Saudi Arabia is tightening its belt. With oil revenues down, the government is looking to reduce a budget deficit by potentially canceling transportation, housing, health and education projects valued at more than US$20 billion.
Cancellations aren't the only option on the table to save money, though. The kingdom is also stepping up its project management game by setting up a new National Project Management Organization (NPMO). Also known as “Mashroat,” the NPMO will help Saudi government bodies create their own project management offices to reduce inefficiencies and better manage large-scale infrastructure projects—including many tied to the country's Vision 2030 plan aiming to diversify the economy away from the oil industry.
In 2015, to prevent wasteful spending, the government halted all major new contract awards until the new national PMO was in place. Even projects that had been approved, such as new metro projects in Mecca and Jeddah, could not advance to the contracting phase.
The U.S.-based engineering, procurement and construction firm Bechtel is now setting up the NPMO, which it will then operate. “Bechtel will 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,” Bechtel program director Georges Chahine said in a news release.
With per-barrel crude oil prices still well below the peak of 10 years ago, the pressure is on to find efficiencies. “[T]he government has to rationalize spending because of the drop in oil revenues,” John Sfakianakis, director of economic research at the Gulf Research Center, told Bloomberg. —Jessica Boden
The Riyadh Financial District under construction in 2015