meed-logo

line1 line2 line3
SIGN IN / REGISTER

Saudi Arabia under project pressure

28 March 2023

 

Saudi Arabia’s projects market is overheating. The volume of projects announced in the past six years vastly exceeds the resources that are available to work in the kingdom. 

Combined with tight deadlines to complete projects as part of Vision 2030, the pressure on the construction industry to deliver is ratcheting up and turning the tables on the supply chain as the shift from a buyer’s to a seller’s market accelerates.

For the five years from 2016 to 2020, there was an average of about $14bn-worth of contract awards a year in Saudi Arabia for the construction and transport sectors. After rising to $21bn in 2021, the total rose to $32bn in 2022 – the second-best year on record. 

The near doubling of the total annual value of contract awards by the end of 2022 has required a significant scale-up of resources in the kingdom, and the ramp-up is set to continue. 

Much of this pressure is due to the five official gigaprojects, which are major programmes of work that will involve a sustained flow of contract awards for years to come.

Gigaproject focus

The project most recently classified as a gigaproject by the Saudi authorities is the Diriyah Gate development on the western outskirts of Riyadh. It joins the $500bn Neom development in the northwest of the kingdom, Qiddiya entertainment city outside Riyadh, Red Sea Global’s projects on the Red Sea coast and Roshn’s housing developments across the kingdom.

These projects are relatively new. They began to be launched in 2017 and spent much of the following three years in the design phase. 

After a start that was hampered by the work and travel restrictions required to manage the Covid-19 pandemic, construction activity on these projects has accelerated sharply since the start of 2022. 

According to regional project tracker MEED Projects, there have been $36bn-worth of contract awards across these official gigaprojects since 2017. Compared to the entire Saudi projects market over the same period that represents 14.5 per cent of contract awards. 

The percentage rises to 20 per cent if a more recent time frame is used and only contract awards since the start of 2022 are included. As work gathers pace on the gigaprojects, their significance is expected to grow even further.

More major projects

Saudi Arabia’s ambitions are not limited to the five gigaprojects. In January, Crown Prince Mohammed bin Salman al-Saud launched the world’s largest modern downtown in Riyadh. 

Known as the New Murabba project, it involves the development of 19 square kilometres of land to the northwest of the capital. The centrepiece of the project is the Mukaab, which is a 400-metre-cubed structure with a tower standing inside it. 

New Murabba is part of a plan announced in January 2021 to double the size of Riyadh from 7.5 million residents to 15-20 million residents in 2030. Other major projects in the capital include King Salman International airport, King Salman Park, Sports Boulevard and Mohammed bin Salman Non-Profit City. 

Beyond the capital there are development projects planned in all major urban centres by Saudi Downtown Company, as well as entertainment centres being developed by Saudi Entertainment Ventures (Seven).

Connecting these cities and projects will be railways, roads, ports and airports that form part of the National Transport & Logistics strategy, which aims to turn the kingdom into a global hub for travel and trade by 2030.

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

Resourcing challenges  

One of the key challenges for the development firms and government agencies responsible for delivering these projects is securing the resources they need. 

As client bodies attempt to make their projects more attractive for companies to work on, the industry is changing. The first signs of this change can be seen in the consultancy market. 

After years of searching for project opportunities, the big consultancy businesses are now only selectively bidding for projects in the kingdom. This is because their orderbooks are already full, and for many international firms there is a concern that they could become over-exposed to the Saudi market. 

On contracts that have already been won there are also challenges. Staffing projects is proving difficult as the kingdom remains a hard sell for many project professionals, despite significant social reforms that have taken place in recent years. 

Then, once staff have been recruited and deployed on projects, there is the prospect of losing them to competitors or clients that require the same human resources.

Securing contractors

As activity on site accelerates, the bigger concern is contracting resources. As things stand, there are not enough contractors working in Saudi Arabia to deliver all of the planned projects. 

The first way to deal with this problem is to increase the capacity of contractors in the kingdom. In February this year, the Public Investment Fund (PIF) invested $1.3bn in four local construction firms: Al-Bawani Holding Company, Almabani General Contractors Company, El-Seif Engineering Contracting Company and Nesma & Partners Contracting Company. 

This investment will allow the companies to scale up their capacity, adopt advanced technologies and improve local supply chains. 

