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
  • UAE is poised to weather the storm

    25 April 2025

    Commentary
    John Bambridge
    Analysis editor

    Despite the rising turmoil in global markets due to US-imposed tariffs, the UAE is well positioned to cope thanks to a combination of strong fiscal and macroeconomic fundamentals and government-supported project spending.

    Abu Dhabi is set to comfortably achieve a fiscal surplus for the fifth year running in 2025, even with the recent dip in global oil prices, which has still brought prices nowhere near the $50-a-barrel fiscal breakeven point that according to the IMF would tip the UAE into the red. Also working in the government’s favour is the expected increase in the country’s oil production output due to the phasing out of some of its voluntary production cuts this year. 

    Beyond oil, the UAE’s greater degree of non-oil diversification relative to other oil-exporting markets in the Gulf and wider region provide it with a more stable revenue base, while the country’s financial institutions remain on a strong growth heading – thanks to their burgeoning project finance loan books.

    The market confidence is also reflected in the growth of residential property sales in Dubai by 30% in 2024 – with housing being one of the main contributions to the albeit restrained 2% consumer price inflation in the country at large. 

    Economic strength

    The UAE also retains its role as an economic beacon for the Middle East and beyond. Dubai real estate purchases by Chinese and Russian buyers saw double-digit growth in 2024 and could account for more than 30% of sales in 2025.

    The UAE economy is being staunchly supported by both public and private spending in the projects sector, which hit $94bn in contract awards for the second year running, according to regional projects tracker MEED Projects – far in excess of the $30bn average in the three years before.

    The projects boom is being driven by a combination of expansionary government spending on infrastructure and renewed investment in property and real estate by both state-owned and private developers alike. There are about $140bn-worth of projects currently under execution in the energy, infrastructure and utilities sectors, and a similar figure in the building sector alone.

    This buoyancy is continuing in 2025, with the $27bn in new project awards to date outstripping the value of project completions by a factor of almost three and setting the market on track for another exceptional year.

    Abu Dhabi is meanwhile hedging its geopolitical fortunes by promising to invest $1.4tn into the US over 10 years – a pledge that will both secure access to the US’ dominant technology market and please the transactional US president.

    While the UAE was only ever in line for the minimum 10% reciprocal tariff imposed as a blanket measure across the world, it does the country no harm at all to build up additional political capital in Washington ahead of whatever whim next takes hold in the office of the presidency.

     

    MEED’s May 2025 report on the UAE includes:

    > GOVERNMENT & ECONOMY: UAE looks to economic longevity
    > BANKING: UAE banks dig in for new era
    > UPSTREAM: Adnoc in cruise control with oil and gas targets
    > DOWNSTREAM: Abu Dhabi chemicals sector sees relentless growth
    > POWER: AI accelerates UAE power generation projects sector
    > CONSTRUCTION: Dubai construction continues to lead region
    > TRANSPORT: UAE accelerates its $60bn transport push

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13726696/main.gif
    John Bambridge
  • GE Vernova to divest Hamriyah IPP stake

    25 April 2025

    US-based GE Vernova is looking to divest its interest in the 1,800MW Hamriyah independent power producer (IPP) in the UAE's northern emirate of Sharjah, sources familiar with the process tell MEED.

    Sharjah Hamriyah Independent Power Company (Shipco) is the project company that owns and operates the combined-cycle gas turbine plant.

    GE Capital owns a 25% stake in the project company. The other shareholders are Sumitomo, which owns 35%;  Sharjah Asset Holding Management, 25%; and Japan's Shikoku Electric Power, 27%.

    MEED understands that international bank BNP Paribas is running the sale process for GE Vernova, which expects to receive non-binding offers "within a month".

    One of the sources said that Saudi, UAE and other international utility developers and investors are likely to bid for GE's stake in the project.

    Sharjah Electricity & Water Authority (Sewa) awarded a joint venture of Japan’s Sumitomo and US-based GE the contract to develop the 1,800MW CCGT project, Sharjah's first IPP, in December 2018. The project reached commercial operations in October 2023.

    MEED has requested comments from GE Vernova.

