The government's focus to fulfill its citizen's demands for improved infrastructure capabilities played a significant role as more than 31 percent of the value of awarded contracts during the second quarter were directed toward infrastructure related sectors. However, the residential real estate and power sectors garnered the highest percentage of the value of awarded contracts, accounting for 26 percent and 23 percent, respectively, the report said.Although the total value of awarded contracts fell compared to last quarter, the value at which the contracts are being awarded is staggering. The SR34.5 billion in awarded contracts during Q2, 2011 represents a 43 percent increase compared to Q2, 2010 where the value was SR24.2 billion. Furthermore, the SR84.2 billion in awarded contracts during H1, 2011 represents a 156 percent increase compared to the same period of 2010 where the value was SR33 billion. According to the NCB report, the Construction Contracts Index (CCI) jumped to 205.3 points at the end of H1, 2011, which is a stark contrast to H1, 2010's CCI of 80.36 points. This reflects the robustness of the construction industry over the past six months in particular as the initiatives from the annual budget and Custodian of the Two Holy Mosques King Abdullah's royal decrees are currently being implemented.In terms of geographical break-up, Riyadh accounted for the highest portion of awarded contracts by value with a 26 percent share. This was largely due to a significant residential real estate contract which will cover an area of four million square kilometers. The Eastern Province had 25 percent of the value of awarded contracts as a considerable portion of industrial, water and urban development contracts were awarded. The Makkah and Madinah regions accounted for 16 percent and 15 percent, respectively. The main contract awards in those regions were residential real estate projects in Jeddah and a power contract in Yanbu.Approximately SR16.4 billion was awarded in April, with the power and residential real estate sectors accounting for 40 percent and 37 percent, respectively. A residential real estate contract was awarded in the amount of SR6 billion by Thabat (joint partnership between Al-Oula Real Estate Development Company and Talaat Moustafa Group Holding) to Saudi Constructioneers Establishment. The plan calls for the development of "Nasamat Al-Riyadh", a mixed-use residential development on four million square meters of land in Riyadh. The development will include villas, apartments, commercial areas and a mall. The project will be divided into three phases and is expected to be completed by the first quarter of 2017.The power sector had a significant contract that was awarded by Power & Water Utilities Company for Jubail & Yanbu (Marafiq) to Hanwha Engineering & Construction Corporation. The SR3.9 billion contract is for the construction of an interim power producing 850 megawatts (MW) and a desalination plant producing 60,000 cubic meters per day in Yanbu. The project is expected to be completed by the first quarter of 2014. The Public Investment Fund (PIF) is expected to provide the majority of the financing needed for the project.A second sizable contract in the power sector was awarded by Saudi Electricity Company (SEC) to Al-Fanar Construction for the construction of the High Speed Haramain Railway 380kV substations project. The SR1.1 billion project is expected to be completed by April 2013.The Healthcare sector had a contract awarded by King Faisal Specialist Hospital in Riyadh to a national contracting firm in the amount of SR906 million. The contract calls for the construction of the King Abdullah Center for Tumors and Liver Diseases at King Faisal Specialist Hospital. The project is expected to be completed within 30 months, the report added.The value of awarded contracts fell to SR9.3 billion in May. Roads and petrochemicals led all sectors in awarded contracts as the roads sector had more than SR3 billion in awarded contracts while the petrochemical sector had a SR2.8 billion contract award. The Ministry of Transportation signed numerous contracts with national firms to enhance the road networks within the Kingdom. The majority of the contracts across the Kingdom called for the extension of existing highways, tunnel implementation and the improvement of existing roads. The total amount of awarded contracts in the roads sector during H1, 2011 reached SR5.5 billion. Improvements in road networks was a key initiative in the 2011 budget as the value of the awards have increased by SR1.5 billion compared to the same period of 2010, the NCB report said.The largest contract in the petrochemical sector was awarded by a joint venture between Saudi Arabian Mining