New Dubai law requires contractors to prove competence - not just cut costs

Dubai: In Dubai, new construction contracts will be awarded on companies’ track record and not just on who comes up with the lowest quotes during tenders.

That, according to industry sources, will be the biggest outcomes from Dubai’s newly issued rules for contracting activities. The rule changes assume even greater significance as Dubai sees its next round of mega-projects that will reshape the city in the next decade, whether that’s the new airport, skyscrapers, additional infrastructure and more.

“By mandating technical competence (or contractors) and strong business ethics, Dubai is prioritising value over cost,” said Gordon Rodger, Managing Director at the project manager Stonehaven.

"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.”

In other words, less of the widespread lowest cost mentality that contractors operated in.

For the first time, Dubai will also see the creation of a Contracting Activities Regulation & Development Committee, with oversight powers of the sector.

This would also mean a drastic overhaul of the hiring and job prospects in the local construction sector, sources add. “The new Dubai ensures that competition in the construction sector is based on capability and compliance," said Sinimol Noushad, founder-Chairperson of UN!Q Project Solutions.

“Now, there’s clear criteria for contractor classification and registration, ensuring only qualified firms get to operate in Dubai. Plus, there are the targeted penalties to deter unethical practices, especially by underqualified or non-compliant players."

Any failure by contractors on the compliance side will invite penalties.

Given the kind of margins that’s there in a highly competitive construction market like Dubai’s, the penalties do cut deep.

There are other potential penalties too such as:

“The Law No. 7 upgrades Dubai’s already disciplined construction ecosystem,” said Mohamed Hussein, Chief Development Officer, Azizi Developments.

“A single statute replaces the patchwork of emirate and free zone rules.

The market gets a real-time contractor registry and a strict classification system to verify who’s fit for which scope.

“A standing committee resolves regulatory friction - and six-figure fines will back the new code of conduct.

“It’s the Dubai construction sector’s ‘torque-wrench’ - tightening every critical joint. As developers, we welcome this: it sharpens accountability, raises execution standards, and enables timelier, higher-quality delivery.”