Saudi Arabia’s $1.5 trillion Neom project still intact despite recalibration

 

Saudi Arabia’s Neom megaproject to accelerate work on priority areas 

Saudi Arabia’s $1.5 trillion Neom development stands as one of the most ambitious construction programmes ever conceived. Built around strategic procurement partnerships with some of the world’s largest engineering, construction and logistics firms, Neom offers a real-world case study in managing supply chains at unprecedented scale.

While the overall vision for Neom remains intact, reports suggest Saudi authorities have recalibrated construction timelines in response to rising costs and recurring delays. Initial phases are still targeted for completion by 2030, but delivery is increasingly focused on high-impact components rather than the full original scope.

At the heart of Neom is The Line — a proposed linear city of mirrored skyscrapers stretching across the desert. Though once envisioned as a 170km-long urban corridor housing nine million people, current efforts are centred on a 2.4km starter segment, reflecting a more phased and value-driven approach.

 

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Neom was conceived under Crown Prince Mohammed bin Salman’s Vision 2030 strategy, aimed at reducing Saudi Arabia’s dependence on oil and diversifying the Kingdom’s economy. Funded primarily by the Public Investment Fund (PIF), the project is considered the crown jewel of Saudi Arabia’s giga-project portfolio.

However, with oil prices fluctuating and fiscal pressures mounting, the Kingdom has shifted its focus toward components expected to generate faster economic returns, particularly luxury tourism, advanced logistics and digital infrastructure.

Strategic contractor procurement at scale

Delivering Neom’s core infrastructure has required extensive engagement with global engineering and construction leaders. The project is now regarded as the world’s largest single customer for civil engineering services, with contracts worth billions of dollars awarded to both international and regional firms.

Italian contractor WeBuild is leading the $5 billion dam project at Trojena, constructing three dams to create an artificial lake for the planned mountain ski resort. European groups Vinci and ACS, along with Saudi firms Nesma & Partners and Al Bawani, are heavily involved in backbone infrastructure, including high-speed rail networks and underground utility corridors beneath The Line.

 

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China State Construction Engineering Corporation (CSCEC) plays a central role in vertical construction, deploying modular building techniques to accelerate delivery of residential and administrative clusters.

For procurement professionals, Neom highlights the importance of blending international expertise with strong regional partnerships. The diverse contractor base reflects a deliberate strategy to manage risk, encourage knowledge transfer and maintain delivery momentum across multiple workstreams.

The $10 billion supply chain partnership

A defining feature of Neom’s procurement model is its $10 billion logistics joint venture with global transport group DSV. Formed in October 2023 and scheduled to be fully operational by 2025, the partnership is structured with 51% ownership by Neom and 49% by DSV.

The joint venture is responsible for end-to-end supply chain management across the entire region, handling everything from construction materials and high-grade steel to advanced AI hardware. An innovation centre under development at Oxagon will focus on autonomous freight solutions and carbon-neutral last-mile delivery.

Suppliers seeking to work on Neom must engage through the Neom Supplier Portal, where sustainability, circular economy practices and ESG compliance are key evaluation criteria. This marks a shift from traditional mega-project procurement models, where cost and speed alone often dominated decision-making.

 

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By combining DSV’s global logistics expertise with Neom’s strategic oversight, the partnership has created a model now being closely studied by other large-scale developments worldwide.

Procurement across Neom’s development zones

Progress across Neom’s four main regions varies significantly. Artificial intelligence has emerged as a priority area, with the PIF launching HUMAIN, a venture aimed at transforming parts of Neom into a global hub for data centres and AI research.

Sindalah, the luxury island destination, is currently the most advanced component and officially opened to the international yachting community in December 2024. Trojena remains under intensive construction ahead of the 2029 Asian Winter Games.

Oxagon, the octagonal industrial port city, is evolving into a centre for automated manufacturing and green energy. It is set to become the world’s first fully automated port and integrated supply chain hub. The site also hosts the Neom Green Hydrogen Company, which is developing what is expected to be the world’s largest utility-scale green hydrogen plant.

For procurement leaders, Neom demonstrates how phased delivery, strategic partnerships and stringent supplier standards can help manage the risks and complexities of delivering transformational infrastructure at an unprecedented scale.

Source: Procurement Magazine