Construction Project
Synonyms: Building Project، Construction Works، Capital Project
Last updated: 2026-09-25
Short Definition
A construction project is an organized set of works to build a new building or to extend, renovate or alter an existing one, with a defined scope, budget and schedule, delivered by key parties: the owner (employer), the designer, the supervisor and the contractor.
Overview
Legal Basis
The core basis is the Saudi Building Code Implementation Law (Royal Decree No. M/43 dated 26/4/1438H): Art. 2 (application to public and private sectors and to existing buildings when renovated or altered), Art. 7 (design, supervision and execution under contracts with practice-licence holders), Art. 8 (designer, executor and supervisor must comply with the code; the supervising designer and executor are jointly liable for collapse and for defects threatening soundness, including hidden defects, per the amendment by Royal Decree M/15 dated 19/1/1441H), Art. 9 (occupancy certificate required to occupy and for full electricity connection, per amendment M/88 dated 10/4/1446H) and Art. 12 (fine of up to SAR 1 million per violation per building and suspension of the practice licence). The contractual relationship is governed by the construction contract (muqawala) chapter of the Civil Transactions Law (Arts. 461–478).
Practical Example
A family in Riyadh builds a 520 m² villa on a 450 m² plot. Through Balady it authorizes a designing engineering office (design fee SAR 25,000), commissions a soil test (SAR 4,500), and the technical inspection company and then the municipality review the drawings and issue the design approval certificate. It contracts a supervising office (SAR 30,000) and a classified contractor on a lump-sum contract of SAR 910,000 (SAR 1,750 per m² for shell and finishing), obtains the inherent defects insurance policy and pays the permit fees, making the permit valid. Construction takes 14 months; at the end the supervising office applies for the occupancy certificate, and the family cannot move in or get full power connection before it is issued.
Common Mistakes
- ✗Starting excavation or construction before the permit is valid; the permit is only activated after the inherent defects insurance policy is issued.
- ✗Relying on a contractor without an engineering supervision office, although contracting a supervising office is a permit requirement.
- ✗Changing the design during construction without updating the permit through the add/modify building components service.
- ✗Failing to document change orders, payments and site minutes, which weakens the owner's position in a dispute.
- ✗Occupying or leasing the building before the occupancy certificate is issued.
International Differences
Most countries follow a similar path (design, permit, construction, occupancy), but the tools differ: in Turkey, licensed building inspection firms (yapı denetim) carry out supervision, and in the UAE, municipalities and development authorities issue permits and completion certificates. Saudi Arabia is distinctive in linking the permit electronically through Balady to a technical design review and mandatory 10-year inherent defects insurance, and in making the occupancy certificate a condition for full electricity connection.

