Dubai’s New Contracting Law Transforms Construction: From Price Wars to Quality First

By passing Contracting Law No. 7, Dubai has taken a new step in raising the caliber of its building and infrastructure projects. Contractors will no longer be chosen purely on the basis of submitting the lowest bid in tenders under this law. Rather, the main factors will be their performance history, technical know-how, financial capacity and moral behavior.

A Change in Strategy: Prioritize Quality Over Price

Because contracts were given to the lowest bidders in previous years, some projects experienced delays and quality problems. Now, that strategy has been put on hold. Dubai has placed a higher priority on long-term project value and quality investment than on short-term cost reductions.

Gordon Roger, CEO of Stonehaven Project Management, commented on the shift:

“One of the smartest moves (with the new Dubai contracting law) is shifting the focus away from simply chasing the lowest price. Because in the long run, that’s rarely the most cost-effective way to do business.”

Committee for Oversight and Increased Openness

Dubai has created a Contracting Regulation and Development Committee for the first time. This organization oversees contractors, formally categorizes them according to their resources, experience and prior performance, and keeps an official registry. Investors and Real Estate Developers in Dubai will thus have a better understanding of contractors’ true capabilities.

According to Sinimol Noushad, founder of UN!Q Project Solutions:

“Dubai developers and investors gain better visibility into contractors’ technical and financial capabilities, reducing project risks,”

Tough Penalties for Violations

Contractors who violate the new law face severe penalties and limitations, such as:

• penalties for a first infraction of up to AED 100,000;
• penalties for repeated infractions within a year of up to AED 200,000;
• removal from the official contractor registry, temporary suspension or a classification downgrade.

These fines will serve as powerful deterrents in a market as competitive as Dubai.

Effects on the Construction Industry

Law No. 7, which mirrors similar laws already applied to developers and real estate consultants, increases transparency in Dubai’s construction industry by harmonizing contracting regulations.

Mohamed Hussein, Senior Development Executive at Azizi Developments, said:

“Dubai introduced a similar legal framework – first for developers, then for brokers – signaling a fast-tracked legal evolution that underpins the sector’s record-setting growth.”

Conclusion

As evidenced by Law No. 7 on contracts, Dubai is establishing professional standards, quality and transparency as the foundation for its future growth. This change gives investors greater assurance that large-scale endeavors will succeed, while contractors can only take part in projects based on their actual skills and technical credentials. In addition to raising the standard of construction, this change has a direct effect on Dubai’s real estate market, increasing its appeal to both domestic and foreign investors because of respectable businesses and top-notch projects.

Source: https://gulfnews.com