BE2C2 Report — Bechtel has been awarded contract to help set up and operate Saudi Arabia’s National Project Management Organization (NPMO).
The NPMO will support Saudi government agencies and municipalities to create their own project-management arms to manage large-scale, complex infrastructure programs required under Saudi Vision 2030 project.
The Kingdom halted all new major contract awards in the third quarter of 2015, with one government official claiming that the kingdom had wasted between US$80 billion to $100bn per year through inefficient procurement of major infrastructure works, The National reported.
Saudi Arabia had indicated that it wanted to put a new project management office in place before awarding other big-ticket contracts to avoid any further wastage. Since then, major projects have been on hold and a number of those that were already well advanced, including new metro projects in Mecca and Jeddah, have not progressed through to the awards stage.
In an interview with the newspaper, David Clifton, a senior business development director at project management firm Faithful + Gould, said that the introduction of a national project management office would be a vital step for the delivery of up to $1 trillion worth of projects proposed under the government’s new 2030 National Transformation Plan.
Several international companies submitted bids last year for the consultancy contract to manage the NPMO.
Including Bechtel, Fluor, Parsons, CH2M, AECOM and Hill International (all US based) competed for the contract, Bloomberg reported last year. UK’s Atkins was sole non-American firm in shortlist to manage kingdom’s future capital investment, according to globeconstructionreview report published last year.
The San Francisco-based privately owned construction and project management company is also leading the BACS consortium delivering a $10bn contract for lines 1 and 2 of the Riyadh Metro, the largest under-construction mass transit system in the world with a budgeted price tag of almost $23 billion.
“We are committed to making a success of the NPMO, a catalyst for continued economic growth in Saudi Arabia,” said Amjad Bangash, the general manager of Bechtel’s Emea (Europe, Middle East and Africa) infrastructure business.
Georges Chahine, the program director, said that the company would “mobilize experts from across the company to develop world-class systems and processes for the NPMO, and to share these new tools across all Saudi government ministries and entities”.
The company, which recently set up its own graduate training program at the Riyadh College of Technology, also said that it would train Saudi nationals to help implement the NPMO.
Under the terms of the deal, Bechtel will facilitate the office’s establishment and operations.
The NPMO, also known as “Mashroat”, will support government agencies to deliver complex infrastructure projects in line with the National Transformation Plan NTP 2020 which envisages localization, public-private partnerships and cost optimization by 2020 – the plan flows flows from Saudi Vision 2030 – the overall arching concept announced last April for non-oil and knowledge-based economy.
In the past, program management has been used for individual developments and schemes. Bechtel, in particular, has been playing a prominent part in many of the kingdom’s most ambitious projects, such as the construction of the new town of Jubail on the Gulf coast, the Riyadh Metro and the Waad al-Shamal industrial city.
The NPMO will also oversee the kingdom’s privatization drive. The government has identified about 146 state-owned entities that could be privatized as it looks to monetize assets to meet the country’s budget shortfalls.
The largest of these entities is Aramco, the national oil company, which is thought to be worth about $2 trillion. However, only about 5% of this is expected to be offered to private buyers.
Commenting on the contract win, Dr Bangash, said: “Bechtel is privileged to have worked in Saudi Arabia for 70 years, developing megaprojects from oil and gas facilities to airports and critical infrastructure.
“We thank the [NPMO] for the opportunity to continue our legacy in the kingdom.”
Mr. Chahine, program director at Bechtel, added: “We will train Saudi nationals and implement a knowledge management system.”
Previously, Bechtel has assisted the Royal Commission of Jubail and Yanbu in the development and expansion of industrial cities in Jubail and Ras Al Khair. The company has also worked on a selection of infrastructure projects in the kingdom, including King Fahd International Airport and King Khalid International Airport.
The aim of the NPMO is to strengthen the Saudi government’s capital expenditure program. The body will work to enable government entities’ project management offices to develop and improve related policies, and to maximize the impact of delivered projects.
Bechtel’s annual revenue was $32.3 billion in 2015 and employs over 55,000 people worldwide.
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