Construction Contract Review in Riyadh : Back-to-Back Contracts in Construction

جدول المحتويات

Introductory overview

A construction contract review is a decisive step for any joint-stock company operating in the industrial or construction sector, and for every contracting company handling medium or large-scale projects in Saudi Arabia. A construction contract is not just a template or a standard Word/PDF form; it is a live risk-management tool that governs financial exposure, timelines, and legal responsibility throughout the life of the project.

With the widespread use of Back-to-Back contracts in construction between main contractors and subcontractors, mistakes in drafting or cross-referencing between the main contract and the subcontract have become a direct cause of delay penalties, disputes, and claims. Guided by the experience of arbitrator and attorney Mohammed Almuzayen, any company that signs without a proper construction contract review often ends up paying a much higher price during performance or litigation.

What will you learn in this article?

Who should be seeking construction contract review, and why it is essential for joint-stock and construction companies.
How construction contract review is connected to Back-to-Back contracts and subcontractor risk.
The key clauses that arbitrator and attorney Mohammed Almuzayen focuses on when reviewing construction contracts.
How a proper construction contract review protects cash flow and reduces exposure to delay penalties.
Frequently asked questions about construction contract review and Back-to-Back agreements in the Saudi market.

About the author

Mohammed Almuzayen is a lawyer and arbitrator with more than fifteen years of experience, specializing in construction disputes, infrastructure projects, government contracts, and franchise agreements. He holds an LL.B. from King Saud University in Riyadh (Class of 2009), and has extensive practical experience through his work with leading national companies, including Al-Majdouie Group, Binzagr Company, United Mining Investments Company, Al Mawarid Holding (a listed company), and Golden Petroleum Investment Company.

Who is the construction contract review service for, and why is it critical?

This article primarily addresses:

Joint-stock companies active in the industrial and construction sectors; and
Construction and contracting companies engaged in government or private projects that rely on subcontractors and suppliers.

These entities typically deal with:

Construction and EPC contracts with owners or governmental bodies;
Procurement, operation, and maintenance agreements; and
Subcontract agreements that are closely tied to the main contract.

A professional construction contract review before signing helps these companies to:

Identify contractual risks hidden in technical, financial, and time-related provisions.
Align the contract with Saudi law and regulations, particularly for government projects; and
Ensure the contract is consistent with the company’s corporate governance and internal risk policies.

In line with the guidance of arbitrator and attorney Mohammed Almuzayen, a reviewer’s role is not to “fix language” only. The contract must be read as an operational instrument that will affect cash flow, project performance, corporate reputation, and even the credit and classification profile of the company.

How does construction contract review relate to Back-to-Back contracts?

In many projects, a company signs a main contract with the owner, then enters into a chain of subcontracts and supply agreements on a Back-to-Back basis—seeking to mirror as many obligations as possible from the main contract onto the subcontractor.

When conducting a construction contract review in this context, an expert—following the structured approach of arbitrator and attorney Mohammed Almuzayen—will pay particular attention to the following issues:

1. Clarity of the relationship between the main contract and the subcontract

Key questions include:

Is the main contract actually attached to the subcontract?
Are its terms incorporated by reference, or only used as an interpretive guide?
Which provisions are expressly intended to apply to the subcontractor (technical, time, financial, penalties, approvals, etc.)?

Vague wording such as:

“All provisions of the main contract shall apply to this subcontract.”

creates significant interpretive risk and may open the door to disputes.

2. Time buffer between the two contracts

The subcontractor’s completion period should not be identical to the contractor’s completion period vis-à-vis the owner. A time buffer must be created to allow the company to:

Intervene in case of delay,
Replace the subcontractor if necessary, or
Complete the works directly on the subcontractor’s account.

3. Delay penalties and liquidated damages

The reviewer must ensure that:

Delay penalties imposed on the main contractor by the owner can be properly back-charged to the subcontractor when it is responsible for the delay; and
There is a clear mechanism for deducting penalties from amounts due or from performance bonds and retention.

4. Payment mechanisms and cash-flow protection

Payment terms should be reviewed so that subcontractor entitlements are tied to:

Verified and approved progress of the works, and
Payments actually received by the main contractor from the owner (in whole or in part, as agreed).

This protects the company from funding the project out of its own pocket due to owner-side delays or approval bottlenecks.

