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Source:
الوطن
50,000-Riyal Cost Gap
The gap between the cost of carrying out construction projects and the value of contracts signed earlier may reach SAR 35,000–50,000. Residential-sector costs rose by 2.1% year on year between September 2025 and September 2026, while energy costs increased by 3% and labor costs by 1.5%. Some materials saw steeper price increases, including electrical cables, which rose by as much as 27.6%, and reinforcing steel, which rose by more than 22%. To narrow the gap, market participants proposed partial compensation for increases in the prices of essential materials, based on official invoices; purchasing and storing key materials in advance; and adding a clause allowing prices to be reviewed if the construction-materials index rises by more than 10%. The problem is compounded by the fact that most contracts with individual clients have fixed prices and do not specify how changes in costs will be handled, leaving small contractors to absorb the increases or face delays and penalties.
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