Tuesday 27 / October / 2026
Muscat: Oman has introduced stricter measures to address delays in government projects, requiring contractors to submit recovery plans when delays reach 5 per cent, while those facing delays of 15 per cent may have their eligibility to participate in future government projects reviewed.
The measures form part of a new package of unified government contracts issued and updated by the Ministry of Finance in cooperation with the Projects, Tenders and Local Content Authority.
The package includes a new Design, Procurement and Construction Contract and updates to the Construction Contract and Engineering Consultancy Contract, aimed at improving project execution, controlling costs, reducing disputes and enhancing the efficiency of government spending.
Under the revised provisions, contractors must submit a recovery plan when delays reach 5 per cent to bring projects back on track. When delays reach 15 per cent, the contractor’s eligibility will be reviewed, with the possibility of restricting participation in future government projects.
Another significant change is the abolition of the 5 per cent retention from the actual contract value, a move intended to improve contractors’ financial liquidity and accelerate project implementation. The revised contracts also seek to clarify responsibilities among project parties, reduce overlapping authorities and limit variation orders during execution. The updated framework addresses insurance, guarantees and the respective rights of contractors and employers, while establishing clearer procedures for resolving contractual disputes.
Local content and Omanisation have also been incorporated into the contractual requirements. Contractors are explicitly required to meet local content obligations, including employing and training Omani nationals and relying on local suppliers and contractors.
The changes are intended to create greater opportunities for national companies and small and medium enterprises to participate in government projects.
The revised contracts also broaden the definition of force majeure to cover natural events, epidemics and pandemics, providing greater clarity on contractual obligations and a more balanced approach to risk-sharing when exceptional circumstances affect project execution.
In addition, employers are granted broader powers to withhold or suspend payments and exercise set-off rights, subject to contractual controls, to ensure compliance with work requirements and quality standards.
The Ministry of Finance said the revisions followed comprehensive technical and legal reviews of existing contracts to address contractual challenges and align the framework with international best practices in project management and execution.
The changes are expected to support faster project completion, improve execution quality, strengthen accountability and enhance the reliability of Oman’s business environment.
