Fahd bin Muhammad al-Hammadi, Chairman of the Contractors Committee at the Riyadh Chamber of Commerce and Industry, noted the Cabinet’s approval of the tender for the public transportation project in the City of Makkah to be awarded to contractors based on “FIDIC,” which ensures a balanced protection of financial rights for both contracting companies and government agencies. He expressed his hope that the FIDIC contract system would be fully implemented this year across all projects in the Kingdom.
Al-Hammadi explained in a press statement today that the “FIDIC” contract system guarantees appropriate compensation for companies in the event of rising construction material prices or labor costs, and in return grants government agencies the right to a price reduction in the event of falling prices.
He noted that replacing existing contracts for current projects with FIDIC contracts would resolve the issues stemming from the old contracting system, which has caused many projects to stall.
He explained that it is not necessary to apply FIDIC contracts to private-sector projects, as they rarely face project stalling issues, since the contracting companies awarded the projects clearly stipulate their terms in the contracts signed with the private sector.
The chairman of the Contractors Committee at the Riyadh Chamber of Commerce emphasized that the FIDIC contract system ensures a high probability of project success, unlike the current situation in project implementation, as the former reduces the level of risk for the contractor, and therefore the benefits of its implementation will be twofold for both parties, with the State Treasury being the primary beneficiary, in addition to the private sector.