- Construction Contract: Official Template for Government Projects in Saudi Arabia

Introduction

The construction contract is the standard legal agreement used by government entities to execute building and infrastructure projects. Etimad has released an official template that comprehensively covers the legal, technical, and procedural framework for executing such projects with transparency and high quality.

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Contract Scope

This contract outlines the contractor’s obligation to execute the construction project within a defined timeline and in accordance with approved materials and specifications.

Examples of Applicable Projects:

• Government buildings (e.g. schools, clinics, administrative offices)
• Road development and expansion
• Construction of public facilities or service stations

Key Clauses in the Contract Template

1. Project Duration

The total duration is defined in days. Extension is allowed only in justified technical cases, subject to official approval.

2. Detailed Work Schedule

The contractor must submit a phased timeline showing project stages, key activities, and milestone delivery dates.

3. Quality and Technical Standards

• All work must comply with technical specifications listed in the project documents.
• The government entity has the right to reject non-compliant work and require rework at the contractor’s expense.

4. Local Content Requirements

The contractor is required to use a specified percentage of locally sourced materials or services, in line with directives from the Expenditure Efficiency Authority.

5. Subcontracting Rules

Subcontracting is allowed under the following conditions:

• No more than 30% of the work may be subcontracted.
• The subcontractor must be qualified and officially approved.

6. Technical Amendments

The government may modify the scope or quantities during execution, provided changes are documented and within budget.

7. Penalties

• Delay Penalty: 1% of contract value per week of delay, up to a maximum of 10%.
• Quality Penalty: Imposed if there is a failure to meet technical standards.

8. Guarantees

• Performance Guarantee: 5% of contract value as a security bond.
• Work Guarantee: 12-month post-delivery defect liability period.

9. Dispute Resolution

Any disputes will be resolved via the designated arbitration committee or based on procedures stated in the Procurement Law.

Benefits of Using the Etimad Template

• Contains all elements for proper construction project governance.
• Facilitates official approvals and compliance.
• Reduces risk of disputes.
• Recognized by oversight authorities and regulatory bodies.

Conclusion

The Construction Contract template from Etimad is the go-to legal framework for managing public construction projects in Saudi Arabia. It provides a robust structure to ensure quality execution, budget control, and legal protection for both government entities and contractors.