- What Is the Official Construction Contract in Saudi Arabia and When Should It Be Used?
The construction contract is the official legal template used for public infrastructure and building projects commissioned by Saudi government entities. Issued by the Etimad platform, it sets the technical, legal, and procedural framework for execution. You can view and download the official version by visiting our in-depth article on the Etimad Construction Contract PDF.
When Should the Construction Contract Be Used?
- When a government entity needs to build or expand physical infrastructure.
- Applicable to projects that involve materials, labor, equipment, and execution phases.
- Examples: public buildings, road construction, paving works, water treatment plants.
What Are the Key Clauses in the Contract?
1. Project Duration
- Defined based on project size.
- Contractor must submit a detailed timeline broken into execution phases.
2. Quality and Technical Standards
- Contractor must adhere to the Saudi Building Code and official specifications.
- The government entity reserves the right to reject non-compliant work.
3. Local Content Requirements
- A specific percentage of materials and labor must be sourced locally.
- Aligned with the Expenditure and Project Efficiency Authority (EXPRO) directives.
4. Subcontracting
- Allowed up to 30%, but subcontractors must be officially approved.
- The main contractor retains full legal responsibility.
5. Penalties
- Delay fines of 1% per week, up to 10% of the contract value.
- Penalties also apply for technical non-compliance.
6. Guarantees
- 5% performance guarantee of the contract value.
- 12-month post-delivery defect liability (warranty) period.
7. Modifications
- Scope and quantities may be adjusted if formally documented and within the contract budget.
Can the Template Be Modified?
Yes, under the following conditions:
- Formal mutual agreement.
- Documentation in an official annex.
- No violation of the Government Tenders and Procurement Law.
How Does It Differ from Other Contracts?
| Type | Purpose | Evaluation Based On |
|---|---|---|
| Supply Contract | Procurement of goods | Product delivery & testing |
| O&M Contract | Operating and maintaining assets | Ongoing performance |
| Construction Contract | Building from scratch | Phased execution progress |
Conclusion
The Etimad Construction Contract is the standard legal framework for public infrastructure in Saudi Arabia. It defines responsibilities, ensures technical compliance, and enforces accountability from planning to final delivery.
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