meed-logo

line1 line2 line3
SIGN IN / REGISTER

Saudi demand-supply imbalance needs action

26 January 2024

Some $879bn-worth of giga projects are planned in Saudi Arabia, of which about $50bn has been awarded to date, according to regional projects tracker MEED Projects.

The data shows that 2023 was a record year for projects in Saudi Arabia. 

However, the extensive scope of work associated with these projects has exposed the challenges of scaling up the local construction supply chain fast enough to meet the surge in demand.

With projects launching in quick succession, suppliers, contractors and subcontractors are struggling to keep up with the influx of new work into the market.

Riad Bsaibes, president and CEO of Amana Investments, says this shortage of resources is a critical issue, stating, “There is currently a bottleneck in the entire supply chain, from human capital and materials to subcontractors and general contractors.”

Moreover, the construction sector faces significant execution risks.

While some projects are subject to delays, efforts to accelerate others are exerting pressure on timelines and budgets. 

Highlighting the disparity, Bsaibes notes, “This mismatch is leading to delays as schedules stretch out and costs rise above original tender amounts. This creates risks for contractors if they cannot deliver projects on schedule or within the costs estimated during the tendering process.”

Career investment

The launch of Saudi Arabia's Vision 2030 has spurred an era of growth and investment. The surge in construction projects aligns with the kingdom's goals, positively impacting employment opportunities. 

Yet recruiting top local and expatriate talent across large-scale projects is becoming a challenge in Saudi Arabia, according to Bsaibes.

He acknowledges that attracting and retaining skilled workers is getting more difficult with time, stating: “This is particularly challenging due to the scale of expansion, coupled with the pressure of Saudi Arabia’s nationalisation policies that encourage contractors to recruit qualified Saudi nationals.”

As well as focusing on hiring practices, companies must also commit to nurturing and enhancing skills over time.

Continuous upskilling is crucial in the construction industry, where new technologies, techniques and regulations frequently emerge, requiring employees to adapt and stay relevant.

Bsaibes advocates a strategic approach to talent management that involves upskilling the existing workforce before hiring new talent.

He recommends a hands-on approach to learning and improving skills.

“A core part of skills development at Amana includes on-the-job training for all employees,” he adds.

“Skills development must extend to developing competency in cutting-edge technologies such as building information modelling (BIM), modular construction and other digital tools. This long-term effort should be a key priority for firms.

“Continuous learning and development are very important throughout an employee’s career, starting from their initial entry into the construction workforce.”

Bsaibes further highlights the significance of internships in providing candidates with practical experience before taking on permanent positions. 

This approach aims to facilitate a smoother onboarding process for individuals entering the workforce, ensuring they are well-prepared for new roles.

“Companies should invest in the professional development of their employees,” he says. “This could include training programmes, workshops and educational initiatives aimed at enhancing the skills, knowledge and capabilities of the workforce.”

Credit challenge

Access to credit is another major issue in the construction sector. A strong financial profile enhances borrowing capacity and facilitates the smooth execution of projects by ensuring a steady flow of financial resources.

Addressing credit concerns is, therefore, essential for construction firms. 

Bsaibes recommends adhering to a strategic financial approach, opting to retain significant cash reserves instead of incurring debt.

“This approach not only facilitates self-financing for projects when necessary, but also serves as collateral for the letters of guarantee frequently demanded in construction contracts. 

“Moreover, it provides the company with the flexibility to navigate through any payment delays without succumbing to financial distress.

“Amana has a strong balance sheet and well-established banking relationships,” he adds. “Banks view Amana as low risk due to its solid cash reserves and strong track record of on-time payments across different regions/currencies.”

In contrast, Bsaibes points out that many other contractors struggle due to insufficient cash flow management and weaker balance sheets. 

“Maintaining high cash levels on its balance sheet is a fundamental goal for Amana.”

Strong working capital allows the contractor to be selective in bidding for projects, avoiding low-margin work while still securing sizable contracts.

“Additionally, we have a positive history with lenders, which allows Amana to support its operations and capitalise on growth opportunities.”

Incentivising growth

Clearly, there is a need for industry-wide improvements.

Bsaibes says the most impactful change would be longer-term transparency across developers’ project pipelines. 

“This approach contrasts with the unpredictable, stop-start demand cycles currently prevalent in the industry. 

“It involves providing the supply chain with visibility into funding-backed plans over a three to five-year period. Such transparency is crucial for better resource planning and timely project delivery,” he adds.

