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Digital transformation a must for Saudi construction sector to survive

Published: 17/01/2018

Country: Saudi Arabia

Saudi Build, one of the biggest construction events in the region, will hold this year’s event from October 23 to October 26 and reveal how the construction sector has adopted a digital strategy to transform itself and face the challenges ahead, in line with Saudi Vision 2030.

Saudi Arabia and digital transformation

According to macroeconomic, industry and financial market analysis firm BMI Research, the Saudi construction market is estimated to reach SAR 178 billion approximately ($48bn) in terms of 2018 works announced and underway, and companies are managing their projects’ completion milestones, based on building information models (BIM) instead of traditional computing methods.

BMI said that Saudi Vision 2030 and the National Transformation Program 2020 put forth highly complex projects, including high-speed rail, airports and seaports. Architects, designers and engineers are sourcing and implementing construction technology and software solutions in the preparation for this growth.

Following an agreement between the Saudi Ministry of Communications and Information Technology and Oracle implement an IT training project for over 5000 Saudis as part of the National Transformation Plan 2020, Saudi daily Arab News reported that IT spending in Saudi Arabia will reach SAR28 bn ($7.5bn) in 2017.  

“Building Information Modeling software solutions are in high demand in the Kingdom, helping to enhance productivity and collaboration across the entire project lifecycle, and reducing waste and cost. In the current economic climate, technology solutions can drive business competitiveness and new levels of digital business innovation,” said Anwar Al Qwasmi, General Manager for Saudi Arabia at global construction technology company Trimble Solutions.

Saudi Construction subdued

BMI research shows that Saudi’s construction sector growth will remain slow over the short-term with the main reason being persistently low oil prices, with recovery only expected in the long term.

“Our oil and gas team projects that the price of Brent crude will rise to $69 per barrel by 2021, up from $54 per barrel in 2017,” said BMI. This slow oil price progress has led to austerity measures undertaken by Saudi authorities on their pipeline of large-scale infrastructure projects.

BMI has lowered its 2017 full year real growth forecasts to 1.4 per cent year-on-year from 1.9 per cent previously, as it expects continued delays of mega investment plans in the short term. “While industrial projects related to economic diversification will go ahead, we expect private investment in the non-residential building sector to remain low.”

ME and digital transformation

Worldwide IT spending is projected to total $3.7 trillion in 2018, an increase of 4.3 per cent from 2017 estimated spending of $3.5 trn, according to the latest forecast by global research company Gartner.

“Software spending is projected to grow 8.5 percent in 2017, and it will grow another 9.4 per cent in 2018 to total $387bn. IT services spending is on pace to grow 4 per cent in 2017 to reach $931bn, and increase 5.3 per cent in 2018 to reach $980 bn.”

Over the past year, more than $3bn has been raised from Middle Easterners for technology investments in the region, according to Bloomberg calculations.

It said that, in March 2017, Inc. acquired, a Dubai-based eCommerce platform, for $580 million. Careem, a cab hailing company, became the Middle East’s only unicorn with a valuation of more than $1 billion.


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