Legal consultation (CTA)

If your organization—whether an industrial joint-stock company or a construction contractor—is about to sign a main construction contract or Back-to-Back subcontracts in Riyadh, commissioning a construction contract review by a specialist before signing is one of the most effective investments you can make.

Mohammed Almuzayen Law Firm provides comprehensive review and drafting services for construction contracts and Back-to-Back agreements, with a practical perspective that aligns with Saudi law and with the governance requirements of listed and unlisted joint-stock companies. You can share your draft contract for review and receive a structured written report with observations and suggested amendments.

What are the core clauses to focus on in a construction contract review?

Drawing on the experience and methodology of arbitrator and attorney Mohammed Almuzayen, several clauses are consistently treated as “high-sensitivity points” in any successful construction contract review:

1. Scope of Work

A precise description of the works and obligations, linked to drawings, specifications, and technical appendices; and
Avoiding generic language that could be used to load the contractor with additional work without clear entitlement to additional payment.

2. Time for completion and program of works

Defining the project duration and the mechanism for approval of the baseline program; and
Clarifying whether delays in program approval justify extensions of time.
Setting a clear procedure for extension of time where variations or changes in conditions occur.

3. Contract price, payments, and claims

Reviewing bills of quantities, pricing, and procedures for variation orders and additional works; and
Aligning the relationship between owner payments and subcontractor payments, especially under Back-to-Back arrangements.

4. Delay penalties and compensation

Examining the percentage and maximum cap of delay penalties (liquidated damages); and
Ensuring that multiple sanctions are not stacked on the same event in a way that undermines contractual balance.

5. Guarantees and bonds

Duration and conditions of bid bonds, performance bonds, and advance-payment guarantees; and
Addressing the risks of open-ended dates or broad, loosely drafted rights to call bonds.

6. Dispute resolution (courts / arbitration)

Defining the competent forum, governing law, language of proceedings, and method of appointing arbitrators; and
Ensuring that dispute resolution clauses are enforceable and do not create procedural deadlocks.

Here, the arbitration practice of arbitrator and attorney Mohammed Almuzayen adds particular value, as he drafts dispute clauses with a clear view of how they will perform in real disputes.

How can a specialist law firm protect your company through construction contract review?

When a joint-stock or construction company entrusts a construction contract review to a specialized law firm, it gains:

A holistic contractual reading that connects the main contract, Back-to-Back subcontracts, and key supply agreements;
Early identification of gaps that might expose the company to liability for works or delays not truly under its control; and
Practical, negotiable amendments that can be presented to the counter-party without obstructing contract award.

In line with the approach of arbitrator and attorney Mohammed Almuzayen, the lawyer’s role in reviewing construction contracts should be preventive and advisory, rather than emergency-driven after a dispute has already arisen.

For this reason, Mohammed Almuzayen Law Firm prepares written comments and redlines that can be directly used in official correspondence and negotiation with the other party. The firm also offers tailored support to industrial joint-stock companies engaged in EPC contracts or in the construction of plants and production lines, where complex technical requirements overlap with regulatory and compliance expectations.

By working with Mohammed Almuzayen Law Firm, companies turn their contracts from static forms into dynamic instruments for risk allocation and corporate protection.

Practical recommendations for joint-stock and construction companies

Do not sign any main construction contract or Back-to-Back subcontract without a legal review—no matter how “standard” or widely used the template appears.
Adopt an internal policy requiring a written construction contract review for every new project, signed off by in-house or external legal counsel.
Document all contractual comments and pré-signature correspondence, and keep them in the project file for use if a dispute arises.
Train procurement and project teams to understand the core construction clauses so that their commercial negotiations are aligned with legal risk management.
Leverage the experience of arbitrator and attorney Mohammed Almuzayen to develop a set of standard contract forms for the company, then adapt them to each project instead of starting from scratch every time.

Frequently asked questions about construction contract review in Riyadh and Back-to-Back agreements

1. When does our company need a construction contract review?

You should commission a review whenever you sign a main construction contract with an owner, government entity, or developer, and whenever you enter into Back-to-Back subcontracts on medium or large-scale projects in or around Riyadh. The higher the contract value and the more complex the scope, the more critical a professional review by Mohammed Almuzayen Law Firm becomes.

2. Are standard construction contract templates sufficient without review?

No. Standard forms are only starting points. They do not reflect your specific project risks, regulatory environment, financing structure, or risk appetite. A tailored construction contract review ensures that the template is adapted to Saudi law, Riyadh-based practice, and your company’s governance requirements.

