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Case Study
Drafting Operation and Maintenance Agreements for a Government-Related Project Exceeding SAR 35 Million in Al-Ahsa
Dispute Value
SAR 35 million
Government-related operation and maintenance projects require a clear contractual framework defining the scope of services, performance standards, technical and financial obligations, supervision mechanisms, and liability for delays or non-performance.
In this matter, Atyar Advocates and Legal Consultants provided legal services to a private client for an operation and maintenance investment project in Al-Ahsa, with an investment value exceeding SAR 35 million.
The scope included legal advice, a comprehensive legal study, drafting operation and maintenance agreements and related investment contracts, litigation, preparation of pleadings and legal memoranda, and legal research.
All services were provided under strict confidentiality regarding the client, the related entity, the facilities and assets, and the project’s technical, financial, and commercial terms.
Quick Matter Overview
Project Value
More than SAR 35,000,000
Project Location
Al-Ahsa, Saudi Arabia
Nature of the Project
Government-related project
Subject of the Investment
Operation and maintenance of facilities and assets
Nature of the Agreement
Operation and maintenance investment agreement
Scope of Legal Services
Legal advice, comprehensive legal study, litigation, drafting pleadings and legal memoranda, legal research, and drafting investment agreements
Background of the Investment Relationship
The matter concerned an operation and maintenance investment project in Al-Ahsa, with an investment value exceeding SAR 35 million.
Given its connection with a government-related entity and the ongoing nature of the services, the project required a clear contractual framework covering the scope of services, facilities and assets, performance standards, response times, preventive and corrective maintenance, reporting, and approval procedures.
The framework also addressed responsibilities for personnel, equipment, materials, spare parts, breakdowns, and damage, as well as the consequences of delays, inadequate performance, or failure to meet agreed performance indicators.
Atyar Advocates and Legal Consultants was engaged to provide legal advice, prepare a comprehensive legal study, and draft the operation and maintenance and investment agreements, defining the parties’ rights, obligations, and risks.
Investment Value
Subject of the Relationship
Operation and maintenance investment arrangement
Project Location
Al-Ahsa
Nature of the Entity
Government-related entity
Nature of the Operation and Maintenance Agreement
An operation and maintenance agreement governs the relationship between the owner or beneficiary of the facilities and the service provider. It defines the services to be performed and the results and performance levels required throughout the project term.
The principal legal matters associated with the agreement included:
- Identifying the facilities, assets, and systems covered by the operation and maintenance scope.
- Regulating daily and periodic operational services.
- Defining preventive and corrective maintenance activities.
- Regulating response to breakdowns and emergency situations.
- Establishing key performance indicators and service levels.
- Regulating personnel, equipment, materials, and spare parts.
- Defining the contract term and implementation phases.
- Regulating technical and periodic reporting.
- Establishing supervision and work-approval procedures.
- Regulating the financial consideration and payment certificates.
- Defining deductions and contractual penalties.
- Addressing variations and additional works.
- Allocating responsibility for breakdowns and damage.
- Addressing delay, inadequate performance, and non-performance.
- Regulating default, rescission, and termination.
Essential Elements of the Operation and Maintenance Agreement
Scope of Operation Services
Defining the facilities, assets, and systems covered by the agreement and the daily and periodic operational activities required from the service provider.
Maintenance Works
Regulating preventive, scheduled, and corrective maintenance and the procedures for responding to breakdowns and emergency situations.
Performance Indicators
Establishing measurable standards covering quality, availability, response times, and completion rates for maintenance activities.
Financial Consideration
Regulating the contract value, payment schedule, payment certificates, work approvals, deductions, and financial penalties.
Responsibilities and Safeguards
Allocating responsibility for personnel, equipment, spare parts, damage, and compliance with technical specifications.
Default and Termination
Defining events of default, notice and cure procedures, suspension, rescission, termination rights, and dispute resolution arrangements.
Key Legal Challenges
Defining the Scope of Work
The project required precise definition of the operation and maintenance services to prevent overlap between the core contractual scope and additional services. It was necessary to identify the facilities and assets covered by the agreement, define the service provider’s responsibilities, and specify the activities requiring separate approval.
Establishing Measurable Performance Indicators
The agreement required clear standards for assessing service quality, response times, availability, and completion of preventive maintenance. This allowed performance assessments, payments, and penalties to be linked to measurable and documented results.
Allocating Technical Responsibilities
The agreement had to allocate responsibility for personnel, equipment, materials, spare parts, breakdowns, and damage. It was also necessary to distinguish between breakdowns caused by the service provider’s failure and events falling outside its contractual responsibility.
Regulating Payments and Penalties
The project value exceeded SAR 35 million, requiring detailed regulation of payments, payment certificates, approval procedures, deductions, and contractual penalties. Clear procedures were also required for challenging penalties or deducted amounts.
Addressing Variations and Additional Works
The nature of the project could require amendments to the service scope or the addition of new works during the contract term. The agreement therefore required a written variation procedure defining the financial, time, and resource implications before implementation.