As these firms grow, the hope is that it will encourage other local companies to also expand.

International or regional companies can also help, and over the past two years foreign players have become active in the kingdom again. Firms such as Bouygues, Samsung C&T, Hyundai Engineering Construction, China State, Webuild, FCC, Alec, Consolidated Contractors Company and Urbacon Trading Contracting Company have all secured major orders. 

In some cases, these contract awards have been supported with foreign finance, which gives the contractor an additional level of comfort when it comes to potential payment for projects. For others, the contract awards reflect growing assurance in the Saudi market. 

Boosting appeal

Confidence has been lifted by measures to make the Saudi market more attractive. Payment terms are improving and many of the frustrations typically faced by contractors are being addressed. 

One example is the use of performance guarantees. Red Sea Global, which is developing the Red Sea Project and Amaala gigaprojects on the Red Sea coast, no longer requires contractors to submit bid bonds and returns performance bonds on completion of the project, along with half of the retention. 

Alternative procurement methods and contract types are also being used, notably early contractor involvement and design and build. 

These different approaches reduce risk for the contractor and allow the client to lock in resources at a much earlier stage of the procurement process. 

Red Sea Global has adopted a different approach and is self-delivering the bulk of its projects. By acting as its own management contractor, it engages with subcontractors itself. While this means it does not need to secure the services of a main contractor, it still requires engaging with the supply chain, which – like the main contractor market – has finite resources in Saudi Arabia.

Payment terms are improving and many of the frustrations typically faced by contractors are being addressed 

Driving efficiency

On the other side of the equation, making construction more efficient could also help to limit the resources required. 

Client bodies are exploring modern methods of construction to increase the speed of delivery, reduce costs and cut the amount of resources needed on site.

The market could also be self-limiting. Decision-making in the kingdom remains centralised, which means key project decisions can be slow. While this is changing as development companies are left to run their own projects, bureaucracy can impact the speed of delivery, which ultimately reduces the immediate demand for resources on a project. 

While slow decision-making could impact progress on some projects, the overriding story for 2023 will be one of sustained pressure on the kingdom’s construction sector as it becomes a seller’s market. 

With that, there is the likelihood that contractor margins will start to creep up, just as they did in the UAE when its construction market overheated in 2003 and 2008. 

So far, that does not appear to have happened, as clients in Saudi Arabia have managed to find sufficient resources. For that to remain the case will be a major challenge, however, as on-site activity for most projects in the kingdom is still several years away from peaking. 

Daniel King, director, Currie & Brown

International contractors continue to see a level of risk in the Saudi market

“There is a lot of opportunity. A large volume of work is being planned, designed and rolled out. With that, there is significant pressure right now on the market in terms of resources and supply chain. 

“On the consultancy side, the market is tremendously difficult. 

“Even with the best incentives and best set of practices, retaining staff is a challenge. People are being attracted elsewhere and the competition is fierce. 

“For the contractors, there are a lot of tenders being let. The perception that the market has risk remains, however. That is certainly the perception for international contractors, and they are still looking at the Saudi market with some level of risk appreciation in terms of how quickly they are going to be paid and what the margins really are. 

“That approach will likely prevail for the short to medium term, until clients’ practices change in terms of contractual frameworks and payment practices. 

“Varied procurement practices are coming into play to guarantee supply chain. It might be early contractor involvement or partnering, but the main purpose is to guarantee the right level of contractors.”

Adel Karem Jemah, senior vice-president, Hill International

To prevent resource shortages, supply chain and procurement must be carefully considered

“It is imperative to consider alternative methods of procurement during boom times, and the current boom in Saudi Arabia is unprecedented considering the types, size, nature and complexity of projects that have been announced in line with Vision 2030. 

“This necessitates giving due consideration to the supply chain and type of procurement.

“It is not enough to look for resources locally or even regionally to cope with such projects. One needs to reach out to where such resources are available globally, either due to slowdowns in certain regions or the completion of other major projects. 

“Cost-plus contracts were used previously in many projects in Saudi Arabia. However, the risk for such contracts rests with the client and sometimes the cost ends up much more than expected. That is why financiers prefer the lump-sum type of contracts. 

“Nonetheless, I can see this type of contract being used for fast-track projects with very tight schedules, for instance to meet deadlines for facilities required for international or regional sporting events. 

