The the Saudi Council of Engineers has adopted a standardized contract document to regulate the relationship between engineering consulting firms and project owners, with the aim of standardizing contracting procedures, improving the quality of engineering design services, and ensuring that the rights and obligations of all parties are upheld within a clear legal and technical framework.
Mechanism for the Disbursement of Financial Payments
The document included a new mechanism for the disbursement of financial payments, stipulating that payments be made only after the completion of each project phase and the documentation of that completion via an approved electronic platform, thereby ensuring that payments are linked to the actual percentage of completion.
The document divided the design work into four main phases, beginning with the preparation of the initial project concept and ending with the fulfillment of all regulatory requirements and the delivery of the building permit to the owner, while specifying each party’s obligations during each phase.
To reinforce adherence to the timelines, the document stipulates that the engineering firm be granted an additional grace period not exceeding five days in the event of a delay in delivery, after which a daily late fee will be applied, with the total not exceeding 10% of the contract value.
Dispute Resolution
The document assigns the electronic platform a central role in resolving disputes related to payment entitlements, to which objections are referred when the owner refuses to disburse any payment, so that it may issue a technical report within seven days determining the extent of the phase’s completion and the entitlement to financial compensation.
The Authority required the engineering designer to comply with the requirements of the Saudi Building Code and the approved technical standards, while ensuring that all plans and designs comply with the project requirements and the building classification.
In return, the document grants the owner the right to request two non-substantial amendments to the preliminary designs at no additional cost, allowing for improvements to be made before the final plans are approved.
Site Visits
It also required the engineering firm to conduct a site visit to the project location before beginning design work, to study regulatory requirements and statutory setbacks, and to identify any obstacles that might affect future implementation.
The document required that the client be provided with editable original copies of the design files, in addition to the final copies on which the competent authorities relied when issuing permits, while at the same time preserving the intellectual property rights of the engineering firms and prohibiting the use of the plans in other projects without the designer’s written consent.
With regard to contract termination, the document specifies cases of automatic termination, including a court ruling transferring ownership of the property or its sale without the designer’s notarized consent, It also requires the owner to pay all amounts due up to the stage at which the project was suspended if the owner decides to suspend or halt the work.
The document stipulates that any dispute arising between the parties is subject to the regulations in force in the Kingdom, with the option to resort to the competent courts or the Saudi Engineering Arbitration Center to resolve disputes.