Regulating Default and Termination
It was necessary to distinguish between material and non-material breaches and to define cure periods and the remedies available to the affected party. The agreement also had to regulate the handover of facilities, records, assets, and data upon termination of the relationship.
Our Legal Strategy
Reviewing the Nature of the Project
The engagement began with a review of the facilities, assets, and services requiring operation and maintenance and the results expected from the service provider. This assisted in identifying the technical and commercial matters requiring contractual regulation.
Defining Contractual Obligations
The parties’ responsibilities concerning operation, maintenance, personnel, equipment, materials, reporting, and coordination with the beneficiary entity were structured clearly. The objective was to reduce ambiguity and prevent overlap between the parties’ responsibilities during implementation.
Drafting Performance Standards
Clear performance standards were drafted covering quality, availability, response times, and maintenance-completion rates. The performance results were linked to payments, penalties, and corrective procedures.
Regulating Payments and Variations
The payment mechanism, payment certificates, work approvals, deductions, and additional costs were defined. Procedures for approving variations and additional works and determining their financial and time effects were also regulated.
Preparing the Legal Position
A comprehensive legal study, supporting research, pleadings, and legal memoranda were prepared concerning the client’s rights, obligations, and implementation risks. The engagement also included litigation in matters arising from the contractual relationship.
Drafting the Investment Agreements
Comprehensive operation and maintenance agreements were prepared regulating the service scope, performance indicators, payments, safeguards, liability, default, termination, and dispute resolution.
Legal Services Provided
Legal Advice
Providing advice concerning the project structure, the client’s rights and obligations, and the risks associated with the performance of operation and maintenance services.
Comprehensive Legal Study
Preparing a specialised legal assessment of the investment relationship, scope of work, payments, responsibilities, and principal legal risks.
Litigation
Representing the client in matters and disputes arising from the operation and maintenance agreements within the agreed scope of engagement.
Drafting Pleadings and Legal Memoranda
Preparing pleadings, legal memoranda, defences, responses, and other submissions required to support the client’s position.
Legal Research
Conducting legal research concerning operation and maintenance agreements, government-related and investment contracts, and contractual liability.
Drafting Investment Agreements
Preparing operation and maintenance agreements governing the service scope, performance, payments, safeguards, default, and termination.
Legal Insight
An operation and maintenance agreement should not merely list the services to be performed. It should define the required outcomes and performance levels, allocate each party’s responsibilities, and regulate the procedures for approving works and payments.
Careful drafting becomes particularly important in high-value government-related projects, where payments should be linked to measurable performance indicators and variations, penalties, and handover procedures must be regulated precisely.
An early legal assessment also assists in identifying risks before implementation begins and reducing disputes concerning the service scope, financial entitlements, breakdowns, delay, or inadequate performance.
Legal Value Delivered to the Client
- Defined the operation and maintenance scope.
- Regulated the parties’ technical and financial obligations.
- Established measurable performance indicators.
- Structured payments, deductions, and penalties.
- Addressed variations and additional works.
- Drafted liability, default, termination, and dispute resolution provisions.
Scope of Legal Work
Atyar Advocates and Legal Consultants provided legal services to a private client in connection with an operation and maintenance investment project in Al-Ahsa with an investment value exceeding SAR 35 million.
The scope of work included providing legal advice, preparing a comprehensive legal study, drafting operation and maintenance agreements and related investment contracts, conducting litigation, drafting pleadings and legal memoranda, and undertaking legal research.
The legal work also addressed the scope of services, performance levels, financial consideration, the parties’ responsibilities, additional works, penalties, and the consequences of default and termination.
The engagement was undertaken without disclosing the client’s identity, the government-related entity, the facilities and assets covered by the project, or the confidential technical and financial terms.
Legal Team Responsible for This Matter
Prof. Dr. Turki Al-Tayyar
Founder and Managing Partner, and an expert in the judiciary, legal practice, arbitration, and university education, with more than 25 years of combined experience.
Mr. Salem Saad Al-Dosari
Partner specialising in administrative contracts, investment, and litigation, with extensive experience in administrative and commercial cases.
Practice Areas Related to This Matter
- Real Estate Dispute Resolution
- Property Ownership Claims
- Litigation Before the General Courts
- Investment Disputes
- Government Contracts and Administrative Matters
- Compensation Claims
Need Assistance Drafting or Reviewing an Operation and Maintenance Agreement?
If you are preparing to implement an operation and maintenance project, require review of an existing agreement, or need protection of your rights in a contractual claim, Atyar Advocates and Legal Consultants provides legal advice, comprehensive studies, research, drafting, and litigation services throughout Saudi Arabia.
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بيانات الاتصال
- شارع التخصصي، النخيل، الرياض 12384
- 3132 شارع الأمير تركي، الكورنيش، 6309, الخبر
- Info@al-tayyar.com.sa
- 00966555398969
مجالات الممارسة
القانون التجاري والشركات
صياغة العقود والوثائق القانونية
القانون المالي والمصرفي
الضرائب والزكاة والجمارك
العقارات والملكية الخاصة
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