How does a developer handle procurement when so many massive projects are happening all at once in the same nation? ‘You could liken what is happening in Saudi Arabia to a single ignition firework box,’ says Roshn CEO, David Grover (the type you light once, step back, and watch in wonder as the spectacular choreographed firework display takes place).
It's an arresting metaphor. At the same time, the nation talks about best practice, international investment, and partnerships when it comes to procurement. The debate under way in the country is about risks in the supply chain of everything required for construction and delivery of these new projects.
Conor McGahon, senior director of development at Roshn, says: ‘There is a challenge in our supply chain. It is one of our key considerations: how do we ensure we have a robust and secure supply chain?’
He provides a number of examples, and in each case the solution is ‘localisation’ – go to local manufacturers and suppliers first that will help deliver the necessary products and further help diversify the Kingdom’s economy.
Trees, trees, trees Saudi Arabia requires a staggering ten billion trees for all planned developments. Given Roshn is ahead of the other giga-project developers in its progress, the company has live demand to plant trees right now. However, if it procures the number it wants, it will likely cannibalise other projects throughout the Kingdom. The answer? Launch your own tree nursery. Last year it awarded a contract to construct a nursery in Jeddah, and soon it will launch a second nursery in Riyadh. ‘We will meet our own demand. If we can do that, we are also freeing up supply for others to use. We need to make sure we are not killing other people’s projects,’ says McGahon.
He reveals the procurement departments of Roshn meet counterparts of other giga-project developers including Neom, Red Sea, and Qiddiya regularly to discuss concerns.
During the Cityscape Global event, Roshn alone signed in the region of SR 9.5 bn (€2.4 bn) worth of firm commitments with third-party suppliers.
One was with Saudi Abyat for the latter to design, supply and install around 12,000 high-quality kitchens at Roshn homes. Abyat is one of the most famous kitchen companies in the Middle East. As part of the deal, the Kingdom is actually helping Abyat build a new manufacturing plant inside the Kingdom not only to supply Roshn projects but others in the KSA and wider Gulf zone.
Another deal it signed worth SR 7.7 bn was with Chinese contractor, China Harbour Engineering Company, to develop 6,700 residential units at its Sedra and Warefa communities in Riyadh. China Harbour is a long-established operator in Saudi Arabia, giving Roshn confidence in delivery.
But its parent holding company is obviously Chinese, so how does that synch with the goal of localisation? McGahon explains: ‘We are interfering in the actual delivery of the project. We have asked China Harbour to partner with local Saudi manufacturers to use high-quality products, from tiles and sanitary products to windows and everything else. This is how we are reshaping how we do procurement. We are able to secure local products and give massive orders, making sure our customers are getting quality local products and growing our local supply chain.’
