Many government projects have been stalled for long periods of time; several government agencies have recently identified more than 4,000 projects and identified the reasons for the delays in more than 1,000 projects, most of which are funded by budget surpluses. Projects under the Ministry of Education are considered the most stalled, as the authority identified delays in the implementation of 894 projects, while 802 stalled projects were identified in the electricity and water sectors and 391 in the Ministry of Municipal and Rural Affairs, in addition to other stalled projects currently being classified.
Reasons for Stagnation
The reasons for project delays vary, and perhaps the most important of which is the shortage of classified construction companies, of which there are no more than 500 Saudi companies amid the large number of projects underway in the Kingdom, and, as a number of real estate experts and contractors point out, another major cause of project delays is that these delays are concentrated in several areas, including delays in recruiting workers, delays in issuing visas lasting more than 90 days—to the point where project implementation begins before workers have arrived—as well as the awarding of some projects to contractors who lack the administrative, technical, and financial capabilities necessary to execute large-scale projects, as well as delays in the payment of dues to contractors by some government sectors, and the poor efficiency of some technical supervisory bodies affiliated with a number of government agencies.
The Anti-Corruption Commission (Nazaha), the regulatory body overseeing the performance of government agencies, confirmed in its latest report that it had reviewed numerous projects being implemented by government agencies and identified many delayed and stalled projects due to suspected corruption and nepotism, including a lack of follow-up on implementation. Since the Authority’s establishment, it has assessed a total of 1,526 projects, of which 672 (44 percent) were identified as stalled or delayed.
Nazaha addressed the causes of project stalling and delays which center on several key issues, most notably the lack of planning,a lack of clarity during the feasibility study and design phases, a failure to properly prepare project documents before putting them out to bid, inadequate analysis of the project’s nature, awarding contracts to the lowest bidder without considering technical capabilities, awarding contracts to contractors with other stalled projects that exceed their financial and technical capacities, the lack of competence among members of the preliminary and final project acceptance committees; the absence of a Project Management Office (PMO); poor coordination among service providers involved with project sites and operations; Inadequate infrastructure databases maintained by the relevant authorities; frequent change orders during project execution; excessive subcontracting without the project owner’s approval; and government agencies" failure to enforce procedures for terminating contracts with contractors.
Stalled projects totaling 001 billion
An official from the Jeddah Chamber of Commerce revealed that the value of stalled government projects amounts to approximately 100 billion riyals, due to several reasons, including Abdullah Radwan, chairman of the Contractors Committee at the Jeddah Chamber of Commerce and Industry, explained that stalled government projects during the recent period account for more than 30 percent of all government projects currently under implementation.
He noted that there are directives and a call for a unified national database of government projects to assess their status, determine the scale of projects that have been completed or are currently underway, and identify those that are delayed or stalled. The chairman of the Contractors Committee at the Jeddah Chamber of Commerce and Industry called on the Ministry of Labor to act swiftly, respond promptly, and revitalize the recruitment process and staffing agencies, which will undoubtedly help bridge the gap in the labor market and provide the skilled workforce needed to carry out these projects.
One real estate expert explained that stalled government projects across various regions of the Kingdom are valued at over 100 billion riyals. He noted that the coming days will see even more projects stall, attributing this to several reasons, including a lack of labor, and even if available, they will be in short supply, which will result in higher wages. He also noted that another factor contributing to project delays is the unjustified rise in construction material prices.
Government Measures
The government has taken several measures to curb project delays, directing efforts to resolve these issues and barring contractors with a history of delays from being awarded government projects for a period of three years, Last year, the Council of Ministers also issued a decision allowing foreign companies to participate in infrastructure projects, which will help resolve the stalling of more than 4,000 projects across the Kingdom. In addition, it issued Decision No. 260, which includes a series of provisions addressing project delays; several government agencies and chambers of commerce were tasked with implementing these provisions, as well as a number of decisions that identified the problem and also specified the means and mechanisms to address it. If government agencies work to implement the Cabinet’s decisions and royal directives, the problem of stalled projects will be resolved once and for all.
