The Red Sea Development Company (TRSDC), the company behind the world’s most ambitious regenerative tourism project, has a mission to reimagine and innovate in order to create a unique, luxury destination that embraces nature, culture and adventure, while setting new standards in sustainable development. Such a grand vision, of course, requires broad expertise, not only from within TRSDC itself, but also from other specialist companies that can offer the relevant skills, quality, and service required.
But how do these companies get involved; what is TRSDC searching for? We spoke to John Pagano, CEO at TRSDC and AMAALA, to gain a little insight into what TRSDC looks for in a partner.
Saudi Projects: What type of tendering does TRSDC/AMAALA typically use – open tendering, selective tendering, negotiated tendering etc. – and why?
John Pagano: The Red Sea Development Company’s (TRSDC) tendering is always fair, equitable, transparent, and a driver for free competition in all its projects. We have a clear mandate and vision of what we are looking for in the market, and we engage early to ensure the ‘buildability’ factor in our innovative and sometimes pioneering requests. We understand we often ask suppliers to do things that have previously never been done before using methods never attempted. Still, we make sure we don’t ask for the impossible. Our approach is based on realistic expectations on technical capabilities and a reasonable allocation of scope and risk.
Procurement aligns with our corporate strategy to be an instrumental contributor to KSA’s Vision 2030 and a catalyzer in the global transition to regenerative sustainability. That means we actively consider how we impact the market, acting like a leader who encourages all kinds of industries to go one step further and step out of our comfort zones. As I said, we know what we want, which makes us quite prescriptive, and as a business, we remain very much involved in the development of the project at all stages. We are a vertically integrated real estate developer with the capacity to manage interfaces at all supply chain levels proactively. Our suppliers truly become our partners in delivering the best possible outcome for the project.
We are constantly looking for industry champions that can add value and contribute to our projects
SP: When tendering, timing is often crucial, so how long do you like a contractor’s presentation to be?
JP: It is a case-by-case scenario. Every project is different, unique in its own way, which requires adapted approaches. At TRSDC, each tender is governed by a multi-disciplinary Tender Committee that will carefully evaluate the proposals. We always make sure the market understands our approach, engaging long before our tenders reach them, which we have found to be the best way to ensure that the responses to our requests are optimal.
The timing is indeed crucial. Our significant progress against our timeline can be explained by the agility and efficiency of our procurement processes. The completion of the Public-Private Partnership for our Utilities Package is an interesting example. It was a complex process involving more than 2,000 documents per bidder. We have developed sophisticated online management systems that facilitate the bidders’ submissions, the coordination of our evaluation teams, bidder selection, and negotiation. This enabled us to go from publishing the Request for Proposals to commercial close and contract signature in under 18 months.
We have awarded over 500 contracts, worth more than SAR 15 billion
The process timeline, running from June 2019 to November 2020, was directly impacted by the Covid-19 pandemic and the need for lockdowns. Still, we adapted to the challenging circumstances by completing the procurement process entirely online. The outcome is a highly sophisticated commercial instrument, a utility package financed by local and international investors to provide 100% renewable energy 24/7. We are now on track to become the world’s largest tourist destination powered exclusively by renewable energy day and night, supported by the largest installed battery storage facility in the world.
Business continuity planning has been a key focus during 2020, ensuring that we continue destination development with minimal disruption, and this includes procurement. We have awarded over 500 contracts worth more than SAR 15 billion, including critical developments like the airport, road infrastructure and jetties, and our first hotels.
SP: Do you include pre-qualification questionnaires or carry out pre-tender interviews?
JP: We actually do both. We are constantly looking for industry champions that can add value and contribute to our projects. Potential vendors can register online at any time via our website, and more than 3,000 companies have already completed this process. After registration, companies are contacted by our technical and commercial experts for an evaluation and final approval as a potential supplier. Then, once an opportunity arises, they can apply to pre-qualify. This is part of our ongoing conversation with the market, which we believe is crucial to staying connected with industry and technological trends, interests, and challenges.
Potential vendors can register online at any time via our website, and more than 3,000 companies have already completed this process
SP: What do you look for when a contractor demonstrates its capability, such as systems to be used etc.?
JP: All our procurement processes are led by a dedicated Tender Committee. They rely on well-defined, strict evaluation criteria that apply to all candidates. Having technical capabilities and a solid record of high-standard project delivery in this region and internationally is undoubtedly important.
But as I said earlier, we have a clear mandate. Our mission is to lead the global transition into regenerative development. We are a driver for paradigmatic change, redefining luxury tourism, development, and even considering our natural capital when evaluating our investment returns.
We are pioneering large-scale sustainable development, which means some of the solutions we are looking for are not yet available in the market or have never been implemented before on this scale. In that case, previous track records or size are not the only relevant variables when considering new partners. We will look for companies that innovate and are willing to work with us to help us deliver on our ambitious regenerative goals. We know we will have to work together with our partners to lead the way, and we factor that into our evaluations too.
