Saudi Arabia is the biggest construction market in a generation.
Most contractors aren't ready for what comes next.
SAR 1 trillion of awarded projects. Giga-developments at every horizon. Subcontractor capacity is the binding constraint - and the firms that scale into it are the ones whose books, filings, and working capital can take the pressure. AlHisabat audits, advises, and tax-structures Saudi mid-market contractors so the operational growth is matched by financial discipline that survives ZATCA scrutiny, IFRS audit, and lender review.
SAR 1+ trillion of awarded projects.
Subcontractor capacity is the bottleneck.
NEOM. The Red Sea. Diriyah. Roshn. Qiddiya. Public Investment Fund development arms now control awarded project pipelines that dwarf anything Saudi Arabia or the wider GCC has seen. The Tier-1 EPC contractors are international. The work happens through Tier-2 and Tier-3 Saudi subcontractors - electrical, mechanical, finishing, civil, fit-out, MEP - and through specialist trades that didn't exist at this scale five years ago.
For mid-market Saudi contractors, the opportunity is the largest in a generation. The financial discipline required to capture it is also the largest. Payment cycles are long. Certification gates are non-negotiable. Audit standards on these contracts are international. Withholding tax on cross-border subcontractor stacks is closely watched. ZATCA Phase 2 e-invoicing applies through every tier of the supply chain. The contractors that scale through this cycle are the ones whose finance function scales with them.
Three patterns repeating across the sector.
Revenue recognition that doesn't survive audit
Percentage-of-completion estimates are made by the project manager on instinct, not by IFRS 15 cost-to-cost methodology. Contract modifications and variation orders are recognised when invoiced rather than when earned. By the time the auditor arrives, the prior-period revenue restatement is unavoidable - and the lender conversation that follows is harder than the audit.
Payment terms that destroy working capital
Certifications run two months late. Retention is released eighteen months after handover. Variation orders sit unbilled because the documentation isn't airtight. Cash collected from completed work is funding work in progress on the next project, and the gap keeps widening. Without a disciplined billing and collections process, contractors run out of cash before they run out of work.
Subcontractor stacks that hide tax exposure
Withholding tax on payments to non-resident subcontractors is missed or applied at the wrong rate. ZATCA Phase 2 integration covers the main contractor but not the subcontractor onboarding flow. Supplier KYC is incomplete. When ZATCA reviews the chain - and they do - the assessments come with penalties that wipe out a quarter of project margin.
Six service lines specifically tuned for construction.
Audit & assurance
IFRS 15 revenue recognition for long-term contracts. Cost-to-cost methodology, contract asset and liability presentation, variation-order accounting, expected credit loss on receivables, and disclosures that hold up in the lender review pack.
Zakat & tax
Withholding tax on foreign subcontractors, deemed-supply VAT on inter-company transfers, ZATCA Phase 2 e-invoicing integration across the subcontractor chain, and zakat treatment of long-duration contract assets and retention receivables.
Cost & margin management
True contract margin tracking. Estimate-at-completion (EAC) variance analysis. Cost code discipline tied to the bill of quantities. Standardised monthly project reporting that lets owners and lenders see margin slip before it becomes a crisis.
Working capital advisory
Billing cycle redesign, certification process tightening, retention release tracking, variation-order documentation discipline. Treasury and cash forecasting fitted to the rhythm of construction collections rather than generic monthly cycles.
ZATCA Phase 2 e-invoicing
Integration scoping across the contractor and subcontractor chain. Onboarding workflow design. ERP connector mapping. Pilot testing and ZATCA Fatoora-portal certification. Continuous monitoring once live, including handling of credit notes for retention release.
Restructuring & advisory
Group consolidation under IFRS for owners with multiple contracting subsidiaries. Debt restructuring conversations with Saudi banks. Project workout planning when a contract has gone sideways. Family-business succession planning for founder-led contracting groups.
More than ZATCA.
More than SOCPA.
Saudi construction touches a wider regulatory footprint than almost any other sector we serve. We map every authority that applies to your business and the filing calendar that comes with it.
Five KPIs every Saudi contractor should report monthly.
These aren't the headline P&L numbers - they're the leading indicators that flag margin slip, cash trap, and regulatory exposure before they show up in the audited statements.
Estimate-at-completion variance
EAC versus original budget, by project, refreshed monthly. The single best predictor of margin erosion before it hits revenue recognition.
Days sales outstanding
DSO across certified-but-unpaid receivables. Anything above 90 days warrants partner-level review of certification process and client risk.
Retention release ageing
Retention receivables aged by months past handover. Money trapped in completed projects is the largest hidden working-capital line on most contractor balance sheets.
Subcontractor concentration
Liability exposure to the top three subcontractors as a percentage of work-in-progress. Single-supplier exposure is a quiet killer when one key subcontractor stops performing.
Saudization actual vs target
Headcount by nationality, mapped against the Nitaqat band you're classified into. Slipping a band has consequences across hiring, visa quotas, and tender eligibility.
Three things we always check first.
On every new construction engagement, the partner runs a short diagnostic on the same three issues. They are the most common sources of restatement, regulator finding, and lender concern in this sector.
Percentage-of-completion methodology
Is it cost-to-cost in line with IFRS 15, or is it project-manager intuition with a spreadsheet on top? The difference is sometimes the difference between a clean audit opinion and a qualification.
Withholding tax on cross-border subcontractors
Has it been filed, at the right rate, with the right treaty position, on the right party? The penalty regime for missed WHT is severe and applies retrospectively.
ZATCA Phase 2 integration scope
Does it cover only the main contractor's invoices, or the full subcontractor onboarding chain? Half-built integration creates compliance risk that compounds quietly.
Three typical mandates.
The shape and intensity of a construction engagement varies with the size of the contractor and the stage of the work. Below are three patterns that recur often enough to be worth describing in advance.
Mid-size electrical contractor, SAR 80M revenue
Family-owned, growing fast on giga-project subcontract awards. Engagement combines ZATCA Phase 2 onboarding for the new project pipeline and an IFRS 15 revenue recognition rebuild ahead of the next audit cycle. Working capital tightening built in as a workstream three months after kick-off.
Civil works subcontractor on giga-project, SAR 250M revenue
Already audited but with persistent cash strain. Engagement focuses on working capital overhaul - certification process redesign, retention release tracking, variation-order documentation discipline - paired with a margin diagnostic that surfaces three loss-making projects the operations team had assumed were break-even.
Founder-owned contracting group, SAR 400M combined
Three contracting subsidiaries under one founder. Engagement runs across group consolidation under IFRS, zakat optimisation reflecting the structure, partner-led succession planning ahead of the founder's transition, and ZATCA Phase 2 across the group.
Tell us where you're stuck.
We'll tell you what we'd do first.
Whether the trigger is an upcoming audit, a ZATCA Phase 2 deadline, working capital strain, or a new giga-project award - a senior partner will respond within one working day with a short read of your situation and where we'd start.