    Energy-efficient gas turbines

    The power plant runs on three GE Vernova 9HA.01 turbines, which GE Vernova describes as its most energy-efficient gas turbines to date.

    GE Vernova’s Gas Power business has provided turnkey engineering, procurement and construction (EPC) services and delivered the three 9HA.01 gas turbines powering three H84 generators, three STF-D650 steam turbines powering three A74 generators, and three heat recovery steam generators for the facility.

    It also plans to provide parts, repairs and maintenance services for power generation assets at the site for about 25 years.

    Financial close

    The project reached financial close in May 2019 with support from private banks Japan Bank for International Cooperation (JBIC) and Nippon Export & Investment Insurance.

    The 24-year, $1bn financing consists of two tranches.

    A group of private financial institutions including Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, the Norinchukin Bank, Societe Generale, Standard Chartered Bank and kfW-Ipex agreed to provide the first $516m tranche.

    JBIC agreed to provide the second tranche of $555m.

    The project marks Sewa’s first IPP, with previous plants all having been developed under standard EPC contracts. The project is part of Sewa’s plans to boost capacity and reduce reliance on imports of electricity from Abu Dhabi, which have grown steadily over the past decade.  

    Abu Dhabi state utility Emirates Water & Electricity Authority said that the commissioning of the plant in 2023 was expected to reduce its electricity exports, although this will be offset by the addition of offshore demand from Abu Dhabi National Oil Company starting in 2026.

    Photo credit: GE Vernova, for illustrative purposes only

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13753945/main.jpg
    Jennifer Aguinaldo
  • Syria makes progress towards reunification

    24 April 2025

     

    Following the ousting of Bashar Al-Assad in late 2024, President Ahmed Al-Sharaa has rapidly consolidated power in Syria. He has transitioned from a militant and political outsider into a credible leader increasingly recognised in the region and on the world stage.

    Within Syria, Al-Sharaa faces political, economic, military and civil challenges in pulling the country back together again. In recent weeks, a prominent focus has been the reunification of Syria’s fractured security landscape through the negotiated dissolution and integration of smaller rebel factions into a centralised military structure under the Ministry of Defence.

    Rebel disbandment

    Most recently, the new government brokered the dissolution of the Eighth Brigade, a 3,000-strong rebel group based in the southern city of Daraa that had waged an insurgency against the government of Bashar Al-Assad since 2018.

    That outcome proved a relief to the government after its trustworthiness in talks was thrown into doubt by the chaos that erupted in Syria’s coastal region on 6 March as Islamist groups committed massacres against Alawite civilians in revenge over attacks by Assad loyalists.

    On 9 March, Al-Sharaa appointed a committee to report on the violence, determine its perpetrators and theoretically hold them to account. That move caused some murmurings within his own ranks, but externally it showed the president’s commitment, in principle, to justice.

    It also appeared to serve the political imperatives of the moment. Just a day later, on 10 March, the reassured Kurdish- led Syrian Democratic Forces (SDF) – representing tens of thousands of trained soldiers – signed a deal to integrate its forces into the national army.

    The deal marked perhaps the most significant step towards national reunification so far, promising to restore to government control a swathe of northeastern Syria and its oil fields that has been largely lost to Damascus since the 2014 invasion by the Islamic State.

    The integration of the SDF into the national military also appears to have been accepted by the US, which had been supporting the SDF military as an independent force in the northeast of the country, but has now announced the planned staggered withdrawal of its stationed troops.

    Al-Sharaa has been making his rounds of the region in a diplomatic blitz aimed at shoring up regional support for his new government

    Broader priorities

    Alongside reconsolidating and restructuring the country’s military and security apparatus, Al-Sharaa’s main priorities are foreign affairs and economic policy. These two areas go hand in hand, given that removing international sanctions is key to reviving Syria’s economy.

    In late March, Al-Sharaa entrenched his authority by enacting a new constitutional declaration, announcing a new transitional government and granting himself sweeping executive powers, including the right to appoint a third of the legislature and select judges for the constitutional court.

    The cabinet was also broadened and reshuffled to address concerns over the lack of representation from minority communities. Individuals from the Alawite, Druze and Christian communities, as well as one woman, were appointed to ministerial positions.