Bsaibes also emphasises the importance of incentivising suppliers, subcontractors and contractors to scale up their capacity. “This will help them grow in a coordinated manner through financial/regulatory support from the government.”

Another area of improvement is the digitisation of government processes, although Bsaibes notes that progress is already being made.

Bsaibes also calls for changes in Saudi Arabia’s regulatory environment.

The continued maturation of Saudi Arabia’s evolving regulatory framework will reduce the complexities faced by international firms. Yet, greater alignment with global construction norms will stimulate competition and investment in the kingdom’s expanding market.

According to Bsaibes, transitioning contract law closer to international standards, such as those outlined by the standards organisation International Federation of Consulting Engineers (FIDIC), would significantly mitigate risks for new market entrants. Presently, the reliance on sharia law introduces an element of unpredictability into obligations, he says.

To achieve this, he recommends adopting contract laws aligned with common law systems, such as the UK’s, to provide foreign suppliers and partners with a clearer understanding of their obligations.

Bsaibes concludes that while the continued evolution of Saudi Arabia’s regulatory environment will take time, gradual alignment with international construction norms will ultimately ease risks and costs for both local and global industry players.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11449096/main4309.jpeg
Sarah Rizvi

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

Click here to register
Exclusive from Meed
Related Articles
  • Building resilience into infrastructure delivery

    21 October 2026

     

    The regional disruptions earlier this year tested Gulf supply chains, challenging the movement of goods and construction materials and raising questions about the ability of infrastructure programmes to maintain momentum.

    For the UAE Ministry of Energy & Infrastructure, the experience reinforced the importance of the systems that support project delivery, from transport networks and customs procedures to domestic manufacturers and international suppliers.

    “The disruption reinforced an important principle: infrastructure resilience is ultimately about the ability of the national system to continue operating under pressure,” says Mohammed Al-Mansoori, undersecretary for infrastructure and transport affairs.

    Supply resilience

    The ministry worked with ports, customs authorities, transport and rail operators, contractors, suppliers and the private sector to maintain the flow of essential goods and construction materials. It monitored critical materials and project schedules, identified alternative sources and adjusted procurement and delivery arrangements.

    The response included movement exemptions and facilitation measures for more than 6,600 lorries, while rail freight operations increased from approximately one journey a week to as many as seven journeys a day. Priority and green corridors were activated, customs procedures facilitated and critical shipments prioritised at ports.

    According to Al-Mansoori, these measures contributed to an estimated 25% reduction in transport costs, a 40% improvement in customs clearance times and an increase of approximately 15% in port capacity during the response period.

    For infrastructure projects, the ministry worked with local manufacturers and suppliers to identify alternative sources of road and construction materials meeting the required technical specifications and quality standards. This helped reduce reliance on disrupted international supply routes and support ongoing projects.

    The experience also highlighted the value of existing coordination mechanisms and partnerships.

    “It also reinforced a fundamental principle: resilience means ensuring that critical infrastructure delivery does not depend on a single supplier, a single route or a single mode of transport,” Al-Mansoori says.

    The ministry is planning to build on this experience by diversifying suppliers, strengthening domestic manufacturing and improving supply-chain monitoring.

    Resilience is increasingly being incorporated into procurement planning. For critical materials and services, the ministry aims to identify risks early, broaden the pool of qualified suppliers and ensure viable alternatives are available.

    The approach supports the UAE’s wider industrial objectives, including the national in-country value programme, which seeks to direct a greater share of procurement expenditure into the national economy.

    “Our objective is not simply to purchase more locally. It is to help create competitive national supply chains,” Al-Mansoori says.

    Domestic suppliers must be able to meet the technical requirements, quality standards and volumes demanded by major infrastructure programmes. Localisation is therefore about developing competitive industrial capabilities while shortening supply chains, improving responsiveness and encouraging investment.

    “Localisation is not simply a procurement choice; it is an investment in national capability and long-term resilience,” Al-Mansoori says.

    The ministry is also working with contractors to manage pressures from fluctuating material, insurance and transport costs. Its approach combines commercial discipline with early engagement to prevent external pressures from affecting project delivery.

    “Our approach is based on early engagement, transparency and disciplined commercial management,” Al-Mansoori says. “Long-term infrastructure delivery depends on strong contractors as much as it depends on strong contracts.”

    Contractors remain responsible for normal market and contractual risks, but the ministry seeks to assess exceptional pressures objectively, supported by evidence of their impact on costs and schedules. Realistic planning, early procurement and proactive risk management also help maintain momentum.

