Saudi Arabia to consolidate consulting channels into colossal contracts

17 April 2018 2 min. read

Saudi Arabia is set to kick-start its stalled infrastructure pipeline by consolidating its outsourcing procedures, with individual consultancies to be hired for each of its state agencies and big contracts up for grabs.

According to reports, the Saudi government has drawn up plans to streamline its advisory channels in an effort to improve efficiency, trim budgetary waste and reduce the potential for corruption, with the overall aim of delivering fresh momentum to a number of sluggish infrastructure projects in a programme worth hundreds of billions of dollars.

As part of the revised practices, the government will, over the coming months, consolidate its consultancy roster by contracting individual management firms to oversee the array of projects at each of its concerned ministries and agencies, such as the Saudi health, housing and energy departments – believing that the cross-over of multiple consultancies may be contributing to the slow delivery of projects.

Further to enhancing efficiency, the reports suggest that the government is also seeking to restructure its project management processes, with the awarded consultancies to be given responsibility for monitoring the projects – a task currently undertaken by the government departments – in addition to design and execution.Saudi Arabia to consolidate consulting channels into colossal contractsThe five-year contracts, which could individually carry fees in excess of a $1 billion – with one source from an unspecified ministry telling Reuters of his department’s planned $1.3 billion tender package for services – are expected to fall to the big regional and foreign consultancies with international project management expertise; with the additional capacity-building rationale that the consulting leaders will train the local bodies to manage such future functions internally.

The move forms part of a broader effort to standardise project workflow mechanisms in the Kingdom, with one government advisor to the deputy crown prince Mohammed Al Sheikh having previously stated a belief that the Saudi government was throwing away up to $100 billion annually on inefficient procurement.

One of the measures to address inefficiencies has been the establishment of the National Project Management Organisation (with the government having since appointed the American engineering giant Betchel to manage the entity) – which will act as the overseeing body for the project management offices to be rolled out at each of the state ministries.

As one of the original advisers on the set-up, the consultancy Faithful+Gould predicts the acceleration of processes through the PMO introduction could see up to $35 billion in infrastructure contracts awarded this year – with the total pipeline now at a potential worth of $1.75 trillion after a recent spate of fresh announcements, while the reported consulting packages are expected to be tendered in the upcoming months and finalised by the end of this year.