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Winning Construction Work: Saudi Arabia
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Saudi Arabia has often been referred to as a "sleeping giant" in the Middle East's construction sector. As smaller states such as the United Arab Emirates (UAE) launched project after project, Saudi remained conservative in its pace of development.However, the kingdom is far from conservative in terms of the scale of its plans. The global fall in commodities prices and a desire to maximise the returns from record oil prices has led to an acceleration in projects getting under way.
According to the Middle East project tracker service run by Construction News's sister title, MEED Projects, the value of contracts awarded in the construction sector alone in 2008 was £3.3 billion – almost double that awarded in 2007.
This growth, coupled with the country's biggest ever budget, which forecasts spending of £85 billion in 2009, is leading many in the sector to speculate that the giant is now awakening.
According to Riyadh-based UK Trade & Investment (UKTI) commercial officer Saad Al-Adhami, some huge opportunities are on the horizon. These include three major railways, four new multi-billion pound cities, and investment in power, water and marine infrastructure.
"There are market opportunities for most infrastructure related firms across all sectors," he says. "We get requests for [introductions to] all sorts of companies, particularly quantity and cost consultants, project managers and bidding consultants."
The kingdom particularly needs programme and project managers as many of the schemes being launched are on a scale never seen in the region before. For example, King Abdullah Economic City, a whole new urban conurbation north of Jeddah supported by industry and a massive port, is worth £18 billion. And the kingdom is also about to build its first modern railway of over 950 km between Riyadh and Jeddah.
GENERAL CONSTRUCTION £116 BILLION
Economic cities
In a bid to raise productivity the government has begun investing £33 billion in building four new cities to house five million people by 2020. Two further cities are planned. The infrastructure needs are vast and so are the opportunities for UK firms as design and construction are at the very early stages. Most advanced is the largest city, King Abdullah Economic City, north of Jeddah.
Housing and real estate
Housing is high on the list of priorities as the population grows by up to 500,000 people a year. To ease the housing shortage major real estate projects are getting under way such as the £9 billion Jeddah based Al Wasl housing scheme, a project by UAE developer Limitless.
TRANSPORT £34 BILLION
Rail
There are plans for more than £34 billion of new roads, railways and ports, with around half of this committed to new rail projects. Some of the biggest schemes include:
• The £3 billion Saudi Landbridge linking Jeddah with Riyadh. This 50 year build operate transfer (BOT) contract is currently being retendered after the government decided global credit conditions and falls in commodities prices will dramatically alter the budget. Four consortia are bidding and each has UK firms involved including Atkins, Arup, Balfour Beatty Rail, Halcrow, Mott MacDonald and Scott Wilson. Parsons Brinckerhoff International is working with local Saud Consult as main consultant.
• The £4 billion, 444 km Mecca to Medina high speed rail link. This was originally to be let as a BOT but the government now plans to use a traditional form of contract. Six firms have pre-qualified to bid for the scheme.
• The £2.7 billion Mecca monorail will link in to the planned Mecca to Medina high speed rail link and transport pilgrims around the city***s holy sites.
Roads
The annual spend for the Ministry of Transport and Telecommunications is £3.5 billion and much of this is being invested in major upgrades of the road networks in the kingdom***s biggest
cities such as Riyadh and Jeddah. Across the country a programme of "dualisation" is under way where two-lane highways are being upgraded to four-lane roads.
Ports
Improvement of the marine infrastructure to boost trading is a priority for the kingdom, which is simultaneously upgrading transport links into its sea terminals.
The biggest scheme planned in the marine sector is a £4 billion port as part of the King Abdullah Economic City. Consultancies such as Halcrow, RSP Architects Planners & Engineers and Cansult Maunsell are involved with the design of the scheme, which is to be awarded later this year.
Water & electricity £160 billion
As one of the most water-scarce places in the world Saudi Arabia must invest heavily to meet demand for potable water. To do this as efficiently as possible the kingdom has started an extensive privatisation programme being led by the National Water Company, established in 2007.
So far, two management contracts have been awarded for water services and wastewater collection, to France***s Veolia, covering Riyadh, and the second for Jeddah, to French firm GDF Suez partnered with local firm Acwa Power International. Ten more contracts are set to follow.
The next will be a six-to-seven-year public-private partnership covering all of Greater Dammam, Medina, Mecca and Taif.
These will be followed by contracts to upgrade and maintain major wastewater treatment works in the kingdom.
The government is working towards privatising the kingdom***s electricity generation and transmission network.
This will be done over three phases between now and 2016. For example, the £300m-plus subsea power cable between Saudi and Egypt will be awarded at the end of this year.
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