Lured by the expectation of lucrative government contracts, an ever-increasing number of engineering companies and consultancies (ECCs) from all over the world are operating in the Kingdom of Saudi Arabia (KSA). Not all of these ECCs, however, are in a position to deliver services which meet industry quality standards: the Saudi Arabian Council of Engineers claims that, last year alone, there were approximately 30,000 engineers working in KSA without appropriate – or, worse, with doctored - qualification certificates. In this article, we examine a new law in KSA aimed at addressing these issues.
Ministerial Decision No 15098
Like other GCC countries, notably the UAE, the KSA government has now taken decisive steps to raise quality standards in this area and assist its ministries and other governmental and semi-governmental entities to identify suitable ECCs with whom to contract.
Ministerial Decision No 15098 (issued by the Ministry of Municipal and Rural Affairs (the Ministry)) (the Decision) establishes a new classification system for EECs operating in KSA. The Decision came into effect on 16 August 2015. As from 10 March 2016, it will be compulsory for any EECs wishing to bid for and/or carry out government contracts in KSA to have completed this classification process. An EEC wishing to participate in the tender process for a public project will need to satisfy the specific classification criteria set out in the tender documents.
The new classification system
The new classification system comprises eleven main categories: (i) Civil Engineering, (ii) Electrical Engineering, (iii) Mechanical Engineering, (iv) Construction Engineering, (v) Planning Engineering, (vi) Safety Engineering, (vii) Chemical Engineering, (viii) Industrial Engineering (ix) Electronic Engineering (x) Telecommunication Technology, and (xi) Information Technology (the Categories).
An ECC may apply for classification under one or more of these Categories, within either or both of the disciplines of 'project management' and 'study, design and supervision'.
The Ministry will be responsible for categorising applicant ECCs based on an assessment of their technical, organisational and financial capabilities. In forming its assessment, the Ministry will examine matters such as an applicant's financial strength, its management, the qualifications and experience of its engineers and technicians, the quality of its machinery and, interestingly, its past performance in relation to private and public sector projects both in KSA and abroad. The Decision does not, however, set out the specific criteria an EEC must fulfil so as to be assigned to any particular tier.
Once the Ministry has completed its assessment, it will issue a certificate confirming that the applicant is qualified to provide engineering services, the Categories it is classified for, and the tier has achieved. This certificate is valid for a period of four years. It may, however, be amended or cancelled by the Ministry during this period.
Those EECs which may in the past have failed to deliver on their commitments under KSA government contracts have the most reason to be apprehensive about the new classification regime. For other EECs, while the changes may prove burdensome from a time and cost perspective, the general raising of standards in this area may prove welcome.