We are proud that over 70% of our construction contract value has been awarded to Saudi companies
Giga-projects like The Red Sea Project and AMAALA are opportunities for any company involved in construction, real estate, energy, transport, hospitality, and many other industries to grow strategically. These kinds of projects are hard to find anywhere else in the world. Companies can learn how to scale up, innovate and be more competitive globally.
Finally, we are proud that over 70% of our construction contract value has been awarded to Saudi companies on both projects. The mix of Saudi and international organizations will enrich and diversify the national industrial fabric, one of the critical goals of Vision 2030.
SP: How do you measure how sustainability-focused a potential contractor is?
JP: Similarly to the evaluation of other capabilities, we’d be looking at records and company capacity. But for us, sustainability is much more than a skillset. It’s a principle, a transversal obligation, a culture. We are meeting the highest sustainability standards you can find in tourism development and beyond, and in fact, seek to set new standards in this area. Our drive is regenerative sustainability, an approach inspired by the living-systems theory that aims to conserve, protect and enhance the destination’s environment. We don’t design just buildings or infrastructure. We design for human, ecosystem, and planetary health, blending with nature so that our destination and guests can become part of it.
Sustainability commitments are of utmost importance when choosing the right supplier for one of our projects. A potential contractor must be willing to engage with the same level of commitment as we do. Sustainability is non-negotiable and a deal-breaker at any stage of discussions or during the delivery of a contract.
Pioneering large-scale regenerative sustainable development means that some of our standards are yet to exist in the market. We have decided to fully control sustainability matters, from setting new standards to designing the best strategies and procedures to meet them. Our role during construction is sometimes dual, acting both as the client and the contractor. We prescribe and request goals, and we support and follow third parties’ efforts to achieve them, constantly evaluating performance and the contractor’s capacity to evolve towards the levels of excellence we demand. We believe that this is the way to drive industry innovation.
Existing international standards like those from the International Finance Corporation (IFC) are a valid reference to create adequate living conditions for workers
SP: What are you looking for when it comes to employee welfare when taking on a contractor?
JP: We believe that if we take great care of the workers, they, in turn, will build with great care. We aim to protect and enhance the destination as we develop it, and as such, it makes sense to ensure that we protect and enhance the wellbeing of those more directly involved in building the place. Taking care of their physical and mental wellbeing is very important, least of all because it is the right thing to do, but because happy, healthy workers are more productive. The more care and attention you put in, the greater the return you can expect. We have a moral mandate to set standards on workers’ welfare and set an example to follow as we do in so many other areas.
Existing international standards like those from the International Finance Corporation (IFC) are a valid reference to create adequate living conditions for workers. In practice, this looks like shared rooms with bunk beds, shared external toilet facilities, and essential medical care provision. But we want to go one step further and chose to exceed IFC standards, setting a new global industry benchmark. Similar to our approach to other crucial project factors, the best way to do that is by taking complete control of workers’ welfare, requesting all contractors to host their workers in our facility.
We designed and built the Construction Village, which accommodates up to 10,000 workers comfortably, which we now operate with our partners Red Sea International and FMCO. Each room is shared by a maximum of three workers and is equipped with partitions between beds for privacy and en-suite bathrooms with shower. There are 12 landscaped neighborhoods, sports pitches, gyms, recreational facilities, including television, games rooms, cinema, a minimarket, and a barbershop, among other amenities.
Importantly, last month we opened a Central Medical Facility managed by our partners International SOS. The facility, coupled with several satellite clinics, ensures we are providing the highest quality medical care and assistance for up to 28,000 construction workers at peak operation, including general practitioner and occupational health doctors and nurses, pharmacists, ambulance drivers, and emergency evacuation capacity.
Additionally, we have a helicopter available on-site ready to transport patients to larger hospitals in Jeddah or Tabuk, for example, and being based in a remote location, readily available medical assistance to this degree could quite literally a lifesaver for us.
Pioneering large-scale regenerative sustainable development means that some of our standards are yet to exist in the market
In summary, it is our camp, with our standards and conditions, and we request contractors to host all their workers in it. Consequently to this approach, we demand from all contractors full compliance with respecting workers’ health, safety, and wellbeing at all times.
SP: If unsuccessful, do you welcome debriefings so that a contractor can understand where they went wrong and perhaps correct it for next time?
JP: Definitely – as part of our proactive relationship with the market and the learning process the giga-projects represent for the industry, we provide feedback whenever requested. The projects will keep offering numerous opportunities during the construction and operation phases. Therefore lesson learning is a valuable exercise for potential contractors, TRSDC and the industry.
SP: If you had one piece of advice for a contractor who wants to work with TRSDC/AMAALA, what would it be?
JP: I’d tell them to be bold and dare to think outside of the box. Be innovative, pioneer new ways of doing things, and most of all, believe they can be part of this opportunity to grow together with TRSDC and our projects. We want companies of all types and sizes to get involved and contribute to our goals and the realization of these groundbreaking projects. We invite them to follow our principles, buy into our ethos, and join us in this exciting trip towards regenerative sustainability, Saudi Vision 2030 and the global future of tourism.