    The move further witnessed the replacement of the formerly appointed justice minister Shadi Al-Waisi, whose elevation embarrassed the government after 2015 videos surfaced of him presiding over street executions by morality police as part of the then Nusra Front. His removal was another reassuring step for observers that the government is attuned and reactive to constructive criticism.

    With the right signals sent, Al-Sharaa has been making his rounds of the region in a diplomatic blitz aimed at shoring up regional support for his new government. He is likely also aiming to put the right words in the right ears, in the hope that they filter through the Gulf’s power lobbying system to the US.

    Already on 30 January, just a day after Al-Sharaa became president, Qatar’s Emir Sheikh Tamim Bin Hamad Al-Thani flew to greet the man who displaced Al-Assad – a goal also long pursued by Doha. On 2 February, Al-Sharaa then took his first trip abroad to meet Saudi Crown Prince Mohammed bin Salman.

    Some other regional governments have been more reticent to launch into renewed relations, but have increasingly come on board.

    This includes Iraq, which, hesitant over Al-Sharaa’s past militant activity against Baghdad, only arranged a meeting between the Syrian president and Prime Minister Mohammed Shia Al-Sudani on 17 April in Doha – ultimately driven by shared security imperatives. Al-Sudani also invited Al-Sharaa to attend the upcoming Arab summit in Baghdad in May.

    On 14 April, the equally green Lebanese Prime Minister Nawaf Salam also met with Al-Sharaa in Damascus – no doubt keen to address the recent border clashes between the two countries. A day earlier, Al-Sharaa was in Abu Dhabi to meet Sheikh Mohamed Bin Zayed Al-Nahyan, rounding out his visits to the key power brokers and budget holders in the Gulf.

    Between all of these meetings, Al-Sharaa appears to have ingratiated himself with the region’s other leaders with remarkable rapidity and ease. A year after the Arab League reaccepted him in May 2023, Al-Assad had made little comparable progress.

    For world leaders weary from years of dithering by Al-Assad’s government, which was unable or unwilling to even acquiesce to the Gulf’s most basic request – to stem the flow of the drug captagon from within Syria’s borders – Al-Sharaa is at least a partner who can do that and achieve far more besides. 

    For years, it has been the case that a reunified Syria and a rebuilt Syrian economy would lift the entire Levant region and any Gulf investors with it. The appetite in the region to see it succeed has been there. All that has been missing is a suitable partner in Damascus to move forward with.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13747658/main.gif
    John Bambridge
  • Gulf markets slide as US tariff shockwaves hit

    24 April 2025

     

    This package also includes:

    > GCC shelters from the trade wars
    > Lower oil prices raise Gulf’s fiscal pressure
    > Gulf utility projects unbothered by Trump tariffs so far

    Gulf markets fell sharply after the US announced a new tariff regime on 2 April, triggering declines as trading resumed after Eid. The 10% baseline import duty and levies on aluminium and industrial metals led to selloffs across regional indices.

    Almost all major Gulf indices were dragged down by the tariff shock and began the week on Sunday 6 April with losses: Kuwait’s market dropped 5.7% and Qatar’s fell 4.2%, while the Muscat Securities Market Index declined 2.1% and Bahrain’s All Share Index fell approximately 2.5%. 

    Saudi Arabia’s Tadawul All Share Index (Tasi) fell 6.1% at the start of trading on 6 April, marking its steepest single-day decline since March 2020 and wiping out over SR500bn ($133.3bn) in value. The index partially recovered, rebounding 0.7% on 7 April and rising 3.7% on 10 April after the US announced a 90-day tariff suspension, its largest daily gain in nearly five years.

    Almost all major Gulf indices were dragged down by the tariff shock

    The Abu Dhabi Securities Exchange and Dubai Financial Market followed similar trajectories as trading resumed on Monday 7 April. Dubai’s DFM index dropped 3.1%, led by a 5.7% fall in Dubai Islamic Bank. Abu Dhabi’s main index slipped 2.6%, with Adnoc Gas down nearly 5%. 

