This study examines 69 construction-related companies operating in Saudi Arabia — 6 developers, 33 contractors, 15 cement producers, 9 steel and pipe manufacturers and 6 building materials firms — drawn from 37 Tadawul-listed companies and 32 private firms filing audited accounts. It finds a sector split down one line: who owns the assets and who only borrows them.

A cement company is its assets. The kiln, the quarry, the plant — that is the business, and it sits where a bank can see it and lend against it. A contractor owns almost nothing productive.

It rents what it needs for the length of a job: subcontractors, crews, plant, supplier credit. Its capacity to build is contractual rather than physical.

That is not a flaw in how contractors are run. It is what the work demands. Jobs arrive in lumps rather than a steady flow, a single contract can be larger than the firm executing it, and sites move across the country from one year to the next.

Own the workers and the machines and you pay them through every gap between contracts, then pay again to move them to wherever the next site is. Renting avoids both costs, and leaves the balance sheet almost empty.

The consequence appears in the payment chain. Main contractors are paid only once completed work has been inspected, approved, and processed, which takes months. Their own subcontractors and suppliers are paid in weeks.

The contractor stands in that gap, funding work it has already delivered, and it funds it with bank debt. This is structural, not a failure of management. Every new contract enlarges the book of unpaid work, and that book is financed by borrowing.

So contractors carry the sector’s heaviest debt, and it built up in the good years rather than the bad ones. Margins never slipped. What grew was the pile of finished work waiting to be paid for, faster than the owners’ capital behind it.

That thin capital explains the best returns in the sector, which is often mistaken for proof of a better business. The same thinness that flatters the returns is what removes the cushion.

Collateral compounds the asymmetry. Cement producers borrow against plants, developers against land that appreciates, contractors against a client’s promise to pay. Payment terms, meanwhile, follow bargaining power.

In mature markets, the largest contractors run trade credit in their own favour, financing operations on their suppliers. In Saudi Arabia, the direction is reversed, because the client is the state and its development companies.

This is why every recalibration of the pipeline matters. An extension, a reduced scope, a pause in awards sends a liquidity shock down a chain in which each handover turns a sovereign decision into a private obligation.

The party at the top can revisit a timetable. The party at the bottom has already hired, mobilised and bought. Saudi Oger showed where that ends: owed for completed work, carrying bank and supplier debt, no buffer, and gone within two years of the 2014–16 spending cuts.

Webuild’s termination at Trojena in March 2026 is the same mechanism in the present tense. And because lending is concentrated in a handful of banks exposed to the same large groups, one sizeable failure does not stay local — it travels through the subcontractors beneath it.

The binding constraint on delivery is therefore not labour, which is available at scale, nor materials, nor technical skill, which international joint ventures supply. It is working capital.

That puts the policy question in a more useful form. Paying contractors sooner would not create working capital; it would relocate it — off the balance sheets that fund it with bank debt at commercial rates, and onto the one that borrows most cheaply.

Escrow accounts and binding payment forms have narrowed the gap since 2020, but disputes still touch a substantial share of projects. The reform outstanding is enforceable payment terms: cheaper than any subsidy, and aimed at the constraint the sector actually has.