NEWS UPDATE
http://www.mepmiddleeast.com August 2019 | MEP Middle East 7
Contractors required to maximise procurement of
materials and equipment from local manufacturers
PAYMENT DISPUTES
The value of construction
disputes in the Middle East
has plummeted, but the av-
erage time it takes to reach
a resolution has also shift-
ed, with the typical claim-
ant waiting over a year-and-
a-half for a payout.
The ninth edition of Ar-
cadis’ Global Construction
Disputes Report showed
a signifi cant reduction in
outstanding payments in
the region, down from
$91million to $56.7m be-
tween 2017 and 2018.
The global average fell
from $43.4m to $33m in
the same period.
But claimants are be-
ing made to wait longer
than at any point since
2010, with the average
resolution coming after 20
months.
This, according to the
report, is due to the on-
going low liquidity in the
market that results in de-
lays in paying out.
Poorly drafted or incom-
plete and unsubstantiated
Construction dispute values have fallen sharply year-on-year.TENDER AWARD
Engineering, procurement
and construction con-
tracts worth $18billion
have been issued by Saudi
Aramco – with 50% going
to kingdom-based fi rms.
A total of 34 contracts
will cover works on the
Marjan and Berri incre-
ment programs. The com-
pany plans to boost the
Marjan and Berri fi elds’
production capacity by
550,000 barrels of Arabi-
an crude oil per day, plus
a further 2.5bn standard
cubic feet of gas.
More than 90 compa-
nies and institutions were
invited to bid on the pack-
ages. Contractors work-
ing on the projects are
required to maximise theprocurement of material
and equipment from local
suppliers and manufactur-
ers to help achieve Saudi
Aramco’s In-Kingdom
Total Value Add Program
goals, which aim to in-
crease the company’s
locally-sourced goods and
ser vices to 70% by 2021.
“These two programs
will signifi cantly en-hance Saudi Aramco’s
oil production and gas
processing capabilities,
both strengthening our
position as the leading
integrated energy sup-
plier and meeting grow-
ing long-term demand
for petroleum,” said Amin
H. Nasser, president and
CEO of Saudi Aramco.
“These investments
will support our focus on
employing best-in-class
technologies, well com-
pletion, and reser voir
management practices.”Saudi Aramco awards $18bn contracts
METALS PRICESNICKEL
STEEL
COPPER
Source: London Metal
Exchange (prices per tonne)$
23 July$
24 June$5,
23 July$5,
24 June$14,
23 July$12,
24 June$$$$$$$$$$ 99999999999999666666668
$$$$$$$$$$$$$$$
Value of construction disputes in
Middle East plunges $34.3million
claims, a failure to proper-
ly administer the contract,
and owners, contractors,
and subcontractors failing
to understand or comply
with contractual obliga-
tions – a mainstay since
2016 – have been touted as
the most common causes
of disputes.
Shawkat Abbas, head
of quantum contract solu-
tions at Arcadis Middle
East, said claimants “muststick to an evidence-based
approach if they want to
reach a satisfactor y con-
clusion” when dealing
with disputes.
He added: “Combined
with the other two com-
mon dispute causes, the
industr y is confi rming the
importance of complete
understanding of contract
administration and claims
fundamentals.”
Party-to-party negotiationand arbitration remained
the preferred methods of
resolving disputes.
The report also showed
that mediation is return-
ing as a common method
of alternative dispute reso-
lution in the region.
“With party-to-party
negotiation still the pre-
ferred resolution method,
we see how important
open and consistent com-
munication among differ-
ent parties is in resolving
disputes,” added Abbas.
“Seeing the importance
of logic and facts in the
causes of disputes and the
emphasis on the human
aspect in reaching a reso-
lution are not contradic-
tor y at all.
“Instead, this is tell-
ing us that we must have
substantial understand-
ing of the problems, but
we should always keep
in mind that we are deal-
ing with creatures of
emotion and not just with
numbers in our spread-
sheets.”But claimants are being made to wait longer than at any point since 2010,
with the average resolution now taking 20 months
$$$$$$