“In any case, the evaluation and selection of contractors needs to be done with extreme diligence.”

MEED's April 2023 special report on Saudi Arabia includes:

> ECONOMY: Riyadh steps up the Vision 2030 tempo

> CONSTRUCTION: Saudi construction project ramp-up accelerates

> UPSTREAM: Aramco slated to escalate upstream spending

> DOWNSTREAM: Petchems ambitions define Saudi downstream

> POWER: Saudi Arabia reinvigorates power sector

> WATER: Saudi water begins next growth phase

> BANKING: Saudi banks bid to keep ahead of the pack

https://image.digitalinsightresearch.in/uploads/NewsArticle/10705629/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 economy shows resilience

    4 November 2026

    Commentary
    Colin Foreman
    Editor

    State-backed capital is carrying the UAE projects market through the economic shock of the Iran conflict. Government and government-related entities have accounted for $22.4bn of the $34.6bn of contracts awarded in Dubai so far this year, almost two-thirds of the total, according to regional project tracker MEED Projects. Private developers have deferred new launches, and off-plan residential sales in the emirate fell from $9bn in February to $4bn in August.

    In Abu Dhabi, state-affiliated developers and cultural agencies are accelerating destination projects on Yas and Saadiyat islands, including the $1.7bn Sphere Abu Dhabi venue.

    The energy sector is adding momentum. The UAE’s exit from Opec in May has freed Abu Dhabi National Oil Company (Adnoc) to make greater use of its spare crude capacity, and the company is on course to exceed its 2024 upstream project spending this year. Adnoc Gas has awarded $8.2bn of contracts for the second and third phases of its rich gas development programme.

    The $3bn Taweelah C combined-cycle gas turbine plant accounted for most of the $4.17bn of power contracts awarded by early September, while Dubai’s AED30bn ($8.1bn) Tasreef stormwater programme is driving water sector activity. 

    MEED Projects tracks $103bn of transport schemes at pre-execution stages, including rail links that would give exporters routes that avoid the Strait of Hormuz.

    Non-oil activity is also holding up. The UAE purchasing managers’ index compiled by financial information and analytics provider S&P Global reached a 20-month high of 55.3 in September. Net profits at the 10 biggest UAE banks rose 7% to AED47.8bn ($13bn) in the first half, supported by loan growth of 21%.

    Meanwhile, Abu Dhabi is repairing relations with Riyadh after a year of friction over Yemen and Sudan. On 8 October, the two countries signed a memorandum of understanding covering power grid interconnection and freight rail.

    Risks remain. The Washington-based IMF expects the GCC economy to contract by 3.8% this year, with recovery dependent on shipping through Hormuz returning to normal. US scrutiny of Iran-linked transactions is also tightening compliance demands on UAE banks. That said, there are reasons to be hopeful. The IMF expects the economy to rebound in 2027 with 7.7% GDP growth.

     

    MEED’s November 2026 report on the UAE includes:

    > GOVERNMENT: Abu Dhabi mends fences with Riyadh
    > ECONOMY: UAE growth holds up as regional risks persist
    > BANKING: UAE banks profit as credit growth surges
    > UPSTREAM: Adnoc steps up crude expansion
    > DOWNSTREAM: Adnoc funnels billions into boosting gas processing
    > POWER: Gas-fired projects drive resilience in UAE power sector
    > WATER: Tasreef scheme drives UAE water investment
    > CONSTRUCTION: State-backed spending cushions UAE construction slowdown
    > TRANSPORT: Infrastructure drives UAE growth agenda
    > MANUFACTURING: UAE vehicle manufacturing push moves into production

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20947110/main.gif
    Colin Foreman
  • Kuwait appoints KPMG for ports strategic plan

    4 November 2026

    Register for MEED’s 14-day trial access 

    Kuwait Ports Authority (KPA) has appointed the local office of UK-headquartered KPMG to develop its ports strategic plan, which aims to improve the competitiveness, connectivity and performance of Kuwait’s commercial ports.

    KPMG will act as lead consultant on the strategic consultancy engagement, with Netherlands-based Haskoning Nederland and local engineering firm Dar Gulf Consult providing engineering consultancy support.

    KPMG will consolidate the three consultants’ work into a single strategic plan. It will lead the market, commercial and organisational analysis, as well as develop and implement the strategy.

