Mega projects in KSA to boost value of contracts

The value of awarded contracts dropped to $10.6bn in Q1 of 2014

NEWS, Business, Construction, Contract award, Saudi Arabia

The announcement of mega projects in Saudi Arabia will boost the value of awarded contracts throughout the year, according to the NCBC Construction Contracts Index.

During the first quarter of 2014, the quarterly index noted a 19% drop in awarded contracts reaching $ (SAR39.7bn), compared to $13bn (SAR49.1bn) in the same period of 2013.

The decline could be attributed to the lack of mega-projects announced as compared to those witnessed in 2013, it said.

However, this is expected to change throughout the year as many mega-projects are currently in the tendering phase and will account for a significant share of awarded contracts throughout the year.

The Construction Contracts Index (CCI) also witnessed a 31% decline compared to the same period last year, although the report expects the index to “climb back to its familiar zone,” as more mega-projects are awarded.

According to the review, most of the contracts were awarded in the three main regions of Eastern Province, Riyadh and Makkah as they accounted for 29%, 26% and 21% of contract values, respectively.

“The nature of the contracts were geared toward the rehabilitation of roads, up keeping and enhancement of urban developments and the construction of new healthcare centres.”

Roads and urban development sectors were the highest contributors to the $10.6bn (SAR39.7bn) worth of contracts awarded in Saudi Arabia during the first quarter of 2014.

"While the power sector captured the highest share of awarded contracts, with 25%, it was the roads and urban development sectors that significantly contributed to the overall value by capturing 16% and 12% shares, respectively,” said the NCBC Index.

The report noted that the government’s focus on infrastructure investment will allow for sustainable opportunities for both local and international contractors.

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