JEDDAH — A notice hangs in the hall of the Jeddah municipal building announcing cash incentives to city inspectors who find the most violations among the numerous private contractors involved in city construction projects.
The inspector who doles out the largest number of fines each month gets a SR10,000 bonus. The first and second runners up get SR5,000 and SR3,000, respectively.
The incentives aim to encourage inspectors to find violations that could pose a threat to public safety. According to several contractors interviewed by Arab News, the municipality has caused major headaches and delays in completing public projects.
Contractors say the municipality is chipping away at profits with its inspection policies.
“We have tried to achieve the maximum profit possible,” said one of the engineers involved in Jeddah’s large-scale ongoing water and sewage works. “Then we started being worried about simply breaking even. Now we just want to finish the project with the minimum loss possible.”
Some foreign contractors have said their experience with Jeddah municipality has discouraged them from doing business in the Kingdom.
“This is the first and last time that my company will do a project in Saudi Arabia,” said one foreign contractor.
Arab News agreed not to divulge the identities of seven engineers who visited the newspaper’s offices in Jeddah in order to protect their identity so that they could speak frankly about the problems they have encountered.
These managers work for various private contracting companies. One of them said he was worried that the municipality would seek retribution against his company if it were cited in this report. All of the men are involved in projects that are at least four years old and the projects have had to be extended beyond their expected completion dates.
Municipal officials repeatedly delayed responding to Arab News inquiries seeking their side of the story. Arab News submitted questions in writing to municipal officials, including the deadline for this report.
Among the problems cited by the contractors were: excessive and arbitrary fines, on-the-spot impounding of equipment that causes delays and possible safety risks, and difficulty in disputing violations. One of the project managers said his company paid SR450,000 in fines in one month. The engineers agreed that some of the fines were legitimate but that it seems to them that the municipality is using the system to squeeze as many fines as possible out of them. They also say that a municipal policy implemented in July 2006 requires them to pay one percent of the remaining capital for a project on a monthly basis, which is based on the lunar calendar.
“For example, if a project needs 100 million riyals to continue, the company has to pay (the Jeddah municipality) one million riyals in that month,” said one of the engineers.
Another engineer told Arab News that the city added this one-percent rule last year: a grandfather clause added to the companies’ agreements after the contracts with the Ministry of Water and Electricity were signed. The municipality implemented the fee ostensibly to pay for the additional resources involved in these public works project, such as pumping groundwater and obtaining drainage pipes from the city. But the contractors say they get very little for this fee.
“We pay this one percent out of our profits to the municipality without getting the facilities they promised us,” said one of the contractors.
“Why should I pay this one percent?” said another. “I got the money from the government (the ministry) and I’m paying it back to the government (the municipality). What for?”
According to another contractor, the one-percent agreement included an article that says the clause is confidential and must not be shown to anyone, including the principal administrator of these projects: the Ministry of Water and Electricity.
The engineers said they have brought up this issue with the ministry, which then informed the municipality of the contractors’ complaints. To date the ministry has not followed through with the complaints, according to the engineers. “There is a lack of communication between the two organizations which negatively affects our projects,” said one of the men.
The municipality’s inspection regime is also an issue of contention among the contractors. One of the engineers claimed that one day his company was fined SR10,000 for not posting an on-the-site announcement displaying the name of the project and the company overseeing the work. A few hours later, he said another inspector came and fined the company because the sign was in poor condition and unreadable. “We sometimes get contradictory violations like this,” said the engineer. “How did we fail to maintain a sign that wasn’t there?”
Another project manager said that some of the violations are relative. For example, an inspector might decide to fine a project for inadequate lighting at a site, “however, we as people who have strong technical backgrounds see that the lighting is enough.”
The engineers, some of whom have 30 years of experience in infrastructure development, complain that the inspectors are young and inexperienced, and that disputing the violation is difficult and time consuming. “We have to pay the fines first and then protest later,” said one.
The engineers partly blame policies that encourage inspectors to issue the most violations, such as the sign at city hall offering financial awards for issuing the most tickets. “This is to motivate them to fish for violations,” an engineer said.
Public and workers’ safety has been a stated concern of municipal officials. Arab News has reported in the past about potential dangers to the public and to workers at public works sites. Tomorrow is the one-year anniversary since two South Asian workers died and another was injured when a piece of heavy equipment fell into a collapsing trench being dug for a sewage line. At the time of that accident, Lt. Col. Muhammad Al-Ghamdi, the head of Jeddah’s Civil Defense, told Arab News that officials would crack down on companies that do not follow safety regulations.
However, the engineers contend that the municipality is more interested in collecting fees and fines from contractors than protecting the public or workers. They also say the longer it takes to complete projects, the higher the chance of accidents to occur and the longer the projects inconvenience city residents. “They don’t seem to care that citizens will have to bear the disturbances of extending the periods of excavations and digging,” said one contactor.
The managers also say that the municipality was impounding equipment on the spot, causing further delays.
“I come to the site one day and find that there is not a single piece of equipment not only at the location where they saw a violation, but in all the other project locations,” said an engineer. “Then we pay 80 riyals for ever day (for each piece of equipment impounded) and 2,000 riyals for the cost of moving the equipment back to the location. When we take back our equipment, we sometimes find it broken and have to repair it, causing more expense and delay.”
The project managers also claim that some of the equipment that get impounded without considering how the removal of equipment will affect the safety at the site, such as holes that remain exposed while the company seeks to reclaim impounded earth-moving equipment. “They’ve confiscated pump lines that can cause ground water to rise and do structural damage to nearby houses,” said an engineer.
One project manager said his company pays about SR600,000 for each day his contract with the city is extended. “That makes me pay any fines without question simply to avoid delaying the project,” he said.
The engineers say that in January, following a meeting between contractors and the municipality, officials agreed to give a 24-hour notice before impounding equipment. “Things are relatively quiet now, they haven’t impounded our equipment since then,” said one of the men.
Other engineers weren’t convinced that this agreement would stick. “I hope this isn’t some calm before a storm,” one said.