    The scope is split into two workstreams. The first covers strategy development, planning and an implementation framework, including an assessment of KPA’s current market position and performance.

    The resulting strategic options and roadmap will be developed into detailed functional plans, supported by key performance indicators, a risk framework and a monitoring plan.

    Under the second workstream, KPMG will set up and lead a strategic technical support office for 36 months. The office will provide KPA with strategic oversight, technical advisory services and integrated project management support.

    KPA operates Kuwait’s three main commercial ports: Shuwaikh Port, Shuaiba Port and Doha Port.

    In line with the New Kuwait Vision 2035 development strategy, KPA is transitioning its operations into high-efficiency smart ports by investing heavily in automated machinery, deeper navigational channels and significant berth capacity expansions.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21106611/main.jpg
    Yasir Iqbal
  • 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
  • Qiddiya seeks interest for water infrastructure packages

    4 November 2026

    Register for MEED’s 14-day trial access 

    Qiddiya Investment Company (QIC) has issued an expression of interest for two water infrastructure packages at Qiddiya City, southwest of Riyadh.

    According to a source, the first package covers a wastewater treatment plant with a capacity of 60,000 cubic metres a day (cm/d).

    The second package involves a wastewater treatment plant with a capacity of 9,000 cm/d. It will also include a “sizeable” reverse osmosis (RO) facility, a source close to the project told MEED.

    The deadline for submissions of interest is 8 November.

    The infrastructure package will cater to Saudi Arabia’s 360-square-kilometre Qiddiya entertainment city.

    QIC, which is owned by Saudi Arabia’s Public Investment Fund (PIF), is overseeing the development of Qiddiya City, including its supporting utilities infrastructure.

    In October 2024, MEED reported exclusively that QIC planned to tender its utilities packages individually under an engineering, procurement and construction model.

    QIC had previously planned to procure the infrastructure through a public-private partnership (PPP). However, it cancelled this approach despite receiving two bids for a multi-utility package in 2020.

    The original utilities package covered power generation, water desalination, sewage treatment and water transmission networks.

    In September 2023, QIC signed infrastructure contracts worth SR2.29bn ($611m) with a joint venture of Saudi Real Estate Infrastructure Company (Binyah) and InfraRoad Contracting.

    The contracts covered a wider infrastructure package at Qiddiya’s Resort Core, including roads, utility networks, water storage facilities and pumping stations, as well as the construction of a sewage treatment plant (STP).

    Two other major PIF-backed developments, the Red Sea project and Amaala, have each awarded multi-utility packages using a PPP model, while contractors are preparing to bid for two separate wastewater treatment plants for Oxagon, Neom’s industrial cluster.

    In September, the utilities system serving Saudi Arabia’s Red Sea tourism destination reached commercial operation, marking the start of a 25-year concession for one of the world’s largest integrated off-grid utilities projects.

    The project, known as the Marafiq Red Sea Project or Red Sea Utilities Multi-Utilities Project, includes three seawater RO plants, an STP, a waste management centre and 32,500 refrigeration tonnes of district cooling capacity.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21111446/main.jpg
    Mark Dowdall
  • Riyadh plans multibillion northern roads network overhaul

    4 November 2026

    Register for MEED’s 14-day trial access 

    Saudi Arabia’s Royal Commission for Riyadh City (RCRC) is preparing to implement a 189-kilometre (km) programme of road upgrades and extensions in the north of the capital as part of a comprehensive restructuring of the capital’s northern transport infrastructure.

    The programme comprises 19 road projects and 33 interchanges serving the airport and 16 surrounding developments, including the Expo 2030 site, Roshn’s Sedra and Plot 1 communities and King Salman Stadium.

    Once complete, the upgraded network will have the capacity for 4.2 million daily trips.

    Fifteen of the links, totalling 162km, will be funded from the Riyadh City Strategy budget and procured across three waves and five packages.

    The remaining four links, covering 27km of roads within and around the airport campus, will be developed by King Salman International Airport (KSIA).

    Wave one

    Wave one is the most immediate phase, covering seven links totalling 49km around the airport terminals, Expo 2030 and Roshn’s developments. 

    Fast-tracked for design completion in August 2026, Wave 1 comprises critical primary conduits split across two packages: 

    Package 1: Covers 11km, comprising an initial 8km stretch of Sheikh Jaber Al-Ahmad Al-Sabah Road and the first extension phase of King Salman Road.

