A majority of the awarded contracts were in transportation, power, and real estate which accounted for approximately 59% of the total value of contracts awarded. Water, urban development, and petrochemicals accounted for 32% of the total value while oil & gas accounted for only 7% of the total, the lowest on record. 2% were awarded in other sectors. The USSBC’s Contract Awards Index fell to 105.26 points by the end of the third quarter. The index steadily declined through the quarter as the slowdown in the construction sector continues. The construction sector continued to weather the COVID-19 pandemic as project owners and contractors face ongoing challenges. Revised budget spending along with fiscal consolidations by the government and private sector strained the pipeline of awarded contracts during Q3’20 as the value reached SAR7.4 billion ($2 billion). The government’s commitment to absorbing the financial impact of the pandemic on the economy through fiscal spending cuts has mainly impacted its capital expenditures. According to the Q3 2020 budget update report from the Ministry of Finance, capital expenditures have decreased by 26 percent through Q3 compared to 2019. Furthermore, the ‘Economic Resources’ sector, which includes infrastructure and tourism related spending witnessed a 38 percent decline through Q3’20 compared to 2019. Spending in these areas is one of the main drivers of contract awards as was the case in 2019. The drop in awarded contracts in Q3’20 compared to Q2’20 resulted in a 33 percent decrease. Compared to Q3’19, the value of awarded contracts precipitously fell by SAR40.4 billion ($10.8 billion) in Q3’20. Through Q3’20 the value of awarded contracts during the pre-pandemic period of 2019 reached SAR161.8 billion ($43.2 billion) versus 2020, which slowed to SAR63.6 billion ($17 billion).
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