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How to optimize value and maximize potential in capital projects

Authors

  • Marco AbouZahr

    EY MENA Financial Accounting Advisory Services Leader

  • Sauveek Chakraborty

    EY MENA Financial Accounting Advisory Services Partner, Ernst & Young Middle East (Dubai Branch)

10 minute read 19 Aug 2025
Related topics
Financial accounting advisory services
Assurance
Infrastructure
Strategy by EY-Parthenon
Long term value
Government and Public Sector
Digital and innovation in Government

Capital project strategies are vital to addressing obstacles in project delivery, leveraging innovative solutions and latest developments.

In brief

  • In capital projects, the application of AI technologies can enhance decision-making, improve resource allocation and project timelines.
  • By using intelligent diagnostics and targeted interventions, project owners can rebalance risk and enhance cost and time predictability.
  • Effective risk management practices are essential to mitigate potential project pitfalls and confirm consistent project progress.

The capital project landscape in the Middle East is evolving rapidly, driven by ambitious infrastructure investments, sustainability mandates, and digital transformation initiatives. Countries that are at the forefront of spearheading giga projects aimed at achieving long-term economic transformation. However, despite raising investment volumes, capital project delivery continues to face significant challenges, including cost overruns, schedule delays and contractual disputes.

Significant delays in project completion
of the projects deviated from the planned schedule completion in the MENA region.

How EY can help

Key challenges in capital project delivery

The persistent issues in capital project delivery stem from ineffective partnering and contractual frameworks, which hinder progress and efficiency. Early planning and design readiness, along with fragmented risk management, contribute significantly to the execution challenges faced by projects in the region. A lack of an integrated systems approach, combined with a short-term focus on cost over long-term value, further exacerbates these problems.

 

These gaps frequently translate into high volumes of variation orders, prolonged claims cycles and contractual disputes, all of which erode commercial value and strain stakeholder relationships. As a result, capital projects in the Middle East often face a recurring cycle of inefficiencies, limiting their potential for successful outcomes.

 

Insights from EY MENA’s project reviews

Leveraging extensive experience, EY teams have conducted deep-dive project reviews across the MENA region, analyzing more than 100 infrastructure project packages with a cumulative capital outlay exceeding US$20b. These reviews uncovered systemic value leakages and delivery inefficiencies across key capital project categories, including residential, tourism, sports, commercial, mixed-use and infrastructure.

The analysis reveals that capital deployment and project performance vary significantly across sectors. While infrastructure and residential projects account for the largest share of capital outlay, the most pronounced schedule delays are observed in tourism and commercial developments. This comparison highlights that although infrastructure dominates the overall capital investment, execution pressures and value erosion are more obvious in the tourism, commercial and residential sectors.

The patterns identified signal sector-specific control gaps, ranging from planning slippages and design errors to changes and cost escalations induced by variations. Across the reviewed portfolio, six dominant risk themes emerged, encompassing procurement inefficiencies, gaps in commercial enforcement, and reactive contract administration. These insights underscore the need for a bespoke contracting model that includes long-term relationship-based contracting and a robust project delivery and contract administration process to mitigate potential risks.

Stressed tendering and procurement processes were prevalent, with over 70% of flagged projects exhibiting issues such as inconsistent technical criteria and scoring methodologies.  

Stressed tendering and procurement
of flagged projects exhibiting issues such as inconsistent technical criteria and scoring methodologies.

Single-sourced packages that deviate from competitive bidding protocols not only inflate contract values but also limit transparency in vendor performance tracking, leading to missed opportunities for optimal price discovery.

Recurring control breakdowns were observed in the certification of various cost heads, including material onsite payments and on-account variation payments. These certifications were often made without supporting documentation or entitlement validation, resulting in unchecked approvals that increased untimely cost exposure and delayed recoveries. Despite evident schedule overruns, penalties and damages were often waived or not enforced, weakening contractual leverage.

Furthermore, over three-quarters of the projects experienced extended execution timelines, prompting contractors to raise associated claims. However, entitlement validation and mitigation strategies were either absent or inconsistently applied, resulting in audit risks and settlement uncertainties. Variation-related inefficiencies emerged as a prominent cause of value leakage, often stemming from variations awarded on a lump-sum basis without clear itemization, scope awarded outside original contract limits and inadequate justification for rate approvals.

How EY can help

  • Assurance services

    Learn more about how our Assurance teams serve the public interest by promoting trust and confidence in business and the capital markets.

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These recurring issues demonstrate capital project risks are not merely technical or contractual, but systemic and cross-functional. Without embedded assurance mechanisms and governance interventions, these risks continue to erode value silently across the project life cycle. To move from reactive mitigation to proactive value optimization, organizations must rethink how they monitor, control and govern their capital programs.

 

How EY MENA teams can help optimize the value and unlock the potential of capital projects

Projects and Asset Lifecycle Management team (PALM) of EY MENA supports organizations in safeguarding and optimizing the performance of large-scale project portfolios. This assurance-led approach combines data-backed insights, predictive analytics and structured control reviews to help clients unlock measurable value across the project lifecycle.


By independently assessing project risks, governance structures and delivery controls, EY teams enable organizations to proactively address value erosion, compliance exposures and decision bottlenecks. This structured capital project assurance framework empowers stakeholders to strengthen project performance, improve delivery certainty and enhance alignment within the approved budgets, timelines, environmental, social, ESG commitments and regulatory expectations.


Unlock full potential of capital projects with EY Projects and Asset Lifecycle Management team (PALM)
  1. Assessing the evolution of design and traceability across planning phases to support alignment with approved budgets and facilitate early identification of divergence risks.
  2. Performing project assurance across lifecycle including inception, design, procurement, cost allocation and validation, construction, handover and property management to strengthen lifecycle visibility and bring out single version of truth.
  3. Transforming the capex and asset management lifecycle through frameworks, policy and process, digitization of gateway systems, and implementing quality management systems that enable standardization and reducing manual inefficiencies.
  4. Performing continuous program review and monitoring project time and cost improvement based on unique optimization levers, intelligent dashboards. This involves assessing risks through EY MENA’s proprietary capital projects control assessment tools.
  5. Implementing AI-enabled analytics and predictive models to support real-time decision-making, scenario planning and early detection of execution risks.
  6. Reviewing readiness for handover, commissioning and LD enforcement during operational transition and safeguard recovery opportunities.

Summary

Capital project delivery in the MENA region faces significant challenges, including cost overruns, schedule delays and contractual disputes, despite increasing investments in infrastructure and sustainability initiatives. Ineffective partnering, fragmented risk management and a lack of integrated systems contribute to these issues, leading to inefficiencies and value erosion. Insights from extensive project reviews reveal sector-specific control gaps and procurement inefficiencies that exacerbate delays. To navigate these challenges, leveraging advanced solutions from the EY MENA PALM can help organizations unlock the full potential of their capital projects and drive sustained value across the project lifecycle.

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    About this article

    Authors

    • Marco AbouZahr
      EY MENA Financial Accounting Advisory Services Leader
    • Sauveek Chakraborty
      EY MENA Financial Accounting Advisory Services Partner, Ernst & Young Middle East (Dubai Branch)
    Related topics
    Financial accounting advisory services
    Assurance
    Infrastructure
    Strategy by EY-Parthenon
    Long term value
    Government and Public Sector
    Digital and innovation in Government

    EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.