    RCRC has already begun implementing the Sheikh Jaber Al-Ahmad Al-Sabah Road scheme, awarding multimillion-dollar contracts for the project this year.

    The centrepiece of this wave is the extension of King Salman Road, which will be realigned south along the boundary between KSIA and Roshn.

    The new road will have six main lanes and three service-road lanes in each direction, with three full interchanges where Airport Road, a Roshn Sedra link and Sheikh Jaber Road cross it on bridges.

    The interchanges will also give separate access to the airport support facilities and terminals, and are each forecast to handle 300,000-400,000 vehicles a day by 2040.

    Sheikh Jaber Al-Ahmad Al-Sabah Road will be upgraded along an 8km section and extended by a further 5km. Three grade-separated T-intersections will provide access to Roshn Sedra.

    The existing 6km section of King Salman Road will be widened to six main lanes in each direction, with tunnels beneath it at the Prince Saud Bin Jalawi interchange and between Expo 2030 and Roshn Plot 1.

    Package 2: Covers 28km of core alignment updates across King Salman Road, the Expo South link, Airport Road, Prince Badr Bin Abdulmohsen Road and Anas Bin Malik Road.

    A new 6km road south of the Expo site will extend Prince Saud Bin Jalawi Road through three grade-separated junctions, relieving King Salman Road of Expo and Roshn traffic.

    The 8km Airport Road upgrade will add five main lanes and four service-road lanes in each direction, an underpass interchange at Expo Road, a bridge linking Expo with Roshn Sedra and new elevated ramps serving Princess Nourah Bint Abdulrahman University.

    Prince Badr Bin Abdulmohsen Bin Abdulaziz Road will be widened from three to four lanes in each direction for 5km, with an underpass to King Salman Stadium.

    A tunnel-and-bridge junction will carry it beneath the upgraded 3km Anas Bin Malik Road.

    Wave one also includes a main bridge over Riyadh Metro Line 4.

    Wave two

    Wave two comprises two further packages totalling 72km that extend the network west and south of the airport.

    Package 3: Covers 38km and includes the 33km upgrade of Al-Janadriyah Road, the longest single link in the programme, together with the 5km western section of Mohammed Bin Faraj Road. Its design submission is due in November 2026.

    Package 4: Covers 34km and comprises the extension of King Salman Road to Al-Janadriyah Road, the 10km upgrade of the Airport Extension Road serving the airport support functions and the 16km upgrade of Prince Saud Bin Abdullah Bin Jalawi Road.

    Design is scheduled for submission in March 2027.

    Wave three

    Wave three is a single 52km package covering the outer northern and eastern corridors. It comprises the 11km upgrade of Al-Thumamah Road, the 17km upgrade of Khuzam Road and the 19km extension of Jabal Azid Road, with design due for submission in August 2027.

    Alongside the RCRC-led schemes, KSIA will deliver four links totalling 27km on its own campus. These are the 10km upgrade of the Airport Extension Road adjacent to the terminals, a 6km upgrade of Mohammed Bin Faraj Road, a 5km road to the cargo and aviation services area and a 6km road to the Iconic Terminal.

    All three waves are scheduled to reach tender by 2028.

    Programme rationale

    Designed by Lebanon-headquartered engineering firm Dar Al-Handasah, Taiwan’s Wiecon Consulting Engineers and Germany’s Bodeker, the programme responds to the concentration of Riyadh’s flagship schemes on the city’s northern edge.

    Riyadh is planning major developments in the north, with most due for completion by 2030. Daily trips in the area are forecast to rise from about 775,000 today to 1.7 million by 2030 and 3.7 million by 2050.

    Roshn’s projects account for 37% of that demand, with Roshn Sedra alone generating more than 520,000 daily trips by 2030.

    The sequencing is driven by Riyadh’s event timetable. Wave one targets the links that unlock KSIA’s new terminals, the Expo 2030 site and King Salman Stadium, a venue for the 2034 Fifa World Cup.

    The later waves then build capacity for the housing, logistics and mixed-use districts expected to drive traffic growth after 2030, sustaining a pipeline of road contracts in the capital well into the next decade.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21109126/main.jpg
    Yasir Iqbal