    “The objective is to strike the right balance between protecting the government’s commercial interests and securing best value for money, while maintaining an efficient, sustainable contracting market capable of continuing to deliver strategic infrastructure projects,” Al-Mansoori says.

    Resilience means ensuring that critical infrastructure delivery does not depend on a single supplier, a single route or a single mode of transport

    Project delivery

    The ministry’s focus on measurable outcomes is reflected in the Emirates Road enhancement project, which involves widening approximately 25 kilometres of Emirates Road from three to five lanes in each direction, alongside major improvements to Interchange No. 7.

    The works are expected to increase road capacity by up to 65% and reduce journey times by up to 45%.

    The project illustrates the ministry’s emphasis on assessing infrastructure by the benefits it delivers, rather than simply the scale of construction.

    “Infrastructure success should be measured by the value it creates – not just by the kilometres we build,” Al-Mansoori says.

    That principle is increasingly important as the UAE balances new construction with the long-term costs of operating and maintaining its assets. Decisions made during planning and construction can influence maintenance requirements, operating costs and performance for decades.

    For Al-Mansoori, resilience, domestic capability and effective delivery are closely connected. Stronger local supply chains can reduce exposure to external shocks, while closer engagement with contractors can help projects withstand cost pressures. 

    Don’t miss MEED’s MENA Construction Summit 2026, taking place under the patronage of the UAE Ministry of Energy & Infrastructure
     Secure your place as an attendee or request the sponsorship deck by clicking here or emailing us at meedevents@meed.com

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/20810056/main.gif
    MEED Editorial
  • Riyadh tenders Expo 2030 Adaptation and Innovation Pavilion

    21 October 2026

     

    Register for MEED’s 14-day trial access 

    Expo 2030 Riyadh has tendered the design-and-build main contract for the Adaptation and Innovation Pavilion in the exhibition’s Technology District.

    The pavilion will be built on a plot of at least 12,710 square metres and will feature a two-level basement, ground-level public areas, an elevated skywalk, visitor experience areas, food and beverage outlets, retail space, VIP facilities, offices, back-of-house areas, exhibition spaces, an amphitheatre and a resonance hall.

    The facility is being designed to accommodate a minimum of 20,000 visitors a day at peak periods, with an anticipated average of about 15,000 visitors a day. The project targets LEED Gold certification.

    The tender was issued on 1 October, with bids due on 6 January 2027.

    The design-and-build contractor will be responsible for completing, reviewing, verifying, coordinating and technically integrating the design, including specialist contractor design portions and coordination with the novated lead design consultant.

    The scope includes completing early works and substructure activities, including grading, bulk earthworks, excavation, cut and fill, soil improvement, raft foundations, reinforced-concrete basement walls, basement columns through to the ground-floor slab, waterproofing, mechanical, electrical and plumbing (MEP) provisions, and backfilling.

    The contractor will also deliver the superstructure and building envelope, including structural works, facade engineering and installation, roofs, waterproofing, external finishes, and permanent facade access and maintenance systems. The internal works will cover front-of-house and back-of-house areas, public and core spaces, internal finishes, fixtures, fixed fittings, joinery, circulation areas, lobbies, stairs, toilets, storage, waste areas and associated builder’s works.

    The building services package includes MEP systems, information and communications technology, extra-low-voltage systems, building management systems, security, fire and life safety systems, specialist lighting and vertical transportation.

    The contract also covers the visitor experience package, including procurement, installation, integration, testing, commissioning and handover of visitor-facing environments, media, immersive and audiovisual technologies, interactive elements, experiential lighting, digital content, interpretive and wayfinding systems, controls and supporting infrastructure.

    Within-plot infrastructure and utilities, landscaping, public realm works, paving, planting, irrigation, signage, street furniture, drainage, stormwater systems, external lighting, security, and fire and life safety systems are also included.

    The contractor will be responsible for procurement, off-site fabrication, construction, testing and commissioning, performance verification, training, operations and maintenance documentation, operational readiness, handover, defects rectification and close-out.

    The main works tender is based on a 60% RIBA Stage 3 design, with the Stage 3 design to be completed to 100% through an addendum.

    Early works and substructure works, as well as the lead design consultant, will be novated to the contractor. Visitor experience works are included as a provisional sum.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/20801465/main.jpeg
    Yasir Iqbal
  • Mubadala Bio lands Lilly logistics deal

    21 October 2026

    Mubadala Bio, the life sciences subsidiary of Abu Dhabi state investor Mubadala Investment Company, has signed an agreement with US drugmaker Eli Lilly to localise the packaging and logistics of Lilly’s glucagon-like peptide-1 (GLP-1) medicines in Abu Dhabi.