Company (Maaden) and Sahara Petrochemicals Company to South Korea's Daelim in the amount of SR2.8 billion, the NCB report said. Daelim will perform the engineering, procurement and construction (EPC) for the petrochemical plant that will have a production capacity of 250,000 tons of caustic soda and 300,000 tons of ethylene dichloride per year. The project will be financed through private banks and the state-run Saudi Industrial Development Fund (SIDF). The project is expected to be completed by the fourth quarter of 2012.Within the industrial sector, a contract was awarded by Maaden to McConnell Dowell Corporation Limited for carrying out the mechanical installation of two pot lines with a total of 740 pots at the Ras Al-Zour aluminum smelter. The value of the awarded contract was SR938 million and is expected to be completed by the second quarter of 2013.The SEC awarded a contract in the power sector to National Contracting Company (NCC) in the amount of SR443 million. NCC will construct an overhead transmission line of 380 kV from Jazan to Najran. The project is part of SEC’s goal to improve the electricity transmission and distribution network in the Kingdom. The project is expected to be completed by the fourth quarter of 2013.The value of awarded contracts further slipped in June, reaching SR8.8 billion. The residential real estate sector had SR2.8 billion worth of awarded contracts while the urban development sector had SR1.4 billion, the NCB report said. Ewaan Alfareeda Company, a joint partnership between Ewaan Global Residential Company and Islamic Development Bank (IDB) awarded a contract to Arjab Development Establishment in the amount of SR1.4 billion. The details include the development and management of "Ewaan Alfareeda Project" on the north side of Jeddah. The project will cover an area of 2 million square meters with a construction of 2,500 housing units catered to middle income families. The development will also include mosques, healthcare facilities, a shopping mall, educational facilities, sports club and diverse facilities. The project is expected to be completed by the fourth quarter of 2012.A second contract in the residential real estate sector was awarded by Alargan Homes Company to Alargan National General Trading & Contracting Company to construct a residential master planned community called "Al-Sohoul Community" in Jubail that will cover an approximate total area of 1 million square meters and will house approximately 10,000 people. The SR619 million project is expected to be completed by the first quarter of 2016.Within the urban development sector, the contract for the construction and development the Al-Marina project stretching 4 kilometers between the cities of Alkhobar and Dammam was awarded by Injaz Development Company to Al-Rajhi Construction, LLC. The SR1.1 billion contract award covers the infrastructure works, which will include landscaping, waterfronts, sidewalks, garbage disposal and sewage systems, schools, mosques, playgrounds, and other facilities. The project will be completed in three phases with an expected final completion time by the third quarter of 2015.A sizable contract was awarded by the Ministry of Justice to Asaad Said for Contracting Limited in the amount of SR1.2 billion. The Ministry of Justice is expecting the construction of 32 court complexes across the Kingdom to upgrade and enhance its judicial services. The project is expected to be completed by the second quarter of 2013.The telecommunications sector had a contract that was awarded by Etihad Etisalat Company (Mobily) to four international firms for the installation of fiber optics networks (FTTX) in Riyadh, Jeddah, Dammam and Alkhobar. The SR400 million contract is the first phase of the project that is expected to cover 4,000 kilometers and serve more than 70,000 households, the NCB report added.The rate at which contracts have been awarded during H1, 2011 has brought numerous opportunities for both, large and SMEs players. The demand for improved services in infrastructure, power, and real estate sectors were the main drivers of high value contract awards. This frenzied pace is expected to continue through H2 as there are numerous high value projects that are in the bidding phases and are expected to be awarded in Q3. One such bid that is expected to be awarded is phase 2 of the Haramain high-speed railway project at an estimated value of SR30 billion. Additionally, King Abdullah's royal decree regarding the 500,000 housing units to be constructed is expected to commence during H2, 2011. With oil projected to average at $95 a barrel in 2011, the surplus in state revenues will increase capital expenditures in construction in the medium-term, the NCB report said.