    Both indices began recovering on 10 April. By 14 April, Dubai’s index had risen 1.8%, led by a 4.7% gain in Emirates NBD and a 3.2% rise in Dubai Islamic Bank, while Abu Dhabi’s index climbed 0.9%.

    Equities dropped sharply across the region on 6 and 7 April, with blue-chip and sector-leading stocks in banking, real estate and energy posting heavy losses. The UAE’s Emaar Properties fell nearly 9% during intraday trading before closing 2.5% lower. 

    The aluminium sector came under scrutiny following the reinstatement of the 25% US import duty. However, the impact was limited, as Gulf aluminium exports, particularly from Bahrain and the UAE, represent a modest share of total output. 

    Oil price drop

    The energy sector was not immune to the volatility. Brent crude dropped nearly 15% to around $64 a barrel – one of its steepest weekly declines in over a year. This slide is significant, given that fiscal breakeven oil prices are estimated at $90.9 for Saudi Arabia and $124.9 for Bahrain. Saudi Aramco lost over SR340bn in market value on 6 April before recovering 1% the next day.

    Gulf petrochemicals producers also came under pressure. Saudi-based petrochemicals manufacturer Sabic is forecast to report a 47% year-on-year decline in Q1 earnings, according to a Riyad Capital report. The report cited softer product pricing and weaker demand from key markets including China and the US as the main cause.

    Oil, energy and most petrochemicals products are exempt from US tariffs. While Gulf trade exposure to the US remains modest, the wider effects were felt through sentiment, capital flows and commodity pricing, and the deeper threat lies in reduced global demand, prolonged oil price weakness and weakened investor appetite. 

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13732791/main.png
    Sarah Rizvi
  • Market awaits Kuwait’s Shagaya solar tender

    24 April 2025

     

    Kuwait’s Ministry of Electricity, Water & Renewable Energy (MEWRE), through the Kuwait Authority for Partnership Projects (Kapp), could issue the request for proposals (RFPs) for a contract to develop the Gulf state’s first utility-scale solar photovoltaic (PV) plant project before the summer.

    According to an industry source, the independent power project (IPP) tender documents are awaiting final approval before they are released to the market.

    MEWRE prequalified six consortiums and companies that can bid for the contract, MEED reported in August last year.

    The Al-Dibdibah power and Al-Shagaya renewable energy phase three, zone one project is understood to have a capacity of 1,100MW.

    The consortiums and companies prequalified to bid for the contract are:

    • Acwa Power (Saudi Arabia) / Alternative Energy Projects Company (local)
    • Trung Nam Construction (Vietnam)
    • EDF Renewables (France) / Abdullah Al-Hamad Al-Sagar & Brothers Company (local) /  Korean Western Power Company (Kowepo, South Korea)
    • Jinko Power (Hong Kong) / Jera (Japan) 
    • Abu Dhabi Future Energy Company (Masdar, UAE) / Fouad Alghanim & Sons General Trading Contracting Company (local)
    • TotalEnergies Renewables (France)

    The 1,100MW solar PV IPP project is located in the Jahra governorate, about 100 kilometres from the capital, Kuwait City.

    Kapp issued the request for qualifications for the contract in January 2024.

    The package to be tendered comprises the Al-Dibdibah and Shagaya renewable energy phase three, zone one project, Kapp said when it issued the request for qualifications to interested bidders.

    In August 2022, a team led by London-headquartered consultancy firm EY won the transaction advisory contract for the next phases of Kuwait’s renewable energy programme.

    London-headquartered DLA Piper is the legal adviser, while Norwegian engineering services firm DNV is the client’s technical and environmental adviser.

    2030-50 strategy

    Kuwait aims to have a renewable energy installed capacity of 22,100MW by 2030 as part of the 20-year strategy that was announced in March and which ends in 2050.

    Minister of Electricity, Water & Renewable Energy, Salem Falah Al-Hajraf, confirmed that the strategy also involves installing distributed or rooftop solar farms, with the state procuring the energy output from solar PV farms.

    Kuwait aims to reach net-zero carbon emissions by 2060.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13746421/main3315.jpg
    Jennifer Aguinaldo