhile, in Dubai, contractors have been given additional time to submit bids for both the Jebel Ali sewage treatment plant expansion and a dams rehabilitation project in Hatta.
Individually, these shifts are not unusual, and extensions are a routine part of the procurement cycle, especially with large, capital-intensive schemes.
However, amid regional tensions and increasingly complex risk profiles, stakeholders are having to weigh up how much they can absorb, whether that is performance guarantees, financing exposure or delivery risk.
For contractors and developers, this could mean looking more closely at supply chains, insurance costs and the potential for disruption. Lenders, too, are likely taking a more measured view on long-term exposure.
This caution can show up in the bid process. More internal approvals, more conservative pricing, and in some cases, perhaps a hesitation to commit altogether.
At the same time, strong pipelines across the GCC mean contractors are not short of work. Firms can afford to be selective, focusing on projects where risk and return are better aligned.
Clients, in turn, face a choice. Push ahead with more limited competition or extend and try to draw in stronger participation. Most appear to be opting for the latter.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16640998/main.jpg -
Saudi Arabia launches $2bn Jawharat Al-Arous project1 May 2026
Saudi Arabia has launched Jawharat Al-Arous, an SR8bn ($2bn) private-sector-led residential development in north Jeddah.
The scheme covers 107 million square metres and comprises 18 residential neighbourhoods planned to accommodate more than 700,000 residents. It will provide more than 80,000 residential and commercial plots.
The masterplan also includes 41 government-backed infrastructure and service zones to support large-scale urban expansion.
The project was unveiled by Mecca Region Governor Khalid Al-Faisal and will be overseen by Saud Bin Mishaal Bin Abdulaziz.
According to a recent report by real estate firm Cavendish Maxwell, Jeddah’s residential stock stood at about 1.09 million units at the end of 2025, following the completion of around 4,000 units that year.
An expanding pipeline of about 18,000 units in 2026 and 22,000 units in 2027 is expected to bring total stock to around 1.14 million units by 2027, gradually adding supply without destabilising market equilibrium.
GlobalData expects the Saudi construction industry to grow by 3.6% in real terms in 2026, supported by increased foreign direct investment (FDI) and investment in the housing and manufacturing sectors.
The residential construction sector is forecast to grow by 3.8% in real terms in 2026 and to record an average annual growth rate of 4.7% between 2027 and 2030, supported by Saudi Vision 2030’s goal of increasing homeownership from 65.4% in 2024 to 70% by 2030, including through the delivery of 600,000 homes by 2030.
MEED’s April 2026 report on Saudi Arabia includes:
> COMMENT: Risk accelerates Saudi spending shift
> GVT &: ECONOMY: Riyadh navigates a changed landscape
> BANKING: Testing times for Saudi banks
> UPSTREAM: Offshore oil and gas projects to dominate Aramco capex in 2026
> DOWNSTREAM: Saudi downstream projects market enters lean period
> POWER: Wind power gathers pace in Saudi Arabia
> WATER: Sharakat plan signals next phase of Saudi water expansion
> CONSTRUCTION: Saudi construction enters a period of strategic readjustment
> TRANSPORT: Rail expansion powers Saudi Arabia’s infrastructure pushTo see previous issues of MEED Business Review, please click herehttps://image.digitalinsightresearch.in/uploads/NewsArticle/16640863/main.png -
Damage to US bases in region expected to cost more than $15bn1 May 2026
The $25bn estimate a Pentagon official gave US lawmakers on 29 April did not include the cost of repairing damage to US bases in the Middle East, and the real cost of the war is likely to be between $40bn and $50bn, according to CNN.
That would put the cost of repairing bases and replacing destroyed assets at between $15bn and $25bn.
Jules Hurst III, the Pentagon official serving as the agency’s comptroller, told the House Armed Services Committee that “most” of the $25bn he cited had been spent on munitions. Defence Secretary Pete Hegseth declined to say whether the figure included repairs to damaged US bases.
Iranian strikes across the Gulf in the early days of the war significantly damaged at least nine US military sites in 48 hours, hitting facilities in Bahrain, Kuwait, Iraq, the UAE and Qatar.
Six US servicemembers were killed in an attack on a command post in Kuwait, and 20 more were injured.
Three sources told CNN that the figure provided to the House Armed Services Committee did not include the cost of rebuilding US military installations and replacing destroyed assets.
One source said the true cost would likely be between $40bn and $50bn.
US contractors such as KBR and Fluor, as well as local firms, are likely to be among the leading contenders for contracts to repair and rebuild US bases in the region.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16638663/main.gif