Saudi Mega-Projects Shift From Contract Awards To Operating Capacity

Saudi Arabia’s largest project developers are entering a tougher operating phase as new districts, resorts and civic assets start to need staffing, facilities management and service capacity alongside the final waves of construction, MEED reported from its Shaping Mega Projects conference in Riyadh.

The shift changes the pressure point for the kingdom’s giga-projects.

Delivery is no longer only a matter of awarding works packages or keeping sites moving.

The next constraint is whether operators, service providers and specialist contractors can mobilize fast enough for places that are beginning to receive users while surrounding construction continues.

For King Salman Park Foundation, the initial pair of phases is now mostly contracted: 95% of that work has been awarded, and attention is moving to operators.

Dale Chadwick, the foundation’s acting chief executive, told the conference that its operating structure has been agreed, but the project has not yet fully crossed from construction delivery into day-to-day running.

The immediate gap is labor and capability.

Chadwick described a services market that must expand at speed because the assets are large and require both enough people and the right skills.

That warning points to a wider market issue: Saudi developers can complete buildings and infrastructure, but the operating ecosystem has to grow around them before those assets can function smoothly.

Red Sea Global is further along.

The Red Sea update came from Ben Edwards, who oversees cost, commercial and procurement for the group.

Phase one of the destination is nearing completion, with additional Shura Island hotels due to open by year-end.

Utilities, the airport and a school are already running, and a hospital came online last week.

That makes Red Sea Global a useful test case for the next stage of the market.

Edwards credited the developer’s hotel delivery to a construction-management model in which each project was bought as its own package.

That structure kept the client closer to suppliers, quality standards, delivery risks and site safety.

A model that initially drew skepticism in the kingdom has worked well enough that the developer expects to keep using it.

Diriyah is managing a different version of the same problem: bringing assets into use while a major worksite remains active.

Diriyah’s development arm was represented by its president, Mohamed Saad, who put the daily workforce at about 74,000 and total contract awards at roughly SR130bn, or $34.7bn.

The Ministry of Culture has moved into its new project headquarters, and The Residences, the first residential community, is being readied for transfer.

The residential opening requires more than finished units.

Saad described landscaping and public realm placed around the community so residents do not feel as if they are living inside a construction site.

He framed the wider opening as gradual, not a one-day switch, with assets coming online over several years.

For suppliers, the operating phase creates a different order book.

Saad pointed to opportunities for mechanical, electrical and plumbing contractors, fit-out companies and facility managers as more assets come through.

Chadwick also argued for wider use of prefabrication, especially as the kingdom plans to deliver large numbers of hotel rooms before the 2034 Fifa World Cup.

The next marker for the sector is whether that services base can scale as quickly as projects move from awards into live operations.