3. What is the difference between reviewing the main contract and reviewing Back-to-Back subcontracts?

Reviewing the main contract focuses on your obligations toward the owner or government body. Reviewing Back-to-Back subcontracts focuses on how those obligations are passed down to subcontractors and suppliers. Both reviews must be aligned so that risks and timelines are consistent and enforceable across the entire contract chain.

4. Can contract review actually reduce our exposure to delay penalties?

Yes. A structured construction contract review can refine completion periods, extension-of-time mechanisms, liquidated damages caps, and back-to-back recourse against subcontractors. This significantly reduces the risk of disproportionate delay penalties being imposed on your company in Riyadh projects.

5. Why involve an arbitrator as well as a lawyer in the contract review process?

An experienced arbitrator such as Mohammed Almuzayen has seen how construction contracts are interpreted in real disputes. That perspective allows him to identify weak or ambiguous clauses that are likely to be litigated later, and to correct them proactively during the review instead of waiting for arbitration or court proceedings.

6. How can I verify a contract in Riyadh?

Verification normally involves confirming the identity and authority of the parties, checking commercial registration details, and ensuring that the contract complies with Saudi law and any sector-specific regulations. Mohammed Almuzayen Law Firm can conduct a formal legal review and, where required, guide you on notarisation or attestation procedures in Riyadh.

7. How can I check my contract agreement in Saudi Arabia?

You should have the contract examined by a Saudi-qualified lawyer who understands both construction practice and local regulation. The review typically covers validity, enforceability, risk allocation, dispute resolution, and compatibility with your existing obligations. Mohammed Almuzayen Law Firm offers this as a dedicated construction contract review service.

8. What construction contracts are commonly used in Saudi Arabia?

Saudi projects frequently use bespoke construction contracts, FIDIC-based forms (with local modifications), EPC and EPCM contracts, as well as government-issued standard forms in public projects. A key part of any construction contract review is understanding which model you are using and how far it has been amended in negotiations.

9. Which construction companies operate in Riyadh?

Riyadh hosts a wide range of local and international construction and contracting companies, from major infrastructure players to specialised subcontractors. Rather than focusing on names, a construction contract review ensures that—whichever contractor you engage—the contractual framework properly protects your interests.

10. Why are construction companies important in Riyadh’s market?

Construction companies drive much of Riyadh’s growth in real estate, infrastructure, industrial facilities, and giga-projects. Because they operate on tight timelines and thin margins, legally robust contracts are essential. Mohammed Almuzayen Law Firm supports this ecosystem by helping both owners and contractors manage legal and financial risk.

11. How should we choose a construction company in Riyadh from a legal perspective?

Beyond technical capability and pricing, you should evaluate a contractor’s track record in meeting contractual obligations, handling variations, and resolving disputes. Request to see previous contracts, dispute histories, and bonding capacity, then combine that due diligence with a construction contract review to ensure the contract reflects your risk position.

12. What challenges do construction companies face in Riyadh, and how does contract review help?

Key challenges include regulatory changes, permit and approval delays, supply-chain disruption, payment timing, and coordination among multiple subcontractors. A well-structured construction contract—reviewed and negotiated by Mohammed Almuzayen Law Firm—allocates these risks clearly, provides realistic timelines and extension mechanisms, and embeds practical tools for managing variations and disputes.

Conclusion

A construction contract review is not a luxury; it is a core component of risk management for industrial joint-stock companies and construction contractors in Riyadh and across Saudi Arabia. With the increasing use of Back-to-Back contracts in construction, it has become essential to draft and review contracts carefully so that the company is not held liable for works it did not perform or delays it did not cause.

Working with a seasoned professional such as arbitrator and attorney Mohammed Almuzayen, and engaging Mohammed Almuzayen Law Firm to review main contracts and Back-to-Back agreements before signature, is a practical step to protect shareholders’ funds, safeguard projects, and maintain a strong reputation in the market.

Summary of the article

This article explains how construction contract review helps industrial and construction companies in Riyadh and across Saudi Arabia manage legal and financial risks, especially when using Back-to-Back construction contracts with subcontractors. It outlines the key clauses that must be examined, the typical risks in timelines, payments, and penalties, and how working with Mohammed Almuzayen Law Firm, led by arbitrator and attorney Mohammed Almuzayen, can protect companies from disputes, delay penalties, and unbalanced contractual obligations.