The National Contractors Committee at the Council of Saudi Chambers announced recently that they have signed up an international consulting house to study the impact of delays in implementing various government projects.
"The study will give a correct picture of the whole problem and will contribute to boosting the contacting sector," said Fahd Al-Hammadi, chairman of the committee. He called for the establishment of an authority for contractors to solve various problems facing this vital sector.
"We are looking for a realistic and practical solution to the problem in order to save the state and contractors from heavy losses," Al-Hammadi said. "We also intend to propose a suitable mechanism to overcome the difficulties that were hindering the implementation of many projects."
Raed Aqeeli, chairman of the contractors committee at the Jeddah Chamber of Commerce and Industry, put the total value of delayed projects at SR550 billion. He welcomed the plan to conduct a study on the problem by a neutral international consultancy.
Aqeeli attributed lack of funds, manpower and equipment as well as problems related to contract terms as the main reasons for the delay. "We have also problems related to increase in prices of building materials, the working mechanism for consultants, and government bureaucracy," he pointed out.
While unveiling the national budget for 2011, Custodian of the Two Holy Mosques King Abdullah had urged all government departments to carry out their projects without delay. Despite the king's order many projects were delayed, incurring heavy losses to both the government and the contracting companies.
Contractors have cited many problems for the delay of projects, most importantly the delay in getting recruitment visas, lack of enough technical staff at government departments to prepare tenders, nonavailability of a list of importers and manufactures of products required for projects in each region, and delay in getting licenses from authorities to commence work.
The Saudi construction sector is the largest and fastest growing market in the Gulf region. Ongoing construction projects in the Gulf are valued at $1.9 trillion (SR7.1 trillion), with a quarter of them in Saudi Arabia.
The government has recently allocated SR250 billion to construct 500,000 housing units in different parts of the country. Saudi Arabia needs to build 275,000 new housing units per year to meet the requirements of its growing population.
According to Saudi officials, the Kingdom will spend an estimated $400 billion (SR1.5 trillion) on large infrastructure projects over the next five years. In the period between October 2008 and April 2009, industry experts estimate that the Saudi government invested nearly $137 billion (SR513.8 billion) on construction projects.
According to TradeArabia News Service in June 2009, only 4 percent of Saudi real estate projects worth a total of $543 billion (SR2 trillion) have been canceled or delayed. Indeed, 30 projects have been canceled, while 25 have been delayed, out of a total of 812 projects in real estate, leisure, and infrastructure.