    The work will take place at a 125,000-square-metre site in Khalifa Economic Zones Abu Dhabi (Kezad), which includes packaging and warehousing facilities. Mubadala Bio said the facilities would strengthen its pharmaceutical contract manufacturing, packaging and logistics capabilities and its ability to serve international clients from the UAE.

    The packaging and logistics activities will be introduced in phases and will be subject to technical, quality and regulatory requirements. The companies did not disclose the value of the agreement or a timeline for the first phase.

    The Emirates Drug Establishment approved Lilly’s oral GLP-1 drug Foundayo (orforglipron) for chronic weight management in April. The companies said this made the UAE the second country in the world to register the medicine.

    In Abu Dhabi, the treatment is available to eligible patients under a weight management programme launched by the Abu Dhabi Department of Health and the Abu Dhabi Public Health Centre in June 2025. The UAE was also an early launch market for Lilly’s injectable treatment Mounjaro (tirzepatide) in August 2022.

    Mubadala launched Mubadala Bio in 2025 to expand domestic drug manufacturing and distribution, with a focus on national drug security. It is one of Mubadala’s designated national champions, set up to support strategic sectors. At launch, its combined facilities covered 110,000 square metres, with an annual capacity of more than 2.5 billion tablets and capsules and 120 million intravenous and injectable units.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/20801279/main.jpg
    Colin Foreman
  • Chinese/local joint venture wins Qiddiya stadium facade

    21 October 2026

    Register for MEED’s 14-day trial access 

    A joint venture of China’s Fangda Group and Saudi Arabia’s IKK Group has secured a SR1.15bn ($306m) contract to deliver curtain wall facade works for the Prince Mohammed Bin Salman Stadium in Qiddiya City, Riyadh.  

    The contract was awarded by the joint venture of Spain’s FCC Construccion and local contractor Nesma & Partners, which is building the stadium under an estimated SR15bn ($4bn) main contract awarded by Qiddiya Investment Company (QIC) in October 2024.  

    The IKK-Fangda joint venture will design, supply and install curtain wall façade systems for the main stadium (Lot 1), as well as for the museum and ancillary buildings (Lot 3).

    The contract has an execution period of 863 days.  

    The stadium will seat about 47,000 spectators and will be the home ground for Saudi Pro League clubs Al-Nassr and Al-Hilal.

    The facade award follows the appointment of Elegancia Arabia, a subsidiary of Qatar-based Elegancia MEP and Estithmar Holding, to deliver the stadium’s mechanical, electrical and plumbing works.

    The SR829m ($221m) contract is Elegancia Arabia’s largest award in Saudi Arabia to date.

    The project is being designed by US-based consultant Populous.

    It is among the venues planned for the 2034 Fifa World Cup and will also host the Saudi King Cup, the AFC Asian Cup and the 2034 Asian Games.  

    https://image.digitalinsightresearch.in/uploads/NewsArticle/20799367/main.jpg
    Yasir Iqbal
  • Zamil Steel wins $82m Qiddiya tennis centre contract

    21 October 2026

    Advanced Building Industries Company (Senaat) has announced that its subsidiary, Zamil Structural Steel Company (Zamil Steel), has secured a SR308m ($82m) contract for the National Tennis Centre in Qiddiya City, Riyadh.  

    The 19-month contract was awarded by the joint venture of France’s Bouygues Batiment International and local contractor Almabani General Contractors Company.  

    Zamil Steel’s scope includes the fabrication, supply and installation of structural steel and external facades for the scheme.   

    MEED reported in June that the Bouygues Batiment International-Almabani joint venture had started construction of the National Tennis Centre.  

    The development will include 30 tennis courts, comprising 28 hard courts and two clay courts. The main Centre Court will seat 15,000 spectators and feature a retractable roof.

    The facility is being designed to meet standards set by the Association of Tennis Professionals, the Women’s Tennis Association and the International Tennis Federation.  

    The development will also include an 8,000-seat multipurpose arena with a retractable roof, known as Court 3. Other facilities include a 5,000-seat Court 1, a 2,000-seat Court 2, six competition courts, six indoor courts and 14 practice courts. Each outdoor match court will provide 450 seats.  

    Total seating capacity across the complex will be 33,000. US-based architect Populous designed the project.  

    Qiddiya Investment Company officially announced the project on 15 June. The developer has said the centre will be the region’s largest tennis complex and will host international tennis events.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/20799055/main.jpg
    Yasir Iqbal