Speaking at the seminar, Hanafi, an engineer, criticized the tendency to blame contractors for delayed projects and found fault with officials who blame unqualified contractors. “Who is responsible for awarding projects to these contracting companies if they are not qualified to see them through?” he said.
According to Hanafi, there are several factors that are responsible for delays and that government agencies, bureaucracy, and administrative and financial problems stand in the way of completing projects on time.
“Is it wise to blame contractors for the delay in projects caused by bureaucratic bottlenecks in inviting bids, selecting winners, awarding contracts and allocating funds on time?” he said, adding that the current way of drawing contracts as outlined by the Ministry of Finance only serves the government’s interests and not those of contractors.
Hanafi drew attention to the demand made by the Contractors Committee at the Jeddah Chamber of Commerce and Industry to review the unified contract system and develop a new system that also meets the interests of contractors.
Citing several problems faced by contractors when implementing projects, he noted that owners sometimes intervene and suggest design changes after a contractor has begun work.
“This creates trouble for contractors. It’s a similar situation when a consultant is replaced by another,” he said, adding that unexpected increases in the price of construction materials during the period between when a contract is given and the time when administrative and financial procedures are completed also leads to problems.
A journalist who spoke at the event pointed out that the government, contractors and market conditions are equally responsible for delays.
“It is unwise to blame contractors for delays that are caused by factors for which they are not responsible. There is also no provision in the contract to give contractors compensation for delays in projects because of the faults of other parties involved in the deal,” he said.
The journalist added that delays in paying contractors also hinder projects. “Most contracting companies are family-owned and don’t have strong financial capital. It is therefore essential to ensure they are given funds in installments,” he said.
Al-Harithy, an economist, is of the same view as Hanafi. He said greedy contractors have been instrumental in delaying projects. “These contractors are eager to grab several projects even though they know they cannot complete them. In such cases, they sub-contract to unqualified contractors at a lower price and secure a big profit margin.
Some of these sub-contracts have been awarded to foreign companies which do not meet all of the government’s terms and conditions,” he said.
He added that this practice is more evident with the enormous amounts of money that has recently been channeled by the government into development projects following the surge in oil revenue. “The budgetary allocation for implementing development projects during 2007 was SR76 billion. However, this amount shot up to SR260 billion in the largest ever budget announced by the Kingdom in 2010,” he said.
Addressing the seminar, Al-Saadi underlined the need for an integrated program to make government projects a success. “This program should address all of the projects’ requirements — economic feasibility studies, allocation of appropriate funds, efficient administration, proper consultancies and qualified contractors,” he said, adding that there is a need to put an end to the tendency of awarding projects to unqualified bidders only because they offer the cheapest option.
Hanafi called on the authorities to follow the model followed by Saudi Aramco and the Royal Commission in awarding projects. “Saudi Aramco follows a very good system in awarding projects. They award the project after proper checks and only give projects to qualified contractors and ensure that implementation of other projects by them does not stand in the way of implementing the project within the stipulated period of time,” he said, adding that the oil giant is always keen to avoid any bureaucratic delay in implementing projects.
Al-Harithy said that the government’s awarding of the prestigious King Abdullah University of Science and Technology project to Saudi Aramco is in appreciation of its excellent performance in this respect.
Participants at the seminar also spoke about the merits and demerits of merging small contracting companies to form big conglomerates. Most of them were of the view that this would be the best way to solve many problems facing smaller contracting companies especially in this age of globalization.
