Contractors in Kingdom blame it on Nitaqat for project delays

Saudi contractors said they incurred losses amounting up to 95 percent in 2014.
The losses, according to a report in a local newspaper, came as a result of sudden decisions issued by some ministries.
Contractors demanded that equal terms be imposed on them as foreign investors in terms of flexible contracts.
“We hope that government agencies treat us on equal terms as foreign investors in the construction field, especially since foreigners get a lot of benefits,” said Fahad Al-Hamadi, head of the national committee for contractors at the Council of Saudi Chambers (CSC).
He urged the government to draft special regulations for the construction sector.
“The plan should explain the mechanism of how decisions are taken and grant the contractors a grace period of three years to implement the new decisions,” he said.
Commenting on the profit margins of construction companies in the Saudi market, Al-Hamadi said: “It stands between 5 and 10 percent. Such low profit margins directly affect the financial capabilities of the contractor and his reputation in the eyes of suppliers and banks.”
He said that contractors are linked with time-limited contracts and projects. “Any changes in regulations have negative impact on our work, causing us to incur losses. One such decision was to raise recruiting costs of foreign workers to SR2,400,” said Al-Hamadi.
He said the wage protection system causes confusion in the sector because contractors receive their money allocations every two to three months, and not on a regular basis at the end of each month. “The wage protection system obliges the contractor to pay monthly salaries to workers, so what can he do if the allocated entitlements were delayed for one reason or another?” he asked.
Al-Hamadi demanded that authorities make contracts flexible and changeable in line with other changes that might occur in the contracting sector.