Breaking into Saudi Arabia’s Construction Supply Chain: A Guide for Vendors and Suppliers
Discover how companies can join Saudi Arabia's construction supply chain, tapping into giga projects like NEOM and Red Sea
Amid a competitive market such as Saudi Arabia, the construction supply chain is undergoing constant evolution as it adapts to rapid and complex changes in the current and future business environment.
This has firmly laid the foundation built around efficiencies in Saudi construction supply chain segments, leading to more efficient and streamlined value chains in large-scale construction initiatives, notably giga projects.
This article provides a snapshot of the impact of the critical industry in advancing sustained growth in supply chains while explaining the multi-layered giga value chain.
It is an excerpt from a guidebook titled “Saudi Construction Boom: Building a Future of Growth and Prosperity,” recently launched by AstroLabs, the Gulf’s leading business expansion platform.
Value Chain of Giga Projects in Saudi Arabia's Construction Sector
The Red Sea is part of the 13 megaprojects, cumulatively valued at $1.3 billion, spearheaded by the Public Investment Fund (PIF). These projects lie at the center of the ongoing transformation happening on the ground nationwide, working as a powerful lever for economic growth and vital driver of job creation.
Detailed Structure of the Giga Project Value Chain
Below is a detailed description of the value chain of a giga project, highlighting the specific roles involved in each of the project’s phases, ensuring successful execution and delivery.
1. High-Level Decision-Makers and Advisors
At the top of the value chain is the PIF, the owner of the project and the primary funding body responsible for the overall vision and direction.
The first tier of the value chain includes key stakeholders such as:
- Financial Partners
- Royal Commission
- Legal Councils
- Master Planners
2. Project Development and Delivery Team
The next layer focuses on the execution of the project, involving:
- Public Development Companies or Private Real Estate Developers: These entities are responsible for management and ensuring the timely delivery of the project.
- Project Managers: They are tasked with the communication between various teams and ensuring deliverables are met with the highest quality standards.
- EPC Contractors: These primarily involve engineering, procurement, and construction contractors.
- Subcontractors: These include material suppliers and construction technology firms that provide the necessary expertise and innovation-led solutions.
3. Ongoing Management
Once the project reaches completion, ongoing management becomes crucial to ensure the project's long-term success.
This can span:
- Facilities Management Companies: They ensure the infrastructure operates smoothly and efficiently.
- Real Estate Professionals: Agencies and brokers engage with tenants, including individuals and businesses, to manage leasing and sales processes.
- Service Providers: This includes Proptech companies that offer technological solutions to enhance property management and visitor experiences.
Major Development Authorities Under the Public Investment Fund (PIF)
Several development authorities operate under the PIF umbrella, each playing a distinct role in accelerating Vision 2030’s urban growth objectives and diversification.
Notable entities include:
- Red Sea Global (RSG)
- Qiddiya Investment Company
- Amala
- Riyadh Development Authority (RDA)
- Diriyah Gate Development Authority (DGDA)
- Saudi Entertainment Ventures (SEVEN)
- Saudi Downtown Company
- AlUla Development Company
- King Abdullah Financial District (KAFD)
- Saudi Arabian Military Industries (SAMI)
- National Housing Company (NHC)
- Jabal Omar Development Company
- Oil Park Development Company (OPDC)
- King Abdullah Economic City (KAEC)
- ROSHN
The value chain of giga projects is one of an intricate nature that ensures optimal collaboration and coordination among various stakeholders. It aptly exemplifies the potential of these large-scale projects in diversifying the country’s economy and creating ample opportunities for innovation and expansion.
Strengthening Saudi Construction Supply Chain and Driving Logistics Growth
Saudi Arabia has been making headway in ensuring better connectivity as a way to boost its trade, streamline logistics processes, and enhance its visitor appeal. The implications are profound for sectors like tourism, hospitality, and infrastructure.
Supporting the Kingdom’s aim to become a pivotal tourist and business hub is Riyadh Metro, which started operations in November of this year. Aiming to streamline traffic flow to benefit both commuters and tourists, is poised to transform urban mobility, with plans to initially transport 1.2 million passengers daily.
Next year, the country will also see the completion of the $60 billion Jeddah Metro, further boosting trade, travel, and smooth business operations. These projects exemplify the multifaceted impact of the construction sector on spurring sustained economic growth by strengthening supply chain processes.
Along with this, the formation of logistics-focused Saudi economic zones (SEZ) helps construction companies optimize the flow of materials; this, in turn, attracts global companies to the Kingdom’s shores.
Efforts to continually enhance supply chain operations have made the Kingdom an attractive proposition for companies like the UK-based Unipart, one of AstroLabs’ expansion clients.
Unipart’s Saudi expansion was influenced by the Saudi strategic location and heightened focus on being a strategic supply chain management hub.
The advancements in the Saudi construction supply chain create multiple avenues for the tourism and hospitality industries to thrive, making Saudi Arabia a beacon of connectivity, innovation, and tourism excellence.
The giga projects stand central to the kingdom’s tourism drive; the immense scale of significant infrastructure development and renovation happening across the Red Sea Project, for example, attracts global innovators such as Grankraft.
Expanding from the UAE, Grankraft’s Saudi market entry was facilitated by AstroLabs. Within The Red Sea Island, Grankraft is closely involved with the construction of the iconic Sheybarah Hotel.
Cultivating a robust footprint in the Saudi construction space has been pivotal in the company's growth trajectory. Today, Grankraft has a strong market presence across the GCC, with operations in Europe, Africa, and Asia, supported by a team of over 800 employees and three production facilities.
Click here to download the guidebook and explore top opportunities for growth in supply chains as a key beneficiary of the construction upswing as well as strategic avenues for investing in Saudi Arabia's giga and mega projects, key to Vision 2030.
