Partnering for Success in Saudi Arabia Construction

The economic effects of the global pandemic have been felt in Saudi Arabia over the past two and a half years, with the country’s economy going from a value of USD 793 billion in 2019 to a 14% decline in 2020 at USD 681 billion. But with global recovery picking up speed, Saudi GDP is expected to bounce back by growing 5.6% from 2020 to 2025 for a total estimated value of USD 895 billion. 

In addition to this, the Saudi Arabian economy is being driven by changes in the Kingdom’s long-term plans, especially with a growing population more accustomed to a digitalized economy. The most important is the future-thinking environment created by Saudi Vision 2030, a strategic framework first released in 2016, which aims to ease the country’s dependence on oil revenues by increasing domestic consumption and strengthening the development of the private sector. The government is steadily focused on its goal to diversify away from oil, with non-oil revenues growing from 9.5% in 2010 (USD 19 billion) to 38% by the end of 2020 (USD 86 billion). 

Aside from highlighting the importance of diversification, Saudi Vision 2030 also focuses on infrastructure development, which aims to establish economic centers not just in major metropolitan areas, but all over the country to encourage the establishment and growth of Tier 2 cities. However, there is still much to be done for KSA construction development, especially as the government positions Saudi Arabia as hub for foreign investment.  

This white paper provides a detailed overview of the current key drivers for KSA’s construction market to develop further, as well as an in-depth look into project financing, enablers, and the most crucial success factors for foreign contractors who want to enter the Saudi Arabian market: 

• Contractor Capability: Financial and project execution capability is crucial, given the capital-intensive nature of large projects. 
• Track Record: Contractors must have had a good performance record on previous projects, with quick turnaround and resources. 
• Technical Expertise: Foreign contractors have better chances of winning bids if they have prior experience in the region, can demonstrate safety and reduced mobility time, and the ability to fast-track projects. 
• Commercial Bid: Both technical and commercial criteria are taken into consideration with equal weight.  

With these factors to consider, both foreign contractors and local clients can benefit from partnerships to execute construction projects in Saudi Arabia. YCP Solidiance has extensive experience in facilitating these partnerships and can aid potential clients through our network of offices and on-the-ground knowledge of the Saudi Arabian market.