Riyadh—Amlak

The Ministry of Municipal and Rural Affairs has confirmed its rejection of the measures taken by municipal authorities to extend project contracts, after recently noting that municipal authorities and local governments have been increasingly assigning contractors additional work amounting to 10% of the contract value, along with the resulting financial burdens and contract extensions based on such assignments, calling for the adherence to six guidelines in the event of official approval for contract extensions.
The Ministry also emphasized in a circular directive the requirement to submit the approval and to prepare a detailed schedule of quantities signed by the relevant officials, in addition to attaching the project implementation schedule, which must indicate the percentage of work completed relative to the elapsed project duration, as well as the percentage of funds disbursed and the project value, It also reminded officials at secretariats, municipalities, and affiliated agencies to work in accordance with the regulations and to limit the assignment of additional work unless the project requires it.
The Ministry called for adherence to the regulations when exercising the authority to increase or reduce a contractor’s obligations, or when making any amendments or changes to the contracted work, and to ensure that additional work falls within the scope of the contract and does not exceed it, and that any necessary amendments or changes to the work serve the facility’s best interests, provided that this does not result in a breach of the terms and specifications or a change in the nature of the contract or its financial balance, and that the necessary funds to cover the cost of the additional work are secured before the contractor is authorized to perform it. Furthermore, if the contract does not include provisions or quantities for the additional work, the matter shall be referred to the Bid Review Committee or the committee responsible for procurement, as applicable, to review the costs of such work and assess the appropriateness of the prices submitted by the contractor; If the contractor does not agree with the committee’s conclusion, the work shall be contracted out to other contractors in accordance with the provisions of the regulations.
The regulations governing the extension of project contracts prohibit the authorization of additional work after the completion of the work covered by the contract. The regulations also stipulate that all orders regarding increases or decreases in the contractor’s obligations and the timeframes applicable to additional work, as well as change orders, must be issued by the person authorized to award the contract.