Contracting issues: JCCI panel proposes new plan

The application of FIDIC contracts in the Kingdom could solve 80 percent of the contracting sector problems and save rights of all concerned parties, head of the Contracting Committee at Jeddah Chamber of Commerce and Industry (JCCI) Abdullah Rudwan told local media.
The International Federation of Consulting Engineers, commonly known as FIDIC, is an international standards organization for the construction industry, best known for the FIDIC family of contract templates.
Speaking to Al-Riyadh daily, Rudwan said the application of the FIDIC contracts conformed to global systems, which regulate work in the construction sector, preserve rights of the local contractors vis-a-vis other parties and act as a reference for differences arising from the implementation of contracts.
He said the Council of Ministers has given 180-day period that expires in November for the completion of the new FIDIC-compliant system, which is to be supervised by the Ministries of Commerce, Finance and Labor.
Mohamed Al-Sa’ad, an investor in the contracting sector, said the number of Saudi workers employed in the sector stands at 200,000, based on the National Committee of Contractors data, out of 2.17 million total workers in the sector.
The number of commercial registers of the contractors stands at 280,000, of which 138,000 contractors are registered in the commercial and industrial chambers.
However, the rate of the categorized contract firms is estimated at 0.01 percent of the total contractors, he said.
The new FIDIC formula will bring about balance to the sector, preserve rights of the investors and minimize the defaulting rates of contractors, which has recently increased, he added.
He stressed the need to create a fund aimed to provide loans to contractors, as the case in other countries, in the face of defaulting cases emerging from the absence of financing facilities.
Meanwhile, member of the contracting committee in the Eastern Region Chamber of Commerce and Industry (ERCCI) Mohamed Al-Yami stressed the need for adopting the FIDIC formula in the new contracts, as the system is applied in all world countries.
He said the system protected the rights of all the concerned parties on the equal footing and, further, ensured the principle of compensation, notably in cases where price differences existed in all building materials.
He affirmed that the contacting firms have begun getting their financial dues from governmental departments without delay contrary to earlier periods. Completion of papers and documents will pave the way to get the required financial due on time, he said.
Earlier, the national commission of contractors at the Council of Saudi Chambers (CSC) stressed the need for activation of a Council of Ministers’ decision on the creation of a national commission for construction sector in which more than 2 million are working, of which 10 percent are Saudis, the local media said.
The study enumerated a series of reasons to justify the creation of the proposed commission saying that the construction sector experienced a growth rate of 16.5 percent in 2012 and its contribution to the gross domestic product (GDP) stood at 4.6 percent.
It is to be recalled that FIDIC is charged with promoting and publishing standard forms of contracts for works and clients, consultants, sub-consultants, joint ventures and representatives, together with related materials such as standard pre-qualification forms.